[Congressional Record Volume 140, Number 9 (Friday, February 4, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: February 4, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
             BALANCED BUDGET AMENDMENT TO THE CONSTITUTION

  Mr. CRAIG. This late afternoon I come to the floor to speak on 
another issue for a few moments that I find very important, and one 
that before the end of the month we expect to debate. That is the 
balanced budget amendment to the Constitution, or Joint Senate 
Resolution 41.
  The opening round of the debate will start by the end of the month. 
But of course I think all of us recognize that really started some time 
ago. The Committee on the Judiciary voted last summer to report the 
measure favorably by a 15 to 3 margin; the highest level of support 
ever recorded for an amendment in that panel. Statements pro and con 
have been offered during morning business on the Senate floor in this 
body and around the Nation the debate, I hope, will heat up and 
increase steadily over the coming weeks.
  It is exciting for me to realize that in coffee shops and town halls, 
in the Senate and in the House, and in 50 State capitals, after we send 
an amendment to the States for ratification Americans will engage in 
perhaps one of the most probing discussions of the appropriate size, 
scope, and responsibility of the Federal Government since the origin of 
the Bill of Rights, ratified more than 200 years ago.
  With this in mind, I would like to begin to layout systematically, 
reasons why this Senate should pass such an amendment and send it to 
the American people for their consideration.
  This simply-worded amendment that we will be debating by the end of 
the month, actually touches on many complex issues and has inspired 
volumes of speeches and writings. To the extent that so many arguments 
can be summarized in a single sentence, the case for a balanced budget 
can be summed up as follows.
  The ability of the Federal Government to borrow from future 
generations involves decisions of such magnitude that they should not 
be left to the judgment of transient majorities.
  Let me repeat that. The ability of the Federal Government to borrow 
money from future generations involves decisions of such magnitude that 
they should not be left to the judgment of transient majorities.
  There are several broad areas of discussion that follow from, I 
think, that very fundamental statement; a statement of the premise why 
we should be and must be debating this amendment in the coming days. A 
balanced budget amendment deals with the fundamental rights of the 
American people. The nature and importance of the right make it the 
kind of right traditionally and appropriately protected by the 
Constitution. In other words, when someone will say on this floor in 
the coming month that we ought not be debating it, it is inappropriate 
and it should not be put in our Constitution--that is that this 
Congress should balance the budget of the Federal Government on an 
annual basis--it will be my contention that it is such an important, 
fundamental right, that we must debate it, that it deserves to be 
protected within the Constitution.
  Third, this right has been seriously and repeatedly violated and the 
American people have been and are now being harmed by the violation of 
this right.
  Fourth, further infringements of this right will not be prevented by 
any less than a constitutional restraint. After many studies and 
discussions, a proposed amendment which would be effective in 
protecting the fundamental right in question has been drafted in 
language that is appropriate for inclusion in the Constitution. For 
more than a decade I have been involved in an examination of fine 
tuning that has demonstrated that there is a satisfactory answer to 
every question or objection raised concerning the issue of a 
constitutional amendment on a balanced budget.
  I plan to discuss each of these propositions in detail on the Senate 
floor in the coming days.
  In a recent issue of the Washington Times was an article by the 
senior Senator from Illinois, Paul Simon, and myself that we wrote 
previously for a publication called Senior Class, a publication of the 
seniors coalition.
  I ask unanimous consent that that article be printed in the Record at 
the conclusion of my statement.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. CRAIG. Mr. President, next to our article in the Washington 
Times, there appears a political cartoon in which John Adams stands 
before several of the original framers of the Constitution. I would 
like you to picture this with me. He has a parchment in hand on which 
we can see the words ``balanced budget.'' Amid much laughter, one of 
the framers says, ``Mr. Adams, that amendment is pure folly. What 
Continental Congress in its right mind would spend more than it has?''
  This cartoonist knew what he was saying. In his Inaugural Address in 
1797, President John Adams said:

       The consequences arising from the continual accumulation of 
     public debts in other countries ought to admonish us----

  Meaning the Continental Congress.

     to be careful to prevent their growth in our own. Of course, 
     in our own Government.

  Similarly, President James Madison, usually referred to as the 
founder of our Constitution, pledged that his administration would 
``liberate the public resources by an honorable discharge of public 
debt.''
  These were not abstract expressions of fiscal policy, and they were 
not based solely on the well-established rules of economics that 
indebtedness could become burdensome and even disastrous for our 
Nation's economy. Our Founding Fathers saw a balanced budget and prompt 
repayment of debt as a moral imperative. It was not just an economic 
principle in their mind; it was a part of their substance. They 
believed it to be their moral responsibility.
  Failure to meet these goals was not simply considered economic folly 
or a violation of a basic right of the people: The right to be free 
from the harms caused by massive indebtedness or a profligate 
Government. In other words, it was without question a moral obligation.
  Thomas Jefferson explicitly elevated balanced budgets to these levels 
of morals and fundamental rights when he said:

       The question whether one generation has the right to bind 
     another by the deficit it imposes is a question of such 
     consequence as to place it among the fundamental principles 
     of Government. We should consider ourselves unauthorized to 
     saddle posterity with our debts, and morally bound to pay 
     them ourselves.

  One might ask then how fundamental, how integral is the right to 
remain free of the shackles of Government debt? To what similar right 
or rights can it be compared?
  Woodrow Wilson, who was not only the 28th President but also an 
eminent scholar of history, offers this equation:

       Money being spent without new taxation, and appropriation 
     without accompanying taxation, is as bad as taxation without 
     representation.

  In other words, what he was saying is, if you cannot be honest 
fiscally, then you are not representing your people. Of course, we once 
had a revolution and the premise of that revolution amongst some was 
``taxation without representation.'' Of course, Woodrow Wilson knew 
that in both the fundamental sense and in the intellectual sense.
  Madam President, no one would deny that taxation without 
representation is a violation of one of those inherent rights of our 
citizenry, and no lesser intellect than that of Woodrow Wilson compared 
the violation of that right to the harm caused by unbalanced budgets.
  These two rights are more than analogous to each other. One is 
literally a variety of the other. Debts that are incurred have to be 
paid for. Either they are repaid, or interest payments are made for as 
long as the debtor is using the money.
  When a debt load becomes too large relative to income, then for a 
nation, the same as a family or a business, two outcomes are possible.
  So in other words, what I suggest tonight is that our Government is 
no different than any one individual or family or any company in this 
society and in this economy. If the debtor is unfortunate, or I should 
say if the debtor is fortunate to discover the plight in time to cut 
back their standard of living and to start paying on their debt, then 
they can solve their problems. But if the debtor is less fortunate, its 
standard of living is throttled back by the necessity to make large 
interest payments while income does not grow enough to allow the debtor 
to start repaying the principal.
  National governments have a third option that families do not have. 
They can put the Treasury's printing press in high gear, devaluating 
the currency, monetizing the debt and, of course, the result of that is 
very clear. It is throughout history known as inflation. The worth of 
people's incomes and the assets of those values are depressed and the 
outcome is the same: A lower standard of living. An extreme example of 
this outcome occurred in the 1920's when Germany, heavily indebted and 
turning then to the printing press, found out that they succumbed to 
ruinous hyperinflation.
  Either way, Madam President, it is unconscionable for the Government 
in one generation to run up a huge debt to pay for current consumption 
and then send the bills to the next generation. You and I know that is 
exactly what we are about doing in this Congress and have been for now 
nearly 20-plus years.
  ``Saddling posterity with our debt,'' to use Thomas Jefferson's 
words, is an obvious example of taxation without representation. The 
children and grandchildren who will pay the price through higher taxes 
from interest payments or a debased living standard have no 
representation in the Government making the decisions to borrow and 
spend their money.
  As serious as the burden of the next generation is, it is not the 
only harm. The cost of debt begins immediately with the first interest 
payment. Every dollar borrowed for extra consumption today ultimately 
costs several dollars in higher taxes or several dollars of unavailable 
Government money down the road.
  Deficit spending is really an insidious form of a tax increase. 
Borrowing, like taxing, removes resources from productive private uses 
and diverts them to Government consumption. Borrowing also creates an 
ongoing, permanent diversion of productive resources to serve that debt 
for as long as it exists. And today, interest payments on debt are now 
nearly higher than the deficit itself. If that example has none other 
than the current budget of the United States, I find that to be the 
perfect example.
  Andrew Jackson's Secretary of the Treasury, Samuel Inghams, 
understood this dynamic. Considering the effects of balancing the 
budget and paying off the national debt, he observed:

       Interest is now paid to capitalists out of the profits of 
     labor; not only will this labor be released from the burden, 
     but the capital thus thrown out of an unproductive use, will 
     seek a productive employment; giving thereby new impetus to 
     enterprise, agriculture, the arts, commerce and navigation.

  What is he saying? He says if you do not borrow and you do not build 
debt and you do not have to pay interest on debt, then your Government 
expenditures are less and that money remains in the private sector to 
be used in the enterprises of the economy, and in so doing creating 
jobs and benefiting the average citizen as--in his instance he refers 
to as--``the profits of labor.''
  Another fact well understood since the earliest days of our Republic, 
as implied by the Secretary of Treasury at that time, is that 
unbalanced budgets cause regressive transfers of wealth.
  This is one of the reasons why Jefferson was so opposed to Government 
debt. He objected to his opponents in the Government, the Federalists, 
collecting taxes from farmers, laborers and small merchants for the 
purpose of paying interest to the bankers and the wealthy lenders--
Federalist constituencies--on the Federal debt securities they held.

  Thomas Jefferson we recognize and we oftentimes tout as one of the 
great and wise Fathers of our Constitution. Obviously, the Nation's 
Founders understood that unbalanced budgets infringe on the fundamental 
rights and threaten the economic well-being of the citizenry, in this 
case the American people.
  From Thomas Jefferson to Woodrow Wilson to millions of Americans 
today, those of us who believe that freedom from debt of a profligate 
Government is a fundamental right are in good company.
  When I rise again to speak to this topic, Madam President, I will 
address the issue of why the right deserves constitutional protection, 
because every poll that has been taken for the last decade indicates 
that 75 to 80 percent of the American people know that without a 
constitutional amendment forcing the Federal Government and those who 
serve in the Congress of the United States and the budgeting process 
must bring about a balanced budget, failure to do that ultimately 
creates such a phenomenally destructive force in our Nation and in our 
economy that we could, like other nations, fall to the ruinous of 
hyperinflation.
  Madam President, I yield back the remainder of my time.

                               Exhibit 1

                 [The Washington Times, Oct. 25, 1993]

                    Economic Security in the Balance

                (By Senators Larry Craig and Paul Simon)

       ``Once the budget is balanced and the debts paid off, our 
     population will be relieved from a considerable portion of 
     its present burdens and will find out new motives to 
     patriotic affection, (and) additional means for the display 
     of individual enterprise.''
       That statement, as relevant as today's news, was made more 
     than 150 years ago by President Andrew Jackson. This 
     perspective on the federal government and the economic well-
     being of the people, once at the very foundation of our 
     political system, urgently needs to be reasserted.
       It should be, early in November when Congress takes up our 
     Balanced Budget Amendment to the Constitution, S.J. Res. 41.
       Federal budget deficits are not an abstract problem; they 
     are now the single biggest threat to our nation's economic 
     security. When the economy is unstable, seniors on fixed 
     incomes suffer the most.
       The government has spent more than it has taken in for 55 
     of the last 63 years; the budget was last balanced in 1969. 
     The result is a federal debt totaling $4.3 trillion, or about 
     $17,000 for every man, woman and child in America, and 
     growing.
       Like every family and business, when the government 
     borrows, it must make interest payments. Annual gross 
     interest on the debt now runs about $300 billion, making it 
     the second-largest item of federal spending, next to Social 
     Security. This amount equals an incredible 57 percent of all 
     personal income taxes.
       Every dollar borrowed incurs interest costs that result in 
     significantly fewer dollars for high-priority programs and in 
     higher taxes. With a growing population depending on Social 
     Security, the best way to ensure its continued soundness is 
     to stabilize the economy and reverse the growth in interest 
     costs--which compete with Social Security for dollars--by 
balancing the budget.

       The fiscal costs and economic drag of the federal debt 
     imperil both seniors today and their children. Last year, 
     Congress' nonpartisan General Accounting Office said that, if 
     nothing changes, our children's standard of living in the 
     year 2020 will stagnate at today's levels--putting an end to 
     the American dream of each generation leaving the next a 
     legacy of opportunity. In contrast, balancing the budget by 
     2001 would produce a 36 percent improvement in the nation's 
     standard of living by 2020.
       Who collects interest payments on the federal debt? About 
     15 percent goes overseas. Almost all of the rest goes to 
     large banks, corporations, state and local governments, and 
     wealthy investors. Thomas Jefferson objected to any federal 
     indebtedness, fearing that taxes on farmers, laborers, 
     merchants and their families would escalate forever to pay 
     the interest on a growing debt.
       Why has it been so hard to balance the budget? The 
     unlimited ability to borrow leads naturally to unlimited 
     demands to spend. Every American belongs to at least one 
     group that benefits from federal spending. And everyone would 
     like to see his or her taxes held down. If you don't have to 
     say ``no,'' then many elected officials see only political 
     peril in doing so.
       Our system of government has changed fundamentally: While 
     almost all Americans want a balanced budget, there's no way 
     to put this general, public interest on a level playing field 
     with the specific demands of mobilized, organized interest 
     groups.
       That is, there's no way to make it a fair fight until we 
     add to the Constitution a rule the government can't break, 
     that guarantees we get no more government that we are willing 
     to pay for and calls on us to pay for all the government we 
     demand.
       Fifty years before Jackson, Jefferson said, ``We should 
     consider ourselves unauthorized to saddle posterity with our 
     debts, and morally bound to pay them ourselves. . . . I wish 
     it were possible to obtain a single amendment to our 
     Constitution . . . an additional article, taking from the 
     government the power of borrowing.''
       It's time to live up to Mr. Jefferson's vision.

  Mr. PELL. Madam President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The absence of a quorum has been suggested. 
The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. SARBANES. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Maryland is recognized.

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