[Congressional Record Volume 140, Number 70 (Wednesday, June 8, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: June 8, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                           WASHINGTON REPORT

                                 ______


                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                        Wednesday, June 8, 1994

  Mr. HAMILTON. Mr. Speaker, I would like to insert my Washington 
Report for Wednesday, June 1, 1994, into the Congressional Record.

                      A Balanced Budget Amendment

       In March, the House considered several versions of a 
     balanced budget constitutional amendment (BBA). None received 
     the two-thirds vote necessary to adopt a constitutional 
     amendment. The version getting the most votes would have 
     required the President to propose a balanced budget each 
     year, and, although Congress could change the President's 
     priorities, it would take a \3/5\ vote of both the House and 
     Senate to pass an unbalanced budget.


                              reservations

       Congress has considered a balanced budget amendment on 
     several occasions, and while I support a carefully written 
     amendment, I do have several concerns.
       First, a BBA could reduce the flexibility of policymakers 
     to deal with national emergencies, and could have the effect 
     of worsening recessions by requiring Congress to cut spending 
     or raise taxes during an economic downturn. Because the 
     deficit automatically widens during a downturn, a BBA could 
     turn a minor downturn into a serious recession.
       Second, a BBA could enshrine in the Constitution the 
     principle of minority rule. Many of the BBAs considered by 
     the House include a supermajority provision where a three-
     fifths vote of the total membership of the House and Senate 
     could vote to approve an unbalanced budget, an arrangement 
     that would greatly increase the power of minority blocs in 
     Congress.
       Third, a BBA delays action. Even if approved by Congress, 
     it would still require approval by the States, which could 
     take several years. Furthermore, a BBA would not, on its own, 
     balance the budget, leaving that to future decisions by 
     Congress. So the politically difficult decisions on tough 
     cuts or raising taxes are put off to another day.
       Fourth, a BBA could lead to involvement of the courts in 
     budget policy issues, deciding whether the provisions are 
     being met and what action to take if they are not. The slow, 
     complex judicial process does not mesh well with economic 
     policy which needs to be flexible to respond to changing 
     conditions.
       Fifth, Congress and the President could try to evade its 
     requirements--through basing budgets on unrealistic 
     scenarios, putting spending ``off-budget'', and using 
     mandates or regulations to shift costs, for example, 
     requiring states or private businesses to pay for more health 
     care coverage.
       Finally, most proposed BBAs do not distinguish between 
     spending for general operating expenses and spending for 
     capital investments (such as investments in research, 
     education, and infrastructure). I believe that borrowing for 
     long-term investments to increase economic growth can make 
     sense and should not be subject to balanced budget 
     requirements.


                         reasons for supporting

       Despite these concerns, I did, for several reasons, vote 
     for a balanced budget amendment.
       First, Congress has tried many different approaches to 
     bring down the deficit, including deficit limits, tax 
     increases, caps on domestic spending, cuts in spending, and 
     pay-as-you-go requirements for new spending. While the 
     deficits have come down and certain areas of spending have 
     been curtailed, the deficits are expected to increase at the 
     turn of the century.
       Second, I see no evidence that there is anything else on 
     the horizon that will work to bring the budget back into 
     balance. It is often said that all we need is strong 
     presidential leadership and political will to make the tough 
     choices. Yet no President since Carter has submitted a 
     balanced budget. Deficit spending has become an intractable 
     problem. A fundamental change is needed.
       Third, large deficits are no longer just a matter of fiscal 
     policy but increasingly a factor in our nation's economic 
     security, and thus are a legitimate area for constitutional 
     amendment. They drain our national savings and lead to 
     stagnant productivity growth and income growth. They make it 
     difficult if not impossible for policymakers to respond to 
     new pressing needs or to make important longterm investments 
     in the future.
       Fourth, a BBA would put the moral force of the Constitution 
     behind fiscal restraint. It would not be an ironclad 
     guarantee that no deficit spending would ever occur, but it 
     would force Congress and the President to better set 
     priorities and to make the tough choices that would bring and 
     keep the budget in line.
       Fifth, BBAs have worked reasonably well for the states. 
     Comparison with the states should not be pressed too hard, 
     since only the national government has responsibilities for 
     the overall performance of the nation's economy and its 
     security. But generally it appears that, although the states 
     can play games to evade balanced budget requirements, they 
     cannot do so over several years. The provisions eventually 
     bite and force them to make the tough decisions. In addition, 
     the experience of the states is that the balanced budget 
     requirements have not led to endless disputes in the courts 
     or to the courts taking over fiscal policy.


                           different versions

       Four versions of a BBA were considered by the House, each 
     with its pluses and minuses. My main concern about the 
     version getting the most votes was its inflexibility; it 
     would constrain Congress' ability to respond to national 
     emergencies, such as war or a recession. 40% of the Members 
     plus one in either the House or Senate could block efforts to 
     respond to the emergency, and that could make legislative 
     gridlock, already a problem in Congress, more likely.
       I voted for another version, which addressed some of my 
     concerns while also establishing budget discipline around a 
     meaningful deficit benchmark. This amendment did not contain 
     supermajority provisions but instead specifies the exact 
     circumstances in which the requirement for budget balance 
     could be waived by a majority vote--in event of war, a 
     serious military threat, or recession. While requiring a 
     balanced operating budget, this amendment established a 
     separate capital budget, avoiding a bias against public 
     investments that sustain economic growth and provide long-
     term economic returns. This amendment also explicitly 
     excluded Social Security, protecting beneficiaries from cuts 
     in benefits in order to balance the budget. This version, I 
     felt, better balanced the need for tough enforcement of 
     spending restraint with the flexibility that is critical in 
     order to respond to military threats and recession.


                               conclusion

       A balanced budget amendment is no panacea for our nation's 
     fiscal ills. But persistent deficits and the fiscal burdens 
     we are placing on future generations make a case for one. A 
     carefully drawn amendment is a gamble, but a gamble worth 
     taking.

                          ____________________