Adam Smith

Mr. SMITH of Washington

Mr. SMITH of Washington. Mr. Speaker, throughout the 1980s and into the 1990s, no problem loomed larger in our Nation than the growing, seemingly never-ending Federal debt. Now, we have gotten to the point where that Federal debt is at $5.5 trillion, and in the early 1990s we were adding to it to the tune of almost $300 billion a year and more, and projections showed that going up forever. It looked like it was never going to end and it did not seem like we were ever going to get out of the debt spiral. I rise today to give a little good news, that we are headed in the right direction finally on the debt issue, but also to emphasize the importance of going the whole way: getting the budget balanced, and perhaps as important, paying down some of that debt. Since 1992 we have seen reductions in the yearly deficit, to the point where in this past year that deficit is only about $30 billion. I know Members have heard we have a surplus, but we really do not, because we are still counting the money we borrow from the social security trust fund as income, and it is really not. We have to pay that money back. So within the unified budget we are $30 billion in debt this year, and have a projected surplus for 2001. So we are headed in the right direction, but we need to maintain that fiscal discipline to get there, to get the budget balanced. To show just how big a problem the debt is, I have brought a chart with me today that shows where the Federal Government spends its money. It spends it in a variety of different areas. The third largest chunk of money going out of the Federal Government right now goes to interest on the debt. Fourteen percent of our budget, or $243 billion a year, is paid on interest on the debt. What that means is that this money basically is not helping us do anything. It is not helping us cut taxes, it is not helping us cover social security or national defense or health care for seniors. It is simply going to service the debt we ran up over the course of the last 30 years. If we can reduce this number we can do dramatically positive things for this country, either by reducing taxes or funding necessary programs. It is very important that in the next 10 years we do this, we start to reduce the debt, because the economy is strong now. We have an unemployment rate of 4.3 percent. We have record low inflation. Now is the time to pay down that debt. A crisis will come. The economy cannot remain in boom times forever. When it does, we are going to need the resources to deal with that crisis. If we do not step up to the problem now, start paying down the debt during good times, we will be in horribly bad shape when the bad times come. I rise with particular emphasis on this point as a Democrat because I think Democrats need to be for fiscal responsibility and emphasize that that is a cornerstone of our message, is to get the budget balanced, keep it that way, and pay down the debt. I think that is a very important principle for the Democratic Party to stand up for. I as a Democrat I am going to stand up for that. This will have dramatic effects on individual lives, as well. Speakers who are going to follow me are going to talk a little bit about the positive effects of reducing interest rates on peoples' lives. If the government is not out there sucking up all of the money, that means that others, small businesses, farmers, individuals, people looking for student loans, home mortgages, will have access to that money and to borrow it at a better rate, because the government is not out there grabbing all of it. If the interest rates go down, that improves individual's lives in a wide variety of areas, some of which my colleagues will touch upon in a minute. The bottom line point here is with the economy strong, with us headed in the right direction, finally, on fiscal responsibility, we need to stay with that discipline and get there, get the budget balanced, start paying down the debt so we can strengthen our entire economy, create more jobs, and create a better future for ourselves and for our children. I strongly urge my colleagues today to maintain fiscal discipline and pay down the debt. That needs to be one of our number one priorities for the coming decade.

Mr. SMITH of Washington

Mr. SMITH of Washington. Mr. Speaker, I rise today to talk also about debt and how we can get rid of it, and about our current budget situation. We are getting better, which is the good news. In 1992 it seemed like we would never have anything but rising yearly deficits contributing to a larger and larger national debt for the rest of our lives and beyond. But we have turned that around. We have seen the earlier deficits go down steadily since then and we have now even heard talk of actually running a surplus. The gentleman who preceded me is absolutely correct, we are not there yet, because we are still borrowing money from the social security trust fund and counting that as income, but we are getting closer. Even without counting social security, the debt this year was $30 billion, which is a lot less than it was 5 or 6 years ago. If we maintain the path of fiscal discipline we can get to the point where we begin to run surpluses. What I would like to talk about today is taking that one step further, not just begin to run surpluses, but actually begin to pay down the debt. That debt is pushing towards $6 trillion, and has a devastating effect on our economy. We should get to the point where we can start paying down that debt to do a lot of positive things: to reduce interest rates and also stop the amount of interest we have to pay. I have a couple of charts to illustrate this point. The first chart talks about how much money we spent on the debt. There are a lot of crushing needs that we have in government: defense, education, infrastructure, Medicare, social security. But this shows that one of the biggest items that every year out of the budget is paid is interest. Two hundred forty-three billion dollars, or 14 percent of our budget, is paid on interest, which does nothing for us. All it does is it meets our obligations on the debt. To the extent we can reduce that debt, we can reduce the amount of money that we have to spend on interest and free up more money for tax cuts or for spending on other programs that are necessary, like national defense or Medicare. That is a huge blow to our budget. Every $100 million we can spend down on this debt will reduce this crushing figure we have to face and pay every year. This goes beyond the effect it has on government. Paying down the national debt will have a profound effect on the lives of individual citizens, as the second chart will show. We have achieved a record level of home ownership in this country, and that is great, but it is still only about 60 or 65 percent. We need to go even higher, and those of us who are homeowners would also like to see the monthly payment reduced. If we can pay down the debt, the government will not be the single largest borrower in this country. We will not be out there gobbling up all the money and driving up interest rates. We can actually reduce interest rates. What this basically means is that we will save in our mortgages. This chart shows an example of an average home price of $115,000, so actually in today's market that is probably below average in a lot of areas. This shows what you can save on a home mortgage if you have a monthly payment of $844 at the 8 percent interest rate. If we can reduce that interest rate by just 2 percent we can save as much as $155 a month, which is almost $2,000 a year out of our personal family budget. All that is by reducing the amount of money that the government gobbles up for its own debt. That can help make that money more available for people who want to borrow money for home mortgages, and also for businesses, for farms, for a variety of other interests. We can reduce that debt. We face a lot of challenges in the next few years, but this is one of the biggest. The economy is strong right now. We have unemployment of 4.3 percent, we have low inflation, we have relatively low interest rates. Now is the time to save the money and pay down the debt, because that economy will not always be this robust. When the time comes and the economy slows, that is when we might need to help the economy, maybe borrow money to help get the economy back up. While we are in such a strong economic situation is the wrong time to be running debt the size of our current debt. There needs to be a constituency out there for reducing our Federal debt, help reduce interest rates and recognize the amount of money that the government is borrowing and also pays on interest each year in the budget. As a Democrat, I want to make this a very important issue. I think for too long Democrats have been accused of not being fiscally responsible. I think we can and should be. And for my part, as a Democrat, I am going to argue we need to save some money, begin paying down that debt to reduce interest rates and reduce the amount of money that government spends on interest every year. It is the fiscally responsible and prudent thing to do when the economy is strong. If we wait, we are in no position to do it when the economy is weak. Now is the time to step up our fiscal responsibility. We can all be proud. We can finally see someplace in the future where we will have a surplus. But let's take it one step further, let's pay down the debt.

Mr. SMITH of Washington

Mr. SMITH of Washington. Mr. Speaker, I rise today to introduce the ``Honesty in Budgeting Act.` This is an important bill that I hope my colleagues will join me in supporting. Right now, the public and elected officials alike are confused about our federal budget. Both President Clinton and the Republican Congressional leadership said we had a budget surplus last year, but the national debt still increased. The public asked, how could we have a surplus but still increase the debt? That is a good question. The answer is that we didn't really have a surplus last year. We had a $29 billion deficit in the budget, and a $99 billion Social Security trust fund surplus. Politicians who wanted to make the numbers seem better than they were ignored those numbers and focused on the ``unified'' budget surplus of $70 billion, misleading the American people into thinking that we had extra money in our budget. The Honesty in Budgeting Act does several things to help remedy that problem. First of all, it simply expresses the sense of the House that all of us in Congress and those in the White House should stop misleading the public and instead talk about the real budget numbers-- the on-budget numbers. Second, it reinforces Social Security's off- budget status. Finally, it directs the official budgeting agencies of the government, the Congressional Budget Office and the Office of Management and Budget, to stop including Social Security trust funds in its report to Congress and the American public. This is important because while we have previously taken Social Security off-budget, too many elected officials still talk and act like nothing's changed. Eliminating the trust funds figures from the official reports of the CBO and OMB will force Congress to focus on the real budget numbers and stop masking budget deficits with the Social Security trust fund. I believe that the Honesty in Budgeting Act is particularly important as we now enter an era of surpluses. Latest economic projections indicate substantial budget surpluses as early as this year. These surpluses are non-Social Security surpluses, which is great news. But as we start talking about how to use those surpluses, whether it is to cut taxes, increase investment in education or defense or to pay down the national debt, we must start the debate with honesty. We must set aside all of the Social Security trust fund surpluses for what it is obligated--Social Security--and then have a national discussion about what we should do with any additional surpluses.

Mr. SMITH of Washington

Mr. SMITH of Washington. Madam Chairman, I would like to take some time to talk about some of my concerns regarding H.R. 99, the FAA reauthorization legislation. I recognize that this bill funds some very important and critical programs, including operation and maintenance of the air traffic control system, safety inspections, and other Federal Aviation Administration (FAA) activities. It does an adequate job ensuring that our airports and airways are safe and efficient. Madam Chairman, I've had personal experience with the FAA and the Airport Improvement Program (AIP) as a community activist, a state Senator, and now as a Member of Congress. In fact, I grew up about a mile from the Seattle/Tacoma International Airport (SeaTac), so I know how people are affected by airports first hand. The Port of Seattle has been attempting to expand SeaTac for more than nine years. Over those years, I've had several problems with the way the Port and the FAA have dealt with this proposed expansion project. I feel they have severely underestimated the environmental impacts the new runway would have on local communities, including the potential financial costs of implementation. They have also failed to adequately evaluate other potential problems, including increased traffic that would arise from construction and the increased noise expansion would have on local schools and neighborhoods. Overall, I strongly believe the FAA and the Port have shown a disregard for the concerns of the local citizens who will have to bear the brunt of the negative results of this proposed expansion. Considering my experience with this program, I believe there are three things that could have been included in the legislation that would have made it better for those that live and work around our countries' airports. First, I have concerns over the current executive branch dealing with pollution from aircraft. The principle agency in the federal government that deals with environmental impact is the Environmental Protection Agency (EPA); however, when it comes to pollution resulting from aircraft it is the FAA. This wasn't always the case. Previously, the Office of Noise Abatement and Control in the EPA was responsible for coordinating federal noise abatement activities, updating and developing new noise standards, and promoting research and education on the impacts of noise pollution. This office was eliminated in 1982. I believed the FAA has a strong disincentive for effectively handling aircraft pollution because their main function is to expand and promote aviation. On the other hand, the EPA is in a much better position to fairly analyze pollution from aircraft and thus effectively implement policy to deal with these impacts, because its chief objective is to protect people against dangerous environmental problems. I feel the bill should have transferred these powers from the FAA to EPA in order to properly study and better protect citizens in my district and others from aviation pollution. Second, I would like to have seen the bill set aside more funds to directly compensate the public for the damage that it will have on their lives. A study has determined that the impact that the proposed 3rd runway would have on my constituents is around $4 billion, but the plan by the Port includes only $50 million in mitigation costs. This is clearly unfair. The citizens of communities surrounding the airport would have to bear the brunt of mitigating the environmental problems surrounding the proposed project, despite having very little input and decision making authority. I feel that the bill could have authorized more money for the use of directly compensating individuals impacted by new construction for areas like my district. Third, I'm very concerned about the lack of congressional and local input in the decision making authority for approving FAA discretionary grants for new airport construction. While I understand the meaning of a discretionary program is that the federal agency has the discretion in determining whether to appropriate the funds, I believe the current system so substantially displaces legislative input that it trumps the spirit of the separation of powers of our three branches of government, which is a critical part of our representative democracy. The Port of Seattle and the FAA negotiated a Record of Decision in July of 1997, despite serious objections from myself and my constituents. Our system is designed to have Members of Congress represent the concerns and interests of their home districts and thus executive decisions that impact a certain group of people should only be done with the consideration of the opinions of the Member who represents those people. I do not feel that my concerns have adequately been taken into consideration during this process, and I feel this is wrong. Overall, I feel that the concerns of local citizens and thus Members of Congress who represent them are not sufficiently taken into consideration under the AIP, and will continue to advocate for changes to this program in the future. Therefore, I urge my colleagues to oppose this legislation.

Mr. ADAM SMITH of Washington

Mr. ADAM SMITH of Washington. Mr. Speaker, I would like to take this opportunity to express my strong support for making changes to the home health care interim payment system (IPS). As part of the $16.2 billion in savings from home health over five years, the Balanced Budget Act of 1997 created an interim payment system to serve as a bridge until the prospective payment system could be implemented. While the interim payment system was designed to cut costs and reduce fraud, it has unfairly punished the efficient home health agencies throughout the country, including those of Washington state. In the 1980s, the federal government promoted home care as a way to improve the health care situation in the United States. Using home care services reduces hospitalization, cuts the demand for expensive nursing homes, eases the burden on family caregivers and is proven to help sick people get better faster. Increased use of these services has helped make the health care system more efficient and better for consumers. While home health services have improved health care for many individuals, Congress could not ignore the increased costs and fraud in the home health system in recent years, and we acknowledged changes need to be made. Unfortunately, Congress did not make the correct changes in the process. My primary concern with the changes in the Balanced Budget Act of 1997 relating to home health care payments is that in interim payment system disproportionately punishes areas of the country where home health patients are served efficiently. Washington state has been especially effective in their use of home health care. The state's home health care systems is one of the most efficient in the country. The typical home health patient in Washington state uses only about 34 visits per year, which is less than half of the national average. Efficient agencies should be rewarded, not punished, under the new system and I believe Congress must fix the changes they made as part of the BBA to assure we do not unfairly punish those who have done their job well. I strongly support this bill because I believe it is a good step in the right direction for addressing the problems in the home health interim payment system. I feet we must continue to address this issue in the future to assure we are not punishing the home health agencies that provide services efficiently.

Mr. ADAM SMITH of Washington

Mr. ADAM SMITH of Washington. Mr. Speaker, the key fact in this debate is that there is no budget surplus. The only surplus that exists, exists in the Social Security trust fund. So, when we hear the other side talking about how they are setting aside $1.4 trillion for Social Security, we cannot set aside money that is already spoken for. That money is borrowed. It must be paid back, plus interest. We would not borrow $200,000 for a home mortgage and say we are setting that aside for our child's education, because we have to pay it back. That is the fundamental flaw in the Republican argument. The money is already in the Social Security trust fund. We should keep it there. We saw that chart that the gentleman from California (Mr. Farr) brought up. We saw the truth. The only surplus that exists outside the Social Security trust fund, which we have to pay back, is $31 billion. Now, if they wanted to be honest and offer a bill to say we should set aside 90 percent of the real surplus, 90 percent of $31 billion would make sense, because that is the only surplus that we have. Mr. Speaker, we cannot spend money twice. I will agree with the Republicans on one point. We were wrong for 40 years. I use ``we'' loosely, because I was not here. We should not have borrowed that money and used it to reduce the size of the deficit, and the public agrees. They sent us that message in 1994. What I am afraid of is that the Republican majority has forgotten the very message that sent them here. I hope that the American public will send them the same message in 1998: Do not borrow from the Social Security trust fund and treat it as income. That is manipulative rhetoric, and it is wrong. The reason is that money is already spoken for. We have to pay it back. We should not let the Republicans, any more that we would let the Democrats, spend money twice. It gets us into big deficits.

Mr. ADAM SMITH of Washington

Mr. ADAM SMITH of Washington. Mr. Chairman, I would like to take this opportunity to explain my support for the Dollars to the Classroom Act. As a strong supporter of local control of the public education system in our country, I believe a top priority of Congress should be to assure Federal funds for education go to the local level where members of our community can determine the best use of these funds. In light of this view, I support the concepts encompassed in this legislation of block granting select education programs and assuring 95 percent of Federal funds go to the local level. I will vote for this bill because I see it as a step in the right direction. The underlying question we must ask in this debate is ``Do we believe in local control?'' If we say that our local teachers, administrators, and parents should have control over the education of students, we must carry though with that ideal and hand over the decision making authority for education dollars to these individuals. I fundamentally believe in local control because the people in my community who dedicate their lives to educating children know better than Members of Congress how funds could best serve our students. In addition, when I visit schools in my district, teachers and administrators tell me they need more funds for education and fewer regulatory requirements from the Federal Government. This legislation begins to focus on the problem of Federal Government regulations and takes step to eliminate the requirements for funding with which teachers and administrators must comply. For example, I strongly support the expansion of the ED-FLEX program to all 50 States included in this bill. This program provides the regulatory flexibility that the schools in my area are asking for and I am an advocate of expansion. I share the concerns of my Democratic colleagues that historically block grants lead to cuts in funding over time. I plan to be vigilant in assuring that the Federal Government continues to provide adequate education funding. As always, this battle will be fought in the appropriations process, and I plan to be a leader in assuring education funds are not cut. Supporters of education must continue to work within the constraints of the budget to assure education is made a top priority. While I feel this bill is a small step in the right direction, there is still much work to be done to improve our public school system. I will support this bill but I feel very strongly that we cannot let the changes incorporated in the legislation lead to cuts in education funding.

Mr. ADAM SMITH of Washington

Mr. ADAM SMITH of Washington. Mr. Speaker, this September as always we face some very difficult budget decisions, but we will not even be able to get to those budget decisions if we do not first address the numbers honestly. Right now we have all heard about the supposed surplus that we have over the next 10 years, $1.6 trillion, and we have heard dozens of different ideas for how to spend that money. The trouble is that money does not exist, because all but $31 billion of that $1.6 trillion is really in the Social Security trust fund. It is money that we borrow and for some crazy reason consider as income. It is not income, it is money we have to pay back, plus interest. We need to honestly assess those numbers. As we stand here today, there are a lot of different programs, a lot of different tax cuts being proposed, but if you ever hear someone say in answer to the question of how they are going to pay for it, ``We're going to pay for it out of the surplus,'' do not let them do it. There is no surplus. If we can address the numbers honestly, we can make wise budget decisions and we can do two very important things in this final month of the session: One, we can get to a true and honest balanced budget; and, two, we can protect Social Security for future generations.

Mr. ADAM SMITH of Washington

Mr. ADAM SMITH of Washington. Absolutely, and let us make one thing clear. It is not the Democrats who are opposed to tax cuts. You know the majority of Democrats in this body voted last year to cut taxes by nearly a hundred billion dollars. It needed to be done, and with the right proposal, with the right offsets, and that is the key point if we wish to cut taxes, if we have a couple of key areas where taxes need to be cut, and I think there are a couple, find some place to offset the money either through changing the revenue so that you have eliminating the deduction or cutting spending somewhere. But as I see the debate unfold, in the month that we were back in our districts, you know this $80 billion is apparently supposed to just fall out of the sky, and where it is falling from is not the sky, it is falling from the Social Security Trust Fund. So when anyone makes an argument in here, I am going to give you a tax cut, and you say, well, where is the money going to come from, they say it is going to come from the surplus; that is not true, and I hope we can hold people up to that truth and say where the money is really coming from.

Mr. ADAM SMITH of Washington. Or, I will emphasize this, or any dramatic increases in spending, because there are certainly a lot of programs; you know, Head Start, a variety of other ideas out there. But if the revenue is not made up somewhere, we should be very cautious about doing that as well, because that too will contribute to the debt. And right now the interest that we pay on the debt is 14 percent of our budget. That means 14 percent of the money that we are spending is simply going to service the debt, it is not going to provide health care for seniors or children in poverty, it is not going to give middle class children access to education, it is not going to protect the environment, it is not going to give us a stronger defense. It is going straight into pay our debt. And so as that number keeps going up, that 14 percent number keeps going up as well, and that basically puts us in a real bind.

Mr. ADAM SMITH of Washington. And I will tell you what my experience has been with my constituents, and we get into this all the time as we come up towards the election. We want to give stuff away. We think that is what is going to make people happy. We will give them a new spending program, we will give them a new tax cut, we will basically, you know, pretend like it is Christmas and pass all kinds of stuff out. What I found with my constituents is what makes them happy is if we are making sound decisions up here, if we are spending the money wisely, paying as we go, being fiscally conservative and responsible. So I do not even think the tactic of passing out the goodies, as it were, I do not think it works. I think the people are fed up with, you know, record high deficits and record high debt, will want to get back to an age of responsibility, and, like I said, I am optimistic that ultimately that philosophy will win out.

Mr. ADAM SMITH of Washington. That is particularly critical to me. The way Social Security works, I will first be eligible to receive Social Security in the year 2032 which is coincidentally the precise year in which they currently estimate there will be no money. So I have a personal interest and my constituents have an interest in it as well. Yes, I mean you will have to find the money somewhere, and that is not fair to future generations.

Mr. ADAM SMITH of Washington. Well, I had a friend of mine in college who was a Republican, but he used to say, you know, Democrats are tax and spend, Republicans are just spend. And I think the truth in what I see the Democrat Party becoming and why I am so proud that we supported the balanced budget agreement from last year is spend responsibly. I mean, that is what it is about. There are things in this country that people want done. We want to make sure that our seniors have an adequate pension, that they have adequate health care, that our young people have access to education. Well, let us do it in a responsible manner. Let us make the programs as efficient as possible, and let us pay for them. Let us not just run up a debt to please people in the moment at the expense of the future. And that is really what it is about is just, okay, well, gosh, I make this person happy right now, and you know maybe I will even be out of Congress by the time we have to pay that bill so I will not have to worry about it. But that is a disservice to the country. And you are right. Part of being conservative to my mind is a pay-as- you-go philosophy, is being fiscally conservative, and I am still optimistic that enough colleagues on the other side of the aisle, having made this same argument that we are talking about here so repeatedly in the past, will rise up to the challenge, make it again in the future even if we are 7 weeks from an election and will make the responsible choice for the future.

Mr. ADAM SMITH of Washington. I thank the gentleman from New Jersey (Mr. Pallone) for yielding, and I appreciate his kind words. I think the important thing to remember in this discussion is there are two things at issue. One is certainly protecting Social Security, but the other is Fiscal responsibility. The two are linked and I think there are two things that we should stand up for and defend in this House, is both Social Security and fiscal responsibility. In this whole debate that is going to brew in the next month before the end of the session is an excellent argument for taking Social Security off-budget. Let me explain what I mean by that because I think that gets to the heart of the debate. As the gentleman from New Jersey (Mr. Pallone) explained very well, the way we do our budget right now is any surplus from the Social Security is simply thrown into the pot like it is income. It is counted against our overall deficit or surplus equation. To take it off-budget would basically recognize that we should hold Social Security separate. So if we have $100 billion in the Social Security trust fund and an $80 billion deficit in the overall budget, they are separate and you can look at a sheet and say, ``Okay, we've got $100 billion over here but we're still $80 billion in debt over here.'' That is why I have been a strong advocate as have many others in the House of taking Social Security off-budget so we can have an honest look at the numbers. It is very, very important to look at these numbers honestly, because with the Social Security budget, the thing to remember is, is it income or is it borrowed money? The way we budget makes it look like income, but it is very clear that it is not. It is very clear because we have to pay it back. That is sort of the way you tell. If someone gives you $10,000 and they give it to you, you can feel free to go out and spend it because you do not have to pay it back. But if they loan it to you, and in fact in this case loan it to you and say, ``Plus you will agree to pay 6 percent interest,'' if you go out and spend the money, you are going to be in trouble because eventually that person is going to want it back. In essence that is what we do with Social Security. If we take the surplus and spend it, we are going to have to pay it back and the money is not going to be there. This is particularly troublesome because we are talking about Social Security. We are talking about something of critical importance that needs to be preserved. So let us take it off-budget and have an honest debate. I would like to look at this for just a moment in the context of the overall debate. You hear a lot of talk about a surplus and the deficit, but you lose track of the overall debt which is basically the debt that we have accumulated over the last 30 years. That stands at around $5.4 trillion. To truly understand that, one needs to understand that in this year, fiscal year 1998, when we are claiming to have a surplus, we have an interesting situation that arises. One would think if we have a surplus this year, that should mean that the overall debt is going down. That makes perfect sense. If you have got an extra $20 billion, an extra $80 billion, well, the overall debt will go down because you can apply that to that debt. But what happens this year? The overall debt goes up. How is that possible? That is possible because again we are borrowing the money from Social Security and that is debt, that is money we have to pay back. We have to keep that in mind. But, and this is a particularly important point, my colleagues on the other side of the aisle know this. I know that they know this because they are the first ones that started making this argument. In the late '80s and in the early '90s when they were complaining about the size of the debt, correctly, they bitterly accused the Democratic majority of masking the true size of that debt by borrowing from Social Security. This was just awful. I remember listening to that argument, this was back before I was in Congress or even in the State legislature, and I was very troubled by that argument as a Democrat. I was troubled because they were right. They were right on point. But now I am very disappointed that the Republicans have come into the majority and they have forgotten their own argument and are saying, no, this is a surplus, we can spend it on tax cuts or spend it wherever. It is not a surplus and they know that. So I guess what I am asking for as a starting point is an honest debate. We have a lot of tough policy choices to make. Just today I had three different groups come into my office and ask for tax cut proposals, none of which are in the Republican proposal, by the way, that sounded like they made sense, sounded like I wanted to do it. I also had three different groups that came in with spending proposals that made a great deal of sense as well, and we want to do this. You want to try to help people. But you have got to be mindful of the future and fiscal responsibility. To spend all the money now is a disservice to future generations. We did it throughout the '80s and into the '90s and it was wrong. Now we are in a position finally, headed in the right direction and yet we want to snatch defeat from the jaws of victory by going back to the old ways. Everybody here knows that. Let us have an honest debate. Let us stop talking about a surplus. I would urge the American public, any politician that comes up to you and says, ``I'm going to do this, that or the other thing with the surplus,'' stop them right there and say, ``You don't have a surplus,'' which means what you are really saying is you are going to do one of a couple of things: Either, one, you are going to continue to spend us into debt. I guess you could say that makes sense, that it makes sense to borrow money. I do not agree with it, but they can make that argument honestly. Or, two, you are going to have to get the money someplace else. Basically that breaks down into two choices. Either a revenue increase or a spending decrease. That is what they have to do. So do not let politicians get away with saying, ``Well, yeah, that program's really important and I don't want to have to find it someplace else, so I'll get it from the surplus.'' The surplus does not exist. I would urge everybody on this floor to do that as this debate unfolds over the course of the next month. Let us be honest about the numbers. I really feel that those are critical issues. We have very tough choices to make. I guess I would close by saying a word to my Democratic colleagues. I think this is an issue of critical importance for Democrats, because we are the ones that believe at times government can have a positive effect on people's lives, in places like Social Security and Medicare and education and protecting the environment and defense and a number of other areas. If we are to be able to go back to the American public and say, we need some of your hard-earned tax dollars to pay for these, we are going to have to show them that government can at least be honest about the numbers. If they cannot look at our budget and truly know how we stand, if we stand up before them and create this mythical surplus to try to make them feel better, then I think in the long run the cynicism will increase about government's ability to be honest and be straightforward. We as Democrats have not always done a wonderful job of this. I urge us to start right now to do the job that we should do, explain to people honestly how the budget works. I think that will help get confidence back because there are some critical programs we need to fund. The biggest one, and I will end on this point, is Social Security which is what the gentleman from New Jersey (Mr. Pallone) started off talking about in the first place. We need that program. It is vital to this country. Let us show people that we can manage it intelligently. Let us stop borrowing money from the Social Security trust fund and using it to mask the true size of the deficit. An honest debate would go a long way towards helping this Chamber and this country in many ways.

Mr. ADAM SMITH of Washington

Mr. ADAM SMITH of Washington. Mr. Speaker, in the early part of this decade, no problem seemed more unsolvable than the problem of our growing Federal deficit. It was at over $200 billion at that point, projected to hit $300 billion in rapid succession, and projected by the end of the decade to be well over $500 billion. Now, fortunately, we began to head in the right direction at that point and were actually almost in a position to get to a balanced budget. That is the good news. The bad news is that we are now looking like we are going to snatch defeat from the jaws of victory. The biggest part of this problem comes from the talk that we have heard here recently about a surplus. I hear my colleagues talking about it, I see it on television, I even hear it in my local press, that there is going to be a $1.6 trillion surplus over the next 10 years. The only problem with that is it is not really true. We are not going to have a $1.6 trillion surplus, and the talk about that surplus I find very disturbing, because it puts us in a position to back away from our commitment to a balanced budget. It gives us the illusion that we have money that we do not have, and I fear that it is going to get us to the point where we are not going to get to the balanced budget that we have worked so hard for over the past 7 or 8 years. It is important to explain these figures. So if we are not going to have a $1.6 trillion surplus, why are so many people saying we are going to have a $1.6 trillion surplus? It is because they count the money that we borrow from Social Security as income. It is just an unusual way of accounting that they do back here in Washington, D.C. Somehow, if we borrow money from a bank or from anyplace else, that counts as being borrowed, but if we borrow it from Social Security, it counts as income. Well, that is not true, because, just like the bank and like any other source, we have to pay the money back to Social Security, plus interest. Now, you might say, well, so part of the $1.6 trillion surplus comes out of the Social Security trust fund. Well, that still gives us some money to play around with. Unfortunately, when you look at the $1.6 trillion over 10 years, only $31 billion of that $1.6 trillion comes from any place other than the Social Security trust fund. So we truly do not have a surplus. Unless we are willing to spend money that comes directly out of the Social Security trust fund on something else, we do not have a surplus. We cannot consider it a surplus, and we must be honest in the way we evaluate those numbers. I find it particularly disturbing to hear some of my colleagues from the Republican side of the aisle talking about this surplus, because I remember back in the late eighties and early nineties they were the ones who first raised the argument that this was unfair, that we were masking the true size of the deficit. Now, at the time Democrats were in the majority, so it was in their political interest to make that point, because it made us look bad. I was very troubled by that argument at the time, and I was troubled by it as a Democrat for one very good reason: They were right and we were wrong. We needed to address that issue and change it. But now we are in the latter part of the 1990's, they are in the majority, and now they are talking about a surplus, as if the Social Security trust fund was income that we could spend any way we want. We need to stop doing that. We need to be honest about the numbers and make sure that we stay on a path to a balanced budget. A balanced budget is critical to this country. It helps our economy and protects our future. We need not to back away from it. I understand with why we do this. I have people come by my office every day who have ideas to spend money on a variety of programs or have ideas for tax cuts in a variety of areas, and rarely does someone come by my office and present an idea where I can honestly say no, that would be a complete waste of money. That would not do any good for anybody. Yes, there are programs that can use more money and taxes that could be cut, but the point is, where is the money going to come from? That is when you get to hard decisions. No one likes to make hard decisions, so what we want to do is we want to say we can take it from the surplus. That is the easy answer. It is free money. We can give you tax cuts, we can give you spending, everything you want, we can promise you the world, and we can simply take it that take it from this mythical surplus. So I understand why we want to do this, because it is an easy way out. But we were not elected to take the easy way out. We were elected to give people honest answers and give them an honest assessment of where the budget is. And the honest assessment is that we are doing okay. We are headed in the right direction. But we do not have a surplus this year, and we do not have that $1.6 trillion projected surplus that we have heard so much about over the last 10 years. Almost all of that money is taken from the Social Security trust fund, is borrowed from it. It is not money that we can spend, for the very good reason that we have to give it back. We have to give it back, plus interest. And if we have spent it, we are going to run up debts or not be in a position to pay the money back. I strongly urge this body in the last four or so weeks that we have in session here to not break down from our commitment. We have worked so hard to get to a balanced budget. Let us get there. Let us be honest about the numbers, and let us stop using the money that we borrow from Social Security to mask the true size of our deficit.

Mr. ADAM SMITH of Washington

Mr. ADAM SMITH of Washington. Mr. Speaker, I rise today to declare a day of recognition on August 16, 1998, for the Friends of Dialysis Day. Everyone who participates in this important day is taking an essential step in helping to increase awareness of kidney disease and the need for organ donation. We all know that organ donations save lives, and increasing the number of donors throughout the country could potentially save the life a loved one for many families in our community and throughout the nation. I hope by declaring this Friends of Dialysis Day we can increase the willingness to donate organs by friends and members of our community. The citizens of my district have participated in the Friends of Dialysis Day through an annual golf tournament. Participants, including patients, transplant recipients, medical staff, and family members, come together to raise money for this important cause. I urge other communities around the country to follow their example and help promote organ donation. I commend all who have taken up this important fight and I hope we can all work together to continue to increase the awareness of kidney disease and the need for organ donations in our communities.

Mr. ADAM SMITH of Washington

Mr. ADAM SMITH of Washington. Mr. Speaker, I would like to take some time to talk about some of my concerns regarding H.R. 4057, the Airport Improvement Program Reauthorization Act. I recognize that this bill funds some very important and critical programs, including operation and maintenance of the air traffic control system, safety inspections, and other Federal Aviation Administration (FAA) activities. It does an adequate job ensuring that our airports and airways are safe and efficient. Mr. Speaker, I've had personal experience with the FAA and the Airport Improvement Program (AIP) as a community activist, a state Senator, and now as a member of Congress. In fact, I grew up about a mile from the Seattle/Tacoma International Airport (SeaTac), so I know how people are affected by airports first hand. The Port of Seattle has been attempting to expand SeaTac for more than nine years. Over those years, I've had several problems with the way the Port and the FAA have dealt with this proposed expansion project. I feel they have severely underestimated the environmental impacts the new runway would have on local communities, including the potential financial costs of implementation. They have also failed to adequately evaluate other potential problems, including increased traffic that would arise from construction and the increased noise expansion would have on local schools and neighborhoods. Overall, I strongly believe the FAA and the Port have shown a disregard for the concerns of the local citizens whom will have to bear the brunt of the negative results of this proposed expansion. Considering my experience with this program, I believe there are three things that could have been included in the legislation that would have made it better for those that live and work around our counties' airports. First, I have concerns over the current executive branch dealing with pollution from aircraft. The principal agency in the federal government that deals with environmental impact is the Environmental Protection Agency (EPA); however, when it comes to pollution resulting from aircraft it is the FAA. This wasn't always the case. Previously, the Office of Noise Abatement and Control in the EPA was responsible for coordinating federal noise abatement activities, updating and developing new noise standards, and promoting research and education on the impacts of noise pollution. This office was eliminated in 1982. I believe the FAA has a strong disincentive for effectively handing aircraft pollution because their main function is to expand and promote aviation. On the other hand, the EPA is in a much better position to fairly analyze pollution from aircraft and thus effectively implement policy to deal with these impacts, because its chief objective is to protect people against dangerous environmental problems. I feel the bill should have transferred these powers from the FAA to EPA in order to properly study and better protect citizens in my district and others from aviation pollution. Second, I would like to have seen the bill set aside more funds to directly compensate the public for the damage that it will have on their lives. A study has determined that the impact that the proposed 3rd runway would have on my constituents is around $4 billion, but the plan by the Ports includes only $50 million in mitigation costs. This is clearly unfair. The citizens of communities surrounding the airport would have to bear the brunt of mitigating the environmental problems surrounding the proposed project, despite having very little impute and decision making authority. I feel that the bill could have authorized more money for the use of directly compensating individuals impacted by new construction for areas like my district. Third, I'm very concerned about the lack of congressional and local input in the decision making authority for approving FAA discretionary grants for new airport construction. While I understand the meaning of a discretionary program is that the federal agency has the discretion in determining whether to appropriate the funds, I believe the current system so substantially displaces legislative input that it trumps the spirit of the separation of powers of our three branches of government, which is a critical part of our representative democracy. The Port of Seattle and the FAA negotiated a Record of Decision in July of 1997, despite serious objections from myself and my constituents. Our system is designed to have members of Congress represent the concerns and interests of their home districts and thus executive decisions that impact a certain group of people should only be done with the consideration of the opinions of the Member who represents those people. I do not feel that my concerns have not adequately been taken into consideration during this process, and I feel this is wrong. Overall, I feel that the concerns of local citizens and thus Members of Congress who represent them are not sufficiently taken into consideration under the AIP, and will continue to advocate for changes to this program in the future. Therefore, I urge my colleagues to oppose this legislation.

Mr. ADAM SMITH of Washington

Mr. ADAM SMITH of Washington. Mr. Speaker, on June 22 this House voted to approve H. Res. 452, expressing the sense of the House that the Postal Service should not raise its rates. My vote was mistakenly recorded as ``No.'' I would like to express my support for the H. Res. 452 and emphasize that I do not believe the Postal Service should raise its rates at this time.

Mr. ADAM SMITH of Washington

Mr. ADAM SMITH of Washington. Mr. Speaker, I was unavoidably detained on the evening of June 11, 1998, and unfortunately missed roll call votes 230 and 231. If present I would have voted ``yea'' on roll call vote 230 and ``yea'' on roll call vote 231.

Mr. ADAM SMITH of Washington

Mr. ADAM SMITH of Washington. Mr. Chairman, confusion has been as big an opponent of campaign finance reform as outright opposition. There seem to be 100 different plans, 100 different ideas out there, and that confusion has stopped us from getting the consensus we need to pass a bill until now; the gentleman from Connecticut (Mr. Shays) and the gentleman from Massachusetts (Mr. Meehan), through a number of years of hard work, brought us that consensus with the Shays-Meehan bill that we now have the option of voting on. I think we should seize on that consensus and pass that bill. It was crafted in a bipartisan way. Unfortunately, the way the rules were set up, a vote for the commission bill is a vote against Shays-Meehan. So we need to vote against the commission bill and give our full support to Shays-Meehan, a bill with meaningful reforms. I have listened to the opposition to Shays-Meehan and support for the commission bill, but what I have not heard are any specific complaints about Shays-Meehan. It makes perfect sense to do as the gentleman from Missouri (Mr. Gephardt) suggested, to pass Shays-Meehan and add the commission bill to it. That gives us the best of both worlds. Basically, if there is something more that needs to be done, great, we can do the commission. But what in Shays-Meehan is so bad? I have not heard that from the proponents of the commission bill because there is nothing bad about it. It bans soft money. It limits independent expenditures. I think perhaps as important as anything else, it gives the Federal Elections Commission more enforcement authority to actually enforce the rules that exist. Those are good things. Somebody has got to say why they are in opposition to Shays-Meehan. We have got a great opportunity here to pass a bill that has consensus and makes meaningful reform. We are arguing against it without even saying why. What is wrong with Shays-Meehan? One final point, we have heard that the Senate may not pass Shays- Meehan. If that is the criterion, we should go ahead and stop right now, because the Senate is not going to pass the commission bill either. We have an opportunity to lead here in the House with Shays-Meehan, with meaningful reform, that does things that we all claim to support. Why do we not support them with our vote as well as with our rhetoric?

Mr. ADAM SMITH of Washington

Mr. ADAM SMITH of Washington. Mr. Speaker, I rise today to strongly urge the House to pass the Shays-Meehan campaign finance reform bill as quickly as possible. I also urge the House to reject all amendments and all substitutes to that bill. Opposition to campaign finance reform has been the main reason that it has not passed thus far, but another reason has been the lack of consensus among the pro-campaign finance reform members. There have been too many reform proposals to settle on one, and the confusion has stopped reform. Well, thanks to the work of Mr. Shays and Mr. Meehan, we have a consensus bill. Let us unite behind that legislation and pass it as soon as possible. I also urge this House to stop the sham on the campaign finance reform debate. The underlying bill currently has 11 substitutes and over 600 amendments filed. It is obvious that this is just a stalling tactic to stop reform. Promises have been repeatedly made on the floor of this House to bring up campaign finance reform and have a vote on it as soon as possible. Once again, those promises are not being met. Campaign finance reform is being thwarted, and a stalling tactic is replacing real reform. Let us vote on Shays-Meehan as soon as possible.

Mr. ADAM SMITH of Washington

Mr. ADAM SMITH of Washington. Madam Chairman, I rise in strong support of the Shays-Meehan bill. Let me first say that I think it is good that people are interested enough in the process to contribute money to a candidate and get involved. The key is to have a reasonable contribution limit so that some people do not have so much more influence than other people that those other people are discouraged from participating. Unfortunately, that is the system we have right now. Shays-Meehan does a very good job of fixing that problem by banning soft money, limiting issue advocacy, and beefing up the enforcement mechanisms the FEC has to enforce the existing laws. I think placing reasonable limits on contributions makes sense, and Shays-Meehan maintains those limits. I do want to caution folks about going too far down the road about how corrupt we are if we receive campaign money. I do not believe that to be the case. However, we do need to keep a ceiling on contributions so that certain individuals do not have undue influence. I think a limit of $1,000 per individual, $5,000 per PAC makes sense. The problem is that between soft money and third-party expenditures, those limits have been rendered meaningless. Shays-Meehan takes a first step towards fixing that problem, and I urge my colleagues to support that bill.

Mr. ADAM SMITH of Washington

Mr. ADAM SMITH of Washington. Mr. Speaker, the most recent estimates show that we are actually going to have a budget surplus for fiscal year 1998 if all continues to go well this year. I rise to make a couple of comments about that. First of all, I think we can all be proud of that accomplishment. It was just 5 years ago that the deficit was $300 billion and climbing, with no end in sight. It was depressing to look as the interest on the debt rose to the point where we felt we would never get out of that hole. Now we are starting to make progress and can be proud of that. I feel that both parties can have some degree of credit for that accomplishment. But as a Democrat, I am particularly proud that my party has shown that it can be fiscally responsible. It can be fiscally responsible, where at the same time caring about other things that are important to the American people: investing in our future through education, protecting our seniors by making sure that they have health care and Social Security. One final point. While we have accomplished a lot, there is still much to accomplish. Fiscal responsibility is not accomplished in one day. You cannot do it once and forget about it. It is a continual task. In the months and years ahead we must remain committed to that fiscal responsibility. I am proud that my party has made that commitment.

Mr. ADAM SMITH of Washington

Mr. ADAM SMITH of Washington. Mr. Speaker, I am here today to congratulate Mr. Kelso Gillenwater, president and publisher of the News Tribune newspaper in Tacoma, WA, for the last 8 years. Mr. Gillenwater officially retired as president and publisher of the News Tribune, one of the most respected publications in the state, last week. Mr. Gillenwater provided Tacoma with fair, insightful, and thorough news and editorial coverage. He has spent his life in the newspaper business as a reporter, editorial writer, and business manager. It is this knowledge of all aspects of the newspaper business that have made Mr. Gillenwater such a quality president of the News Tribune. Not only has Mr. Gillenwater given his time to the newspaper, he has been dedicated to the community. Mr. Gillenwater has given so much to the community--he is a board member of the Washington State Historical Society, the International Museum of Modern Glass, the Washington State Bar Association, and a member of the Higher Education Coordinating Board and the Executive Council for a Greater Tacoma. He has also donated his time as president of the Pacific Harbors Council of the Boy Scouts. Mr. Gillenwater is a fine example of an American who has made his community a better place to live. I am proud to have worked with him and would like this Congress to recognize his accomplishments. I send my best wishes out to Mr. Gillenwater and his family. I wish him an enjoyable retirement in the years ahead.

Mr. ADAM SMITH of Washington

Mr. ADAM SMITH of Washington. Mr. Speaker, I rise today to speak about an issue that is very important to me--lifting unfair export controls on encryption technology. Mr. Speaker, protecting our National Security interests is among my highest priorities. If I thought controlling encryption exports worked toward this end, I would be its strongest proponent. Unfortunately, export controls on encryption software simply disadvantage the United States software industry. Under current law the United States allows only 40 bit encryption codes to be exported, although software companies sell encryption codes of up to 128 bits everywhere in the United States. Forty bit encryption technology is so elementary, it took a graduate student a mere 3\1/2\ hours to break a code last January. Fifty-six bit encryption is 65,000 times more difficult to decode than 10 bit encryption and it only took students three months to break the encryption code. One hundred twenty eight bit encryption has not been broken yet. Naturally, foreign companies do not want to buy 40 bit encryption software, because it is so vulnerable and insecure. The possibilities for ``computer hackers'' to break into the system and wreak havoc are enormous and dangerous. Therefore, foreign companies are purchasing high-level encryption from foreign software providers instead of American ones. The international demand for encryption software is growing exponentially because of the tremendous rise in electronic commerce. For instance, German Economics Minister, Guenter Rexrodt, said, ``Users can only protect themselves against having data manipulated, destroyed, or spied on by strong encryption procedures * * *. That is why we have to use all of our powers to promote such procedures instead of blocking them.'' Our export restraint has not kept the technology from proliferating. It has merely allowed foreign producers of strong encryption technology to fill the vacuum. In fact, American companies are partnering with foreign firms to distribute their software--taking jobs and revenue with them. American-owned Sun Computers has recently joined with a Russian software company to avoid the U.S. export ban and sell to foreign markets. Foreign companies can also purchase American-produced 40 bit encryption technology and upgrade it in their own countries to 128 bit encryption technology. This ``add-on'' industry is among the fastest growing software industries in Europe today. Clearly, if someone wants high-level encryption technology, he or she can easily obtain it. The ability to obtain both powerful and affordable encryption will now become easier with recent developments in Canada. The Canadian Government includes encryption software in decontrolling mass market software under the Generic Software Note. This means any software sold over-the-counter, by mail or on the phone may be exported without limits. Entrust, a Canadian software company, is freely marketing and selling internationally a 128 bit encryption program right now. It sells for less than $50, and Entrust provides a version of the encryption technology free on the Internet. Even our most steadfast ally sees that export controls can no longer help stem the overwhelming demand and spread of unbreakable encryption. Mr. Speaker, if the United States continues to impose these restrictive export bans on its own companies, ``foreign competition could emerge at a level significant enough to damage the present U.S. world leadership'' in the software industry, according to the National Research Council's blue-ribbon panel on encryption policy. If our export ban continues, the United States will not be the worldwide leader on encryption technology for long, and that would be a true risk to our national security. I strongly oppose any unilateral sanctions or regulations that put the United States at an unnecessary disadvantage. Our current export ban on encryption software is a perfect example, and I intend to continue the fight to change our policy and allow the United States to compete in the global software market.