[Congressional Record Volume 141, Number 25 (Wednesday, February 8, 1995)]
[Extensions of Remarks]
[Pages E291-E292]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                     THE BALANCED BUDGET AMENDMENT

                                 ______


                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                       Wednesday, February 8, 1995
  Mr. HAMILTON. Mr. Speaker, I would like to insert my Washington 
Report for Wednesday, February 8, 1995, into the Congressional Record.
                     The Balanced Budget Amendment

       In Late January, with my support, the House passed a 
     balanced budget constitutional amendment by a vote of 300-
     132. Several different versions were considered. The one that 
     passed would require the President to propose a balanced 
     budget each year, and it would take a \3/5\ vote of both the 
     House and Senate to pass an unbalanced budget.
       It may well be that nothing short of a constitutional 
     amendment will force Congress and the President to confront 
     the tough choices necessary to balance the budget. We have 
     simply had great difficulty in coming to consensus on 
     specific increases in taxes or cuts in government spending. 
     The result is an institutional bias toward running a deficit. 
     An amendment could very well force the government to set 
     priorities, a key task that has not been done very well in 
     the past.


                                problems
       Although the amendment was broadly supported in the House, 
     there are problems with using a constitutional amendment to 
     balance the budget. First, a balanced budget amendment could 
     reduce the government's flexibility to deal with national 
     emergencies such as war or recession. It could force the 
     government to raise taxes or cut spending to cover the 
     increasing deficit that a slowing economy was generating. 
     Fiscal policy then would exaggerate rather than mitigate the 
     swings in the economy, and recessions would tend to be deeper 
     and longer. Second, a balanced budget amendment puts off 
     tough decisions and delays action until ratification by the 
     states, which could take many years. Postponing the tough 
     choices could make them much harder in the long run. Third, a 
     balanced budget amendment could draw the courts into budget 
     policy. If Congress failed to pass a balanced budget, 
     unelected judges might have the power to raise taxes or cut 
     programs. Fourth, a balanced budget amendment is an incentive 
     for Congress and the President to evade the requirements. 
     They could do that by imposing or withdrawing regulations, 
     placing new requirements on states or business, saying that 
     certain kinds of spending is off budget, setting up quasi-
     government authorities to borrow money, or scores of 
     [[Page E292]] other ways. Finally, a balanced budget 
     amendment should distinguish between general operating 
     expenses and capital investments (such as bridges, research, 
     or education). Indiana has operated under a similar system 
     for years. Like a homeowner taking out a mortgage, borrowing 
     for long-term investments can make sense.
                           reasons to support

       Despite these concerns, I do support a balanced budget 
     amendment. For years Congress has tried new ways to reduce 
     the deficit, including caps on spending, across-the-board 
     cuts, and pay-as-you-go requirements. These measures have had 
     some effect, and the deficit is down from a record $290 
     billion in 1992 to some $176 billion this year--a cut of 40%. 
     But the longer-term outlook for the deficit--particularly 
     because of rising health care costs--is not good. 
     Particularly disturbing are recent projections by the 
     Congressional Budget Office that show the deficit could rise 
     to as high as $421 billion in 2005. This trend is 
     unacceptable.
       Although I would prefer that Congress and the President 
     face the tough choices and balance the budget on their own, 
     there is little evidence this will be done. Large deficits 
     drain national savings and investment in long-term economic 
     growth, and yearly interest payments prevent policymakers 
     from responding to new challenges. A balanced budget 
     amendment would force us to better reconcile our investment 
     priorities with our economic means.


                              the details

       The House considered six versions of a balanced budget 
     amendment. I supported several versions that protected Social 
     Security from being cut to balance the budget and a version 
     that would distinguish between capital investment and general 
     operating costs. I also voted for a version that would 
     require Congress to spell out the difficult choices necessary 
     to balance the budget in the next seven years. We have an 
     obligation to tell the American people how we intend to get 
     the budget into balance. Too many amendment supporters are 
     unwilling to give us specifics on cutting the budget. The 
     cuts necessary will be far deeper than most people have 
     acknowledged, and important programs like Medicare and 
     student aid would be heavily impacted.
       I opposed a version that made it easy to waive the balanced 
     budget requirement--in any year when unemployment was above 
     4%--and also did not support a version requiring a separate 
     3/5 vote to pass any bill that raised revenue. We should not 
     confer on a congressional minority a veto power over what 
     should be a majority decision to increase revenues. Such a 
     veto power was deliberately rejected by the founding fathers.
       A broad coalition of members from both parties were able to 
     put aside their differences and agree on the final version of 
     the amendment. This amendment would be tough on deficit 
     spending. It would require the President to submit a balanced 
     budget every year, and Congress would need a 3/5 vote in both 
     the House and the Senate to pass an unbalanced budget or to 
     raise the federal debt limit. A majority of Congress could 
     waive this requirement in time of war or imminent military 
     threat. The amendment now goes to the Senate, which is 
     expected to take action later this year. If the House and 
     Senate agree on identical language, thirty-eight states will 
     have to ratify the amendment before it becomes part of the 
     Constitution. The states will be taking a careful look at the 
     balanced budget amendment. It could well hurt them. Drastic 
     reductions in federal spending would leave states with the 
     burden of dealing with those who fall through the safety net.


                               conclusion

       I still have reservations about the House version, and 
     would prefer greater flexibility to deal with national 
     emergencies, protections for Social Security, and 
     requirements that we spell out to the American people what it 
     would take to balance the budget. I believe the House-passed 
     version was good enough, and the need for a balanced budget 
     amendment strong enough, that the process should go forward. 
     I am hopeful that the Senate can address some of my concerns. 
     I will want to see what happens in the Senate before making a 
     final decision on the balanced budget amendment.
     

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