COMMITTEE ON APPROPRIATIONS JAMIE L. WHITTEN, Mississippi, Chairman EDWARD P. BOLAND, Massachusetts JOSEPH P. ADDABBO, New York EDWARD R. ROYBAL, California TOM BEVILL, Alabama BILL CHAPPELL, JR., Florida BILL ALEXANDER, Arkansas JOHN P. MURTHA, Pennsylvania BOB TRAXLER, Michigan JOSEPH D. EARLY, Massachusetts LINDY (MRS. HALE) BOGGS, Louisiana MATTHEW F. MCHUGH, New York MARTIN OLAV SABO, Minnesota VIC FAZIO, California W. G. (BILL) HEFNER, North Carolina LES AUCOIN, Oregon DANIEL K. AKAKA, Hawaii WES WATKINS, Oklahoma WILLIAM H. GRAY III, Pennsylvania BERNARD J. DWYER, New Jersey BILL BONER, Tennessee STENY H. HOYER, Maryland BOB CARR, Michigan SILVIO O. CONTE, Massachusetts LAWRENCE COUGHLIN, Pennsylvania ELDON RUDD, Arizona CARL D. PURSELL, Michigan TOM LOEFFLER, Texas JERRY LEWIS, California JOHN EDWARD PORTER, Illinois ROBERT J. MRAZEK, New York RICHARD J. DURBIN, Illinois RONALD D. COLEMAN, Texas FREDERICK G. MOHRMAN, Clerk and Staff Director (II) THE FEDERAL BUDGET FOR 1987 THURSDAY, FEBRUARY 6, 1986. OVERVIEW HEARING OF FISCAL YEAR 1987 BUDGET CONGRESSMAN JAMIE L. WHITTEN, CHAIRMAN OPENING STATEMENT HON. JAMES BAKER, SECRETARY OF THE TREASURY HON. JAMES MILLER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET HON. BERYL SPRINKEL, CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS INTRODUCTION OF WITNESSES Chairman WHITTEN. I would like to welcome our guests before the full Appropriations Committee this afternoon. Honorable James Baker, Secretary of Treasury; Honorable Beryl Sprinkel, Chairman-Council of Economic Advisers. We greatly appreciate you being with us today. We recognize the demands upon your time, especially during this period shortly after the submission of the Budget. As has been the custom in recent years, we are under the watchful eye of our good friend Jack Brooks, who has lent us this hearing room. On behalf of the entire committee I would like to thank Chairman Brooks and the Government Operations Committee for their continued fine cooperation. Though our Committee on Appropriations has held the line and recommended appropriations $11,200,000,000 below the President's request for fiscal year 1985 and $12,900,000,000 below the President's request for fiscal year 1986 the debt has increased tremendously-largely because of the 1981 tax bill which repealed the windfall profits tax and permitted the sale of tax credits, and the increase in appropriations for military spending from $180,001,000,000 in 1981 to $320,000,000,000 requested in the current year's budget. During this same period, of the 74 appropriations bills we have passed, the President has signed 69 and has vetoed five bills. We overrode one of the bills and worked out the other four. When the current administration took office in January 1981, the national debt stood at $932 billion. At the end of FY 1985 it was $1.8 trillion. By the end of FY 1986 it will exceed $2.1 trillion and is projected to increase to $2.3 trillion by the end of FY 1987. In the short period of five years, the national debt has more than doubled. The increase alone in the debt in the past five years ex (1) ceeds all the debt accumulated since the beginning of the republic, through the Civil War, two World Wars, the Great Depression, the Korean conflict, and the Vietnam War. And this doubling of the debt took place during peacetime. We are a debtor nation for the first time since 1914 with foreign investment in the U.S. totalling some $925.9 billion in 1985. Table A shows this clearly. The following table shows the growth of foreign investment in the U.S. Besides the actual amount of growth each year, it is important to note that these figures show that for the first time since 1914 the U.S. became a net debtor nation. In other words there was more foreign investment in the U.S. than there was U.S. investment in foreign countries. Our trade balance is unbelievably bad, with the 1985 figures showing a gap of $148.5 billion. In 1981 this gap was $27.9 billion. For 1985 this means we bought on credit $148 billion more in commodities and merchandise abroad than we exported. Most of this we could have produced ourselves. We are $49.7 billion out of balance with Japan alone; yet we still spend approximately $1.6 billion to keep troops in Japan-money which the Japanese in effect use to buy into our country. In Germany, we spend some $4.5 billion for troops with a similar effect. American agriculture is bankrupt because we have had the farmer financing our foreign policy-with agriculture embargoes in 1973, 1974, 1975, and 1980 under the former President, and continued for the past five years. Since we do not make our offering price competitive as authorized by law, our income from agriculture exports, our biggest industry, has dropped from $43.8 billion in 1981 to $31.2 billion in 1985 with a further drop projected to $29.0 billion in 1986. Today, not only has our debt more than doubled to over $2 trillion, but large sections of our nation's industry are bankrupt. The textile industry is facing bankruptcy from imports-with similar disasters in shoes and steel and others. Land values have dropped as much as 75%. Foreign countries are buying into our industries. Our notes which they hold are buying our land, building our shopping centers. |