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returned to the economic tyranny which its founders found unbearable 200 years ago.
Finally, I would add that an amendment to the Constitution is necessary to produce a balanced budget. Despite public clamoring, Congress has proved unable to voluntarily balance the budget. Budgetary deficits, which have required a simple majority for approval, have been far too irresponsibly engaged in. But as shown above, deficits are destructive. A constitutional amendment will not prevent any further deficit, but it will raise the threshold to a degree which will necessitate circumspection and caution before we engage in the dangerous course.
As important as balancing the budget is, it is not enough by itself. One way to eliminate a budget deficit is to match huge levels of expenditure with huge levels of taxation. We have to put a lid on the absolute size of big Government. It is for this purpose that I am sponsoring Senate Joint Resolution 9, an amendment to limit the level of Federal expenditures.
The American people are demanding tax relief and limited Government. Government spending has caused them to lose control of their economic destiny. Federal spending has been increasing at an incredible rate. In the last 15 years, the budget has grown 400 percent. In the last 2 years alone, the Government has increased its outlays by $100 billion. The President's estimate of fical 1979 outlays exceeds the actual fiscal 1978 figure by $42.6 billion.
Unless fundamental changes are made, Government spending at all levels will take 54 cents of every dollar earned by 1984. In 1976, Americans paid $486 billion in taxes: About $17 billion more than they spend on food, clothing, and housing combined. Who is getting all these tax dollars? Some 81.3 million people, including Government employees, now receive tax dollars for support compared to the 70.2 million people employed in the private sector who provide these revenues.
The enormous expense of big Government is diverting a great deal of valuable capital and labor away from private industry, which must grow faster than Government in order to provide the needed tax revenues. These high taxes penalize productivity, stifle incentive, and threaten our freedom.
Not only is the burden imposed by big Government enormous and increasing, but presently there is a natural tendency for it to continue so. We in the Congress are confronted each year with a panoply of needs, desires, and emotional claims which, in vacuo, are very attractive, especially to us as politicians whose business it is to please constituencies. But many attractive parts do not necessarily add up to an attractive whole. Having shown little inclination or ability to control the parts, we in Congress ought reasonably to act to control the whole.
There is little justification for many of big Government's expenditures. The Government has begun providing services of which there is little evidence that Government is the natural or even a reasonable supplier. There is a need, if not for cutting back, at least for holding the line on the budget.
I believe strongly, as economist Milton Friedman has said, that:
It is desirable for the people to limit their Government's budget, to decide how much in total they are willing to pay for their Government *** The problem we face is that there is a fundamental defect in our political and Constitutional structure. The fundamental defect is that we have no means whereby the public
at large ever gets to vote on the total budget of the Government * * * The purpose of-expenditure- limitation is to remedy that defect. It will enable us to say to the legislature, “We assign you a budget. Now it is your job to spend that in the most effective way."
George Washington said that "the Government is the servant and not the master of the people.” But if control of the fruits of the people's labor is in the hands of Government, then Government is indeed the master.
Limiting the range of choices made by Government is not the only reason for the amendment. Each of us must plan to save over our lifetime to provide for emergencies and for retirement. No one in private or public life can make a rational plan if he does not have any way of knowing how much he will pay in taxes in future years of work and in retirement. An amendment limiting Government spending provides information about the future, providing more opportunities to plan.
Another of the great advantages to be achieved through an amendment limiting Federal expenditures would be a greater amount of competition among the various proposals for funding. With a firmly established Federal budget only the most advantageous spending programs could survive. Under such a situation special interest groups would not only lobby for funding, but would also be forced to help find areas in the budget that could be trimmed to free up necessary funds. With a firm limit on spending and many proposals clamoring for funding, it would be more in the political interests of Congress, trying to please as many groups seeking funding as possible, to be sure that all funds are being used efficiently. At present there is much waste in the Federal system; many funded programs are of dubious value. There is a lot of fat that could be and ought to be cut. The amendment I am sponsoring would force us to do so.
The sheer bulk of the cost of American Government is unbearable in the burden it imposes on the taxpayer; it represents a huge amount of waste and inefficiency; and it is an infringement upon the basic freedoms of Americans: they pay for it without having voted for it. It is our duty as legislators to limit this cost.
I want to emphasize that it is more important that Congress take some action to limit the deficit and the cost of Government than it is which proposal is actually followed. Responding to the widespread nature of public sentiment on this issue, Congress has a rare opportunity for solidarity of action which I welcome. However, in defense of Senate Joint Resolution 9 and Senate Joint Resolution 10, the two amendments I am sponsoring, I should like to point out that these are drafted in a style of language befitting amendments to the U.S. Federal Constitution, and that they are clear and straightforward enough to be easily explained to and gain the support of voters.
There is a further advantage to the particular arrangement of Senate Joint Resolution 9. By basing the allowable expenditures on the average of national income in the preceding 3 years, this amendment would provide additional impetus to Congress to curtail inflation.
The following table shows the spending limit that would occur under the amendment with different inflation rates. Mr. Chairman, I ask that it be printed in the record at this point in my remarks.
Senator McCLURE. You will note that these figures assume zero percent real increase in national income.
The last column of the chart clearly shows that the lower the rate of inflation, the more money Congress can spend-in real terms. This should act as a beautiful incentive to induce a liberal Congress with social spending programs on their minds to become more fiscally responsible.
In closing, I refer to the 1979 Economic Report of the Joint Economic Committee. In recommendations Nos. 2 and 3 this report calls for a decrease in the deficit and in the level of Federal outlays in relation to the GNP. That this is the first consensus report in 20 years illustrates the movement within the majority toward more conservative fiscal policies.
Interestingly enough, the consensus report is very similar to past minority reports. It is my hope that this movement represents sincere convictions and not merely an effort to placate the public; I believe that it does, and I would hope the Members of Congress will take Seriously the bipartisan recommendations of the Joint Economic Committee, who have studied the economy and made these conclusions,
It is time that the Congress adopt a responsible fiscal policy and the only way to insure this is by amending the Constitution to require that it be done. We have too long been mere politicians, catering to individual special interests: shortsightedly funding anything and everything in order to ingratiate ourselves with constituencies; the taxpayers are fed up with us, with our saying one thing and doing another. Each Senator, each Congressman, going blindly forward taxing and spending for every program that comes along with the citizens' money.
It has been special interest politics at the worst and the people aren't going to stand for it much longer. The fact that the legislature of my own State of Idaho and 29 other States have called for a Constitutional Convention to enact a balanced budget amendment is proof of that. It is about time Congress got busy doing what the people are asking of them.
In urging support of a balanced budget amendment ending limitation on spending, I am asking a difficult task of the Members of Congress; that is, that they put self-serving special interest politics aside. and look instead for one great moment in their lives: to the overall good of our Nation.
Thank you, Mr. Chairman.
Senator Bays. Thank you very much, Senator McClure. We appreciate your being with us this morning, and your interest in this particular subject.
Senator THURMOND. Senator, we are delighted to have you with us. I want to commend you for an excellent statement. I also wish to congratulate you for taking the position you have.
A constitutional amendment requiring a balanced Federal budget would place restraints on the Government but since we have only balanced the budget one time in the last 19 years and eight times in the last 49 years, doesn't it seem that voluntary restraints have failed and that now we need a constitutional amendment to bring about a balanced budget?
Senator McCLURE. Senator Thurmond, I agree with you. I cosponsored and helped work for the passage of the Budget Control Act that set up the Budget Committee and the Congressional Budget Office. I served on that committee for the first 3 years of its existence because I thought it gave us a chance to do what ought to be done. I don't mean to condemn the actions of that committee. As a former member of it, I know how difficult the task is, and how hard they have worked; but even that new statutory procedure has not achieved what we set out to do.
I think it is obvious that if we are going to get to a balanced budget, it will require a constitutional amendment; at least an amendment that will raise the threshold over which we must go to unbalance the budget. A simple majority, obviously, is too easy.
Senator THURMOND. The people of my State are strongly in favor of a constitutional amendment. The biggest newspaper in the State has advocated that. They came up here and had a big delegation, I believe year before last, on that subject. I think this is a matter that is on the minds of the people all over the Nation. I believe the polls show that people favor a balanced budget. I realize it is going to put restraints, but that is what we will have to have so we can cut down. It will cause some loss of employment, but after all, it seems to me that we have got to operate in a fiscally responsible way. We just can't continue like we have been going.
I introduced a bill that would require a balanced budget and, after 5 years, begin making a payment on the debt, too. I think we ought to do both, balance the budget and then after a few years, say 5 years, begin making payment on the debt.
How do you feel about that?
Senator McCLURE. Senator Thurmond, I think it is desirable to reduce the debt. I guess I would be satisfied if we could just stop adding to it. If in good years we could find it possible to do that, I think that would be most desirable. I am not sure that I would want to mandate that it be done in every year because there may be some years where that would be counterproductive.
Incidentally, I might just say that in regard to whether or not the deficit is a stimulus that has only good effects, the idea being that we must have a deficit, that if we don't have it, unemployment will rise, simply is to say that we are willing to pay the price of more full employment now in exchange for larger unemployment later, because certainly there will be a balancing of those books at some point.
Senator THURMOND. We can't keep on like we are going. No good businessman in this country today would operate his business, and no corporation would, in the manner that the Federal Government now operates.
Senator McClure. We can't do it in our personal affairs; we certainly can't do it in our business affairs, and no other unit of government can do it. Why do we think the Federal Government can do it?
Senator THURMOND. No government can do it, whether it is local, State, or Federal. We can't keep on like we are going. I think the time has come where action is demanded, and I sincerely hope that the Congress will see fit to go ahead and submit a constitutional amendment. I believe about 30 States have now petitioned Congress; 26 States require balanced budgets. South Carolina is one of these. It requires a balanced budget by statute and also by constitutional provision. We keep our budget balanced. We can borrow money today
uth Carolina cheaper than the Federal Government can. That is a ridiculous situation, with all the power the great Federal Government has, being required to pay more interest to borrow money than one State.
It just doesn't make sense. I can understand why the lenders would lend South Carolina money at a lower rate than they would the Federal Government because we have a triple A rating; we keep out budgets balanced; we pay our debts; and I think people trust that kind of a government.
Again, I want to congratulate you for your appearance here, and it is an excellent statement.
Senator McClure. Thank you very much, Senator.
Senator Bayh. Senator Heflin asked that his opening statement be placed in the record at the beginning of the proceedings. Without objection, so ordered.
I appreciate your statement, Senator McClure, and your leadership in trying to balance the budget of the United States. I also appreciate the leadership that you provided when you were on the Budget Committee. Little did I know that I would become a member of that committee and have to try to step into your shoes. The task has been very difficult.
Your comment, that it is more important that Congress take some action to limit the deficit and the cost of government than it is which proposal is actually followed, interested me greatly.
We are both responding to the widespread nature of public sentiment on this issue. At this time, Congress has a rare opportunity for solidarity of action, which I welcome, but with the widespread number of balance the budget amendments here, how we reach that solidarity is the important question.
Senator McCLURE. Of course, I would welcome it if the committee and the Congress would decide that Senate Joint Resolutions 9 and 10 are the appropriate vehicles and we would all be solid behind those, but obviously that is not what I am saying. I am saying, let's find the vehicle by which we will submit to the States a constitutional amendment requiring a balanced budget and/or a limitation on expenditures. Let's come to an agreement now, because we have the