Nick Smith

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, it is a season to be very conscious of giving and what we can do for other people. It seems to me that the President and some of the Democrats feel they are gaining politically by calling Republicans mean-spirited in their efforts to whether we are going to reduce the growth of Government and end up with a balanced budget. It is easy for the President, I think, and some of the Democrats to say they want a balanced budget, but it is hard to come up with the specific cuts and reductions in growth that are necessary to achieve that balanced budget. If we are going to give a present, it seems very, very important that we start considering the tremendous obligations that we are putting on our kids and our grandkids by spending the money today to satisfy what we consider our today's problems with money they have not even earned yet, so we are obligating them to pay our today's bills. I think all of us, collectively, must believe that their problems are going to be as difficult and as great as our problems today, if not greater. It seems to me that there are two things that are going to have to happen before we can break this budget impasse: First, the President is going to have to stop playing politics, and doing what is right for the future of our country. I think that is sort of what he is doing. He sees his poll numbers gaining by saying, ``No, I am not going to allow these cuts.'' I think here is the other second option, that the American people spend some really tough, hard studying time learning about the budget of the U.S. Government, and what it is really doing to their future, what it is doing to their future standard of living, what it is doing to their obligation they are going to have when they start paying off this debt. Mr. Speaker, it has been politically damaging to many Republicans to go home, because the PR battle has probably, there has been greater success on the part of the Democrats in saying that, ``Look, Republicans are taking away school lunches, they are going to put poor people out on the streets,'' and so when we go home, it is politically damaging. Let me tell you, Democrats, Mr. President, if we do not succeed this go-around in achieving a balanced budget and start living within our means, my guess is there are not going to be politicians willing to even try it again for the next 15 or 20 years. It is not easy. On the other hand, it is so easy for the President and some of the Democrats to say, ``Look at these mean-spirited Republicans as they try cutting this program and cutting that program and reducing the growth in this other program.'' It is not politically easy to reduce the growth in Government. The bottom line is this: We either do it now, or we are going to wait until the baby boomers start retiring, around 2011 to 2019. Then we are going to have to do it. If we wait that long to make these decisions, those decisions are going to be drastic. Let me just give you one example that sort of puts it in perspective, the difficulty of making these decisions. If it was easy, we would have made the decisions a long time ago. If you go back to after World War II, there were 45 people working for every 1 Social Security retiree recipient. Today there are three people working for every one retiree. People are living longer. The ratio of those working to those retired is becoming greater, and therefore, more difficult to charge more to those working in taxes to pay for some of the benefits of those that are retired. We have increased the FICA tax 29 times in the last 21 years, in either the rate or the base, so we continue to tax those that are working more and more to pay for our overspending. The interest on the national debt this last year was $320 billion, the interest on the total debt, subject to the debt limit. That is the largest expenditure of the Federal Government. We cannot go on, Mr. Speaker, we cannot continue to overspend and run this country deeper and deeper into debt, and jeopardize the success, the economic success of the future. Mr. Greenspan, our top banker in this country, came to our Committee on the Budget. He said: ``Look, if you guys and gals do it in Congress, if you balance the budget, interest rates will be going down 1\1/2\ to 2 percent.'' Such a dramatic increase in the economy. Let us do it now. Let us stick to our guns, if we have to stay here every day. I am hoping I am going to spend Christmas Eve and Christmas with my family. Other than that, I say, let us stay here every day, negotiate, get this done, have a budget that balances, and gives our kids and our grandkids a good Christmas present.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. That is not true. Some Republicans voted for it. Only 60-some Democrats voted for it.

Mr. SMITH of Michigan. Mr. Speaker, will the gentleman yield?

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I will be very brief. I am a Republican, and the gentleman from Michigan, John Dingell, is a Democrat. I have been here 3 years, and what I have discovered is he is just a good person. He cares about people. His knowledge is extraordinary. I served with his son, Chris Dingell, in the Michigan Senate for 10 years. I asked Christ about 3 years ago if he was going to follow the family tradition and run for the U.S. Congress. Chris said, ``Nick, you wouldn't believe how hard dad works.'' I did not believe it then, I believe it now. John, I think, you know, this is not a eulogy, it does not mean you can relax or let down. We need your experience, we need your help, we need your camaraderie to make some of the tough decisions ahead of us. It is a shame, you know more about many subjects and many areas and probably you have more knowledge than anybody else in the world in some of the aspects of your experience over the last 40 years. I personally think you should work harder and write a book. Debbie, encourage him to do that. Mr. Speaker, I am proud to be from Michigan and a colleague of a gentleman that has helped Michigan a great deal and helped America a great deal. Thank you.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I would like to congratulate the gentleman from Virginia [Mr. Payne]. The problem is that only 60-some Democrats voted for his budget that did balance. Mr. Speaker, it is easy for the President and some Democrats to say they want a balanced budget, but it is hard for them to offer a proposal to show where those cuts are coming from. I believe one of two things is going to have to happen before we break this budget impasse. One, the President is going to have to stop playing politics and do what is right for the future of this country; or, Americans are going to have to spend some hard studying time realizing how serious this overspending problem is and what it does to their future. Mr. Speaker, it is not easy politically to reduce the growth in Government. The bottom line is if we fail this time in cutting the growth of Government and balancing the budget, we are not going to do it for many years. Vote against this budget for what it is. It is politics as usual, spending and taxing and borrowing as usual.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, a minute is not very long. I will try. The budget economic ills clobber the market. The four chaps that came down 2 months ago, I talked to on the phone, they are saying here is what the market is thinking, that they are afraid we are not going to achieve a balanced budget. Therefore, the market is going down, largest drop in 4 years. We have seen interest rates go up. That has got to be a signal to use. We have got to pay attention. In the Washington Post today, Jim Glassman writes, ``As long as the President can pose as the saviour of Medicare, with the public blaming Congress for Government shutdowns, he is not going to negotiate seriously.'' Why should he? Here is the bottom line of my message. Democrats, give me your ear: Everybody in this Chamber, or most everybody, wants a better America, better place to live and work. How are we going to come to grips with our over-promises and our overspending if we cannot keep borrowing the money simply to pay our bills? Let us get together. Let us do it. The market is at stake. The U.S. economy is at stake.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I see one reason why this resolution is so important is because so many people say that they would like a balanced budget, but do not mean it. Mr. Speaker, I would say to the gentleman from Hawaii [Mr. Abercrombie], is it not interesting that when we talk about a balanced budget, we are talking about all revenues coming into the Federal Government covering all of the expenses that are going out. But still, this is such a modest proposal, and we cannot even get a modest proposal through. Mr. Speaker, if we fail to do this little bit toward getting this balanced budget now, it could be a generation before anybody is brave enough to try again. Mr. Speaker, in this proposal of a balanced budget, even after 7 years in the year 2002, we are still borrowing $100 billion from Social Security and the other trust funds. How deep in debt should this country go? We are spending the money that our kids and our grandkids have not even earned yet. Let us be brave. My colleagues cannot say they want a balanced budget and then pretend to have rosy scenario scoring from somebody else, just so that they do not have to cut spending. If we are going to achieve this goal of having fiscal responsibility and stability, and if we are going to bring interest rates down, then we have got to do it. I know it is hard. Politicians are used to doing more and more things for people, even if they have to borrow money, because when we talk about the budget, people's eyes sort of glaze over and they do not understand it. Mr. Speaker, the fact is that if interest rates will go down, because we balance the budget, we are going to see this economy take off like it has never taken off before. Let us just do it. The American people want it. Everybody says they want it now. That is good news. Vote for this resolution that says use CBO scoring. Have a balanced budget.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. If the gentlewoman would yield, she should just read the rule, please.

Mr. SMITH of Michigan. Mr. Speaker, I am taking the liberty to come to this microphone, if the gentlewoman from Connecticut would dialog with me. I am taking the liberty to come to this side of the aisle, because I would hope after the current, if you call it, fiasco is done with, and we come to a time period after we have settled this dispute and hopefully come to a conclusion on balancing the budget, how much control do we want to retain, regain for Congress? How much control over the authority given in title I of the Constitution, that says we have control over spending and borrowing, do we want to have a majority in Congress be able to control? To react to a statement that the gentlewoman from Connecticut made, there is nothing in law that protects the Social Security trust fund from the same kind of disinvestment that was enacted on the civil service retirement trust fund on November 15. There are no changes in law between when disinvestment occurred in 1986, when a different administration disinvested the Social Security trust fund in 1986 and used that as flexibility to play with the debt ceiling, than occurs today. So we have a commitment by the Secretary that he does not intend to go into the Social Security trust fund for disinvestment. I will take him at his word, but eventually we must control the ability to not only control spending but to control how large this debt is going to be. Mr. Speaker, the debt of this country was increased $61 billion in one afternoon, if you compare that $61 billion to the fact that it took this country the first 160 years of its existence to mount this kind of a $60 billion debt, and then we expanded the debt load of this country another $60 billion. There is no default that is going to occur under this bill. There are provisions in the rule that specifically relate that what actions have taken place so far will not be under the subject of this law.

Mr. SMITH of Michigan. Mr. Speaker, I think it would behoove us to hopefully one of these days have more camaraderie in trying to reach solutions. Mr. Speaker, I wish the gentleman would examine whatever research he might have undertaken to quote the Speaker as saying a default is okay for any period of time. That is not true.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, for the first day during the budget negotiations to try to come to a compromise for a balanced budget, the administration and Congress, I think, have made some progress. Maybe some of the hopefulness is in what has been suggested, that the CBO has estimated now that approximately $135 billion extra will be available in their new baseline, and that means the differences are less in the dollar amount between the House and Senate. Here is one problem, though, in the CBO estimate of their prediction of a somewhat rosier economy in the next 3 or 4 years. That is the fact that it is exactly that, it is 3 or 4 years. The projection in the fifth, sixth, and seventh year is so ambiguous that that is not where additional revenues coming into the Government are coming from. Therefore, when you decide the social programs that are going to be continued and expanded, when you decide the entitlement programs that are going to be continued and expanded, you have to take into consideration what is going to happen the fifth, sixth, and seventh year. Those issues still need to be addressed today. I particularly am very concerned about what happened on November 15 when the President disinvested the so-called G fund and the thrift savings fund as well as the civil service retirement trust fund for a total of $61 billion. Congress, who is given the authority in article 1, section 8, of the Constitution to control borrowing, has now had some of that power taken away from them by an administration that has found a special way to increase the debt load of this country by raiding the trust funds, $61 billion. It took this country the first 160 years of its existence, through Pearl Harbor, into World War II, before we had amassed that kind of a $60 billion debt. In one fell swoop, the President and Mr. Rubin increased the debt load of this country another $61 billion. What I would suggest is that it is important to try to regain control of spending in this country and the debt ceiling in this country. Mr. Rubin suggests, well, once we have appropriated the money, it is the responsibility of Congress to come up with whatever is necessary in additional borrowing authority to pay off those debts. Here is what is being left out of the discussion, Mr. Speaker. It is the fact that most of the spending, most of the cuts to achieve a balanced budget are coming from the entitlement changes. Since a majority in Congress can no longer reduce spending through the entitlement programs without the consent of the President, we have lost some of our authority to control the purse strings of this country. So it is very appropriate to tie the debt ceiling limit to conditions of changing the entitlement programs of this country, to try to have the U.S. Government live within its means. We need to remind ourselves what we are talking about in terms of what borrowing is doing to our economy and the obligation that that is passing on to our kids and our grandkids. We are borrowing money now because we think what we are doing and the problems that we face are so important that it justifies us going deeper into debt and telling our kids and our grandkids that they are going to have to pay back this debt out of money they have not even earned yet. They are going to have their own problems. Most people conceptually say, well, yes, Government should try to live within its means and balance its budget. The fact is, is that it has such an impact, not only on our moral obligations of what we pass on to our kids as far as increasing their obligation and problems, but also its effect on our economy. Alan Greenspan, our chief banker of this country, head of the Federal Reserve, came into our Budget Committee and said, ``Look, if you are able to end up with a balanced budget, interest rates will go down between 1\1/2\ and 2 percent.'' Two weeks ago, he went to the Senate Banking and Financial Services Committee and said, ``Look, if you do not end up with a balanced budget, interest rates could go up another 1 percent,'' a dramatic difference in the effect of our individual lives, on how much it costs us to buy a home or borrow money to go to school or buy a car. Let me just say that it is so important to our future, to our economy, to our well-being in this country and the well-being of our kids, that we have got to have a legitimate balanced budget, and I sincerely hope the administration and Congress will get together and achieve that particular goal of a real, no smoke-and-mirrors balanced budget.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I thought today with the President's budget coming out it would be a new sort of ``Honesty In Congress Day,'' but I see the rhetoric has shifted from facts and figures and how we achieve a balanced budget to character assassination. Mr. Speaker, I think it is a joyous day for some of us, as we see the President's budget that is going to turn out very close to what the Republicans have proposed, if we are going to reach that balanced budget in 7 years. I look at Jim Glassman's column today. It says it is scandalous how close Congress and President Clinton actually are on the key elements of the Federal budget. If Americans understood these numbers, they would be outraged. I look at the New York Times article that says White House documents reveal similarities in the GOP plans for Medicare. Mr. Glassman says, ``In my own judgment, it is,'' that lack of the deal, is Clinton's fault. Mr. Speaker, there is closeness to this agreement. Let us get together. Let us forget partisan politics. Let us get a balanced budget by 2002.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Let me ask one more question. It is my understanding that the cost of these ships is possibly as low as a 100 million up to $200 million for some of the larger ships. Is it my understanding that over the period of this legislation, 9 years, we are looking at $21 million per ship subsidy, paying that $2.2, or $2.3 or-- --

Mr. SMITH of Michigan. Mr. Chairman, I move to strike the last word. Mr. Chairman, I rise in opposition to this bill. I do not believe that we should be here today creating a new Government program that, once appropriated, is going to hand out a billion dollars. Inasmuch as we are under the caps, that means the billion dollars is going to come out of other programs. I consider this kind of legislation corporate welfare. It is true that H.R. 1350 would replace the existing operational differential program that is more expensive, but that program is being phased out. The industry is expecting the nonrenewal of those contracts. The industry has been planning on the phaseout of that program. Now we are asked to pay more than $2 million a year in subsidies for each ship, for each of the next 9 years for every ship that is enrolled in this program. Even as we struggle to reach a balanced budget and protect the future of our kids and our grandkids, we are being asked to pay shipping companies, if it is appropriated, and I understand the Committee on Appropriations intends to appropriate these bills, we are going to pay every shipping company $21 million for every ship enrolled in this program. It is corporate subsidies, and we have to stop those corporate subsidies simply for saying, if you are going to fly an American flag, you can get this subsidy. This program and the proponents of this bill say that it is necessary to protect national security. But again this ignores the fact, I think, that the old program was being phased out. For too long we have allowed some of these vague national security claims to justify subsidies for selected industries. This year's budget makes some progress in trimming subsidies for military procurement, energy, agriculture, other industries that have been connected to national defense. Agriculture, certainly food and fiber, is essential for our national security in time of war. But we have made the decision to phase out those subsidies. Now, it is possible that other countries are going to produce the food and fiber; we are going to have to depend on those other countries. But it seems to me in this era where we have decided to slow down on those corporate subsidies, it is important that we not start new programs at this time. We have found that many of these subsidies have far more to do with well-financed special interests than military preparedness. The same I think is true here. It is unreasonable to believe that we cannot defend our country without paying shipowners more than $20 million per ship to fly our flag. As we struggle to balance the budget, I think it is outrageous to ask Congress and the American people to create yet another corporate subsidy. I ask all my colleagues' thoughtful evaluation and consideration of this bill.

Mr. SMITH of Michigan. Does it include Bosnia?

Mr. SMITH of Michigan. Mr. Chairman, I guess I have two questions. One would be under the definition of war, if these contracts were signed, would these ships be enlisted for the Bosnia, current Bosnia, situation?

Mr. SMITH of Michigan. Mr. Speaker, will the gentleman yield?

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I question the President's decision to send 20,000 American ground troops to Bosnia. With the additional military personnel the President has committed to the Balkans, our total presence will be over 30,000 men and women. I believe that, as Americans, we best serve our Nation's foreign policy interests when we present a single, unified voice. The President, however, hasn't yet presented a compelling case for American combat troops. I am willing to listen to the President, and will base my decision on the following criteria: Is the deployment of troops in our national interest? Are the mission's objectives clearly defined and obtainable? Can the mission be accomplished and finalized within a reasonable time period? I will evaluate all the facts and, in consultation with the Defense Department and other military experts, reach a decision at the appropriate time.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Chairman, as a chairman of the Budget Committee working group on physical capital, I rise to support H.R. 1788. Our Budget Committee recommended we make major cuts in transportation subsidies. Our inefficient rail programs have been losing money hand over fist for dozens of years. It is time to stop throwing good money after bad. Ultimately, we will phase out operating subsidies for mass transit. Amtrak railroad has been losing tons of tax dollars--so we need to phase out operating and capital subsidies. And to give Amtrak a chance to make it on its own, we get rid of the thicket of regulations that keep Amtrak from being more competitive. background In 1970, the Congress created Amtrak as a for-profit corporation to provide nationwide intercity passenger rail service. Amtrak was expected to help alleviate the overcrowding of airports and highways, and to offer the public a convenient and efficient transportation alternative. Like all major national intercity rail services in the world, Amtrak operates at a loss, and it has always needed Government funding. In 1995, Amtrak received nearly $1 billion in operating subsidies from the Federal Government. Amtrak's financial and operating conditions have declined steadily since 1990. financial condition From 1991 to 1994, revenues were $600 million lower than expected, while expenses were higher than planned. In the same time period, passenger, revenues have fallen 14 percent in real terms. Amtrak's revenues and subsidies did not cover operating expenses, and Amtrak also deferred maintenance on train equipment. It also reduced staffing levels and some services. Even with the proposed route downsizing and other savings initiatives, Amtrak expects that operating expenses will exceed the sum of operating revenues and the Federal subsidy by $1.3 billion from 1996 through 2000. Plus, Amtrak will still need over $4 billion for capital investments. Unmet capital needs in the Northeast Corridor alone now total $2.5 billion. To cope with funding shortages, in the late 1980's Amtrak started reducing train car maintenance. By the end of 1993, costly heavy overhauls where overdue for 40 percent of its nearly 1,900 cars. Amtrak also deferred renovating and modernizing its outdated maintenance facilities, contributing to its spiralling costs of inefficiency. In the immediate future, Amtrak will face new negotiations with its labor force, the costs of which presently represents 52 percent of Amtrak's operating costs. Also, Amtrak faces certain cost increases for track leases, which will be renegotiated in 1996 for the first time since their agreement in 1971. H.R. 1788 helps Amtrak to survive. privatization None of Amtrak's routes--even those in the Northeast Corridor--are profitable when capital costs are taken into account. Revenue in the Northeast Corridor cover 65 percent of the costs on the routes, compared to about 50 percent for routes elsewhere. Amtrak's fastest growing sources of revenues is contracts to operate local commuter rail systems. These contracts generated over $270 million in 1994. Over the long term, Amtrak believes that high-speed rail service will increase ridership and revenues. High-speed service is now limited to track between DC and NYC, with extension to Boston underway. Amtrak has a 45 percent market share between DC and NYC. Private sector efforts to sponsor high-speed rail without substantial Government funding have been unsuccessful. Mr. Chairman, the American people have had enough of big bureaucracies and increased taxes for handouts. By saving billions of dollars out of the physicial capital budget, we help put our Nation on the path to a balanced budget. H.R. 1788 is a modest but necessary beginning.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. If the gentleman would yield, everybody should still understand that revenues from taxes significantly increase over this 7-year time period, so there are going to be more revenues coming in from taxes, even though we have a modest reduction in the rate of some of those taxes.

Mr. SMITH of Michigan. If the gentleman will yield, just the frustration so many Americans have felt that are working so hard for the dollars that they have to raise their families, and then if you go out to the check out counter at the grocery store, very often you see food stamps that are being misused for all kinds of non-nutritious food items. So as you look at the welfare recipients that may be have ended up with a snowmobile or whatever that you cannot afford, while you are paying taxes, you know part of your tax dollars are being wastefully spent in so many areas. So I think the only way we are going to achieve this is for the American people to say ``Look, enough is enough. Just do it.'' I think that is what the American people are starting to say.

Mr. SMITH of Michigan. Let me mention that the Speaker tonight for the U.S. House of Representatives is the gentleman from Michigan, Dick Chrysler. The gentleman just mentioned the Department of Commerce. Mr. Chrysler led the way to make a consensus that we are now moving towards cutting the waste in that department out, abolishing it as a named institution. He has introduced legislation now also that gives that tax credit for education. So my compliments to the Speaker. I throw that in and will yield to the gentleman.

Mr. SMITH of Michigan. Mr. Speaker, I would like to compliment the gentleman from Connecticut [Mr. Shays] for organizing this special order and would ask for his conclusion.

Mr. SMITH of Michigan. We do not want to spend a lot of time eulogizing the gentleman from Connecticut [Mr. Shays].

Mr. SMITH of Michigan. But I am proud to work with you, Chris. Everybody knows the guy that is just consistent, that is soft-spoken, that has good ideas and follows through on them. I am certainly proud to work with you on all of these issues, from campaign finance reform to balancing the budget. See, we just need to shout out and say, look, does everybody realize what a predicament this huge, overbloated Government has gotten us into and the imposition that it is placing on our kids and our grandkids. You know, we say balance the budget, but even at the end of 7 years we are still borrowing $100 billion from the trust funds. And yet the whining and the moaning and the criticizing about our going too far, we are hurting our economic future and we are putting this load on our kids. you know, we have got unfunded liabilities in Social Security and Medicare, Medicaid, promises we have made to retirees. We have now guaranteed that we are going to hold harmless all the private pension funds just in our overzealousness to try to do good things to people so we will get reelected. We have really made some commitments that are placing us in great jeopardy.