Nick Smith

Mr. SMITH of Michigan

Mr. SMITH of Michigan. If the gentleman will yield, the interest on our public debt subject to the debt limit now is almost $330 billion. You compare that with 1977 of a total Federal budget of $370 billion, it is disrespectful.

Mr. SMITH of Michigan. That is correct. And the goal has got to be to expand business and jobs in this country, at the same time that we achieve a balanced budget, to say, just like the gentleman said, the wages that your kids have not even earned yet are going to have to pay for our overindulgence as a Federal Government living beyond our means.

Mr. SMITH of Michigan. If the gentleman will yield further, I think, Mr. Speaker and colleagues, that the American people should know that we are now at a turning point. Will the President work with us in changing the welfare programs and the entitlements? Because those programs represent 60 percent of the savings that need to be made to finally achieve a balanced budget, and the President right now, I do not know if you heard the reports from leadership when they met with the White House, they are still discussing how CBO will do the scoring. Is the President serious about having a balanced budget in 7 years? Will he work with Congress in developing the kind of changes for the welfare programs so that we no longer have welfare as we know it?

Mr. SMITH of Michigan. The Office of Management and Budget works for the President of the United States, takes their directions from him, and so they are able to say, look, the economy is going to expand by 3 or 4 percent. They are able to present a rosy scenario and predict tremendous amount of revenues coming into the Federal Government so that the President or anyone else that wants to say it, look, [[Page H 13715]] with all of these revenues coming in, we do not have to cut any spending and we will still achieve a balanced budget. So the danger is having somebody that is bipartisan, that is impartial, developing the projections for those 7 years.

Mr. SMITH of Michigan. Mr. Speaker, another situation I am sure that the people that want to spend more money have already started arguing is let us not have any tax cuts. So I think it is important to remind ourselves where we have been over the last 5 years, based on the tax increase over a 7-year span. In 1990, we had a tax increase of $235 billion. In 1993, a little over 2 years ago, we had a tax increase of $350 billion spread out over 7 years. Now the tax increase in this proposal is $222 billion. It is just a question that if you start increasing taxes too much, I mean, everybody knows and the economists all say that you start depressing the economy and depressing jobs. So the question is should we give some of those tax increases back.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I think we need to talk about that. I would hope some day we could have a true balanced budget and stop borrowing from the trust funds of this country. In fact, that is a real question, has the President and the Secretary of the Treasury legally gone in and borrowed $39 billion of increased spending to have that money available for an increased debt of this country. I think that is something that needs to be examined. But let us look a minute at where we go on taxes. In 1993, spread over 7 years, we had a 1990 tax increase that was about $280 billion. The 1993 tax increase spread over 7 years was $350 billion. The question I think we need to examine very carefully is, should we give part of that tax increase of those past years back in this balanced budget effort that we are proceeding on. I think the answer is yes, if we care about the American families. We think, we hope the President is going to keep his word on this contract, that we are going to do it, that we are going to do it in 7 years, that we are going to start cutting down the spending of this country and let more of that hard-earned money stay in the pockets of the American taxpayers.

Mr. SMITH of Michigan. I yield to the gentleman from Maryland.

Mr. SMITH of Michigan. Mr. Speaker, I do not have quite the smile that the gentleman from Ohio [Mr. Kasich] did, but all over America, him lifting his hands and smiling, it is a great victory for the American people. I think it is a change. It is a revolution. It is where we are going to be heading in this country, is to start cutting spending. I was a little concerned on one of the morning programs when Mr. Panetta said we can do it in 7 or 8 years. I hope the understanding is clear that it is a 7-year contract that we are after, and that is what we hope to achieve in 7 years.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, I think the good news is that there has to be a slowdown of the bomb-throwing from the other side now, because some of those bombs might come back to haunt them. Now, hopefully, we are going to sit down, we are going to talk about what is the best way to achieve a reduction in the increase of spending over the next 7 years. I just wanted to relate to some of the concerns about the tax breaks and who they are going to. The net tax decrease in this bill is $226 billion. Just for a minute, compare that to what happened in 1990, when we had an increased tax of $280 billion. Compare that to what happened in 1993, when we had a tax increase spread over 7 years of $350 billion. If you believe the economists when they say that these kinds of tax increases are a depressant on the economic and job expansion, is it reasonable to give some of those tax breaks back, take away some of those tax increases of 1990 and 1993? I say yes, if we want to increase job opportunity and the standard of living, we have to look at ways that leave some of this hard-earned money in the pockets of the people that earned it. We have to start looking at the fact that this country, over the last 10 years, has a lower savings rate than any other industrialized country in the world. Guess what our savings rate in this country is; about 5 percent. Compare that with South Korea, at 32 percent; compare it with Japan, at 21 percent. We have been paying out, enjoying our benefits now and pay later. That is what we have been doing in this Government. We have been borrowing from our kids to satisfy what we think are our today's needs. Mr. Speaker, Republicans promised to provide a tax cut that is targeted to middle-income Americans. Look at this chart. We have kept our word. Our tax plan will help strengthen American families, and it is going to give job creation a boost. Sixty-five percent of the relief goes to people with incomes below $75,000. If you want to go up to $100,000, then 82 percent of these tax cuts go to families that are receiving less than $100,000. It is for middle-class families, it is to benefit job creation. Mr. Speaker, throwing bombs, it is easy to say, ``Well, we think you are hurting this group or this group or this group,'' or, ``You are disadvantaging this group just for tax cuts to the wealthy.'' Now, if we are going to agree to this, and the Democrats and the President have said, ``Yet, we will go with a 7-year balaned budget,'' now we have to start talking turkey over this Thanksgiving period. We are going to have to say, ``Here is where I think you should reduce the spending more than you are reducing it today.'' I would say, Mr. Speaker, that it is so good news for the American people that we have agreed to have a 7-year balanced budget. It is what we need to do if we are really concerned about our kids and our grandchildren.

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

Mr. SMITH of Michigan. Mr. Speaker, I would tell the gentleman, I do not know the specific tax increase, but I can tell you that we are putting some of this money back in the American people's pockets. It is a $500 tax cut for individuals.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, several speakers for the other side have indicated that farmers and ranchers of America want more of the same of our existing agricultural policy. Well, I am a farmer and I will tell my colleagues that farmers do not want more of the same ag policies that have held prices down in this country. If we can compete, if farmers and ranchers compete, we have got the most efficient, effective ag industry in the world. Farmers want a fair return at the marketplace. They do not want the kind of policy that puts on limited prices, embargoes, and holds down the price that they would otherwise get.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, if the gentleman would yield, it is a fact that this Congress has been pulling a sham on the American people by using the Social Security trust funds for the last 40 years.

Mr. SMITH of Michigan. Mr. Speaker, I would like to get the attention of the gentleman from Hawaii [Mr. Abercrombie]. Is it not a shame that this is a balanced budget that still borrows money from the trust fund in 2002? The gentleman is absolutely correct, because this balanced budget is a very modest balanced budget. We should do much more. Mr. Speaker, for 40 years the Democrats have been in control of this Congress, and we have been going deeper and deeper in debt. We now have a debt of $4.9 trillion. The year 1996 is the first of a 7 year effort. The spending in this first year is the most modest of any of the 7 years, and yet the whining and moaning and complaining we hear. Mr. Speaker, how can we expect this Congress to have the intestinal fortitude to do what needs to be done. And that means not only balancing the budget, but starting to pay back the debt, stop borrowing from the trust funds? Mr. Speaker, I need to say this in my last few seconds. The last few speakers on the Democrat side have not talked about this rule. They have not talked about the fact that this is a clean CR, except that it says, ``Let us balance the budget in 7 years, according to CBO.'' Let us just do it!

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Chairman, I chaired the budget working group that recommended we terminate the Interstate Commerce Commission. Mr. Chairman, it is time for the Interstate Commerce Commission to go. This bureaucracy was created in the 1880's to regulate emerging railroad monopolies. It is only fitting that one of the first agencies that we kill in the first year of the Republican revolution be the oldest independent regulatory agency in the Federal Government. But the case for eliminating the ICC is much greater than just trophy hunting. Much of what the ICC does has been made unnecessary over the past decade and a half of transportation deregulation. Much of what remains needs to go, too. Tariff filing, probably the most obvious example of why we should kill the ICC, is a boon for bureaucrats, but a burden on trucking companies. For these reasons, I support the ICC Termination Act. But I wish it could have gone farther and eliminated more. The bill creates an independent Transportation Adjudication Panel. I fear that this ensures that too much of what the ICC does--and who does it--may remain the same. Currently there are three seats for ICC Commissioners and two are vacant. The adjudication panel created by this bill would consist of three members, and ``On the effective date * * * the members of the Interstate Commerce Commission then serving unexpired terms shall become members of the panel.'' It also allows staff of the current commissioners to transfer. Are we just changing the name on the door? I would prefer that this panel did not exist and remaining essential regulatory issues be folded into the Department of Transportation. Also this bill allows rail merger issues to be reviewed by the Transportation Adjudication Panel. I would also prefer that this function be performed by the Department of Justice, which handles mergers for all other industries. The administration has stated that the President will likely veto this legislation because it ``renam[es] the ICC and mov[es] its most burdensome regulatory elements to a new Federal entity.'' In my view, there is truth to this. Mr. Chairman, I wish our knife were sharper, and I hope it will be as we cut in the future. I urge a ``yes'' vote on this bill.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, let me say first of all that this bill has everything to do with the truth. You know, despite its importance, the debt held by the public is not the most familiar measure that we have in the Federal debt. That distinction belongs to the debt subject to the debt limit often referred to as the gross Federal debt. The gross Federal debt is now $4.9 trillion--$3.5 trillion is debt, marketable debt, that we owe to the public and $1.4 trillion is the debt owed to the trust funds. [[Page H 12235]] Now, the President has effectively declared that he will not abide by congressional oversight of how much the Federal Government can borrow. Since the founding of this country, Congress has had the authority over this Government's ability to issue more debt. Prior to the First World War, Congress approved every debt issuance. Since that time, the Second Liberty Bond Act has allowed Treasury to borrow up to a certain limit set by Congress. Tomorrow, Treasury will effectively overcome the statutory limit, making a mockery of the people's control over the Federal borrowing and, in large, the Federal debt. The manner in which this has been done, I think, is insidious. Treasury will now begin to disinvest the trust funds. This means they will begin to tear up the IOU's that bear interest. But here is the point I am trying to make: In taking such action, the President is increasing the public debt of this country without the authority of Congress. The first to go is going to be the thrift savings of Federal employees. Next will be the retirement trust fund. The precedent that is now being set by this President would allow a future President to say that the precedent was set in 1995 and now we can go into the Medicare trust fund, now we can go into the Social Security trust fund. The fact is that from now on, if we allow this to happen and do not pass this bill, Presidents will be able to add more than $1 trillion to our existing debt without the review or consent of Congress. There is only one way to stop this scheme and return to the Congress and the citizens of this country authority over the debt issuance of this Government. That is to pass H.R. 2621, which will make it against the law for the Treasury to further destroy the trust funds through this disinvestment process. In fact, we need to develop policies to have the major trust funds invest in marketable Treasury securities. If we stand by, then the President can add $200 billion per year to our national debt for the next 5 years. I have spoken many times of the need to rein in our national debt. This bill is vital to accomplishing our goal of returning America to fiscal stability. I urge support of H.R. 2621. I hope this Congress will do it. We need to develop policies that protect those trust funds.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, let us be clear what the President is doing. The President is planning on simply making a ledger entry that some portion of the $1.4 trillion in Treasury IOU's held in the Federal trust funds is now simply a fictitious cash interest entry instead of a fictitious borrowing entry. This allows Treasury to increase borrowing from the public by the same amount as the disinvestment or underinvestment. Wednesday, Treasury will be about $20 billion over the debt limit if it goes through with its announced auctions. This overage is going to increase to about $50 billion in early December. Clearly the President will underinvest the G fund and disinvest part of the civil service retirement fund in order to obtain additional borrowing authority. Here is the point. In taking such action, the President is increasing the public debt of this country without the authority of Congress. The President has discovered a way to make his own legislation, to snub his nose at Congress and drive this country deeper into debt. Now there is approximately $20 billion in the so-called G fund, approximately $350 billion in the civil service retirement fund, $440 billion in the Social Security trust fund. Using these three funds alone, the President could increase our marketable debt a trillion dollars or more. This makes a mockery of the people's ability to limit the amount of debt that this Government should issue. We should be looking at a new debt ceiling. Try to urge the President to come to the table and get on with the business of Government.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, if honesty were the high road, too often in this debate we are at a much lower level, traveling the course of what happens to the future of this country. Do we want a balanced budget in 7 years or less or do we not and, if we do, how should we try to change politicians' behavior around to achieve that goal? What we have done in this case is try to say that we are going to use the continuing resolution, that we are going to try to use the temporary increase in the debt ceiling, to change what politicians have been doing since the 1920's, and we are actually in some areas going to cut some of the funds that have been going into some of those discretionary programs. In Medicare, it is a farce. It comes as a strong untruth between what the President and the Democrats in the Senate have already suggested of the changes and where we end up with Medicare reform.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, through you to the chairman and the ranking member of the Committee on Ways and Means, would not it be interesting if the President decides to go into these trust funds for disinvestment, and the people of the United States find out that there is no money in these trust funds, that they are void of the kind of cash that a lot of people imagine, and it is only a bookkeeping, an accounting entry? You know, I think if all the people of the United States knew that in these trust funds there was little, if any, money, they would say, ``Hey, Congress, enough is enough. Get on the ball. Balance the budget, do not wait 7 years, do it in much less time, because our future is at stake.'' You know, we hear comments about all of the add-ons on this bill. I for one do not think those add-ons should be on this bill. But is it not interesting, for the last 12 years the Democrats have had the Gephardt rule, rule 41, so they did not have to vote directly on increasing the debt ceiling and said, ``Look, we are just going to automatically increase that every time we pass a budget resolution that is greater than the amount that we have coming in in revenues; therefore it goes up automatically.'' I am concerned that we do not have a reconciliation bill before the President. Let us get that reconciliation bill to the President as quickly as we can. Let us work this weekend, but I took to the Committee on Rules last night language that says let us stop borrowing marketable debt after 2002. We owe it to future generations, our kids and our grandkids.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, the Republicans are faint- hearted. You know, we talk about balancing a budget. We are in the throes now of trying to say in 7 years we will balance the budget of the United States. That means we are going to quit borrowing money from what our kids and our grandkids have not even earned yet. Here is why Republicans are faint-hearted. Number one, we are talking 7 years to do it. Number two, after we finish this 7 years and brag that we have a balanced budget, Mr. Speaker, I wonder if the people of America know that we are still borrowing, in the year 2002, $100 billion from the Social Security Trust Fund and the other trust funds, and yet we see people apologizing. Mr. Speaker, did you know that out of the 7 years, this first year is the easiest spending cut year? And you hear the whining and moaning about the big spending cuts this first year. How do you think we are going to go for the fifth year and sixth year and seventh year if we cannot get through this first year? We have been calling the President of the United States and saying, ``Look, at least agree to balancing this budget in 7 years, even if we continue to borrow $100 billion a year from the trust funds.'' He suggested that maybe 10 years is okay, but yet the budget that he sent to Congress, the budget he sent to Congress does not even balance ever. It continues to overspend $200 billion a year into infinity. Guess, guess how much taxes a child born today is going to pay just to cover his or her share of interest on the public debt if we do not end up balancing the budget. $180,000, that is what, $187,000. That is what is going to be deducted from their paycheck. There is a generation gap. You know, we have environmental checks. We should have a generation gap check for legislation that this body passes. How many more burdens do we want to put on our kids and our grandkids? And it is not just the $4.9 trillion that we have in overspending. Look what we are doing in Medicare. In Medicare, we have now said that we are going to have an unfunded liability, and actuary debt, that amounts to another $5 trillion; social security, we have made promises over what we are going to be bringing in in the FICA tax. There is another $3.2 trillion. Our obligation, now unfunded, to civil service retirees is another half a trillion. Guess what we just did in the last few years? We promised every private pension fund in the country that the Federal Government would make it whole. Mr. Speaker, ladies and gentleman, it is time that we start getting tough. It is time we stopped apologizing and started living within our budget.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, first I would like to ask the previous speaker if I could have that [[Page H 11664]] chart. It is a beautiful chart. It must have taken several dollars to construct that chart. Let me tell you, Mr. Speaker, and our colleagues what is happening with the efforts of the Republicans to reach a balanced budget. In Kemp-Roth in the early 1980s, we talked about reaching a balanced budget and we set out a plan and we failed. In 1986 and 1985, Gramm- Rudman again tried to develop a plan and a proposal to reach a balanced budget and, again, we failed. In 1990 the same thing happened. Now we are talking about a situation where we have increased the spending of this country from $370 billion in 1970 to the $1.5 trillion that we have today. Back in 1970, $370 billion. Today the interest on the public debt is almost that. Last year the interest on the debt that is subject to the debt limit was $330 billion. This Congress, politicians in Washington, Members of the Senate, Members of the House, the White House have found it to their political advantage to spend more money to do things for people, and they have decided that maybe increasing taxes is not so popular so what we have done is expanded our borrowing. Do you know what we are doing when we borrow all this money and go into debt like we are today? We are saying to our kids and our grandkids, we are going to make you pay this back out of earnings and wages that you have not even earned yet, possibly that you have not even had a chance to go through school yet, and yet we are saying to you that our overindulgence today is going to be paid for by your earnings 10, 20, 30, 40, 50 years from now. How do we get to a balanced budget? Well, the debt limit and the vote on increasing the debt limit is not a way to have leverage. It was used in 1985 and 1986. In fact, we have increased the debt limit of this country 77 times since 1940. I mean it has become a way of life. Nobody seems to care. The consequences of that debt are now devastating the kind of economic expansion we could have. We had four individuals from Wall Street down to Washington today. They came down to talk to Members of Congress about what they thought the consequences of not sticking to our guns and not achieving a balanced budget was going to be. They simply said, look, you are halfway through this stream. If you do not stick to your guns, you are going to see the stock market fall. You are going to see the bond market fall, and you are going to see more chaos than if you stick to your guns.

Mr. SMITH of Michigan. Reclaiming my time, Mr. Speaker, that is exactly what we are trying to do. We are trying to use the debt ceiling vote as leverage to force not only the President but those 160 of us, it was not 130, it was 160. We sent the letter to Bob Dole. We sent the letter to Newt Gingrich. We said, look, our interest is in achieving a balanced budget. We know it is going to be difficult. We know it is going to be hard, but here is what we are saying. We are saying we are not going to vote to increase that debt limit unless we get on an absolute glide path to a balanced budget. Now Stan Druckenmiller came down from Wall Street today; James Capra came down from Wall Street; Edward Hyman, ranked the number one economist for each of the last 16 years came down here today, and Kenneth Langone came down here today. Ladies and gentlemen, what they said is, you have got to stick to your guns. If we do not stick to our guns, we are going to perpetually continue to spend and tax and borrow. The question to the American people is, do you want a bigger government with more taxes or do you want a smaller government with fewer taxes? I mean, that is the question. The American people answered it last November. They are now giving us a chance to fulfill that commitment. Go home and ask your constituents that question.

Mr. SMITH of Michigan. I yield to the gentlewoman from Connecticut.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, since my name was invoked by the previous speaker, I would ask unanimous consent that I be allowed to go out of order with my 5 minutes and speak at this time.

Mr. SMITH of Michigan

Mr. SMITH of Michigan. Mr. Speaker, we hear a lot about numbers and figures and procedure and how things move through the House and the Senate and get ultimately signed into law or not signed into law; but I think it is important in this debate over a balanced budget that we not lose sight of our real objectives. The question before the American people, and the American people are going to have to answer this question: Do you want more taxes and a larger government or do you want a smaller government and less taxes? It is hard for politicians to cut spending, whether those politicians are in the White House or in this Chamber or over in the Senate. Members of Congress and the White House have decided that if they do more things for people, if they spend more money on more programs, if they take some pork-barrel projects, the propensity to get reelected is greater. And so that is the tradition that this body has been operating under for the last 40-plus years. In the process of not increasing taxes, we have developed a huge debt for this country, not only the existing debt of $4.9 trillion that is overwhelming, but we have done more than that. We have now made so many promises that the unfunded liability for Medicare, for example, is another $5 trillion. The unfunded liability or actuary debt for social security is another $3.2 trillion. The promises we have made and not funded for civil service retirees is another half a trillion dollars. Now recently we have promised every private pension fund that the Federal Government will stand behind that pension fund and make it solvent. Our goal of what we have called the debt limit coalition, 160 members that have sent a letter to the President, we have also written the Speaker, Newt Gingrich; we have written Bob Dole; we say we think balancing the budget by 2002 or sooner is so important that we are not going to vote to increase the debt ceiling. I mean, that is to give us, some of ourselves, the intestinal fortitude. It is to put pressure on the White House to come to this conclusion. The Federal Government last year borrowed approximately 41 percent of all of the money loaned out in the United States. Can you imagine what would happen to interest rates if the extra demand of Federal Government borrowing was not there? Can you imagine what the additional funds in the economy for people that want to buy a car or build a home or go to college or, more importantly, expand their business? Can you imagine what a great stimulus that would be? Alan Greenspan, the chairman of the Federal Reserve, suggested that if we have got the wherewithal to end up balancing this budget, we have got such a strong underlying economy in the United States we would see jobs and the economy take off like has never happened before. That is why this body has got to stick to its guns and insist in the reconciliation bill and in these appropriation bills that we end up on the glide path to a balance budget. Jim Glassman in today's Washington Post said that default just is not a great fear, many Wall Streeters say, and he quotes Mickey Levy who says the market recognizes any default would have nothing to do with economic soundness and everything to do with political game-playing. He says that the meeting that we have arranged tomorrow with Mr. Druckenmiller and Mr. Langone, who will be speaking at 10 a.m. to a joint meeting of the House and Senate, be available to the press at 11:00, be available at Heritage for a public forum at 12 o'clock and another press luncheon at 1 o'clock, are going to be saying that, look, what is important is the goal that we stick to our guns, that we ultimately have a balanced budget. I would like everybody listening and my colleagues in the House and the Senate to attend that 10 a.m. meeting tomorrow morning. It is important for our future. We are concerned with the numbers. We are concerned with achieving what is good for America, our kids, and our grandkids, and it is not leaving them a debt and a mortgage. It is ending up with a balanced budget and a strong economy. Mr. Speaker, I am including at this point in the Record at statement by Jim Glassman and also a scenario that I have written on the current debt ceiling.