I did have a chance to meet with her in my office for a little over an hour. What I understood her to say when I spoke personally with her was that the 1974 Act was in some significant respects a useful attempt to impose organization, and I have found when I read it as an academic exercise that it makes sense and if you were to follow it-for example, one of the things that it would have had us do is pass all our appropriations bills by June 30, but of course we are not doing that this year, we don't ever do it, and we invent a budget process on an ad hoc basis every year. That is why we need some enforcement. I also agree with you that the absence of entitlement control is part of June O'Neill's pitch, it is part of what I have observed here, and therefore part of the reforms I am proposing and probably why you like the second half. Mr. BEILENSON. That is the big part of your proposal, really, changing everything from entitlements to annual appropriations with the exception of the two programs. Mr. Cox. When I speak of pork barrel, it is probably with the bias of someone who in my first few terms served on what was then the Public Works and Transportation Committee. Mr. BEILENSON. Then you do know more about it than I. Mr. Cox. We were trained in rhetoric to know that road building was not pork barrel, and so when we think of pork barrel, we think of all these other entitlement programs, but I will clean up my rhetoric so that I don't make that mistake anymore. I also would agree with you that the congressional budget resolution is relatively broad brush and does not get mired in such detail that it prevents us from agreeing with each other, but the problem is that it does prevent us in many respects from agreeing with the President, and it is the President who starts off this process with a budget that under the terms of the 1974 Act mandatorily operates at an incredible level of detail. All of that detail is misplaced. The Budget Process Reform Act requires the President to provide that level of detail and CBO will tell us that they need it from the administration and everybody in the agency needs it and so on, but it ought to come shortly after rather than before the passage of this broad brush resolution so that we can all say honestly to our constituents that we didn't vote for those numbers because the President hasn't even produced them yet and we might have our own vastly different ideas. The question is whether we can all live within this large umbrella. Mr. BEILENSON. One final comment. I thank you. In a sense, I think we have that, thanks to you folks. We have a 7-year budget plan. It is a broad-based broad stroke. Mr. Cox. We just don't have the President onboard. Mr. BEILENSON. I understand. But we are all going to be forced to live within it one way or another, perhaps pushing a little bit here or there, so I think we have got it, and future budgets are going to have to work within it. They are going to have to. I think this process is working a lot better than people give it credit for because we have used it to get where you all wanted to go-although if I might say so, I don't think you went about it quite so well and so equitably as we ought to; I think our alternative did it in a more sensible and decent way, but it got only 100 votes on the floor. But because you all have had the political will and courage thus far, we are working toward a balanced budget. I hope you continue to have it because it is going to mainly involve-whatever else we talk about, it is mainly going to involve slowing the rate of growth of the health care programs. That is the key to budget deficit reduction, even though lots of other things have to be done; the big chunk of the money is there and the savings have to be there. So long as you all have the political will and the courage, then it is going to happen. That has always been what is necessary more than a particular change in the process. We have enough of a process to force things to happen once someone has the will to impose it upon that process. I don't think you have to worry too much about the process; I think you have to worry about the will and the courage. I think you guys-with priorities a little misplaced maybe have it at the moment, and that is what is going to get us down to zero or close to it, and you deserve a lot of credit for it. Mr. Cox. If I might Mr. BEILENSON. If you didn't have this process, you wouldn't be able to do it. Mr. Cox. If we didn't have the base closure process, would we have closed all these bases? Mr. BEILENSON. No, I am not sure Mr. Cox. I think in some way the process does make a difference; you end up cutting more spending than otherwise you would have been able to. Mr. BEILENSON. The problem with the base closing process, which is terrific-and I supported it from the beginning is that it gives away a lot of power of ours which I don't think you can really do here. You are not really making an analogy anyway because you are not proposing anything like it in your proposal. You can't give away the spending the way Mr. Goss. I don't wish to interject unnecessarily, but we have many witnesses and not much time. Mr. BEILENSON. We are reaching some agreement here. Mr. Goss. You are, indeed. I wanted to give the others a chance as well. Mr. Chairman? Mr. SOLOMON. Thank you very much. Mr. Linder and I were in a conference over here. Chris, first of all, I want to commend you. You have certainly been a leader in this issue. You know what the problems are, and the budget process is deformed; it doesn't work. If we were a business, we would go bankrupt following these rules. But one thing that caught my attention was, and I did not write it down, because I was called out of the room. You mentioned that because of budget act waivers that were given throughout this 15year period that we have increased the deficit by $300 billion. Was that true? Would you just repeat that. Mr. Cox. The precise number is during the past 15 years overbudget spending, that is actual compared to budget, was more than $300 billion. Mr. SOLOMON. And that was caused by this Rules Committee because this Rules Committee, as you know, in two-thirds of the rules over the last 2 years this Rules Committee has given budget act waivers, and that is the only way they have passed the budget limitations. We need to accomplish something to prevent this committee from doing that. We have committed-we have prevented it for the last 6 months for any large amount of monies that are involved, and we have stuck to that. Mr. BEILENSON. Would the gentleman yield for a moment? Mr. BEILENSON. Only because I don't want us to proceed on erroneous presumptions or assumptions. I think, although I am not sure, because I don't want to put words in your mouth, the excess spending came almost entirely in entitlement programs. Mr. Cox. No, no, that figure is appropriated spending. Mr. BEILENSON. Appropriations? Mr. Cox. It is over a 15-year period of time. Mr. BEILENSON. It is over $20 billion a year, out of $400 or $500 billion. Mr. SOLOMON. I know the gentleman is right because we have researched that. Mr. BEILENSON. I am not saying he is not right. I am sorry, I didn't mean to get back into this. According to June O'Neill's testimony, it came from changes in economic and other conditions and it wasn't because of a lack of trying to enforce the rules here, I think. Anyway Mr. SOLOMON. At any rate, Chris, we want to thank you for your leadership in this and hopefully we are going to come up with a remedy that will make this system work. Mr. Cox. I don't know if you were in the room when I thanked the Rules Committee for what you are doing because this is now squarely within your jurisdiction and you have taken the lead on it, and have done so relatively early in the 104th Congress. We finished our contract agenda, we are just now barely on to the rest of everything else, and this is one of the first things you have taken up. I think it is vitally important because if we can put it in place this year we might actually have a chance of a rational budget process in an election year next year when we are going to elect a new President. Every Member of the House is up. If we don't get this process better organized this year, then next year it is going to be far, far worse than anything that happens this fall. Mr. Goss. Thank you. Judge Pryce. Ms. PRYCE. Thank you. Chris, your breadth of knowledge is amazing to me, but through your experiences in Washington you really know a lot about this, and I for one am a Member who doesn't, and I appreciate your testimony and some of the very fine ideas that you have. I don't really have any questions, but I appreciate you trying to assist us here. Mr. Goss. Thank you very much. If the subcommittee has, either subcommittee has further questions, I presume you will assist us. Mr. Cox. Of course. Of course. Mr. Goss. Thank you. Mr. Goss. Mr. Peter Visclosky, we welcome you, the author of H.R. 1516, the Deficit Elimination Act. We will accept your written testimony for the record, open for comments. STATEMENT OF HON. PETER J. VISCLOSKY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF INDIANA Mr. VISCLOSKY. I appreciate that, Mr. Chairman. What I would like to do is to follow up on the conversation that was begun by Mr. Cox's testimony. I have always supported a balanced budget. I have always generically been opposed to new enforcement mechanisms on the theory that there is nothing in the statutes, regulations, or the Constitution of the United States that prohibits us from acting in a financially responsible fashion. Several things have given me pause, however. One is the CBO report of this past January that said we have good news and bad news, and that the good news is this year's deficit will be lower than last year's, third year in a row, first time since Harry Truman was President; the bad news is, by the way, it is going to be $14 billion higher than we thought in August, thanks to the Federal Reserve. I guess after being in this institution for 10 years, if you needed one last piece of evidence that whatever is going to go wrong in the budget debate was going to go wrong, that was it for me. Second, I think that President Clinton has received absolutely no credit and abject criticism for doing a very good job on deficit reduction during his first 2 years in office by reducing the annualized deficit by nearly a third. My second disappointment this year in the month of February is that he essentially stalled out on his efforts. The third concern I have is contained in the budget resolution that we are operating under today. While I appreciate the fact that there is a plan in place, there is a path to a balanced budget in the year 2002, it is back loaded, and during the first 2 years you see the annualized deficit reduced by $800 million. In the 102d Congress, Mr. Panetta introduced the legislation that is before the committee today, and I was a cosponsor of that. In the 103d Congress, Mr. Penny introduced the same legislation that is before the committee today. This year, I introduced it, along with Mr. Stenholm and a number of my other colleagues. I would have to say that the proposal before you is wildly unpopular on both sides of the aisle. I say that because everything, everybody and every program, is potentially at risk. I don't think that we can abdicate our responsibility to make decisions, specific decisions on all of the programs contained in the budget, whether they are discretionary or whether they are mandatory. On the other hand, if we continue to fail in the final analysis, at midnight on the last day of that fiscal year, I do now subscribe not only intellectually but emotionally to the idea that we need an enforcement mechanism. As an appropriator, I must tell you that I think the Appropriations Committee has acted responsibly. If you look at the figure, assuming Mr. Cox is correct on the figure that there was, because of waivers with the Appropriation Act an additional $300 billion of spending over 15 years, that is $20 billion a year, we have been operating with annualized deficits in excess of $200 billion a year. I am not suggesting that this isn't part of the problem. Every dollar counts. But somewhere else there is 21-204-95 · 4 another $180 billion lurking out there and we have got to focus on that. The proposal before you essentially says if there is an agreement on targets between the President and the Congress we will have to abide by those targets, and we will further subdivide that so that people are forced to act responsibly within their allocations; sequestration would take place on a committee-by-committee basis. If there is no agreement between the President and the Congress, you would have comprehensive sequestration that would include tax increases as well as spending reductions on a ratio of $1 of tax increases to $4 of spending reductions. From the reaction of at least one of the people on the panel, I find that again wildly unpopular. I appreciate that. When I talk to many of my colleagues on my side of the aisle, the fact that programs such as Medicare and Social Security would also be included is just as unpopular. My point to you is we should not get to midnight on September 30 of any year and not have made wise, rational decisions on mandatory and discretionary programs. We should have done that. And the point of the exercise here is to make it so unpalatable to be fiscally irresponsible that we would force ourselves on an annual basis to make these types of very difficult decisions that are before us in this Congress. So, again, I am under no illusions and I am not subscribing to the idea that we need a tax increase. That is simply one-fifth of the penalty we would all have to pay if we did not act responsibly. There is also nothing in the Enforcement Act that would prohibit tax cuts or, if you will, new spending for investment, but on either side of the ledger, they would also have to be paid for. With that, I would be happy to take any questions or enter into a dialogue with members of the committee and would express my deep appreciation for the opportunity to be able to testify today. [Mr. Visclosky's prepared statement follows:] PREPARED STATEMENT OF HON. PETER J. VISCLOSKY, A REPRESENTATIVE IN Mr. Chairman: I would like to thank you and the other members of the committee for the opportunity to testify today regarding needed budget process reforms. I am here this morning because I believe that balancing the budget is our moral responsibility as Members of Congress. Nations, like families, have to plan for the future. As a Nation, we have failed to plan. We have borrowed to achieve a false sense of security today, leaving the bills for our children to pay tomorrow. In 1994, alone, we spent $203 billion more than we had. This means that $783 was borrowed from every single person in America. Over the past 20 years, the average budget deficit has grown $36 billion in the 1970's to $156 billion in the 1980's to the unprecedented $248 billion hole we have dug for ourselves so far in the 1990's. This irresponsible spending has resulted in a money pit so deep that this year's interest payment ($213 billion) will be larger than this year's deficit ($176 billion). I have always supported a balanced budget, and the responsibility to achieve this is not one that I take lightly. Over the years, I have frequently taken the political road less traveled in the name of deficit reduction. When I am in northwest Indiana, I tell my constituents that I am opposed to cutting their taxes because it would undermine serious efforts to reduce the deficit. I was one of very few Democrats to support the rescissions bills this year because I believe we need to start making tough spending decisions now. In January, I supported a constitutional amendment to balance the budget for the first time because I finally lost faith that the Congress has the resolve to balance the budget without being required to do so. Regardless of the amendment's defeat in the Senate, we must not give up the fight for a balanced budget. We have the power to do this without a constitutional |