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S. Hrg. 104-487
CONCURRENT RESOLUTION ON THE
BUDGET FOR FISCAL YEAR
1997
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Concurrent Resolution on the Budget
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BEFORE THE
COMMITTEE ON THE BUDGET
UNITED STATES SENATE
ONE HUNDRED FOURTH CONGRESS
SECOND SESSION
March 1996—THE CURRENT STATE OF THE ECONOMY, THE ECO-
6,
NOMIC OUTLOOK AND THE ROLE THAT PRUDENT FISCAL POLICY
CAN PLAY IN ENHANCING LONG-TERM PROSPECTS
March 199&—IMMIGRATION AND PUBLIC WELFARE BENEFITS
12.
March 1996—BUDGET AND ECONOMIC IMPLICATIONS OF ALTER-
14,
NATIVE SPECTRUM USE POLICIES
March 20, 1996—THE PRESIDENT'S FISCAL YEAR 1997 BUDGET
April 18, 1996—THE ECONOMIC OUTLOOK FOR FISCAL YEARS 1997-2006
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Printed for the use of the Committee on the Budget
S. Hrg. 104-487
CONCURRENT RESOLUTION ON THE
BUDGET FOR FISCAL YEAR
1997
HEARINGS
BEFORE THE
COMMITTEE ON THE BUDGET
UNITED STATES SENATE
ONE HUNDRED FOURTH CONGRESS
SECOND SESSION
March 1996—THE CURRENT STATE OF THE ECONOMY, THE ECO-
6,
NOMIC OUTLOOK AND THE ROLE THAT PRUDENT FISCAL POUCY
CAN PLAY IN ENHANCING LONG-TERM PROSPECTS
March 1996—IMMIGRATION AND PUBLIC WELFARE BENEFITS
12,
March 1996—BUDGET AND ECONOMIC IMPLICATIONS OF ALTER-
14,
NATIVE SPECTRUM USE POLICIES
March 20, 1996—THE PRESIDENTS FISCAL YEAR 1997 BUDGET
April 18, 1996—THE ECONOMIC OUTLOOK FOR FISCAL YEARS 1997-2006
Printed for the use of the Committee on the Budget
U.S. GOVERNMENT PRINTING OFFICE
25-,171a: WASHINGTON 1996
:
ForsalebytheU.S.GovernmentPrintingOffice
SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402
ISBN 0-16-052867-4
COMMITTEE ON THE BUDGET
PETE V DOMENICI, New Mexico. Chairman
CHARLES E. GRASSLEY. Iowa J. JAMES EXON. Nebraska
DON NICKLES. Oklahoma ERNEST F. HOLLINGS. South Carolina
PHIL GRAMM. Texas J. BENNETT JOHNSTON, Louisiana
CHRISTOPHER S. BOND. Missouri FRANK R. LAUTENBERG, New Jersey
TRENT LOTT, Mississippi PAUL SIMON. Illinois
HANK BROWN. Colorado KENT CONRAD. North Dakota
SLADE GORTON. Washington CHRISTOPHER J. DODD. Connecticut
JUDD GREGG."New Hampshire PAUL S. SARBANES, Maryland
OLYMPIA J. SNOWE. Maine BARBARA BOXER. California
SPENCER ABRAHAM. Michigan PATTY MURRAY. Washington
BILL FRIST. Tennessee ROD WYDEN. Oregon
ROD GRAMS. Minnesota
G. William Hoaoland. StaffDirector
William G. Dauster, Democratic ChiefofStaffand ChiefCounsel
(II)
CONTENTS
HEARINGS
— Page
March 6, 1996 The Current State of the Economy, The Economic Outlook,
and The Role that Prudent Fiscal Policy Can Play in Enhancing Long-
Term Prospec—ts 1
March 12, 1996—Immigration and Public Welfare Benefits 69
March 14, 1996 Budget and Economic Implications of Alternative Spectrum
Use Policies 149
March 20. 1996—The President's Fiscal Year 1997 Budget 253
April 18, 1996—The Economic Outlook for Fiscal Years 1997-2006 327
STATEMENTS BY COMMITTEE MEMBERS
Chairman Domenici 1, 69, 149, 253, 306, 327
Senator Abraham 76
Senator Boxer 144, 251
Senator Conrad 151
Senator Dodd 398
Senator Exon 2, 73, 270, 328
Senator Frist 76,289
Senator Grams 402
Senator Gramm 152
Senator Grassley 269
Senator Lautenberg 39
Senator Simon 77
Senator Snowe 42, 250, 270, 311, 403
WITNESSES
Baily, Martin, Member, Council of Economic Advisers 23
Borjas, George J., Professor of Public Policy, John F. Kennedy School of
Crovemment, Harvard University 110
NM
Burgess, Mike, General Manager, KOB-TV, Albuquerque, 194
Capra, James R., Capra Asset Management 6
Darner, Karen, Virginia House of Delegates, on behalfofNational Conference
ofState Legislatures 128
Hausman, Jerry, MacDonald Professor of Economics, Massachusetts Institute
ofTechnology 219
Hazlett, Thomas W., Visiting Scholar, American Enterprise Institute, and
Director, Program on Telecommunications Policy, University of California,
Davis 227
Irving, Larry, Assistant Secretary for Communications and Information, Unit-
ed States Department ofCommerce 175
Levy, Mickey D., Senior Vice President, Chief Financial Economist,
NationsBanc Capital Markets, Inc 11
Martin, David A., General Counsel, Immigration and Naturalization Service,
U.S. Department of Justice, accompanied by Toni Marwitz, Visa Officer,
U.S. Department of State and Lavinia Limon, Director, Office of Refugee
Resettlement, U.S. Department of Health and Human Services 78
Moore, David H., Senior Analyst, Congressional Budget Office; accompanied
by Perry Beider, Natural Resources and Commerce Division, Congressional
Budget Office 153
OT^eilf, June E., Director, Congressional Budget Office 332
Rivlin, Alice M., Director, Office ofManagement and Budget 254
(III)
Page
Shrier. Howard, President-elect, Nebraska Broadcasters Association 197
Tajima, Mark, Analyst, Los Angeles County ChiefAdministrative Office 119
ADDITIONAL MATERIAL
—
Questions and answers Committee members to witnesses, written:
Dr. Rivlin 312
Statement:
Becerra, Xavier, Congressman (D-CA) 145
Articles:
Free the Airwaves — 234
Spectrum Auctions Only a First Step 238
(IV)
THE CURRENT STATE OF THE ECONOMY, THE
ECONOMIC OUTLOOK, AND THE ROLE THAT
PRUDENT FISCAL POLICY CAN PLAY IN EN-
HANCING LONG-TERM PROSPECTS
WEDNESDAY, MARCH 1996
6,
U.S. Senate,
Committee on the Budget,
Washington, DC.
The committee met, pursuant to notice, at 10:06 a.m., in room
SD-608, Dirksen Senate OfRce Building, Hon. Pete V. Domenici
(chairman of the committee) presiding.
Present: Senators Domenici, Grasslev, Brown, Gorton, Snowe,
Abraham, Exon, Lautenberg, Simon, and Conrad.
Staff present: G. William Hoagland, staff director; and Amy
Smith, cnief economist.
For the minority: William G. Dauster, democratic chief of staff
and chief counsel; and Jim Klumpner, chief economist.
OPENING STATEMENT OF CHAIRMAN DOMENICI
Chairman DoMENlCl. Cein we get started? Senator Simon, I have
been told by Senator Exon's staff that we ought to go ahead and
proceed.
Senator Simon. Fine.
Chairman Domenici. What I would like to do is get to the wit-
nesses and let everybody get their opening remarks as they in-
quire. Rather than have long opening remarks from everyone, I
thought maybe Senator Exon and I could give a brief opening and
then go to the witnesses. Then with each of you, as we do it in
order of arrival, as the distinguished Senator from Nebraska has
regularly insisted
Senator SiMON. I am even willing to waive your statement and
Senator Exon's. [Laughter.]
Senator ExON. I object.
Chairman DOMENICI. Mine is very, very brief. Senator Exon, now
that you have arrived, for the record and for you and so you can
dispense this to your members and us to ours, obviously there is
some flux with reference to the schedule for the next couple of
months, depending upon the outcome of the debt limit extension
and the omnibus appropriation bill. We were scheduled to hear Mr.
Greenspan tomorrow. However, understand that because he has
I
not been officially reconfirmed, he has advised the committee that
he cannot testify until he is reconfirmed, or that he won't. There-
CD
fore, the hearing for tomorrow on Dr. Greenspan has been post-
poned.
Two hearings have been scheduled for next week: on the 12th,
which is Tuesday, the budgetary impact of pubUc assistance bene-
fits for non-citizens, and on Thursday, March 14, the budget impact
of alternative spectrum option proposals. In both of those cases, as
we work our way through negotiations, those two issues remain
very, very contentious in terms of the real impact of the spectrum
option and the impact of non-citizens getting benefits, to whatever
extent it is.
So we won't be having hearings on legislation but, rather, on the
concept. As you know, on the option you are going to bring some-
body from a State like yours, and I am going to bring one from a
little more rural State to talk about the impact as we hear from
CBO
on the options. That is our general plan, and I have cleared
that with you.
The following Monday, on the 18th, the President will release de-
tails of his 1997 budget. I am hopeful that that will be a real budg-
et, a total budget. I have been cautious in my remarks and will
await release details. The committee will receive testimony from
the 0MB Director the next day, on March 19th. No further hear-
ings have been set, but I expect that we will want to clarify some
of the Administration's proposals in their total budget. And we will
consult with you, Senator Exon, as we attempt to arrange that.
Now, I don't know yet when we would be expected. Senator
Grassley, when we might mark up the 1997 budget resolution. We
have not consulted yet, nor have I made a decision. It is entirely
possible that we may not do anj^hing on that until after the April
recess. It is possible that if things break right, we might do it be-
fore we go on the recess. But we will be in touch with you regu-
larly. Senator Exon.
OPENING STATEMENT OF SENATOR EXON
Senator ExoN. Mr. Chairman, thank you very much, and I have
not been advised officially by you or anyone else, but I have picked
up several reports through the grapevine and other parts of the in-
formation services that flow back and forth through the cloak room
and otherwise that in all likelihood we, unfortunately, will put off
the decision-making process on the budget until after the April re-
cess. I would hope that we would move aggressively ahead on these
things. I will be glad to work with you in that regard. As we take
up this brand new budget when we haven't finished last year's
work, it puts this committee in a most difficult position, it seems
to me. And I simply want to offer you, Mr. Chairman, my coopera-
tion and that of the minority members of the committee in the
hopes that we will be consulted in some detail on these matters as
we proceed.
No decision has been reached yet, as I understand it, although
there was an interesting story in the Washington Post this morn-
ing that is not official but probably was a fair estimate of at least
where I think we are coming from at the present time. So, there-
fore, despite the divisions that we had last year, this is a brand
new year, and I hope that we can go into this with some kind of
a bipartisan approach, because the budget deficit and the continu-
ing raising of the National debt is not a partisan issue. It has to
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be faced by all of us jointly. are all responsible for action or in-
action, depending on your point of view.
I simply say that I hope we can work in a fashion that is in the
interest of the United States of America, and I pledge my efforts
in that regard. That might break down through the political proc-
ess that we have, especially in a Presidential election year. But,
nevertheless, I wish to start out with an offer, once again, of being
in cooperation wherever and whenever we can. I think that is a
step in the right direction.
I do have an opening statement that I would like to make, prob-
ably hoping to set the tone for this hearing and the ones that will
follow. I am disappointed to hear that Mr. Greenspan felt that he
could not come tomorrow, because I am certain that Mr. Greenspan
has a direct bearing on the decisions of his agency that are essen-
tial to what we do or don't do with the continuing markup, and col-
lecting the figures that are obviously necessary if we are going to
do as honest a job as possible at resolving the various issues that
confront us.
I do want to join you in welcoming the distinguished panel that
we have today, and we are trying to reach into the current state
and the future state of the economy, which, as you all know, is
what the budget process is all about. I hope we can have a serious
discussion about economic growth and not waste our time simply
bashing the President.
The truth is that the American economy is sound. Under Presi-
dent Clinton's stewardship, the economy has performed beyond ex-
pectation. Nearly 8 million new jobs have been created, 93 percent
in the private sector, I would emphasize. The so-called misery
index of inflation and unemployment is at the lowest level in about
three decades. The Clinton administration should be complimented
for not everything that it has done, but the sound approach that
I think has been evidenced by the Clinton administration since
they have brought about downturns in the deficit for 3 years in a
row, and nothing like that has happened since the days of Presi-
dent Harry Truman.
We have a broad bipartisan consensus that the Government
should balance the budget. I hope we can continue with that on
some kind of a reasonable basis. Yet there are some problems with
the economy that the President is the first to say that we must ad-
dress. He did so, I would point out, in the State of the Union mes-
sage.
Finally, climbing into the middle class and staying there is get-
ting harder and harder and harder for those people who generally
are described as middle-class Americans. Productivity keeps going
up, but wages don't. The purchasing power of most workers' wages
has fallen for the past two decades. Many breadwinners find that
one job will no longer do it. It takes two workers, sometimes with
two jobs each, to make ends meet.
Now, Mr. Chairman, I simply want to emphasize that there is
continuing anxiety among American workers, and it is very obvious
and it is very thick. A recent poll found that a staggering 72 per-
cent of those surveyed believed that layoffs and the loss ofjobs will
be a very permanent problem. The wholesale firing in America's
—
blue-chip companies I won't dignify it by calling it simply
"downsizing," which is a new word that does not properly describe
the real problem that we have in America. That has left hundreds
of thousands ofAmericans broken and feeling betrayed.
When I ran a business myself, firing a big chunk of the staff was
a sure sign in those days of failure and incompetence at the leader-
ship levels. But yesterday's bum is lionized as today's savior evi-
dently only for the good of Wall Street. Many are appalled with the
enormous gap between executive salaries and worker pay.
Business Week, no bastion of liberalism, I would point out, states
in the February 19 editorial.
Despite big gains in productivity and profits, most employees are not sharing in the
rewards while shareholders and the option-laden corporate officials most definitely
are. The rising economic tide that once lifted everyone in America is now playing
favorites, and people don't like the new rules.
Indeed, it has become a riptide for countless Americans who are
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being dragged out to sea with no life preserver whatsoever. study
last year of the earnings of nearly 300 chief executives and their
officers found that they made on average 187 times as much as
their average worker, up from 41 times as much 20 years ago. In
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fact, the study predicts that by the year 2010 the average will
be earning multiples of the average worker's pay that have not
been seen since 1789, the days of the difficulties in France that fol-
lowed the Revolution. And we all know what happened then.
I don't profess to have the answer to all of these problems, but
as a recent editorial in the Lincoln Journal Star said, and I quote,
If we want morejob security in this system, there is probably a way for Government
to help us get it. But we must realize that comes at a price, too, for the economy
is much more than just a bunch ofnumbers.
That is something that was all too often missed in last year's
budget debate. There are people behind these numbers. And what
the majority missed last year, I believe, is that it is not just bal-
ancing the budget, but how we do it that is finally important. It
is not just balancing the budget but keeping people working
through programs like the earned income tax credit and others. It
is not just balancing the budget; it is keeping our priorities straight
as we do
it.
So once again, Mr. Chairman, I welcome our witnesses to this
very important discussion today that leads off what I think will be
some very informative hearings under your direction as the chair-
man of our committee. I look forward to hearing the views of this
panel on the state of the economy and what we can do to ensure
that all Americans will still share in the American dream.
Mr. Chairman, I thank you.
Chairman DOMENICI. Thank you very much, Senator Exon. I
think you misunderstood my opening remarks. While I gave you an
agenda of what was to come, you assumed that was my opening
statement and, therefore, gave yours before me. But that was a
great opening statement, and I don't mind at all. I ask that mine
be made a part of the record as if read.
[The opening statement of Chairman Domenici follows:]
