Nick Smith

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I thank the gentlewoman for yielding me this time. I would just like to briefly carry on the discussion of how much power has been transferred from Congress to the President. Article I, section 9 of the Constitution says that Congress shall control the purse strings. Article 1 of section VII of the Constitution says that Congress shall decide how deep we go into debt. I bring this chart to portray the authority and responsibility that Congress has now given away to the President of the United States. This pie chart represents the Federal budget for this coming year. The blue area represents the 52 percent of spending now in these welfare entitlement programs. The spending in those programs cannot be changed without the consent of the President. It has been demonstrated now that also the administration has the authority to go deeper in debt without the consent of Congress. Transferring even greater power to the administrative branch, to the President, by saying that he will have the authority to line out, to veto anything in an appropriation bill, is a tremendous transfer of power. I served under three governors while in the State legislature in Michigan. Every one of those governors, liberal and conservative, used the leverage of the line-item veto to get spending they wanted. A lot of States have the line-item veto. Almost every one of those States also have a constitutional provision that says they have to have a balanced budget. In the State legislature, while the Governor says ``I want to shift priorities to what I think is important spending,'' either for political purposes or for philosophic goals. In the U.S. Government, where we do not have that kind of safeguard of a balanced budget, there is a danger of actually increasing spending and not decreasing spending as some presume. During the last three decades, a lot of us wished that the President had authority to veto spending we did not like. But we now have a Congress that is becoming more frugal, is being more conscientious of a balanced budget, and is more interested in cutting. Now we are saying we are going to take away responsibility from this Chamber, from this body and give it to the President. This is inconsistent with what our Founding Fathers thought was an appropriate balance. I think this legislation could have different results than some expect. I hope we do not see the dangers that could result from further disrupting the balance of power.

Mr. SMITH of Michigan. Mr. Speaker, I thank the gentleman from Texas for yielding time to a person that wants to talk against the bill. Mr. Speaker, what this bill does is increases the debt of the United States by $600 billion. At 5-percent interest, that is another $30 billion a year that taxpayers will have to pay. I think it is unconscionable to continue to increase the debt without some guidelines, without some actual legislative change, at the very least some direction, to cut the spending of this overbloated Government. Borrowing has obscured the true siege of Government. Ultimately we must reach a balanced budget. This bill does not do that, and that is why I am voting against it.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I am concerned about recent stories of children accessing pornographic material on the Internet. This does not, however, mean that there is a problem with the Internet, rather it tells us how much the moral fiber of America has decayed. In short, this material is available because people are demanding it. When a product is in demand, such as pornographic material on the Internet, there is no system more powerful in delivering these demands than our free market. Therefore, we must focus on strengthening our families' and citizens' morality, so it is no longer acceptable to transmit or possess this material. The Government cannot prevent the market from delivering its product to a want in consumer. We must change the focus of the debate from Government prevention, back to the family responsibility. Short of this, the Government can only hope to help business by allowing them to be responsible and close off children's access to this material. That's why I supported Representative Chris Cox's amendment in the House, which allowed business to filter material without threat of a lawsuit.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, day after tomorrow, on Thursday, this Congress is expected to pass its 78th increase in the debt ceiling of this country. Seventy-seven times, so far, we have increased the debt ceiling since the 1940's. We are now at $4.9 trillion of debt. A lot of people in this country, Mr. Speaker, do not really think that they are responsible for this excessive debt. What has happened in the last 40 years is Congress has lost control of spending. Under section 1 of the Constitution, Congress is responsible for the purse strings. Congress is also responsible for how deep this country goes in debt. We have not only lost control of spending, but we have also lost control of how deep we go in debt, because in the last 7 months we have seen Secretary Rubin and the President of the United States find a new way to drive us deeper in debt without the consent of Congress. That way, of course, was raiding the trust funds that we have in this country. Day after tomorrow, we are considering tying yet another diminishing of congressional power and tying that to the debt ceiling increase. That is the Presidential line-item veto, and I just want to mention that before I talk about this chart, the Presidential line-item veto. I served under three Governors in the State of Michigan. In Michigan we have a line-item veto. In every case with every Governor, they traded what they wanted because they had the power of vetoing out what the legislature wanted in particular spending. You know, philosophically, when you have got a liberal Congress and a conservative President, then a line item veto might make sense in terms of trying to reduce spending. But actually what is going to happen with a conservative Congress that is trying to get to a balanced budget and reduce spending and a President that has found it to his political advantage to continue helping people with taxpayers' money; in other words, not reducing spending, not achieving a balanced budget; is that we end up spending more. We end up giving additional congressional authority away to the President. Let me note, Mr. Speaker, this pie chart that represents the roughly $1.6 trillion expenditure of the Federal Government. If we start with the red triangle on this pie chart that represents about 18 percent of total Federal spending, that represents the 12 appropriation bills where Congress has control of the spending. In other words, if there is no bill passed by Congress, or if it is not signed by the President, then that reduced spending or no spending is what is going to happen. Where the President has power is in the blue part of this pie chart that represents the welfare program spending and the other entitlement spending of this country. That represents now 50 percent of total Federal Government spending. So that there were some of us that thought it was reasonable to tie changes in the entitlement spending that is going to help us achieve a balanced budget, to tie that to yet another increase in the debt ceiling. That now is not the plan in the bill that is going to be put before this body day after tomorrow, and I would suggest to you, Mr. Speaker, and through you to the American people, that we cannot balance the budget just by reducing the expenditures in the 12 appropriation bills where Congress now has full control. It just cannot be done. I have studied this over the past several years. You cannot reduce that expenditure below about $200 billion this next year. It cannot possibly be done and still have a viable operation and system within this country. That means that, if we are going to balance the budget, we have got to move into the welfare changes in the welfare program and entitlement programs. They are called entitlement programs, Mr. Speaker, because if you are at a certain level of poverty, you are eligible for food stamps. If you are a certain level of income and you have children, you are eligible for AFDC. If you are a certain age, you are entitled to other taxpayer helps in paying your medical costs. There is no money appropriated. It is in the law. The only way that a majority in Congress can change that law is the consent of the President. I would ask my colleagues, Mr. Speaker, to study the proposal that we are being asked to pass day after tomorrow very carefully. It continues to move us in a direction where we are not going to be able to balance the budget.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, the vote on repeal of assault weapons is not an easy vote. The reason is there are strong philosophical and practical arguments on both sides. On the one hand, we have the second amendment of the U.S. Constitution which protects the citizen's right to bear arms. This is an outgrowth of the fact that for centuries authoritarian governments maintained their power over the populace through the banning of weapons. We may look to Scotland, where in the early 14th century William Wallace led the Scottish freedom uprising against the British. The Scots were forced to use rocks, and homemade weapons because the English had banned Scots from having arms. The other side of the issue can be looked at from the view of the proper role of government. As John Locke pointed out in 1689 in his ``Second Treatise on Civil Government,'' a document that was the intellectual underpinning of our own Constitution, the reason we form governments is to protect life, liberty, and property. Anarchy leads to the strong coercing the weak. In order to reduce the total amount of coercion in society we give up the legal use of force to a government whose function is to protect each individual citizen from one another. The question then becomes, does the ban on assault weapons provide an efficient and reasonable means of protecting individuals from threat of force by other individuals? Again, we may look to Scotland, where just last week several children were killed before the police were able to intervene. Does the ban on assault weapons effectively reduce the chances that you will be coerced by another armed citizen? The tradeoff is between our constitutional right to bear arms and the reason for government in the first place: protection of life, liberty, and property. Those of us who feel our right to bear arms is diminished greatly by the banning of these weapons and that the threat to our person from our fellow citizens is little reduced by the ban will vote for the bill. Those who feel these weapons add little to our freedom to protect ourselves from our government and that the existence of these weapons threatens our personal safety will vote against the bill. For many of us, the evidence is not clear on either side. On the whole, I believe there is strong evidence that crime will be reduced by getting tougher on the criminal that is committing the crime, rather then focusing on the weapon they use. This legislation does this by establishing strong minimum mandatory sentences for criminals who use firearms in the commission of Federal crimes and requiring the Attorney General to order each U.S. attorney to designate at least one assistant U.S. attorney to prosecute armed violent criminals, and makes sure the Department of Justice prosecutes armed violent criminals. Thus I will vote for the bill.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I think we should sort of start with positive news, and the good news is that the President gave us a budget that balances in 7 years. Mr. Speaker, I was trying to remember what was happening just 2 years ago, what the Democrats, what the liberals, what the tax and spend people were saying. I looked up in the Committee on the Budget records of what Leon Panetta said. He said that we are heading toward down as low as a $70 billion deficit, or overspending, by the year 2003, and that is where we should be. The good news is that we have changed the debate in Washington. Now everybody is saying yes, we need a balanced budget. It is the right thing to do for the economy. It is the right thing to do as far as our kids and our grandkids. I think it is interesting to note in the President's budget that he has $234 billion more taxes than the Republican proposal. He has $357 billion more spending than the Republican proposal. It tends to be tax and spend. It is balanced. Although President Clinton often says there is not a government program for every problem, he has incorporated most government Washington solutions in his budget.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I also have been reading the President's budget that he gave us yesterday. I am very upset. If we look at what the President does, for example, on tax increases, he increases taxes $232 billion more than the Republican proposal. Then look at continued spending. He increases spending $350 billion more than the Republican proposal. It is the same old issue of tax and spend. I call, Mr. Speaker, on my colleagues to hang tough, to not have an increase in the debt ceiling unless we are going to get on that glide path to a balanced budget. If we have to close down Government to move ahead, to get politicians to do what every family in this country has to do, balance their budget, then let us do it. Mr. Speaker, I say stick to our guns, hang tough, let us do what we have to do. Stop spending the money that our kids and our grandkids have not even earned yet to pay for today's problems. Let us be reasonable, let us be fair, let us do what we have to do and balance the budget.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, there is good news and bad news in the President's budget that we received today. Let me go with some of the bad news first. Some of the bad news is that he has greater tax increases and that he has more spending for the Federal Government. In other words, some of the same old policy of tax and spend. In fact, on taxes, even though he has a temporary tax cut, the tax cut is done away with by the year 2002, and he has actually a tax increase of over $10 billion by the time he gets to 2002. Now, I think that old tax and spend and borrow philosophy is the bad news. Here is the good news. It is the Republicans, by hanging tough, have now changed the frame of the debate in Washington, so the President's budget still says through their figuring that this budget balances by the year 2002. And that is good news. Let me point out why I think it is such good news. It is because borrowing has obscured the true size of Federal Government. If the American people had to pay the taxes that are required for this huge overbloated, overregulating Government that we have now, they would not stand for it. They would say, ``Wait a minute. Get rid of that fraud and abuse. Get rid of some of these programs, because we do not like you talking 50 percent of every dollar we earn for taxes at the local, State, and national level.'' Let me display this chart a little bit that shows the pie of the way we divide up Federal expenditures. Now, for this current fiscal year, it is a little over $1.5 trillion. The blue portion of this pie that now represents about 50 percent of total government spending is in the so-called welfare entitlement spending. That means if you achieve a certain criteria of age or poverty, the money is automatically going to be there. The Congress does not appropriate that money every year. The only way we can reduce the cost of these welfare entitlement programs is having the President sign a bill, or override his veto. So if we are going to achieve a balanced budget, that means that we are going to have to achieve some changes in the welfare and entitlement programs. Some of the welfare recipients are going to have to start working. Our welfare programs have been successful in transferring wealth, but, too often in the process, we have taken away their self-respect. We have taken away their drive to get up every morning, even when they do not feel like it, and go to work and contribute to the economy of the United States. So they have been recipients of other taxpayer spending. That has to be changed. We have sent one bill to the President. He has vetoed it. We sent another welfare reform bill to the President, and he has vetoed it. What we have got to start doing is having cooperation, or the kind of a President that is going to say yes, some of these changes need to be made. Let me just briefly go around the rest of this pie chart. We have got interest on the Federal debt. The Federal debt is now about $5 trillion. That interest is also on automatic pilot. We have got the defense in green. The defense programs now, even the hawks and the doves, the Republicans and Democrats, the liberals and conservatives, only disagree on about plus or minus 8 percent deviation. In other words, everybody agrees we need a certain amount of defense in this country, so there is very little flexibility. What is left? What is left for Congress, what they have control of, is the 12 appropriation bills that represent the discretionary spending outside of defense. In this little red pie chart area, we have been successful in the last 14 months of cutting $40 billion out of spending. That is a good start. And the reason we have accomplished this, the reason the President and the Democrats and the liberals are now at least saying we need a balanced budget, is because we have changed the frame of the debate by saying look, we are not going to pass this kind of increase. Even if you veto it, Mr. President, even if you shut down Government. And are not going to give you a clean debt ceiling increase, because we are concerned with the debt of this country going over $5 trillion, unless we make some of those changes. Here is my point, Mr. Speaker: If we continue to stick to our guns, if we continue to hang tough, using the leverage that we have of increasing the debt limit, of being very frugal in the appropriation bills that we pass, we can achieve it. We can do it. It is not this overspending and overborrowing. Borrowing has obscured the true size of Government. It needs to be changed. Let us hang tough, let us stick in there, let us do it.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, there has been a lot of talk about default. Default is not going to happen. Let me explain why. In addition to the money already allocated to pay the interest on the national debt, and if you consider credibility, the creditworthiness of the United States to be jeopardized if we do not have timely payment of interest and principal, and principal is rolled over, we reissue principal, then the question becomes on timely payment of interest. Look at this pie chart. Interest represents 15 percent of the money spent in our budget. In addition to the money already allocated to pay timely interest, if we were to take 1.5 percent additional from incoming revenues already coming into the Federal Government, interest would be paid. Treasury can do that. Default is a red herring. It is not going to happen. It is ridiculous to talk about default if you are talking about default in terms of the creditworthiness of the United States, in terms of timely payment of interest and principal. Debt Ceiling Update No. 5 On March 6, H.R. 3021 was sent to the House. This bill would temporarily allow Treasury to borrow outside the debt limit for the purposes of investing trust fund revenues into the trust funds until March 30.\1\ Along with a refunding provision, this would allow for approximately $23 billion in additional debt authority. It also extends the provisions of H.R. 2924, now due to expire March 15, to March 30. H.R. 2924 effectively allowed additional borrowing of $29 billion outside the limit. The rationale for H.R. 3021 is that it will allow time for further refinement and drafting of proposals which may be attached to a longer debt increase. --------------------------------------------------------------------------- \1\ The bill also allows for maturing debt obligations. --------------------------------------------------------------------------- Recent Events and Impending Borrowing Requirements On February 1, the House passed H.R. 2924, which allowed Treasury to issue approximately $29 billion in marketable debt outside the debt limit. By doing this, Congress blunted the threat by the Secretary of Treasury that failure to pass a debt ceiling increase by the end of January would result in failure to make timely Social Security payments. While there was considerable suspicion about the reality of the Secretary's threat, passage of the bill took care of a timing issue with regard to trust fund payments. On March 15, the debt allowed under H.R. 2924 would count against the $4.9 trillion limit. The original March 15 date allowed Treasury to rollover the $27.6 billion of bills that mature March 14. On March 21, $25.5 billion of 13 week and 26 week bills come due. There is a possibility that Treasury could meet its March 21 obligations even if the debt limit exemption is not extended. On March 28, however, another $24.7 billion of bills comes due, and this could not be refunded without some form of increased borrowing authority, such as that included in H.R. 3021, or further Treasury use of options that were outlined in Debt Ceiling Update #4. Increase in the Debt Limit Much discussion has taken place over what other types of legislation might be added to the debt limit bill, e.g., tax provisions, welfare and entitlement reform. However, there has been much less discussion of the form any increase might take. The 160 members of the Debt Limit Coalition in the House, and 9 Senators, signed a letter to the President last June stating that they would require legislation be enacted to ensure we are on a glide path to a balanced budget by the year 2002. One way to accomplish this is to provide in the debt limit increase that increases shall not exceed the amount that would have been necessary under the vetoed Balanced Budget Act of 1995, along with no sale of marketable debt to the public, other than for refunding and cash management purposes, after the year 2002. Stair-Step to a Balanced Budget According to CBO estimates, the following would be the debt subject to limit at the end of the fiscal years leading to 2002: Fiscal year--debt subject to limit (trillions of dollars) 1996, 5.155; 1997, 5.432; 1998, 5.682; 1999, 5.908; 2000, 6.116; and 2001, 6.289. The debt ceiling increase bill would state that debt ceiling increases in excess of these amounts are not valid. Senators Kyl and Mack have suggested that the legislation provide for actual increases in the limit according to this schedule, however, we have introduced and support legislation which would disallow increases in excess of the amount, but would not provide for actual increases. What is important is for Congress to make clear the path of debt over the next seven years, a beginning step to reasserting its constitutional power over borrowing. No Net Marketable Debt to the Public A key provision would be to not allow Treasury to issue marketable debt to the public after the year 2002. This would ensure a balanced budget in fiscal year 2002, as Treasury could not borrow from the public in order to finance deficits. Treasury would still be able to issue debt to trust funds. Since several of the trust funds may still be accumulating surpluses over time, it will be necessary to issue debt to keep them fully invested. This debt could be non-marketable government agency securities, such as is currently the case, or it could be marketable securities. One may also want to provide for short term cash flow. There are at least two ways to handle cash management requirements. One is to take the position that Treasury will have several years notice of the requirement and expect Treasury to accumulate the extra $50 billion in cash it may need to smooth over any mismatch between the timing of receipts and outlays. The other is to exempt from the limit up to $50 billion of cash management notes of 120 days maturity or less, with all such notes maturing prior to the end of the each fiscal year. Philosophy of stair-step/no new public debt As noted in several prior Debt Ceiling Updates, one of Congress' enumerated powers is to borrow money. The approach of detailing the maximum debt limit increases and no new public debt sales after the year 2002 would establish Congress' plan for borrowing and its position that the budget will be balanced in the year 2002. This is in contrast to the ad hoc debt limit increases which have been the pattern since 1940. House Task Force Report On February 12, the House Task Force Debt Limit and Misuse of the Trust Funds released its report. Copies of the report are available from my office. The report covered four aspects: (1) a history of the federal debt and its effects on public choice and the economy; (2) whether the Secretary of the Treasury exceeded his authority when he disinvested the Civil Service Retirement and Disability Trust Fund (CSRDF); (3) whether the Secretary was misleading in his statements regarding the consequences of congressional failure to pass a debt ceiling increase; and (4) what congressional response is appropriate given the recent circumstances surrounding the debt limit. The first conclusion of this report is that the choice of a debt suspension period of twelve months was outside the scope of the law. While the Secretary is given clear authority to disinvest the CSRDF, the law was intended to protect the trust fund, not provide an outlet for the Treasury to fund general fund expenditures. The language of the law would allow the Secretary to sequentially determine its ability to meet pension fund payments. It does not allow an unspecified lengthy declaration in order to generate enough cash to bypass congressional authority over the amount of debt that the U.S. government can issue. The second conclusion is that the Secretary clearly could have been more forthcoming in his statements regarding the likely outcome of not passing an increase in the debt limit. An enumerated power of Congress under Article I of the Constitution is to borrow money on the credit of the United States. Congress determined that the debt limit increase should be linked to legislation which put into place policy changes consistent with the debt increase. The Secretary argued for a debt limit increase not linked to any policy related to the budget. In the debate over the budget, the Secretary did not specify either to Congress or the public that failure to increase the debt limit would lead to disinvestment of certain trust funds, rather than a cataclysmic default. The Treasury, months prior to the date when the debt ceiling was reached had planned for the actions they took to ensure interest payments were made. The failure of Treasury officials to be forthcoming on this issue needlessly clouded the debate over a balanced budget and the linkage between debt and spending. The third issue addressed by the report is congressional response to Treasury's actions of disinvestment of trust funds and sale of certain assets. While Congress has raised the debt limit 77 times since 1940, the recent experience demonstrates that clarification of the law is needed, as is specific congressional direction. The options which have been discussed during the debt limit debate, including disinvestment of trust funds, sale of assets, and delaying income tax refunds, should be directly addressed by the Congress, rather than left open to interpretation. Establishment of a bright line debt limit, through closure of options, should consider what flexibility should be given to the executive branch to manage cash during a period where the debt is at the limit established by Congress.

Mr. SMITH of Michigan. Mr. Speaker, I am sorry the gentleman from Florida [Mr. Gibbons] is leaving. Mr. Speaker, we need some good common sense on how Congress regains control over spending, and I brought this chart this morning to sort of portray what the almost crisis is as Congress, over the last 30 or 40 years, has lost control of spending. Spending for most of the Federal budget of $1.6 trillion almost is now, if you will, on automatic pilot. The blue part of this pie chart represents the welfare entitlement programs. That means the money is automatically there. It does not go through the annual appropriation process, so as we look at the interest that is increasing, last year the gross interest was over $300 billion. If you include the interest paid on Social Security and the other trust funds, that means that we have now on automatic pilot 65 percent of the spending of the Federal Government. The question is, how do we get a President that has found it to his advantage not to cut spending and to demagog the issue to change some of the welfare entitlement programs in the U.S. Congress? This legislation frankly is the last one I am going to support that does not try to move us in the direction of eventually getting onto a glide path to a balanced budget. I mean, everybody has heard the arguments of how terrible it is to pass on today's debts to our kids and grandkids. That is immoral. The other part is the economic negative effects as government's demand for money in borrowing, and government last year borrowed 42 percent of all the money lent out in the United States. You do not have to be an expert in economics to understand that drives interest rates up. Alan Greenspan, the Chairman of the Fed, says interest rates would come down up to 2 percent if we could end up balancing the budget. Everybody is saying it. Now we can do it. Let us pass this bill today. Let us not do it again unless we move toward the glide path toward a balanced budget.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Up until now, in the Balanced Budget Act.

Mr. SMITH of Michigan. They say, ``Look, you've got to do better than this.'' Is it not sad that we cannot get some of the liberals, the President of the United States, to say, Yes, we are going to do the right for the future and we are going to stop playing political games? It is so frustrating that we cannot cut some of this spending and make this economy stronger, and leave our kids a paid-off mortgage rather than the big debt.

Mr. SMITH of Michigan. If the gentleman will yield, when I go to my town hall meetings, and you can picture that group of people out there that are having a hard time with their own budgets, they start saying when we hear what the gentleman from Connecticut [Mr. Shays] has just said: ``Well, why aren't you cutting faster? Why don't you cut more? Why are you spreading it out so long?'' Then they hear that even with the Republican plan we are still borrowing $100 billion a year, even at the end of 7 years, from Social Security and the other trust funds.

Mr. SMITH of Michigan. Mr. Speaker, if the gentleman from Maine will yield, I think the theme is to remind ourselves how bad it is for not only making our kids and our grandkids pay all this overspending and what we borrow back, but it is also tremendously negative on the economy. So what we have said is such things as a child born today is going to have to pay $187,000 in their lifetime just to pay their share of the interest on the national debt.

Mr. SMITH of Michigan. Mr. Speaker, I think there are a lot of people watching maybe that are saying, well, look, you are the Congress of the United States. You have the majority. Why do you not do it? What has happened is Congress has given away the ability to control spending over the last 40 years. We have, in effect, passed into law so-called entitlement programs that say the money is going to be there automatically without being appropriated on a yearly basis from Congress, and so into these laws of food stamps and AFDC----

Mr. SMITH of Michigan. The blue part represents these welfare entitlement programs. A majority of Congress cannot reduce these programs and change spending without the consent of the President, and the President has now vetoed changes in the Food Stamp Program. The President has now vetoed changes in the work requirement in the welfare program.

Mr. SMITH of Michigan. We like your charts.

Mr. SMITH of Michigan. If the gentleman will yield, I would suggest this borrowing obscures the true size of Government. You know, if people have to pay their taxes to afford this huge bureaucracy, they would be saying, wait a minute, but we have somehow, politicians have discovered if they borrow this money and say somehow, well, we will pay this back later, our kids and our grandkids are going to have to do it, but what we have done is we have had a Government become larger and larger, and the bureaucracy so big now that almost half my time as a congressman is spent being an ombudsman to help people move through this political maze of this huge overbloated Government. If we stop borrowing and people have to start digging into their pockets for this size of a Government, they will say, no, wait a minute.

Mr. SMITH of Michigan. Now, the little young tots in that family of four are going to be obligated to account for that money later on in their lives. No. 1, it is immoral. No. 2, balancing the budget is going to strengthen the economy.

Mr. SMITH of Michigan. Just to pay their share of the interest. It is time everybody, that is, however you want to put it, you are a young man relatively, I would say to the gentleman from Connecticut [Mr. Shays], but everybody had better start looking at what this Government is doing to their lives and the lives of their children. Not only is it immoral to make our kids and grandkids pay our bills today, like they are not going to have their own problems when they grow up, but it is tremendously negative on the economy, because our demand for money, for more borrowing, has driven up interest rates by 2 percent.

Mr. SMITH of Michigan. Let me show you where that is on this little pie chart. That is the little red section on this pie chart that represents the 12 appropriation bills other than the defense appropriation bills. This is where Congress has control. If we do not pass the appropriation, if the President vetoes it, there is no money there, so we have been unsuccessful here, and by the year 2002, we are going to see the welfare entitlement portion of this budget grow to almost 60 percent, and then you have got the interest on the national debt. The service, paying the interest on the national debt, is also on automatic pilot unless we follow what these gentleman have been saying and we started reducing the rate of increase in spending.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I would like to talk about the fact that tomorrow this Chamber is going to increase the borrowing authority to the U.S. Department of Treasury, or we presume the votes will be there to increase the debt. The public debt of this country is now $4.9 trillion. I brought a chart with me to explain the roughly $1.6 trillion budget that this Federal Government spends every year. If we look at the growth of the U.S. budget, back in the 1970's, the U.S. budget used up a much smaller portion of our total gross domestic product. In fact, in 1948 it represented 12 percent of GDP. Now it is up to 21 percent of GDP. This Government, this overbloated bureaucracy, is growing bigger and bigger, and how are we going to stop the overspending? How are we going to stop more and more borrowing, that means that we are taking the money that our kids and grandkids have not even earned yet to pay for what we consider today's problems? Everybody in the generation under 40 years old had better sit up and take note about what Government is doing to their future. This pie chart represents how Government spends its money. The bottom blue part represents half of the Federal budget, and it is spent for welfare and so-called entitlement spending. The little white part represents interest. Interest is now becoming the largest single item in the Federal budget. This year, this represents net interest. Gross interest, if we include the interest that is paid on the money that we borrow from Social Security and the other trust funds, was over $300 billion this part year, larger than any single expense item in the budget. The red section represents 12 appropriation bills. Those 12 appropriation bills are controlled by Congress. Article I of the Constitution says Congress is responsible for the purse strings. This is about all we have left, is that little red piece of pie that represents 18 percent of the budget that represents the 12 appropriation bills. Why I say Congress has control of that appropriation spending is because if the President vetoes that particular bill, then there is no money there. The green part is defense spending, and I have separated that out as the 13th appropriation bill, because the hawks and doves, the conservatives and liberals, almost never have disagreed more than a plus or minus 10-percent deviation. Everybody agrees that there should be a certain amount of our budget spent for national defense, so that is pretty much on automatic pilot. The blue is on automatic pilot on the welfare programs, because those welfare and entitlement programs, we cannot reduce the spending for those programs unless the President signs the bill to do it. What we have done is we have given away congressional authority over the years and said that the money is automatically going to be there if individuals meet this certain criteria of entitlement. There is a certain level of poverty, so therefore they are eligible for food stamps, or they are poor and have kids and are eligible for AFDC, or reach a certain age so you can have Medicare, or a certain level of poverty so you can have Medicaid. This cannot be changed. This is the part of the budget that is causing us to increase the national debt more than any other part of the budget. What a lot of us think is that it is reasonable, Mr. Speaker, to say to the President, look, if we are going to increase this debt over the $4.9 trillion that we now have, then we want to tie to it some reforms in the welfare programs, the entitlement programs, that are causing the greatest need for increasing that debt. Let us be fair to our kids, let us be encouraging to the economy, let us balance the budget. The only way you can balance the budget is to change the entitlement programs. That means the President has to sign that bill. We tried it once. We got a balanced budget through the House and the Senate. The President vetoed it. We are going to try again, Mr. Speaker.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Chairman, this is the final decision. The Senate has already put in this kind of language. The Senate, in their ag bill, sort of wanted to satisfy everybody to get the bill out of the Senate quickly, so the Senate has 500 pages and $5 billion more than what we came out with from the House. It is up to $6 billion now in the analysis. Here is my problem with this amendment. If we say that all of the other taxpayers of the United States should contribute to help solve this problem, then it seems reasonable that all of the needs that are going to be considered for environmental cleanup be considered with the available money and it be decided how much goes to each one of those needed projects. For this body now to bypass the Committee on Appropriations, to bypass the analysis of how do we best spend our environmental money is not consistent with the way Congress should operate. It should go through the scrutiny of appropriations. It should go through the scrutiny of the hearings process. It should not be passed as an amendment on this floor to obligate the taxpayers across the whole country to pay for this particular cleanup of the Everglades in Florida.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Chairman, as my colleagues well know, we are all valued members in that committee now. I think the gentleman from Texas [Mr. Stenholm] made a point that should be recognized, and that is that major cuts in programs of this budget, there are two major cuts when we look at what has happened in the last 7 years and the next 7 years. One is an actual dollar cut in defense spending; one is an actual dollar cut in agricultural spending. As I talked to my colleagues, there is an impression that farmers are rich and therefore do not need any help. I think it would be good if I just covered how some of the farmers in my district live. Most of the farmers average 320 acres, a lot of dairy farmers. That means they get up at 5 o'clock in the morning since cows have to be milked roughly 12 hours apart. They get up at 5 o'clock in the morning. Sometimes the water is frozen. It is tough to get out of that bed. They get home at night after doing chores in the evening at about 7:30. These farmers live on very meager incomes, often having to take their kids out of music lessons because their income from farming is not that good. We look at some farmers that have maybe thousands of acres of land and maybe end up being millionaires, but that is not the norm. What is keeping this industry the strongest in the world are the individual owners that are putting in those 14-hour days and producing the food and fiber that has allowed this country to grow. We now produce food and fiber for only 11 percent of our take home dollar. That compares to about 20 percent in Europe, and if we get into the Asian countries, 50 and 60 and 70 percent. We have the highest quality food and fiber at the lower price of any place in the world, and it is because farmers spend a tremendous amount of time working. As we make this transition to the marketplace, it is important that we do it gradually. I would hope that most of these amendments could be defeated.

Mr. SMITH of Michigan. Mr. Chairman, I will try to explain what is happening. I am for a free market. If you are for a free market for dairy farmers and dairy products, then you vote against the Solomon amendment. The producers organizations across the country from coast to coast have now endorsed the committee version of this bill. They do it because they go to a free market. Why some are nervous about the increase in price is because immediately under the committee bill we take away government purchases of powder and butter. That means that under the GATT negotiations, farmers can take advantage of export markets. There is some fear that if farmers take advantage of export prices, the price of milk might go up. If we are after a free market, what we do is vote down the Solomon amendment and get government out of the hair of the dairy farmers of this country. They are having a very difficult time surviving. If we do not get this bill passed, I say that many of the dairy farmers in my district are going to give up the ghost and go out of business. Let us just review the organizations that support this: Nationally, the NFO, NFU, National Farm Bureau, again essentially every producer organization; a few in California do not support the bill. The California program is unique. I urge you to look at a free enterprise system that is going to maintain a dairy industry in the United States that is going to satisfy our needs and not evolve into a situation where we have to depend on imports for milk.