[Congressional Record Volume 141, Number 20 (Wednesday, February 1, 1995)]
[Extensions of Remarks]
[Pages E245-E246]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


       PROPOSING A BALANCED BUDGET AMENDMENT TO THE CONSTITUTION

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                               speech of

                          HON. JAMES A. LEACH

                                of iowa

                    in the house of representatives

                       Thursday, January 26, 1995

       The House in Committee of the Whole House on the State of 
     the Union had under consideration the joint resolution (H.J. 
     Res. 1) proposing a balanced budget amendment to the 
     Constitution of the United States:

  Mr. LEACH. Mr. Chairman, some concerns have been expressed about how 
the balanced budget amendment, if ratified, could effect the Federal 
Government's ability to issue debt, manage its cash position, and 
borrow money at the lowest rate.
  For instance, under present budgetary requirements, budget outlays 
for direct loans, such as those provided by the Eximbank and USDA, 
consist of the net present value of the 
[[Page E246]] subsidy, rather than the net disbursement of cash. 
However, Treasury still must borrow the full amount of the loan. It is 
expected that cash disbursements will exceed $70 billion during fiscal 
year 1995-99. Under House Joint Resolution 1, the debt limit would have 
to be increased by a three-fifths majority of each House in order to 
accommodate these disbursements, even if the budgets were balanced in 
those years and the loans eventually were paid back in full.
  In addition, the Federal Government's cash requirements vary from 
year to year, making it difficult to estimate its revenue needs. For 
example, a large number of unexpected thrift and bank failures in 1 
year could cause the budget to be unbalanced.
  Finally, some have argued that given the constraints of a balanced 
budget amendment and the three-fifths requirement, Congress will look 
for ways to borrow money off budget, which is usually more costly than 
on-budget financing. A good example of a more costly off-budget 
financing scheme was the reliance on REFCORP bonds to finance part of 
the S&L bailout.
  While the above budgetary concerns at first blush would appear 
problemsome, they should not pose insurmountable obstacles to 
successful implementation of a balanced budget amendment. Many of these 
cash management problems can be addressed with more prudential 
planning. Furthermore, section 8 of House Joint Resolution 1 allows 
Congress to enact laws to implement this constitutional amendment. 
Through legislative adjustments Congress retains the flexibility to 
square the various nuances and vagaries of Federal Government debt 
management with the constitutional requirement of a balanced budget.


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