[Congressional Record Volume 141, Number 36 (Monday, February 27, 1995)]
[Senate]
[Pages S3148-S3220]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             BALANCED BUDGET AMENDMENT TO THE CONSTITUTION

  The PRESIDING OFFICER. The Chair does apologize to the Senator from 
West Virginia. Under the previous order, the Senate was to resume 
consideration of House Joint Resolution 1 at 12:30. We will now do 
that. The clerk will report.
  The legislative clerk read as follows:

       A joint resolution (H.J. Res. 1) proposing a balanced 
     budget amendment to the Constitution of the United States.

  The Senate resumed consideration of the joint resolution.

       Pending:
       (1) Feinstein amendment No. 274, in the nature of a 
     substitute.
       (2) Feingold amendment No. 291, to provide that receipts 
     and outlays of the Tennessee Valley Authority shall not be 
     counted as receipts or outlays for purposes of this article.
       (3) Graham amendment No. 259, to strike the limitation on 
     debt held by the public.
       (4) Graham amendment No. 298, to clarify the application of 
     the public debt limit with respect to redemptions from the 
     Social Security Trust Funds.
       (5) Kennedy amendment No. 267, to provide that the balanced 
     budget constitutional amendment does not authorize the 
     President to impound lawfully appropriated funds or impose 
     taxes, duties, or fees.
       (6) Bumpers modified motion to refer H.J. Res. 1 to the 
     Committee on the Budget with instructions.
       (7) Nunn amendment No. 299, to permit waiver of the 
     amendment during an economic emergency.
       (8) Nunn amendment No. 300, to limit judicial review.
       (9) Levin amendment No. 273, to require Congress to pass 
     legislation specifying the means for implementing and 
     enforcing a balanced budget before the balanced budget 
     amendment is submitted to the States for ratification.
       [[Page S3149]] (10) Levin amendment No. 310, to provide 
     that the Vice President of the United States shall be able to 
     cast the deciding vote in the Senate if the whole number of 
     the Senate be equally divided.
       (11) Levin amendment No. 311, to provide that the Vice 
     President of the United States shall not be able to cast the 
     deciding vote in the Senate if the whole number of the Senate 
     be equally divided.
       (12) Pryor amendment No. 307, to give the people of each 
     State, through their State representatives, the right to tell 
     Congress how they would cut spending in their State in order 
     to balance the budget.
       (13) Byrd amendment No. 253, to permit a bill to increase 
     revenue to become law by majority vote.
       (14) Byrd amendment No. 254, to establish that the limit on 
     the public debt shall not be increased unless Congress 
     provides by law for such an increase.
       (15) Byrd amendment No. 255, to permit the President to 
     submit an alternative budget.
       (16) Byrd amendment No. 258, to strike any reliance on 
     estimates.
       (17) Byrd amendment No. 259, to provide that any bill to 
     increase revenues shall not become law unless three-fifths of 
     the whole number of each House shall provide by law for such 
     an increase by a rollcall vote.
       (18) Byrd amendment No. 252, to permit outlays to exceed 
     receipts by a majority vote.
       (19) Kerry motion to commit H.J. Res. 1 to the Committee on 
     the Budget.
       (20) Hatch (for Dole) motion to recommit H.J. Res. 1 to the 
     Committee on the Budget with instructions.
       (21) Hatch (for Dole) motion to recommit H.J. Res. 1 to the 
     Committee on the Budget with instructions.
       (22) Hatch (for Dole) motion to commit H.J. Res. 1 to the 
     Committee on the Judiciary with instructions.
       (23) Hatch (for Dole) motion to commit H.J. Res. 1 to the 
     Committee on the Judiciary with instructions.

  The PRESIDING OFFICER. Under the previous order, the Senator from 
West Virginia [Mr. Byrd] is now recognized.
  (Mr. HELMS assumed the chair.)
  Mr. BYRD. I thank the Chair.
  Mr. President, I have discussed this request with the distinguished 
Senator from Utah. I think, at the moment, he might be constrained to 
object, because I believe he will want to discuss the request with the 
majority leader. But I will make it for the Record just now and then I 
will withdraw it.
  Mr. President, I ask unanimous consent that my amendments be voted on 
in the following order: No. 252, 254, 255, 253, and 258, and that 
amendment No. 289 be withdrawn.
  I withdraw that request until such time as the distinguished Senator 
from Utah can discuss it with the majority leader.
  Mr. President, on tomorrow, the Senate will begin voting on the 
amendments that have been called up and made to qualify under the order 
that was entered previously. I believe that there are in the nature of 
22 or 23 or 24 amendments that are on the list. Among those amendments, 
I have five amendments. I am not counting the amendment which I 
anticipate that I will withdraw.
  Mr. President, in the main, my amendments go to certain of the flaws, 
which I have discussed on previous occasions, that I have found 
objections to in the balanced budget amendment to the Constitution. For 
example, I have been troubled by the numerous supermajority 
requirements that are included in the balanced budget amendment.
  As I have stated on previous occasions that the United States 
Constitution and amendments thereto contain nine circumstances in which 
a two-thirds vote in one or both Houses is necessary to an action or to 
the making of a quorum. Specifically, these are, one, conviction 
following impeachment; two, expulsion of a Member; three, override of a 
Presidential veto; four, advise and consent on treaties; five, 
proposing constitutional amendments; six, removing the bar of entry to 
Congress for having engaged in insurrection or rebellion against the 
United States; and seven, determining the President's ability to 
discharge his duties following a Vice Presidential declaration of 
Presidential disability.
  In addition, article II, section 1, clause 3, and the 12th amendment, 
which supersedes the article II provision, require a two-thirds quorum 
when the election of the President and/or Vice President should be 
decided by Congress. The actual vote, however, remains a constitutional 
majority.
  In several of these instances, the supermajorities have either never 
been called into play or have been resorted to only in a few instances 
and, in some instances, the last occasion in which the particular 
provision was called into play was decades ago.
  For example, in the case of the expulsion of a Member, which requires 
a supermajority, the last instance in which a Member of Congress was 
actually expelled was in 1862, when Waldo P. Johnson, Democrat of 
Missouri, was expelled for having supported the rebellion. Therefore, 
in that instance, as we can see, it was 133 years ago when that 
situation requiring a supermajority last arose.
  In the case of constitutional amendments, for which supermajorities 
are required in both Houses and by the States, only 27 amendments have 
been adopted, and 17 of those have been adopted since the first 10 
amendments.
  There are six additional amendments that have been submitted to the 
States, thus having received the requisite two-thirds in both Houses, 
but which have failed on ratification. The following are those six 
amendments that did not receive the requisite support of three-fourths 
of the States:
  September 25, 1789, an amendment dealing with the number of 
Representatives in the House; an amendment adopted during the second 
session of the 11th Congress relating to acceptance of foreign titles 
of nobility; an amendment adopted and submitted to the States on March 
2, 1861, prohibiting congressional abolition of slavery; June 2, 1926, 
authorizing the Congress to enact child labor laws; March 22, 1972, the 
equal rights amendment; and August 22, 1978, relating to the voting 
rights of D.C. residents.
  So, as we can see, the amendment provision under article 5 of the 
United States Constitution has not been used very frequently.
  As to the 14th amendment, namely, the removal of the bar from entry 
into Congress, the right to remove disabilities imposed by section 3 of 
the 14th amendment was exercised by Congress, by supermajority votes in 
both Houses, at different times on behalf of certain persons. In 1872, 
the disabilities were removed by a blanket act from all persons 
``except Senators and Representatives of the 36th and 37th 
Congresses,'' and 26 years later on June 6, 1898,--in other words, 97 
years ago--Congress passed legislation removing the disability imposed 
by section 3.
  The authority of Congress to determine Presidential disability under 
section 4 of the 25th amendment has never been exercised since the 
amendment's ratification in February, 1967. It should be noted, 
however, that President Reagan did notify the Speaker of the House and 
the Senate President pro tempore of his temporary disability on July 
13, 1985. The disability, due to anesthesia administered during 
surgery, was subsequently terminated later the same day.
  What I have attempted to show here, Mr. President, is the dearth of 
instances in which many of these supermajorities, that are included in 
the original Constitution and the amendments thereto, have actually 
been called into play. And as I say in some instances decades have 
passed since these provisions last were activated. These 
supermajorities, however, deal with the structure of our form of 
government, or with the protection of individual rights.
  But here we come now with this amendment to the Constitution to 
balance the budget which requires supermajorities in enforcing fiscal 
policy--for example, in section 1, section 2, section 4, and section 5. 
Included in those supermajorities is the phraseology of section 4 which 
refers to approval by ``a majority of the whole number of each House,'' 
and of section 5 which does likewise.
  Mr. President, the requirement of approval by a majority of the whole 
number of each House can very well in some instances require more votes 
than a two-thirds vote depending upon how many Senators or House 
Members are present and voting.
  The instances in the original Constitution and the amendments thereto 
that require two-thirds majorities, require a two-thirds majority of 
those Senators and House Members ``present and voting'', except in the 
instance of treaties and convictions on impeachments. I seem to 
remember that in 
[[Page S3150]] those two instances a two-thirds majority of the 
Senators ``present'' are required--not two-thirds of the Senators who 
are chosen and sworn, not two-thirds of those Senators who are voting, 
but two-thirds of the Senators ``present''.
  May I inquire of the Chair if I am correct?
  The PRESIDING OFFICER. The Chair informs the Senator from West 
Virginia he is correct.
  Mr. BYRD. I thank the Chair.
  But, now, this balanced budget amendment, in section 1, which deals 
with balancing outlays and receipts, any waiver requires that ``three-
fifths of the whole number of each House of Congress shall provide by 
law for a specific excess of outlays over receipts by a rollcall 
vote.''
  Section 2, the provision whereby the limit on the debt may be 
increased, ``three-fifths of the whole number of each House'' is 
required to waive that stricture.
  Section 4: ``No bill to increase revenue shall become law unless 
approved by a majority of the whole number of each House by a rollcall 
vote.''
  Well, as I have already indicated, depending upon how many Members 
are present and voting in each House, that requirement could well 
require more than a two-thirds or three-fifths majority of those 
present and voting.
  And the same thing obtains with respect to section 5 of the balanced 
budget amendment. Any resolution allowing for the provisions of the 
article to ``be waived for any fiscal year in which the United States 
is engaged in military conflict which causes an imminent and serious 
military threat to national security,'' must be adopted by a majority 
of the whole number of each House, which, in the case of the Senate, 
means at least 51--and that requirement may very well be more than two-
thirds or more than three-fifths of the Senators who are present and 
voting.
  These are very difficult strictures to overcome--these supermajority 
requirements that are being written into the Constitution by this 
balanced budget amendment--more constrictive than any of the 
supermajorities written into the original constitution and/or 
amendments thereto.
  Mr. President, let us see what the authors of the Federalist Papers 
have to say about supermajorities. Hamilton in the Federalist No. 75 
said and I quote:

       . . . all provisions which require more than the majority 
     of any body to its resolutions have a direct tendency to 
     embarrass the operations of the government and an indirect 
     one to subject the sense of the majority to that of the 
     minority.

  In other words, they create a minority veto.
  I will read Hamilton's statement in Federalist No. 75 again.

       . . . all provisions which require more than the majority 
     of any body to its resolutions have a direct tendency to 
     embarrass the operations of the government and an indirect 
     one to subject the sense of the majority to that of the 
     minority.

  Hamilton, in the Federalist No. 22 says this, about giving the 
minority a negative on the majority:

       To give a minority a negative upon the majority (which is 
     always the case where more than a majority is requisite to a 
     decision) . . .

  Let me read that again because it goes to the provisions that require 
a majority of the whole number of each body, that are to be found in 
sections 4 and 5 of the balanced budget amendment.

       To give a minority a negative upon the majority (which is 
     always the case where more than a majority is requisite to a 
     decision) is, in its tendency, to subject the sense of the 
     greater number to that of the lesser number.

                           *   *   *   *   *

       In those emergencies of a nation in which the goodness or 
     badness, the weakness or strength, of its government is of 
     the greatest importance, there is commonly a necessity for 
     action. The public business must in some way or other go 
     forward. If a pertinacious minority can control the opinion 
     of a majority, respecting the best mode of conducting it, the 
     majority in order that something may be done must conform to 
     the views of the minority; and thus the sense of the smaller 
     number will overrule that of the greater and give a tone to 
     the national proceedings. Hence, tedious delays; continual 
     negotiation and intrigue; contemptible compromises of the 
     public good. And yet, in such a system it is even happy when 
     such compromises can take place: for upon some occasions 
     things will not admit of accommodation; and then the measures 
     of government must be injuriously suspended, or fatally 
     defeated. It is often by the impracticability of obtaining 
     the concurrence of the necessary number of votes kept in a 
     state of inaction. Its situation must always savor of 
     weakness, sometimes border upon anarchy.

  Mr. President, you see we have to go through these Perils of Pauline 
in every fiscal year.
  The Northwest Ordinance was being debated in New York City at the 
very same time that the Constitutional Convention was meeting in 
Philadelphia. On July 13, 1787, the Northwest Ordinance was adopted. 
And that ordinance is one of the most important documents in the 
history of this country, and it rates--not as high as the Constitution 
and the Declaration of Independence, but it may rank a very close 
third. It may be instructive to note that the Northwest Ordinance 
required only simple majorities in the votes of the council, which 
would correspond with the Senate in the Federal Constitution, and in 
the votes of the representatives who were to be elected.
  It also should be remembered that when and where these 
supermajorities are required--and I have listed four instances here in 
the balanced budget amendment in which supermajorities would be 
required--they promote unreliability and unpredictability. People 
cannot count on, from year to year, just what is going to happen, and 
how their lives are to be affected, because we are talking about 
balancing the budget in every fiscal year.

       Total outlays for any fiscal year shall not exceed receipts 
     for that fiscal year, unless three-fifths of the whole number 
     of each House of Congress shall provide by law for a specific 
     excess of outlays over receipts. . . .

  Hence, the people are to be left without assurance as to whether or 
not their Government is going to be constant. These supermajorities 
promote inconstancy. Let us see what Madison, in the Federalist No. 62, 
has to say about such.

       What prudent merchant will hazard his fortunes in any new 
     branch of commerce when he knows not but that his plans may 
     be rendered unlawful before they can be executed? What farmer 
     or manufacturer will lay himself out for the encouragement 
     given to any particular cultivation or establishment, when he 
     can have no assurance that his preparatory labors and 
     advances will not render him a victim to an inconstant 
     government? In a word, no great improvement or laudable 
     enterprise can go forward which requires the auspices of a 
     steady system of national policy.

  Madison continues:

       But the most deplorable effect of all is that diminution of 
     attachment and reverence which steals into the hearts of the 
     people towards a political system which betrays so many marks 
     of infirmity, and disappoints so many of their flattering 
     hopes. No government, any more than an individual, will long 
     be respected without being truly respectable; nor be truly 
     respectable without possessing a certain portion of order and 
     stability.

  Daniel Webster said, ``Let us develop the resources of our land, call 
forth its powers, build up its institutions, promote all its great 
interests, and see whether we also, in our day and generation, may 
perform something worthy to be remembered.''
  Webster was talking about the development of the country, and about 
investing in the Nation, in its people, in its highways, its railroads, 
its waterways. But such investment needs to be on a multi-year basis--
it requires reliability, predictability, and consistency in accordance 
with long-term planning and design. Such investment planning must not 
be subjected to the fits and starts that will result from annual 
supermajority requirements to balance the Federal budget.
  Madison, in 62, is talking about this inconstancy and 
unpredictability in Government policy that would be brought about by 
this spate of new and very difficult supermajorities required in the 
implementation of fiscal policy.

       What prudent merchant will hazard his fortunes in any new 
     branch of commerce, when he knows not but that his plans may 
     be rendered unlawful before they can be executed? What farmer 
     or manufacturer will lay himself out for the encouragement 
     given to any particular cultivation or establishment, when he 
     can have no assurance that his preparatory labors and 
     advances will not render him a victim to an inconstant 
     government? In a word no great improvement or laudable 
     enterprise, can go forward, which requires the auspices of a 
     steady system of national policy.

  There are also those who are concerned, like myself, with respect to 
section 5, which deals with military conflicts.

       [[Page S3151]] Section 5. The Congress may waive the 
     provisions of this article for any fiscal year in which a 
     declaration of war is in effect. The provisions of this 
     article may be waived for any fiscal year in which the United 
     States is engaged in military conflict which causes an 
     imminent and serious military threat to national security and 
     is so declared by a joint resolution, adopted by a majority 
     of the whole number of each House, which becomes law.

  Let us see what Hamilton has to say in the Federalist No. 30.

       How can it undertake or execute any liberal or enlarged 
     plans of public good?
       Let us attend to what would be the effects of this 
     situation in the very first war in which we should happen to 
     be engaged. We will presume, for argument's sake, that the 
     revenue arising from the impost duties answers the purposes 
     of a provision for the public debt and of a peace 
     establishment for the Union. Thus circumstanced, a war breaks 
     out. What would be the probable conduct of the government in 
     such an emergency? Taught by experience that proper 
     dependence could not be placed on the success of 
     requisitions, unable by its own authority to lay hold of 
     fresh resources, and urged by considerations of national 
     danger, would it not be driven to the expedient of diverting 
     the funds already appropriated from their proper objects to 
     the defense of the State?

  Mr. President, note that Hamilton refers to ``the expedient of 
diverting the funds already appropriated from their proper objects to 
the defense of the State?''
  I have heard Senators who are supporters of this amendment say that, 
if we get into a military exigency we will just cut other programs, we 
will divert funds from other programs--as though we have plenty of time 
during a military exigency to go through all this examination of other 
programs and projects and take our pencils and add up and subtract all 
those things. We do not have time for that during an emergency 
involving our military security.
  Hamilton is here speaking of diverting funds already appropriated 
from their proper objects to the defense of the state.

       It is not easy to see how a step of this kind could be 
     avoided; and if it should be taken, it is evident that it 
     would prove the destruction of public credit at the very 
     moment that it was becoming essential to the public safety.

                           *   *   *   *   *

       In the modern system of war, nations the most wealthy are 
     obliged to have recourse to large loans.
       But who would lend to a government that prefaced its 
     overtures for borrowing by an act which demonstrated that no 
     reliance could be placed on the steadiness of its measures 
     for paying?

  Section 2 deals with the limit on the debt of the United States:

       The limit on the debt of the United States held by the 
     public shall not be increased unless three-fourths of the 
     whole number of each house shall provide by law for such an 
     increase by a rollcall vote.

  Hamilton says:

       But who would lend to a government that prefaced its 
     overtures for borrowing by an act which demonstrated that no 
     reliance could be placed on the steadiness of its measures 
     for paying? The loans it might be able to procure, would be 
     as limited in their extent as burthensome in their 
     conditions. They would be made upon the same principles that 
     usurers commonly lend to bankrupt and fraudulent debtors--
     with a sparing hand and at enormous premiums.

  Then Hamilton in 22 goes on to say this:

       Suppose, for example, we were engaged in a war, in 
     conjunction with one foreign nation against another. Suppose 
     the necessity of our situation demanded peace, and the 
     interest or ambition of our ally led him to seek the 
     prosecution of the war, with views that might justify us in 
     making separate terms. In such a state of things, this ally 
     of ours would evidently find it much easier by his bribes and 
     intrigues to tie up the hands of government from making 
     peace, where two-thirds of all the votes were requisite to 
     that object, then where a simple majority would suffice. In 
     the first case he would have to corrupt a smaller number; in 
     the last, a greater number. Upon the same principle, it would 
     be much easier for a foreign power with which we were at war, 
     to perplex our councils and embarrass our exertions. In a 
     commercial view, we may be subjected to similar 
     inconveniences.

  We have discussed section 5 of this balanced budget amendment 
heretofore. It is very obvious that, when it comes to dealing with an 
imminent military threat to the Nation's security, the Congress may be 
hard pressed to secure a majority of the whole number of each House in 
order to lift this burdensome restriction of requiring that outlays not 
exceed receipts in a given fiscal year.
  Let us see what Hamilton, in the Federalist No. 30, says that might 
have some bearing upon this situation.

       It has been already observed that the federal government 
     ought to possess the power of providing for the support of 
     the national forces; in which proposition was intended to be 
     included the expense of raising troops, of building and 
     equipping fleets, and all other expenses in any wise 
     connected with military arrangements and operations. But 
     these are not the only objects to which the jurisdiction of 
     the Union in respect to revenue must necessarily be empowered 
     to extend. It must embrace a provision for the support of the 
     national civil list; for the payment of the national debts 
     contracted or that may be contracted; and, in general, for 
     all those matters which will call for disbursements out of 
     the national treasury. The conclusion is that there must be 
     interwoven in the frame of the government a general power of 
     taxation, in one shape or another.

  I have heard certain Republican Senators recently on this floor state 
that they will never vote for a tax increase. Yet, Mr. President, it 
may be absolutely necessary to have a tax increase, if the Nation is 
faced with a military exigency such as that contemplated in section 5 
of the balanced budget amendment, and increases in taxes may also be 
necessary to balance the budget, or to pay for other important objects 
that are within the jurisdiction of the Congress and the Union.
  Hamilton, in the Federalist No. 30, goes on to say:

       What substitute can there be imagined for this ignis 
     fatuus--

  That is a will-o'-the-wisp or jack-o-lantern.

       What substitute can there be imagined for this ignis fatuus 
     in finance, but that of permitting the national government to 
     raise its own revenues by the ordinary methods of taxation, 
     authorized in every well-ordered constitution of civil 
     government?

  Mr. President, we are not going to have ``ordinary methods of 
taxation'' if this balanced budget amendment is approved because, in 
order to increase revenues, ``a majority of the whole number of each 
house'' will be required to do so. And in some instances, as I have 
already demonstrated, that may amount to more than a two-thirds vote. 
It may actually amount to more than two-thirds or three-fifths of the 
total membership in a given situation.
  Continuing with Hamilton's Federalist No. 30:

       Ingenious men may declaim with plausibility on any subject; 
     but no human ingenuity can point out any other expedient to 
     rescue us from the inconveniences and embarrassments, 
     naturally resulting from defective supplies of the public 
     treasury.
       How is it possible that a government half supplied and 
     always necessitous, can fulfill the purposes of its 
     institution--can provide for the security of--advance the 
     prosperity--or support the reputation of the commonwealth? 
     How can it ever possess either energy or stability, dignity 
     or credit, confidence at home or respectability abroad?

  Mr. President, this new amendment with its supermajorities will makes 
this Nation musclebound. It will put the Nation in a straitjacket when 
it comes to the necessity of increasing revenues, when it comes to the 
necessity of waving the requirements that outlays not exceed receipts.
  Let us look at the plausibility of these new supermajorities which 
fly in the face of what the Framers contemplated. I call attention to 
the fact that, under the Articles of Confederation agreed to on 
November 15, 1777, supermajorities were required in great number--one 
of the reasons why the Articles of Confederation did not work well. I 
shall read from article 10 of the Articles of Confederation.

       The united states in congress assembled shall never engage 
     in a war, nor grant letters of marque and reprisal in time of 
     peace, nor enter into any treaties or alliances, nor coin 
     money, nor regulate the value thereof, nor ascertain the sums 
     and expences necessary for the defence and welfare of the 
     united states, or any of them, nor emit bills, nor borrow 
     money on the credit of the united states, nor appropriate 
     money, nor agree upon the number of vessels of war, to be 
     built or purchased, or the number of land or sea forces to be 
     raised, nor appoint a commander-in-chief of the army or navy, 
     unless nine states assent to the same; nor shall a question 
     on any other point, except for adjourning from day to day be 
     determined, unless by the votes of a majority of the united 
     states in congress assembled.

  Well, there were 13 States. Nine votes would mean a majority of the 
whole number. But in the case of ascertaining the sums and expenses 
necessary for the defense and welfare of the United States or to borrow 
money on the credit of the United States or to appropriate money or to 
agree upon the number of vessels at war to be built or 
[[Page S3152]] purchased, or to agree upon the number of land or sea 
forces to be raised, a supermajority of 9 States out of the 13 would be 
required in each of those instances. Hence, the Articles of 
Confederation were filled with requirements for supermajorities. As I 
say, that was one of the primary reasons why the Articles of 
Confederation did not work.
  So, the Framers of our Constitution, some of whom had served in the 
Congress under the Articles of Confederation, saw the bane of those 
supermajorities and were determined that the new Constitution would not 
contain them. Therefore, only a majority is required to exercise the 
great policy powers that are granted in article I, section 8 and in 
section 9 of the Constitution.
  I offered an amendment last week that would have eliminated the 
problem with section 5, insofar as a majority of the whole number of 
each House is required to lift the restrictions of the balanced budget 
amendment in a time of serious conflict, the security of the Nation 
being at stake. My amendment was tabled by a vote of 55 to 41. The 
language of section 5 remains.
  I talked about the possibility of a Vice President not being able to 
cast a vote that would count in a situation arising under section 5 of 
the balanced budget amendment, because at least 51 Senators would be 
required. At least 51 Senators would be required to lift the strictures 
imposed by the balanced budget amendment. In the event of a 50-50, or a 
48-48, or a 47-47 vote--a vote of the Vice President could not break 
the tie to make a simple majority. A minimum of 51 Members of the 
Senate must vote to lift such restrictions in a time of danger to the 
Nation.
  Here is what Hamilton said in Federalist No. 68:

       The appointment of an extraordinary person, as Vice 
     President, has been objected to as superfluous, if not 
     mischievous.
       . . . two considerations seem to justify the ideas of the 
     convention in this respect. One is, that to secure at all 
     times the possibility of a definitive resolution of the body, 
     it is necessary that the President should have only a casting 
     vote.

  There are other dangers in the balanced budget amendment that I have 
cited from time to time. I think it is pregnant with an invitation to 
the judiciary to intervene. There is nothing in the balanced budget 
amendment that either forbids or invites the judiciary to intervene in 
the enforcement of the balanced budget amendment. But I think that 
circumstances themselves would result in the intervention by the 
judiciary when it came to cutting programs, increasing taxes, deciding 
other problems and cases and controversies that might arise under this 
new article and even outside the new article.
  I read from Hamilton, Federalist No. 78:

       The executive not only dispenses the honors, but holds the 
     sword of the community. The legislature not only commands the 
     purse, but prescribes the rules by which the duties and 
     rights of every citizen are to be regulated. The judiciary, 
     on the contrary, has no influence over either the sword or 
     the purse. . . . It proves incontestably that the judiciary 
     is beyond comparison the weakest of the three departments of 
     power.
       . . . there is no liberty, if the power of judging be not 
     separated from the legislative and executive powers.

  Mr. President, when this new amendment is adopted and later 
ratified--if it is adopted and ratified--it will stand Hamilton's words 
on their head. The judiciary will then become the strongest of the 
three departments of power, rather than the weakest, as Hamilton had 
said in the Federalist No. 78.
  No one can say, Mr. President, with absolute certitude as to what 
will happen if and when this amendment is made a part of the 
Constitution. Nobody can say
 with absolute certainty. But we have to explore these possibilities, 
and I fear, with great alarm, the possibility, nay the probability, 
that the power of the purse will be shifted to the executive; and when 
cases or controversies arise, the courts will intervene and we will 
have situations in which the courts, made up of unelected judges with 
life tenures, will be telling the Congress when to tax, where to tax, 
how much to tax, when to cut programs, what programs to cut, and by how 
much, and it will be a sad day when our country awakens to the fact 
that the judiciary is the strongest of the three branches. Even if 
there were a way to exclude the judiciary--and the Johnston amendment 
was an attempt to do so, but it was rejected--the legislative branch 
would still be weakened.

  Mr. Nunn has an amendment which will be voted on. I will support the 
Nunn amendment, as I supported the Johnston amendment. But I do not 
concede that that amendment will eliminate all prospects of the 
judicial branch's entering into the political thicket of decisions with 
respect to this new article, the balanced budget amendment.
  What did Madison say about the power of the purse in Federalist No. 
58? This is what he said:

       The House of Representatives cannot only refuse, but they 
     alone can propose the supplies requisite for the support of 
     Government. They, in a word, hold the purse; that powerful 
     instrument by which we behold, in the history of the British 
     Constitution, an infant and humble representation of the 
     people, gradually enlarging the sphere of its activity and 
     importance, and finally reducing, as far as it seems to have 
     wished, all the overgrown prerogatives of the other branches 
     of the Government. This power over the purse may, in fact, be 
     regarded as the most complete and effectual weapon with which 
     any constitution can arm the immediate representatives of the 
     people, for obtaining a redress of every grievance, and for 
     carrying into effect every just and salutary measure.

  In the Federalist No. 48, by Madison, we are told,

       . . . the legislative department alone has access to the 
     pockets of the people.

  All this is going to be changed, Mr. President, once this balanced 
budget amendment goes into the Constitution. If it ever becomes a part 
of the Constitution, much of what Madison and Hamilton have said in the 
Federalist Papers will have been thrust aside by today's would-be 
Framers. This power over the purse may, in fact, be shifted to the 
executive and judicial branches of Government and away from the 
people's representatives in Congress.
  There is also a danger of too-frequent amendments to the 
Constitution. Hamilton warned of this in Federalist No. 49.

       . . . as every appeal to the people would carry an 
     implication of some defect in the Government, frequent 
     appeals would, in great measure, deprive the Government of 
     that veneration, which time bestows on everything, and 
     without which perhaps the wisest and freest governments would 
     not possess the requisite stability.

  So here we are, we are about to appeal to the people again by 
submitting to them this balanced budget constitutional amendment. The 
fact that the Senate has taken 30 days to deliberate on this amendment, 
points, Mr. President, to the utility of the Senate. This balanced 
budget amendment was adopted by the other body in 2 days--2 days! 
Including tomorrow, the balanced budget amendment will have been before 
the Senate for a total of 30 days. During those 30 days, Senators have 
debated at considerable length the entire new article, and they have 
found numerous flaws which, upon careful probing, were brought to 
light. This did not happen in the other body. It happened here because 
this is the U.S. Senate, where there is unlimited debate, which can 
only be shut off by a cloture motion or by a unanimous-consent 
agreement entered into by all Senators.
  I believe the constitutional Framers would have been proud of the 
Senate in this instance. I do not know how proud they would be of the 
Senate, once the rollcall vote is taken tomorrow evening upon the final 
disposition of this glittering gewgaw of glorified garbage. That 
remains to be seen. I hope they will be proud of it, as they look down 
from above, because I hope that the amendment will be defeated.
  Madison spoke of the utility of the Senate in Federalist No. 62.

       The necessity of a senate is not less indicated by the 
     propensity of all single and numerous assemblies to yield to 
     the impulse of sudden and violent passions, and to be seduced 
     by factious leaders into intemperate and pernicious 
     resolutions.

  What Madison said in the Federalist No. 62 reflects exactly what took 
place in the House of Representatives--passage after only 2 days of 
debate on this amendment. Let me read Madison's words again from the 
Federalist No. 62.

       The necessity of a senate is not less indicated by the 
     propensity of all single and numerous assemblies, to yield to 
     the impulse of sudden and violent passions, and to be seduced 
     by factious leaders, into intemperate and pernicious 
     resolutions. . . . The mutability in the public councils, 
     arising from a rapid succession of new members, however 
     qualified they may be, points out, in the strongest manner, 
     the necessity of some stable institution in the government.

  [[Page S3153]] And in Federalist No. 63, Madison continues to write 
about the utility of having a Senate. I quote:

       . . . so there are particular moments in public affairs 
     when the people, stimulated by some irregular passion, or 
     some illicit advantage, or misled by the artful 
     misrepresentations of interested men, may call for measures 
     which they themselves will afterwards be the most ready to 
     lament and condemn. In these critical moments, how salutary 
     will be the interference of some temperate and respectable 
     body of citizens, in order to check the misguided career and 
     to suspend the blow meditated by the people against 
     themselves, until reason, justice, and truth can regain their 
     authority over the public mind? What bitter anguish would not 
     the people of Athens have often escaped if their government 
     had contained so provident a safeguard against the tyranny of 
     their own passions? Popular liberty might then have escaped 
     the indelible reproach of decreeing to the same citizens the 
     hemlock on one day and statues on the next.
  Mr. President, how much time do I have remaining?
  The PRESIDING OFFICER. The Chair is advised the Senator has 9 minutes 
remaining.
  Mr. BYRD. I thank the Chair.
  Mr. President, that Montesquieu or Locke or Washington or Madison or 
Hamilton could have believed in the fooleries contained in this 
constitutional amendment on the balanced budget cannot be suspected.
  I should think that the amendment might very well be pronounced as 
the ``gunpowder plot'' against the Constitution. The Gunpowder Plot was 
that conspiracy which was discovered and foiled when Guy Fawkes and a 
group of Englishmen intended to blow up the English Parliament on 
November 5, 1605, the day that King James I was to address it.
  Fortunately the plot was foiled. Whether or not this ``gunpowder 
plot'' against the Constitution will be foiled will be determined by 
tomorrow's vote, but I will cast one vote to help in its demise.
  Mr. President, I think that about the best that can be said of the 
amendment is that it is a partisan, political amendment. In it we can 
see the ``cloven foot'' as to the intentions of most of those in the 
Senate who support it. It is a political amendment. It is supported by 
a political party, as witness the fact that all but one of the 
Republican Senators will very likely vote for it. Political ads have 
been run throughout the Nation by the Republican Party in support of 
it. It is a partisan amendment. That is what we are about to nail into 
the Constitution.
  Washington, in his farewell address, warned us against putting in the 
place of

       The delegated will of the nation the will of party, often a 
     small but artful and enterprising minority of the community; 
     and, according to the alternate, triumphs of different 
     parties, to make the public administration the mirror of the 
     ill concerted and incongruous projects of faction . . . they 
     are likely, in the course of time and things to become potent 
     engines, by which cunning, ambitious, and unprincipled men, 
     will be enable to subvert the power of the people, and to 
     usurp for themselves the reigns of government; destroying 
     afterwards the very engines which have lifted them to unjust 
     dominion.
  Mr. President, the proponents of this amendment in the Congress are 
really living in a fool's paradise. They are living in a state of 
illusive bliss, suspended in the limbo of hypocrisy, doublespeak, 
double-shuffle, vanity, and nonsense. Milton spoke about the limbo of 
vanity in ``Paradise Lost.'' Dante wrote in his ``Divine Comedy'' that 
limbo was the first circle of Hell.
  Mr. President, let me close by remembering some words from the 
``Rubaiyat'' written by Omar Khayyam, a Persian poet of the 12th 
century:

       The Moving Finger writes; and, having writ,
       Moves on: nor all your Piety nor Wit
       Shall lure it back to cancel half a Line,
       Nor all your Tears wash out a Word of it.

  Mr. President, I ask unanimous consent to have printed in the Record 
an editorial from the New York Times of today, February 27, titled 
``Unbalanced Amendment,'' together with letters from the Secretaries of 
Defense; Housing and Urban Development; Education; Veterans Affairs; 
Health and Human Services; and Justice; and various and sundry other 
articles and materials that are germane to the subject of the balanced 
budget amendment.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

         Executive Office of the President, Council of Economic 
           Advisers,
                                Washington, DC, February 23, 1995.
     Hon. Robert C. Byrd,
     U.S. Senate,
     Washington, DC.
       Dear Senator Byrd: The Council of Economic Advisers is 
     strongly opposed to a balanced budget amendment to the 
     Constitution. Although continued progress on deficit 
     reduction is sound economics, a balanced budget amendment is 
     not. As the attached opinion piece which appeared in The 
     Washington Post two weeks ago indicates, such an amendment 
     would eliminate the ability of the Federal budget to moderate 
     the cyclical ups and downs of business cycles which are 
     normal occurrences in a market economy. Indeed, a balanced 
     budget amendment would actually require budgetary policy to 
     aggravate the business cycle, by requiring Congress to 
     increase taxes or cut spending whenever the economy slowed in 
     order to avoid an increase in the deficit. Statistical 
     analysis performed at the Council and at the Department of 
     the Treasury indicates that the amendment would cause 
     recessions to be substantially deeper.
       With fiscal policy enjoined by a balanced budget amendment 
     to be destabilizing rather than stabilizing, sole 
     responsibility for moderating the business cycle would rest 
     with the Federal Reserve. As the attached analysis indicates, 
     even a well-intentioned and prescient Federal Reserve would 
     not be able to play this role as well on its own as it can 
     working in tandem with the automatic fiscal stabilizers. 
     Moreover, in order to fulfill this responsibility, the 
     Federal Reserve might well have to foster greater cyclical 
     variability in interest rates, something which could have a 
     destabilizing effect on financial markets. Finally, there is 
     no reason to assume that Federal Reserve decisions will be 
     influenced by the single goal of stabilizing output and 
     employment levels. Historically, concern about inflation has 
     been the major determinant of Federal Reserve actions. 
     Indeed, some proponents of the balanced budget amendment have 
     also proposed legislation that would require the Federal 
     Reserve's only policy target to be price stability. If such 
     legislation were also to become law, neither monetary nor 
     fiscal policy would be available to limit the ups and downs 
     of the business cycle and their attendant human and economic 
     costs.
       Deficit reduction can be achieved even without a balanced 
     budget amendment. This Administration, working with the 
     Democrats of the 103rd Congress, dramatically reduced the 
     deficits for FY1994 and FY1995, and the budget we have just 
     presented for FY1996 makes additional progress. If it were 
     not for the interest owed on the debt accumulated during the 
     1981-92 period, the federal budget would be in balance by 
     1996 and headed toward surplus thereafter. Based on our 
     projections, the Clinton Administration will be the first 
     since the Johnson Administration to run a non-interest budget 
     surplus for a cycle of four fiscal years. Moreover, net 
     federal debt, after tripling during the 1980s, has now 
     stabilized relative to the size of the economy, and the 
     deficit is projected to decline relative to the size of the 
     economy for at least the next ten years.
       A balanced budget amendment offers only a promise to reduce 
     the deficit--it does not reduce the deficit by a single 
     penny. And it has the potential to cause serious economic 
     harm. I urge you to vote against it for the economic well-
     being of the Nation.
           Sincerely yours,
     Laura D'Andrea Tyson,
       Chair.
     Martin N. Baily,
       Member-Nominee.
     Joseph E. Stiglitz,
       Member.
                                                                    ____

                [From the Washington Post, Feb. 7, 1995]

                    It's a Recipe for Economic Chaos

                       (By Laura D'Andrea Tyson)

       Continued progress on reducing the deficit is sound 
     economic policy, but a constitutional amendment requiring 
     annual balance of the federal budget is not. The fallacy in 
     the logic behind the balanced budget amendment begins with 
     the premise that the size of the federal deficit is the 
     result of conscious policy decisions. This is only partly the 
     case. The pace of economic activity also plays an important 
     role in determining the deficit. An economic slowdown 
     automatically depresses tax revenues and increases government 
     spending on such programs as unemployment compensation, food 
     stamps and welfare.
       Such temporary increases in the deficit act as ``automatic 
     stabilizers,'' offsetting some of the reduction in the 
     purchasing power of the private sector and cushioning the 
     economy's slide. Moreover, they do so quickly and 
     automatically, without the need for lengthy debates about the 
     state of the economy and the appropriate policy response.
       By the same token, when the economy strengthens again, the 
     automatic stabilizers work in the other direction: tax 
     revenues rise, spending for unemployment benefits and other 
     social safety net programs falls, and the deficit narrows.
       A balanced budget amendment would throw the automatic 
     stabilizers into reverse. Congress would be required to raise 
     tax rates or cut spending programs in the face of a recession 
     to counteract temporary increases in 
     [[Page S3154]] the deficit. Rather than moderating the normal 
     ups and downs of the business cycle, fiscal policy would be 
     required to aggravate them.
       A simple example from recent economic history should serve 
     as a cautionary tale. In fiscal year 1991, the economy's 
     unanticipated slowdown caused actual government spending for 
     unemployment insurance and related items to exceed the 
     budgeted amount by $6 billion, and actual revenues to fall 
     short of the budgeted amount by some $67 billion. In a 
     balanced-budget world, Congress would have been required to 
     offset the resulting shift of more than $70 billion in the 
     deficit by a combination of tax hikes and spending cuts that 
     by themselves would have sharply worsened the economic 
     downturn--resulting in an additional loss of 1\1/4\ percent 
     of GDP and 750,000 jobs.
       The version of the amendment passed by the House has no 
     special ``escape clause'' for recessions--only the general 
     provision that the budget could be in deficit if three-fifths 
     of both
      the House and Senate agree. This is a far cry from an 
     automatic stabilizer. It is easy to imagine a well-
     organized minority in either House of Congress holding 
     this provision hostage to its particular political agenda.
       In a balanced-budget world--with fiscal policy enjoined to 
     destabilize rather than stabilize the economy--all 
     responsibility for counteracting the economic effects of the 
     business cycle would be placed at the doorstep of the Federal 
     Reserve. The Fed could attempt to meet this increased 
     responsibility by pushing interest rates down more 
     aggressively when the economy softens and raising them more 
     vigorously when it strengthens. But there are several reasons 
     why the Fed would not be able to moderate the ups and downs 
     of the business cycle on its own as well as it can with the 
     help of the automatic fiscal stabilizers.
       First, monetary policy affects the economy indirectly and 
     with notoriously long lags, making it difficult to time the 
     desired effects with precision. By contrast, the automatic 
     stabilizers of fiscal policy swing into action as soon as the 
     economy begins to slow, often well before the Federal Reserve 
     even recognizes the need for compensating action.
       Second, the Fed could become handcuffed in the event of a 
     major recession--its scope for action limited by the fact 
     that it can push short-term interest rates no lower than 
     zero, and probably not even that low. By historical 
     standards, the spread between today's short rates of 6 
     percent and zero leaves uncomfortably little room for 
     maneuver. Between the middle of 1990 and the end of 1992, the 
     Fed reduced the short-term interest rate it controls by a 
     cumulative total of 5\1/4\ percentage points. Even so, the 
     economy sank into a recession from which it has only recently 
     fully recovered--a recession whose severity was moderated by 
     the very automatic stabilizers of fiscal policy the balanced 
     budget amendment would destroy.
       Third, the more aggressive actions required of the Fed to 
     limit the increase in the variability of output and 
     employment could actually increase the volatility of 
     financial markets--an ironic possibility, given that many of 
     the amendment's proponents may well believe they are 
     promoting financial stability.
       Finally, a balanced budget amendment would create an 
     automatic and undesirable link between interest rates and 
     fiscal policy. An unanticipated increase in interest rates 
     would boost federal interest expense and thus the deficit. 
     The balanced budget amendments under consideration would 
     require that such an unanticipated increase in the deficit be 
     offset within the fiscal year.
       In other words, independent monetary policy decisions by 
     the Federal Reserve would require immediate and painful 
     budgetary adjustments. Where would they come from? Not from 
     interest payments and not, with such short notice, from 
     entitlement programs. Rather they would have to come from 
     either a tax increase or from cuts or possible shutdowns in 
     discretionary programs whose funds had not yet been 
     obligated. This is not a sensible way to establish budgetary 
     priorities or maintain the healthy interaction and 
     independence of monetary and fiscal policy.
       One of the great discoveries of modern economics is the 
     role that fiscal policy can play in moderating the business 
     cycle. Few if any members of the Senate about to vote on a 
     balanced budget amendment experienced the tragic human costs 
     of the Great Depression, costs made more severe by President 
     Herbert Hoover's well intentioned but misguided efforts to 
     balance the budget. Unfortunately the huge deficits inherited 
     from the last decade of fiscal profligacy have rendered 
     discretionary changes in fiscal policy in response to the 
     business cycle all but impossible. Now many of those 
     responsible for the massive run-up in debt during the 1980s 
     are leading the charge to eliminate the automatic stabilizers 
     as well by voting for a balanced budget amendment.
       Instead of undermining the government's ability to moderate 
     the economy's cyclical fluctuations by passing such an 
     amendment, why not simply make the hard choices and cast the 
     courageous votes required to reduce the deficit--the kind of 
     hard choices and courageous votes delivered by members of the 
     103rd Congress when they passed the administration's $505 
     billion deficit reduction package?
                                                                    ____

                                     The Secretary of Defense,

                                 Washington, DC, January 11, 1995.
     Hon. Robert C. Byrd,
     Committee on Appropriations,
     U.S. Senate, Washington, DC.
       Dear Senator: Thank you for your recent letter. I join you 
     in looking forward to working together closely on crucial 
     matters affecting our nation's future security.
       Your letter asked for my assessment of the probable and 
     possible consequences on America's defense posture of an 
     amendment to the Constitution requiring a balanced federal 
     budget. Such an assessment is detailed in the enclosed 
     statement, which was presented at a recent hearing on this 
     subject by John Hamre, Under Secretary of Defense 
     (Comptroller). This statement is an update of my presentation 
     to your committee last February 15, and I strongly support 
     its warnings. With the absence of any realistic 
     implementation details in the amendment, [I fear that huge 
     defense reductions are likely under a balanced budget 
     amendment, which would fundamentally change the character of 
     America's military posture, make our new strategy 
     unsupportable, call into question our ability to fulfill U.S. 
     commitments to our allies and to protect our interests 
     worldwide, and undermine U.S. global leadership.]
       I thank you for this opportunity to inject defense concerns 
     into the debate on this critical issue facing our nation.
           Sincerely,
     William J. Perry.
                                                                    ____

Statement of Under Secretary of Defense (Comptroller) John J. Hamre in 
    Connection With the Balanced Budget Amendment, House Judiciary 
                      Committee, January 10, 1995

       Mr. Chairman, members of the Committee, thank you for the 
     opportunity to appear before you today to discuss the 
     Balanced Budget Amendment, and the likely impact that it 
     would have on America's defense posture.
       The Balanced Budget Amendment (BBA) could severely 
     jeopardize America's national security, and that is one of 
     the major reasons for the Administration's opposition to it. 
     Unless legislatively exempted from reductions, defense 
     spending could end up being the primary billpayer to make 
     federal budgets balance, and that would fundamentally 
     undermine the security of our nation.
       If the Balanced Budget Amendment were adopted, America's 
     defense posture would be vulnerable to two different 
     problems: the impact on defense to reach a zero deficit and 
     the effect on defense of the annual budget process under the 
     BBA.


               impact on defense to get to a zero deficit

       (Chart 1) To illustrate the impact of getting to a zero 
     deficit, several assumptions have to be made about the final 
     date and provisions of the BBA. Let us assume that the year 
     of BBA implementation if 2002, and make calculations based on 
     the most recent deficit projections by the Congressional 
     Budget Office. Balancing the budget on a phased basis--14 
     percent year in 1996 through 2002--would require a total of 
     $1,040 billion in spending cuts and/or revenue increases.
       Exactly how much the Department of Defense (DoD) would have 
     to contribute to achieving a zero deficit would depend on how 
     much revenue would be increased and whether entitlements 
     would be cut. Under the worst case scenario, there would be 
     no increase in revenue and no cuts in the entitlement 
     programs. This means the budget would have to be balanced by 
     cuts in discretionary spending, of which national defense 
     represents about one half. The best case scenario assumes 
     half of the deficit would be offset by increases in revenue 
     and the other half proportionately to spending for 
     entitlements and domestic and defense discretionary programs.
       (Chart 2) Not reproducible in the Record.
       (Chart 3) For national defense, the best case scenario 
     would have a serious impact on national security. The worst 
     case would be a disaster. Achieving these totals would entail
      subtantial reductions to defense people and programs, which 
     are already downsized to the minimum acceptable level 
     deemed necessary in the Bottom-Up Review. Our forces would 
     become hollow and we would have to give up our quality of 
     life initiatives such as adequate compensation for 
     military personnel, child care programs, decent barracks 
     and family housing and other programs that provide a sense 
     of community and support for military families. We would 
     have to stop the modernization and recapitalization, which 
     is needed and planned in our current five-year budget. We 
     would have to cut back our emphasis on science and 
     technology and technology reinvestment programs, and 
     thereby risk the technological edge that has always given 
     our forces an advantage over our adversaries.
       Reductions such as these would fundamentally change the 
     character of America's military posture, make our new 
     strategy unsupportable, call into question our ability to 
     fulfill U.S. commitments to our allies and to protect our 
     interests worldwide, and undermine America's global 
     leadership.


                The Annual Budget Process Under the BBA

       Let me now turn to the second problem: Life under a 
     balanced budget amendment.
       What about the effect on defense of the annual budget 
     process under the Balanced Budget Amendment? The BBA annual 
     budget process could routinely end up removing from our 
     elected political leaders the decision about what level of 
     defense spending is prudent. America's defense preparedness 
     could get determined by economic shifts, cost growth in 
     entitlements, and other non-defense factors. Even if threats 
     to America's 
     [[Page S3155]] global interests were increasing or our forces 
     deteriorating, the BBA could lead to deep defense cuts.
       The fact that these consequences could be avoided with \3/
     5\ approval of each house of Congress is scant reassurance. 
     Preservation of an adequate defense posture would become 
     dependent on exceptional political efforts. The BBA process 
     would be heavily skewed in favor of cutting defense to 
     compensate for whatever was escalating elsewhere in the 
     budget. Even when a \3/5\ majority minus one in either house 
     believed that BBA cuts were unjustified, the minority view 
     would prevail. Not exactly ideal for the world's most 
     powerful democracy and best hope for future peace and 
     stability.
       The BBA would threaten frequent interruptions to the many 
     long-term processes that are essential to maintaining a 
     prudent defense posture. The quality and morale of our people 
     must be continually nurtured, and would be devastated by 
     rapid and deep cuts in end strength. Our military and 
     civilian professionals require extensive training and 
     experience. We cannot recruit and retain top-notch military 
     and civilian professionals, if they are vulnerable to summary 
     dismissal.
       Repair parts must be ordered three years ahead of 
     anticipated use, in order to ensure the readiness of U.S. 
     forces. Many years of research and development are needed to 
     ensure that our forces are never outgunned or outmaneuvered. 
     The average major weapons procurement program requires 8 
     years of development and testing. Production lines are 
     necessarily set up anticipating stable procurement rates; 
     they cannot be stopped and started, in order to offset a 
     downturn in revenues or surge in entitlements. Because of the 
     long-lead times needed for our weapons systems, DoD is unique 
     among executive departments in that we must have detailed 
     five-year plans incorporating them. It would be extremely 
     costly, and essentially unworkable, to turn on and off 
     defense programs, when the BBA forced deep budget cuts.
       In sum, budgeting under BBA would inject great uncertainty 
     and chaos into defense planning, which needs to have 
     stability and a long-term perspective.
       (Chart 4) Small changes in the U.S. economy would mean even 
     bigger budget problems. Using the CBO rule of thumb, a one 
     percent rise per year in interest rates would increase the 
     federal budget deficit $5 billion in the first year and 108 
     billion over five years. A one percent fall per year in real 
     growth in the economy would increase the deficit $9 billion 
     in the first year and $289 billion over five years. Thus 
     under the BBA, even modest changes in the economy could 
     trigger sweeping cuts to federal programs.


                                closing

       The Balanced Budget Amendment addresses a very important 
     issue, but it would dramatically complicate our ability to 
     plan for and manage a strong Department of Defense.
       Defense programs would be especially vulnerable under the 
     BBA, because DoD accounts for about half of all discretionary 
     spending. And that is critical because the BBA has no 
     implementation details. Unless the BBA becomes a vehicle by 
     which revenues are increased or entitlements cut, DoD could 
     well have to pay for half of every dollar of deficit 
     reduction.
       DoD budget authority, in real terms, has been in decline 
     since FY 1985. We have finally reached the end of our 
     builddown. It would be dangerous to continue to downsize our 
     forces at this time. The Balanced Budget Amendment would cut 
     defense spending to whatever level its arbitrary formula 
     dictated, and thereby displace the carefully considered 
     judgments of Members of Congress, Presidents, and civilian 
     and military leaders as to what spending is necessary and 
     wise. I do not believe such an approach to questions of 
     national security would serve America well.
               Impact on Defense to Get to A Zero Deficit

       In order to assess the impact on DOD, assumptions have to 
     be made about final date and provisions of the balanced 
     budget amendment:

------------------------------------------------------------------------
                                                  Assumption            
------------------------------------------------------------------------
Year of implementation.............  2002.                              
Projected deficit at implementation  Current budget projection.         
Will revenue be increased?.........  If yes, 50%/50% revenue/spending.  
Will entitlements be cut?..........  If yes, in proportion to outlays.  
------------------------------------------------------------------------

                   Impact of Cuts on National Defense

       Make substantial reductions to military and civilian 
     personnel.
       Return to ``Hollow Forces.''
       Cancel Quality of Life Initiatives.
       Stop planned modernization and recapitalization.
       Cut back on science and technology.
       Cancel technology and reinvestment programs.
       Fundamentally change U.S. military posture.
       Undermine U.S. commitments to allies.
       Small Economic Changes Mean Big Budget Problems
       Modest changes in the economy would necessitate sweeping 
     program cuts.

                            CBO RULE OF THUMB                           
                        [In billions of dollars]                        
------------------------------------------------------------------------
                                                     Deficit impact     
                                               -------------------------
                                                 First year    5-Years  
------------------------------------------------------------------------
1 percent rise in interest rates..............            5          108
1 percent fall in real growth.................            9          289
------------------------------------------------------------------------

         U.S. Department of Housing and Urban Development, the 
           Secretary,
                                  Washington DC, February 8, 1995.
     Senator Robert Byrd,
     Ranking Minority Member, Committee on Appropriations, U.S. 
         Senate, Washington, DC.
       Dear Senator Byrd: This letter presents the views of the 
     Department of Housing and Urban Development on the proposed 
     balanced budget amendment, House Joint Resolution 1. We are 
     opposed to the proposed balanced budget amendment because it 
     is unnecessary and could undermine important functions of 
     this Department.
       We certainly support the intended goal of reducing the 
     federal deficit. Indeed, in 1993 the President joined with 
     Members of Congress to enact the largest deficit reduction 
     bill in history. The Administration looks forward to 
     continuing to work with Congress on deficit reduction.
       At the Department of Housing and Urban Development, we have 
     established basis spending priorities to guide our decisions 
     in preparing budgets for FY 96 and beyond. We have made our 
     own hard choices and tough spending cuts in developing our 
     proposed ``Reinvention Blueprint'', which would consolidate 
     60 programs into three programs and accomplish $800 million 
     in administrative savings alone over the next five years. 
     Further program reforms and budget economies to be announced 
     February 6, 1995 will show five year savings at HUD of $51 
     billion in budget authority and $13 billion in outlays. In 
     addition, we have already generated savings through a 
     reorganization of our field structure to eliminate an entire 
     layer of regional management. We have found many ways to do 
     more with less people through service-oriented, performance-
     driven, results management, and partnerships with communities 
     and the people we serve.
       The proposed balanced budget amendment would create havoc 
     with our budget decisions and program management. It could 
     have a devastating impact on HUD's mission of service to the 
     American people and communities. For example, our Department 
     worked very hard to provide emergency relief to the victims 
     of natural disasters such as the Southern California 
     earthquake, the Midwest floods, Hurricane Andrew in Florida 
     and Hurricane Iniki in
      Hawaii. Our ability to respond rapidly and effectively to 
     emergencies could be severely curtailed by the balanced 
     budget amendment. The amendment's requirement of a three-
     fifths vote could cause long delays, severe hardship, and 
     perhaps even irreparable harm for the many people that 
     will lose their homes and urgently need adequate housing 
     in these emergency situations.
       While we support the goal of a balanced budget, the 
     proposals under consideration to achieve a balanced budget by 
     the year 2002 could require an unprecedented level of 
     reductions in our programs. It is our understanding that, if 
     social security and defense are exempt from reductions and 
     the tax cuts in the Contract with America are enacted, the 
     remaining Federal programs will have to be reduced by more 
     than 30 percent in FY 2002. For HUD, this would mean a cut of 
     about $10 billion in one year alone. Assuming that reductions 
     of this magnitude would be evenly spread across agencies and 
     accounts, the effect on HUD programs would be devastating. 
     For example, low-income rental assistance, which in the 
     President's Budget would already be declining at the end of 
     the century, would suffer severely, putting thousands more 
     families at risk of homelessness, and our capacity to assist 
     the already homeless would be crippled. A cut of 30 percent--
     $1.4 billion--in Community Opportunity Performance Funds 
     (CDBG), would be a major blow to cities and communities 
     across the nation who depend on the grant to support low-
     income job creation and infrastructure.
       HUD has taken a disciplined, fiscally responsible, creative 
     approach to achieving our key priorities. We have proposed 
     dramatic, sweeping changes in the way the Department is 
     structured and operates. Implementation of our Reinvention 
     Blueprint would make HUD a more customer-driven, cost-
     effective, entrepreneurial organization. With consolidation 
     of existing programs into performance-based funds, the focus 
     would be on serving people and communities and producing 
     better outcomes at significantly less cost.
       This Administration has made great strides in reducing the 
     size of the Federal budget and HUD has contributed to that 
     effort. We must continue these efforts, but we must be 
     prudent and produce real results, not simply crowd-pleasing 
     rhetoric.
       I am committed to working with the Congress to produce 
     savings through further responsible program rescissions, 
     reductions and reforms.
           Sincerely,
                                                Henry G. Cisneros.
                               __________

                                     U.S. Department of Education,


                                                The Secretary,

                                Washington, DC, February 22, 1995.
     Hon. Robert C. Byrd,
     Committee on Appropriations, U.S. Senate, Washington, DC.
       Dear Senator Byrd: Thank you for your recent call and your 
     inquiry concerning the possible impact of a balanced budget 
     amendment to the Constitution on the operation of Federal 
     education programs. I have set out some examples of the 
     effect of the implementation of such an amendment on 
     education programs.
       [[Page S3156]] I am informed by reliable analysts that if 
     we assume that Social Security and National Defense 
     Expenditures are exempted from the reductions in Federal 
     spending required to comply with a balanced budget amendment, 
     all other Federal programs could be subject to an estimated 
     30 percent reduction from the 1995 appropriated level.
       Based on these assumptions, the following are some specific 
     examples of how these reductions could affect Department of 
     Education programs:
       Financial aid for college--the surest route to the middle 
     class American dream--would be slashed. A 30 percent cut 
     would require a $2 billion cut in Pell Grant funding, 
     eliminating awards to nearly 300,000 students and reducing 
     the average award to the remaining 3.5 million students from 
     $1,548 to $1,218. The termination of loan interest subsidies 
     for 3 million low-income students and their families could 
     increase borrowing costs by as much as 20 percent over the 
     life of their loans. Support for the Supplemental Educational 
     Opportunity Grant and Work-Study programs would decline by 
     $360 million, eliminating awards to more than 500,000 needy 
     postsecondary students. These cuts would effectively reverse 
     30 years of progress in expanding postsecondary education 
     opportunity.
       Goals 2000 and School-to-Work Opportunities. Reform efforts 
     now under way in nearly all States would be dramatically 
     scaled back, forcing the Nation to significantly reduce its 
     commitment to high standards for all students. Under Goals 
     2000, for example, 45 States and 5 territories and thousands 
     of communities are working hard to improve their schools, and 
     are counting on these Federal dollars to help implement their 
     education reform plans.
       Title I Grants to Local Educational Agencies. The $2 
     billion cut required by a balanced budget amendment could 
     reduce assistance to over 6 million economically 
     disadvantaged elementary and secondary school students, or 
     even terminate services altogether to as many as 2 million 
     students. Title I helps low-achieving children, particularly 
     those in high-poverty schools, meet the same challenging 
     academic content and performance standards expected of all 
     children.
       Special Education Grants to States. Federal assistance in 
     meeting the extra costs of serving over 5.6 million children 
     with disabilities could drop from $426 to $298 per eligible 
     child. Similar reductions for preschool and early 
     intervention programs could lead many States to stop serving 
     younger children with disabilities, a step that could only 
     increase the need for more expensive services in later years.
       Impact Aid. For this program, there could be a 30 percent 
     reduction in Federal support for paying the operating costs 
     of school districts enrolling large numbers of Federally 
     connected children. Districts heavily dependent on such 
     support could be forced to undertake such actions as 
     furloughing or laying off teachers or shortening the length 
     of the school year.
       All of these serious reductions in Federal support for 
     education could come at a time when international economic 
     competition demands ever higher skill levels from American 
     workers, and when our civic life and democracy demands better 
     educated citizens. It is absolutely the wrong time to take 
     any steps that might reduce our investment in education. I 
     hope that this information will aid your efforts to place the 
     full implications of such an amendment before the Members of 
     the United States Senate.
           Yours sincerely,
     Richard W. Riley.
                                                                    ____

         The Secretary of Veterans Affairs,
                                 Washington, DC, January 30, 1995.
     Hon. Robert C. Byrd,
     Ranking Minority Member, Committee on Appropriations, U.S. 
         Senate, Washington, DC.
       Dear Senator Byrd: This is in response to your request for 
     information on the potential effect on VA programs of the 
     Balanced Budget Amendment that is soon to be considered on 
     the Senate floor. I appreciate the need for continuing 
     efforts to reduce federal deficits and support the goal of a 
     balanced budget. However, I am extremely worried about how 
     the current proposal would affect veterans and their 
     families.
       The proponents of the amendment have refused to indicate 
     what spending cuts they would make in order to eliminate the 
     deficit by fiscal year 2002. Nevertheless, many of the 
     amendment's proponents have indicated what they will not do 
     to eliminate the deficit: reduce Social Security and increase 
     taxes. At the same time, they are promising to create new 
     deficit pressures by increasing defense spending and actually 
     reducing taxes, again without showing how they would offset 
     the enormous costs involved in their initiatives. But despite 
     the fundamental nature of the federal government's commitment 
     to our veterans, Balanced Budget Amendment proponents have 
     left VA programs on the table--subject to tremendous, 
     inevitable pressures that the amendment will create to cut 
     unprotected programs.
       It is my understanding that, if Social Security and defense 
     are exempt from reductions and the tax cuts in the Contract 
     With America are enacted, then remaining federal programs 
     will have to be reduced by more than 30 percent in FY 2002. 
     Assuming, in the current absence of specifics, that such a 
     reduction would be applied across the board, it would have a 
     devastating effect on veterans' programs.
       A 30-percent reduction to the Veterans Health 
     Administration would prohibit us from providing health care 
     services to many of those whom we now treat. A reduction in 
     full-time-equivalent employees (FTEE) of 63,000 in 2002 could 
     be expected and we would be able to treat 488,000 fewer 
     inpatients and accommodate 11,403,000 fewer outpatient 
     visits. The cutbacks could mean the closing of many VA
      hospitals, outpatient clinics, and nursing homes. In fact, 
     the viability of the VA as a national health-care system 
     for veterans could be threatened. It certainly could not 
     be maintained on the same scale as today's system, and the 
     Department's ability to maintain the current high level of 
     quality care could be severely damaged.
       Similarly, our Regional Offices could suffer a reduction of 
     3,000 FTEE, which might make it impossible for us to process 
     veterans' claims for benefits in a timely way. Likewise, 
     operations in the National Cemetery System might have to be 
     severely curtailed; impairing our ability to bury veterans 
     with dignity.
       The many benefit programs that VA administers for disabled 
     veterans could also be subject to deep cuts. As an example, 
     certain severely disabled veterans who receive compensation 
     for service-connected disabilities would, under current 
     policy, be receiving approximately $42,400 per year by 2002. 
     A 30-percent reduction in such a veteran's earned benefit 
     would amount to $12,721 for that year. This is hardly an 
     appropriate response for a grateful nation.
       Our pension program for non-service-disabled wartime 
     veterans is designed to keep these disabled veterans from 
     living a life of abject poverty. A 30-percent cut in 2002 
     would result in a loss of up to $4,790 for the neediest of 
     veterans, and would force nearly all VA pension recipients 
     below the poverty line.
       Thank you for this opportunity to share with you my 
     concerns regarding the Balanced Budget Amendment. As always, 
     I greatly appreciate your concern for and support of veterans 
     and their families.
           Sincerely,
     Jesse Brown.
                                                                    ____

                                           The Secretary of Health


                                           and Human Services,

                                 Washington, DC, January 30, 1995.
     Hon. Robert C. Byrd,
     Ranking Minority Member, Committee on Appropriations, U.S. 
         Senate, Washington, DC.
       Dear Senator Byrd: Much has been said and written about 
     adding a balanced budget amendment to the United States 
     Constitution, but I want to make sure that the American 
     people and the members of Congress fully understand what such 
     an amendment could mean for the people served by the 
     Department of Health and Human Services.
       Let me be clear: While we support the goal of a balanced 
     budget, the proposals under consideration by the Congress to 
     achieve a balanced budget by the year 2002 could require an 
     unprecedented level of reductions in our programs--including 
     Medicare, Head Start, NIH research, and Medicaid.
       If reductions to Social Security and defense spending are 
     taken off the table and the tax cuts included in Contract 
     With America are adopted, then all other domestic programs, 
     including those at HHS, would have to be reduced by over 30 
     percent. This magnitude of reduction could threaten the 
     affordable, high-quality health care our elderly have come to 
     expect, jeopardize the critical research performed by our 
     National Institutes of Health, and drive millions more 
     families into poverty.
       Applying a 30 percent reduction to the Medicare program to 
     achieve the Balanced Budget Amendment goals could mean cuts 
     of over $100 billion in the year 2002 alone. If Congress 
     required beneficiaries to absorb the full cost, it would be 
     the equivalent of charging an additional $215 a month to 
     maintain the Medicare program in addition to the current 
     projected Part B premium in 2002 of $59 a month. If these 
     Medicare premiums are deducted from Social Security checks, 
     this would mean a 25 percent reduction in the average 
     beneficiary's Social Security check each month. For the one-
     in-four elderly Americans who rely almost solely on their 
     Social Security check for their income, this is a painful 
     loss.
       If Congress instead chooses to cut the $100 billion from 
     medical providers, then one of two things could happen: 
     Providers may accept fewer Medicare beneficiaries as 
     patients, or they may shift the costs to their non-Medicare 
     business. This could increase private sector health costs by 
     over 10 percent.
       For Medicaid, balancing the budget could require over $55 
     billion in cuts in the year 2002 alone. Because Medicaid is a 
     Federal/State partnership, cuts in the Federal budget could 
     force States to make up the cuts either with increased State 
     spending or through reduced support to the Medicaid program. 
     Either approach simply shifts the burdens to the States. 
     Moreover, States could have to choose between cutting 
     services or coverage to either the elderly, disabled or poor 
     mothers and their children.
       Other key HHS programs could be harmed by a balanced budget 
     amendment. For example, Head Start local programs could be 
     forced to discontinue services to almost a quarter of a 
     million children. The National Institutes of Health could 
     lose $3.5 billion. This would be equivalent to eliminating 
     the 
     [[Page S3157]] entire National Cancer Institute; the National 
     Heart, Lung and Blood Institute; and about half of the 
     National Institute on Neurological Disorders and Stroke.
       This Administration has made great strides in reducing the 
     size of the Federal budget deficit, and the Department of 
     Health and Human Services has contributed its fair share, but 
     we must proceed down the path of further deficit reduction 
     with care and with the full knowledge of what the price will 
     be.
           Sincerely,
     Donna E. Shalala.
                                                                    ____

                                       U.S. Department of Justice,


                                Office of Legislative Affairs,

                                 Washington, DC, January 27, 1995.
     Hon. Robert Byrd,
     Ranking Minority Member, Committee on Appropriations, U.S. 
         Senate, Washington, DC.
       Dear Senator Byrd: We understand that the Senate will 
     shortly turn its consideration to various proposals to amend 
     the Constitution to require a balanced federal budget. We 
     certainly support the intended goal of reducing the federal 
     deficit. Indeed, in 1993, the President joined with Members 
     of Congress to enact the largest deficit reduction bill in 
     history. The Administration looks forward to continuing to 
     work with Congress on deficit reduction.
       Before passing a balanced budget amendment, however, the 
     Congress should be keenly aware of the impact that such an 
     amendment could have on the essential operations of the 
     federal government in general, and of the Department of 
     Justice in particular. In a word, the impact could be 
     devastating.\1\
     \1\Many proponents of the balanced budget proposals have 
     stated that they would implement the balanced budget 
     amendment without spending reductions in Social Security and 
     national defense. If this is the case, and if the tax 
     proposals contained in the Contract With America are adopted, 
     all other domestic discretionary spending would have to be 
     reduced by over 30 percent. Such reductions would be 
     unprecedented--indeed Draconian--and would wreak havoc on the 
     essential law enforcement programs of this Department.
---------------------------------------------------------------------------
       When the Attorney General testified before the Senate 
     Committee on Appropriations on February 15, 1994, she stated 
     that ``[p]ut simply, the Balanced Budget Amendment would put 
     at risk the Justice Department's ability to fight crime. 
     Passage of the Amendment would mean sharp reductions in all 
     of the Department's crime fighting units.'' This is as true 
     today as it was a year ago. We believe now, as we did then, 
     that the American people look to the federal government for 
     more, not less, assistance in making their communities safe, 
     and that they will not support arbitrary cutbacks or 
     limitations on the essential resources that are urgently 
     needed to combat wrongdoing.
       The Attorney General also noted in her statement that 
     passage of the Balanced Budget Amendment would lead to sharp 
     reductions--and perhaps total elimination--of federal aid to 
     State and local law enforcement. As the Attorney General 
     indicated, elimination of this funding would ``destroy any 
     hope of implementing our community policing and pubic safety 
     initiatives''--two absolutely critical goals of last year's 
     crime bill. At a time when we are striving to assist our 
     State and local partners in ridding the Nation's schools and 
     streets of crime, such an outcome would be tragic--and wrong.
       We have taken the liberty of enclosing a copy of the 
     Attorney General's statement of February 15, 1994, before the 
     Senate Appropriations Committee. It goes into considerably 
     greater detail than this letter about the likely negative 
     effects that passage and ratification of a Balanced Budget 
     Amendment would have upon the Department of Justice and upon 
     law enforcement in the United States. We recognize, of 
     course, that, because of the passage of time, the figures 
     cited in the Attorney General's statement are not current. 
     For example, the effects upon the Department, as stated by 
     the Attorney General, were based on the assumption that 
     spending would have to be reduced by twenty percent. If a 
     thirty percent reduction were required, the budget impact 
     would be fifty percent greater. These considerations do not, 
     however, alter in any way the conclusions contained in the 
     Attorney General's statement. If anything, they reinforce 
     them. We urge that the Senate evaluate these considerations 
     with extreme care before acting on any of the Balanced Budget 
     Amendments that may come before it.
       Thank you for permitting us to provide our views on this 
     important matter. If we may be of additional assistance, or 
     if you require additional information, please do not hesitate 
     to call upon us. The Office of Management and Budget has 
     advised that there is no objection from the standpoint of the 
     Administration's program to the presentation of this report.
           Sincerely,
                                                Sheila F. Anthony,
                                       Assistant Attorney General.
       Enclosure.
                                                                    ____


  Statement of Janet Reno, Attorney General, Before the Committee on 
                    Appropriations February 15, 1994
       Mr. Chairman and Members of the Committee:


                              introduction

       I am pleased to have this opportunity to appear before you 
     today to testify on Senate Joint Resolution 41--the Balanced 
     Budget Amendment. My remarks this morning will be devoted to 
     explaining why this Amendment, which I oppose, could severely 
     undermine the ability of the Department of Justice to fulfill 
     its core function of fighting crime.
       As everyone here is no doubt aware, the Administration is 
     deeply committed to fighting crime and to making our streets 
     and schools safe once again. President Clinton has made a 
     promise to the American people to use all the resources of 
     his Administration to reduce the rate of crime now plaguing 
     our communities. As the President himself said last month in 
     his State of the Union Address, ``violent crime and the fear 
     it provokes are crippling our society, limiting personal 
     freedom, and fraying the ties that bind us.'' Our charge is 
     clear: to rid our society of this scourge while healing the 
     wounds that divide us.
       Members of this Committee have made a significant 
     contribution in the fight against crime by voting for passage 
     of a comprehensive crime bill. I salute you--and your 
     colleagues in the Senate--for your support and dedicated 
     efforts toward making this legislation a reality.
       As Attorney General, my most important responsibility to 
     the American people is to ensure that the laws are strictly 
     enforced and that all the means at my disposal are utilized 
     to their fullest extent in the fight against crime. My 
     testimony today will focus on why the Balanced Budget 
     Amendment--by forcing cutbacks in the very programs at the 
     center of our anti-crime crusade--could severely undermine 
     the Department's ability to banish violence from our homes 
     and streets.
       At the outset, let me state very clearly the basic 
     assumptions I have made in addressing the effects of the 
     Balanced Budget Amendment on the Department of Justice. For 
     purposes of my analysis this morning, I have assumed that any 
     spending cuts required by the Balanced Budget Amendment on 
     the department of Justice. For purposes of my analysis this 
     morning, I have assumed that any spending cuts required by 
     the Balanced Budget Amendment would be pro-rated across all 
     government programs; no single Cabinet Department or agency 
     would be asked to cut any more, or any less, than any other. 
     All would be affected equally.
       Applying this basic assumption, in 1999--the earliest year 
     the Amendment could go into effect--the total budget deficit 
     is projected to be $201 billion. Because Department of 
     Justice outlays are approximately 1 percent of total Federal 
     outlays, we have estimated--again assuming that the 
     Department will be asked to make the same percentage of 
     spending reductions as everyone else--that the Department 
     would be cut by $2 billion in outlays, or one percent of $201 
     billion. This equates to about $1.8 billion in budget 
     authority by 1999, or approximately 20 percent of our 
     discretionary budget authority.
       Let me be blunt: If the Balanced Budget Amendment took 
     effect today, and we were asked to cut almost $2 billion from 
     our discretionary spending--the effects would be immediate, 
     and they would be dire. We would feel those cuts in the very 
     areas we are now trying to strengthen in order to win back 
     our streets, schools and homes against escalating crime and 
     violence.
       Put simply, the Balanced Budget Amendment would put at risk 
     the Justice Department's ability to fight crime. Passage of 
     the Amendment would mean sharp reductions in all of the 
     Department's crime fighting units.


 the amendment would cause sharp reductions in essential departmental 
                                programs

       Every single component of the Department--the FBI, the DEA, 
     INS, the U.S. Attorneys' Offices, the U.S. Marshal's Office, 
     the Bureau of Prisons, and other federal prosecutors--has 
     worked hard to meet the President's FY 1995 budget. To cut 
     them further--as the Balanced Budget Amendment would 
     require--would not only prevent us from meeting our ambitious 
     goals, but might result in a significant retreat from our 
     current capabilities. Let me be more specific.
       As you all well know, most of the Department's activities 
     are funded out of a discretionary budget authority which is 
     under the jurisdiction of the Committees On Appropriations. 
     While the President's 1995 appropriation request for the 
     Department includes only $103 million in mandatory 
     appropriations, it includes a full $12.2 billion in 
     discretionary budget authority. This portion funds the FBI, 
     the DEA, the INS, the U.S. Marshals Offices, the U.S. 
     Attorneys Offices, the Criminal Division, the Tax Division, 
     the Antitrust Division, the Civil Rights Division, the 
     Environment and Natural Resources Division and their 
     respective litigating operations, the Bureau of Prisons, the 
     Office of Justice Programs, and other components.
       As I have already testified, we estimate that the Balanced 
     Budget Amendment, if enacted, would require us to cut $2 
     billion from our discretionary programs by 1999. Using 1994 
     budget figures, instead of having $9.4 billion in 
     discretionary funds to spend on crime fighting measures, we 
     would have slightly more than seven and a half billion 
     dollars.
       Make no mistake about it: these cuts would have immediate 
     consequences for our department. All this at a time when we 
     are working so hard to take back our streets and to stop this 
     devastating cycle of crime and violence.
       With the public up in arms about the epidemic of crime in 
     our communities, I am confident that no one on this Committee 
     would want to see such draconian cuts in our crime-fighting 
     units. Unfortunately, the Balanced Budget Amendment might 
     leave us 
     [[Page S3158]] with no other choice. Indeed, if forced to 
     operate with the parameters of this Amendment, all the paths 
     available to us would lead to one inevitable dead-end--the 
     necessity of limiting the resources our nation so desperately 
     needs to fight crime aggressively.
       For example, one of the cornerstones of our crime-fighting 
     program is the assistance we provide to state and local 
     jurisdictions devoted to crime prevention. In fiscal year 
     1994, this assistance, most of which comes in the form of 
     grants, will amount to nearly $1 billion. The purpose of 
     these funds is to help our local and state law enforcement 
     officials by supplementing their often severely limited 
     resources, providing incentives for action in areas of 
     critical need, and giving them the tools they need to serve 
     their communities.
       The hard, cold reality is that complying with the 
     requirements of the Balanced Budget Amendment might mean 
     eliminating aid to state and local law enforcement entirely. 
     As the former prosecutor of Dade County, I learned first-hand 
     how critically important this assistance is to holding the 
     line against crime at the local level. I know, and President 
     Clinton knows, that it is our local law enforcement 
     officials, working in partnership with citizens and public 
     interest groups, who are leading the fight to take back our 
     streets. If that money is eliminated, it would effectively 
     destroy any hope of forging the crucial federal-local 
     partnerships that today must form the basis of our crime 
     prevention efforts, and destroy any hope of implementing our 
     community policing and public safety initiatives. In 
     practical terms, the Balanced Budget Amendment would make it 
     impossible to meet the President's budget request to put up 
     to 100,000 more police officers on the street by 1999. As you 
     know, in order to increase in 1995 the financial assistance 
     to state and local law enforcement for purposes authorized in 
     the Senate version of the crime bill, the President has 
     already ``bitten the bullet'' and reallocated within the 
     discretionary spending ceiling in order to support this new 
     initiative.
       Yet eliminating all local and state assistance measures--
     while a severe remedy in itself--would account for only half 
     of the cutbacks required by the Balanced Budget Amendment. 
     The Department would still have to eliminate approximately 11 
     percent of its total full-time staff funded by discretionary 
     programs.
       If instead state and local assistance were continued at a 
     rate 20 percent below the current level, we would need to cut 
     approximately 20,000 full-time employees, or about one-
     quarter of our entire full-time workstaff.
       If, on the other hand, we continued the President's 
     commitment to fund 100,000 new police, and the Balanced 
     Budget Amendment were enacted today, the effect on the 
     various Department components responsible for our crime 
     prevention efforts would be catastrophic. The 20 percent 
     reduction in our discretionary spending from 1994 resources 
     required by the Amendment would mean:
       The Federal Bureau of Investigation (FBI) would have to 
     decrease its 1994 resources by $412.1 million and eliminate 
     4387 positions, including approximately 1900 agents and 2500 
     support staff. The Drug Enforcement Administration (DEA) 
     would have to decrease its total resources by $145.9 million 
     and eliminate approximately 500 agents and 600 support staff.
       The impact of this reduction on these programs would be 
     devastating. At all levels of law enforcement, essential 
     training programs and important task forces would be 
     eliminated. In addition, DEA's drug king-pin strategy would 
     be crippled. Most, if not all, of the DEA's resident offices 
     and posts of duty in small and mid-sized cities and towns 
     would have to be closed. These effects would be felt well 
     beyond this nation's borders, as DEA offices in drug source 
     and transit countries would be forced to close shop.
       The Immigration and Naturalization Service (INS) would need 
     to reduce about 2400 staff members to cut $211.9 million off 
     its budget. A reduction of this magnitude would severely 
     curtail INS' ability to control the U.S. borders and enforce 
     the nation's immigration laws. At a time when both the agency 
     and the Administration have been targeting resources on 
     controlling our borders, this would virtually shut down 
     border patrol operations and negate all enhancements, 
     including the increased agent strength that we achieved in 
     1994.
       No new prisons would be built by the Bureau of Prisons
        (BOP), and due to lack of staff, existing institutions 
     would have to close. Prison overcrowding would soar, to a 
     startling 77 percent by 1999, forcing courts to mandate 
     the release of violent offenders back onto the street. 
     Living conditions would worsen, increasing the dangers 
     posed to staff, inmates and the community at large.
       The American people, tired of empty rhetoric and tired of 
     escalating crime, are looking to us to provide direct and 
     immediate action to make our communities safe once again. By 
     passing the Balanced Budget Amendment, we would not be able 
     to make good on the promises set forth in the crime bill. We 
     would be saying to the American people in the same breath 
     that while we're serious about fighting crime, we won't be 
     able to fund the essential programs necessary to win this 
     battle. We can not--and we should not--send such conflicting 
     messages to the American people.
       By passing the Balanced Budget Amendment, we would be 
     gutting the heart and soul of the Senate-passed Crime Bill: 
     the 20 percent reduction required by the Amendment would 
     affect the Crime Control Fund like all other discretionary 
     spending programs. For example, one of the most important 
     initiatives included in the Crime Bill is the provision to 
     hire 100,000 new police officers over the next five years. 
     America's neighborhoods desperately need these new cops; more 
     cops on the streets, working hand-in glove in their 
     communities, means less crime. If passed today, the Balanced 
     Budget Amendment will severely undercut our ability to put 
     these police in the communities where they belong.
       Just as important to our crime-fighting plan is the 
     decision to build boot camps. These camps can give youths who 
     have committed their first crime and who are at risk of drug 
     and gang involvement the discipline, education and training 
     they need to grab another chance for an honest life. If 
     passed today, the Balanced Budget Amendment, however, would 
     slash funds intended for these camps, depriving many young 
     offenders of a chance at a new start on life.
       Similarly, drug-treatment and coerced abstinence programs 
     for criminal offenders--including residential substance abuse 
     for prisoners--cornerstones of both the Crime Bill and the 
     President's National Drug Control Strategy, would not be 
     possible under a Balanced Budget Amendment. Nor could the 
     Bill's plan to help support drug courts, drug testing and 
     certainty of punishment for young offenders be implemented 
     under a Balanced Budget Amendment.
       Tomorrow, Assistant Attorney General Walter Dellinger will 
     testify before this Committee on the potential impact of the 
     Balanced Budget Amendment on the structure of the 
     constitution, and I don't want to duplicate what he will say. 
     I do hope, however, that you will listen very carefully to 
     his testimony, because it will highlight another important 
     aspect of this debate, one that merits serious consideration 
     when you debate the merits of this Amendment.


                               conclusion

       Mr. Chairman, I hope my testimony has made this Committee 
     more aware of just how dangerous the Balanced Budget 
     Amendment could be for the Department and its efforts to 
     reduce violent crime and drugs in America's streets and 
     schools.
       No one wants to see the deficit reduced more than this 
     Administration. As the President and the Senate showed last 
     summer, the deficit can be reduced only if we are willing to 
     make the hard and necessary choices to control federal 
     spending.
       The Balanced Budget Amendment is not the simple cure that 
     its proponents suggest. If it does work, it will only cause 
     painful reductions in the very areas we are trying to 
     bolster.
       The fight against crime is not easy. It has never been 
     easy. Hundreds of thousands of Americans each day put their 
     lives on the line to protect their fellow-countrymen and 
     women from the dangers of their communities. We owe it to 
     them, and to all of us who are afraid to walk our streets at 
     night or to attend schools during the daytime, to provide 
     them with the resources to stamp out this epidemic of crime 
     and restore our neighborhood security. The Balanced Budget 
     Amendment will impede us in this effort at the very time that 
     it is needed most. Let us not make this mistake.
       Thank you for the opportunity to meet with you this morning 
     and I'll be happy to answer any questions.
                                                                    ____

                                   Department of the Treasury,

                                 Washington, DC, January 12, 1995.
     Hon. Howard Dean, M.D.,
     Chairman, National Governors' Association, Office of the 
         Governor, Montpelier, VT.
       Dear Governor Dean: I write to answer your request for 
     information on the likely effects of passage of a balanced-
     budget amendment, accompanied by ``Contract with America'' 
     federal tax reductions, on state budgets and state taxes.
       Enclosed is a set of estimates that Treasury staff have 
     constructed of the possible effect on states and their 
     finances of a constitutional amendment requiring the 
     balancing of the federal budget in 2002, accompanied by the 
     tax reductions mentioned above. These estimates are based on 
     the following assumptions: (I) that the federal budget would 
     be balanced through spending cuts, (II) that Social Security 
     and Defense spending would not be reduced below baseline, and 
     thus (III) that the entire burden of balancing the federal 
     budget would be placed on non-interest, non-Social Security, 
     non-Defense spending, as proposed methods for balancing the 
     budget and financing various tax cuts excludes Social 
     Security and Defense.
       The estimates assume that every expenditure--interest, 
     Social Security, and Defense aside--would be reduced relative 
     to baseline by the same proportional amount. The estimates 
     assume that the deficit reduction will be phased in 
     gradually, an equal amount in each year between now and 2002. 
     This arrangement of the spending cuts results in substantial 
     interest savings relative to the baseline in 2002, and thus 
     reduces the amount of non-interest spending that must be cut 
     in 2002 to balance the budget.
       Nevertheless, the cuts required in 2002 would be severe. To 
     help balance the budget and help offset the tax reductions 
     noted above, federal grants to states would be cut by a total 
     of $97.8 billion in fiscal 2002. Other federal spending that 
     directly benefits state 
     [[Page S3159]] residents would be cut by $242.2 billion in 
     fiscal 2002.
       The cuts in grants--in Medicaid, highway funds, AFDC, and 
     other grants--and the cuts in other spending--on Medicare and 
     on other spending--were distributed across states 
     proportionately to current levels of federal expenditures. 
     Also reported is the amount by which total state taxes would 
     have to be raised if the state wished to fully offset the 
     reduction in federal grants.
       Grants to states in the aggregate, to specific states, and 
     to states for specific programs may be cut by more or by less 
     than projected here. Yet, without further detail, the most 
     reasonable method for illustrating the likely burdens on 
     states is to assume across-the-board proportional cuts.
       Note, also, that these estimates do not incorporate any 
     significant feedback effects: it is possible that shifts in 
     monetary policy would not be able to fully offset the 
     downward macroeconomic impact of a balanced-budget amendment. 
     To the extent that implementation of an amendment slows 
     growth and reduces state revenues, the gap would be somewhat 
     larger and the effect on state finances somewhat more severe. 
     On the other hand, balancing the federal budget could have 
     substantial positive effects on the U.S. economy, which would 
     promise to raise state revenues as state economic activity 
     increased. Such effects are not discussed here.
       Note, finally, that this set of estimates is far from being 
     a complete analysis of a balanced-budget amendment. Its 
     principal function is to identify and evaluate the 
     approximate impact on state government finances of a 
     constitutional amendment that requires federal budget balance 
     by 2002.
           Sincerely yours,

                                                Joyce Carrier,

                                        Deputy Assistant Secretary
     for Public Liaison.
                                                                    ____

The Impact of a Balanced-Budget Amendment and the Contract With America 
                           on State Finances

                                              TABLE 1.--SPENDING REDUCTIONS UNDER BALANCED BUDGET AMENDMENT                                             
                                                         [Fiscal year 2002, Millions of dollars]                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Cuts in grants to State Government                  Required       Cuts in other Federal spending   
                                    -----------------------------------------------------------------  State tax  --------------------------------------
               State                                                                                    increase                                        
                                        Total       Medicaid     Highway        AFDC        Other      (percent)      Total       Medicare      Other   
--------------------------------------------------------------------------------------------------------------------------------------------------------
      U.S. total...................       71,300       40,314        5,176        4,508       21,301         N.A.      176,492       77,475       99,017
                                    ====================================================================================================================
Alabama............................        1,162          641           98           32          391         16.4        3,058        1,157        1,900
Alaska.............................          306           89           71           19          127          9.8          576           44          532
Arizona............................          919          519           78           68          254         10.4        2,397          949        1,447
Arkansas...........................          723          416           65           16          225         16.5        1,567          766          800
California.........................        7,708        3,944          442          960        2,362          9.2       20,321        9,101       11,220
Colorado...........................          755          387           79           36          253         11.8        2,764          721        2,044
Connecticut........................        1,008          587          105           63          253         11.2        1,843        1,089          755
Delaware...........................          158           70           18            9           61          7.2          383          176          207
DC.................................          697          183           17           24          473         20.4        4,937          313        4,624
Florida............................        2,656        1,520          202          170          764         10.2        9,782        5,336        4,446
Georgia............................        1,608          938          131          101          438         12.0        3,790        1,392        2,398
Hawaii.............................          328          117           62           24          125          6.8          737          216          522
Idaho..............................          254          118           33            8           95          9.9          855          218          637
Illinois...........................        2,576        1,354          174          155          892         11.6        7,532        4,092        3,441
Indiana............................        1,490          956          123           54          357         13.8        2,531        1,497        1,034
Iowa...............................          630          328           69           35          197         10.9        1,919          897        1,022
Kansas.............................          622          355           52           29          186         13.0        1,730          819          911
Kentucky...........................        1,157          690           69           56          341         14.5        2,111          952        1,159
Louisiana..........................        1,966        1,500           94           48          324         27.8        2,361        1,066        1,296
Maine..............................          452          279           28           24          121         17.5          717          385          331
Maryland...........................        1,125          581           83           65          396          9.9        6,253        1,377        4,876
Massachusetts......................        1,915        1,073          248          135          459         12.6        4,683        2,449        2,234
Michigan...........................        2,477        1,355          140          229          753         13.2        4,988        3,333        1,655
Minnesota..........................        1,177          679          102           83          314          9.4        2,547        1,123        1,424
Mississippi........................          864          496           61           24          282         20.8        1,672          713          959
Missouri...........................        1,316          747          109           62          398         15.5        3,942        1,781        2,161
Montana............................          277          123           52           12           89         19.8          744          218          526
Nebraska...........................          388          192           44           23          129         13.3        1,213          482          732
Nevada.............................          227          116           32           11           68          6.2        1,005          258          747
New Hampshire......................          212          112           31           11           58         17.6          563          270          293
New Jersey.........................        2,476        1,500          141          129          705         12.7        4,653        2,894        1,759
New Mexico.........................          524          233           70           28          193         12.9        2,117          321        1,796
New York...........................        8,181        5,442          274          535        1,930         17.4       11,058        6,876        4,182
North Carolina.....................        1,697        1,025          136           95          441         11.1        3,217        1,432        1,785
North Dakota.......................          229          105           35            8           81         19.7          563          231          332
Ohio...............................        2,826        1,718          170          212          727         14.4        6,007        3,442        2,565
Oklahoma...........................          770          424           51           51          244         12.4        2,110          934        1,177
Oregon.............................          706          342           54           47          263         12.2        1,976          833        1,143
Pennsylvania.......................        3,057        1,767          211          178          901         12.7        8,555        5,120        3,435
Rhode Island.......................          430          255           42           23          109         21.4          619          347          272
South Carolina.....................        1,003          644           68           31          260         14.3        2,217          682        1,535
South Dakota.......................          231          103           39            6           82         24.7          577          205          372
Tennessee..........................        1,537          989           78           60          411         19.5        3,845        1,349        2,496
Texas..............................        4,167        2,520          340          147        1,159         14.0       10,758        4,280        6,479
Utah...............................          422          190           49           22          160         11.4        1,078          235          842
Vermont............................          207           89           37           13           68         17.4          301          150          151
Virginia...........................        1,005          490           72           49          393          8.2        6,073        1,374        4,699
Washington.........................        1,318          730          117          126          346          8.4        3,569        1,107        2,463
West Virginia......................          765          488           45           32          199         20.6        1,209          600          608
Wisconsin..........................        1,250          694          111           96          349         10.3        2,480        1,503          977
Wyoming............................          218           55           38            8          118         18.7          286           96          191
                                    --------------------------------------------------------------------------------------------------------------------
      State total:.................       70,172       40,271        5,093        4,480       20,328         12.6      172,792       77,199       95,593
      Undist. & Terr...............        1,127           43           83           28          973         N.A.        3,700          276        3,424
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                TABLE 2.--SPENDING REDUCTIONS UNDER CONTRACT WITH AMERICA                                               
                                                           [Fiscal year, millions of dollars]                                                           
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Cuts in grants to State Governments                  Required       Cuts in other Federal spending   
                                    -----------------------------------------------------------------  State tax  --------------------------------------
               State                                                                                    increase                                        
                                        Total       Medicaid     Highway        AFDC        Other      (percent)      Total       Medicare      Other   
--------------------------------------------------------------------------------------------------------------------------------------------------------
      U.S. total...................       97,825       55,312        7,102        6,185       29,226         N.A.      242,151      106,298      135,854
                                    ====================================================================================================================
Alabama............................        1,594          879          135           44          536         22.5        4,195        1,588        2,608
Alaska.............................          420          123           98           26          174         13.5          790           60          730
Arizona............................        1,261          712          108           93          348         14.2        3,288        1,302        1,986
Arkansas...........................          992          571           90           23          309         22.7        2,150        1,052        1,098
California.........................       10,576        5,412          607        1,317        3,241         12.6       27,880       12,486       15,394
Colorado...........................        1,036          531          108           49          347         16.2        3,793          989        2,804
Connecticut........................        1,383          805          145           86          348         15.4        2,529        1,494        1,035
Delaware...........................          217           97           25           12           83          9.8          526          241          284
DC.................................          956          252           23           32          650         27.9        6,774          429        6,345
Florida............................        3,644        2,086          277          233        1,048         14.0       13,421        7,321        6,100
Georgia............................        2,206        1,286          180          138          601         16.5        5,200        1,910        3,290
Hawaii.............................          450          161           85           32          172          9.3        1,012          296          716
Idaho..............................          349          162           46           11          131         13.6        1,173          299          874
Illinois...........................        3,534        1,858          239          213        1,224         15.9       10,334        5,614        4,721
Indiana............................        2,044        1,312          168           74          490         18.9        3,473        2,054        1,419


                                                                                                                                                        
[[Page S3160]]
                                          TABLE 2.--SPENDING REDUCTIONS UNDER CONTRACT WITH AMERICA--Continued                                          
                                                           [Fiscal year, millions of dollars]                                                           
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Cuts in grants to State Governments                  Required       Cuts in other Federal spending   
                                    -----------------------------------------------------------------  State tax  --------------------------------------
               State                                                                                    increase                                        
                                        Total       Medicaid     Highway        AFDC        Other      (percent)      Total       Medicare      Other   
--------------------------------------------------------------------------------------------------------------------------------------------------------
Iowa...............................          864          451           95           48          270         15.0        2,633        1,231        1,402
Kansas.............................          853          487           71           40          255         17.8        2,374        1,124        1,249
Kentucky...........................        1,587          947           95           77          468         19.8        2,896        1,306        1,590
Louisiana..........................        2,697        2,059          129           66          444         38.2        3,240        1,462        1,778
Maine..............................          621          383           38           33          166         24.0          983          529          454
Maryland...........................        1,543          798          113           89          543         13.5        8,579        1,889        6,690
Massachusetts......................        2,627        1,472          340          185          630         17.3        6,425        3,360        3,065
Michigan...........................        3,398        1,859          192          314        1,034         18.1        6,844        4,572        2,271
Minnesota..........................        1,615          931          139          113          431         13.0        3,494        1,541        1,954
Mississippi........................        1,185          681           84           33          387         28.5        2,294          978        1,316
Missouri...........................        1,806        1,025          149           85          547         21.2        5,408        2,444        2,965
Montana............................          380          169           71           17          123         27.1        1,021          298          722
Nebraska...........................          533          264           60           31          177         18.3        1,665          661        1,004
Nevada.............................          312          159           44           15           94          8.6        1,379          354        1,025
New Hampshire......................          291          154           43           16           79         24.1          773          370          403
New Jersey.........................        3,397        2,059          194          177          968         17.5        6,384        3,971        2,413
New Mexico.........................          719          320           96           38          265         17.6        2,904          440        2,464
New York...........................       11,225        7,466          376          734        2,649         23.8       15,172        9,435        5,738
North Carolina.....................        2,329        1,406          187          130          605         15.2        4,414        1,965        2,449
North Dakota.......................          314          144           48           10          111         27.0          773          317          455
Ohio...............................        3,878        2,358          233          290          997         19.8        8,242        4,722        3,520
Oklahoma...........................        1,056          582           70           69          335         17.0        2,896        2,281        1,615
Oregon.............................          969          469           75           65          361         16.8        2,711        1,143        1,568
Pennsylvania.......................        4,194        2,424          290          244        1,237         17.4       11,738        7,025        4,713
Rhode Island.......................          590          350           58           32          150         29.3          849          476          373
South Carolina.....................        1,376          883           94           42          357         19.6        3,042          935        2,106
South Dakota.......................          316          142           53            9          113         33.8          792          281          511
Tennessee..........................        2,109        1,357          107           82          563         26.7        5,275        1,850        3,425
Texas..............................        5,717        3,457          466          202        1,591         19.2       14,761        5,872        8,889
Utah...............................          579          261           68           31          220         15.6        1,479          323        1,156
Vermont............................          284          122           51           18           93         23.9          413          206          207
Virginia...........................        1,379          673           99           68          539         11.2        8,332        1,885        6,447
Washington.........................        1,809        1,001          161          172          474         11.5        4,897        1,518        3,379
West Virginia......................        1,049          670           62           44          273         28.3        1,658          824          835
Wisconsin..........................        1,716          952          153          132          479         14.2        3,402        2,062        1,340
Wyoming............................          300           75           52           10          162         25.7          393          131          262
                                    --------------------------------------------------------------------------------------------------------------------
      State total..................       96,278       55,253        6,988        6,147       27,891         17.3      237,075      105,919      131,155
Undist. & Terr.....................        1,547           59          114           38        1,335         N.A.        5,077          378        4,698
--------------------------------------------------------------------------------------------------------------------------------------------------------

THE IMPACT OF A BALANCED BUDGET AMENDMENT AND THE CONTRACT WITH AMERICA 
                       ON THE STATE OF ALABAMA\1\

     \1\For all calculations, a balanced budget is achieved by FY 
     2002 through across-the-board spending cuts that exclude 
     defense and social security.
---------------------------------------------------------------------------
       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Alabama state government by $1.2 billion.
       $641 million per year in lost funding for Medicaid.
       $98 million per year in lost highway trust fund grants.
       $32 million per year in lost funding for welfare (AFDC).
       $391 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Alabama would have to increase state taxes by 16.4 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Alabama state government by $1.6 billion.
       $879 million per year in lost funding for Medicaid.
       $135 million per year in lost highway trust fund grants.
       $44 million per year in lost funding for welfare (AFDC).
       $536 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Alabama would have to increase state taxes by 22.5 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Alabama by $4.2 billion.
       $1.6 billion per year in Medicare benefits.
       $2.6 billion per year in other spending including housing 
     assistance, student loans, veteran's benefits, and grants to 
     local governments.


THE IMPACT OF A BALANCED BUDGET AMENDMENT AND THE CONTRACT WITH AMERICA 
                         ON THE STATE OF ALASKA

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Alaska state government by $306 million.
       $89 million per year in lost funding for Medicaid.
       $71 million per year in lost highway trust fund grants.
       $19 million per year in lost funding for welfare (AFDC).
       $127 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Alaska would have to increase state taxes by 9.8 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Alaska state government by $420 million.
       $123 million per year in lost funding for Medicaid.
       $98 million per year in lost highway trust fund grants.
       $26 million per year in lost funding for welfare (AFDC).
       $174 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Alaska would have to increase state taxes by 13.5 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Alaska by $790 million.
       $60 million per year in Medicare benefits.
       $730 million per year in other spending including housing 
     assistance, student loans, veteran's benefits, and grants to 
     local governments.


THE IMPACT OF A BALANCED BUDGET AMENDMENT AND THE CONTRACT WITH AMERICA 
                        ON THE STATE OF ARIZONA

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Arizona state government by $919 million.
       $519 million per year in lost funding for Medicaid.
       $78 million per year in lost highway trust fund grants.
       $68 million per year in lost funding for welfare (AFDC).
       $254 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Arizona would have to increase state taxes by 10.4 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Arizona state government by $1.3 billion.
       $712 million per year in lost funding for Medicaid.
       $108 million per year in lost highway trust fund grants.
       $93 million per year in lost funding for welfare (AFDC).
       $348 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Arizona would have to increase state taxes by 14.2 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Arizona by $3.3 billion.
       $1.3 billion per year in Medicare benefits.
       $2.0 billion per year in other spending including housing 
     assistance, student loans, veteran's benefits, and grants to 
     local governments.
   [[Page S3161]] THE IMPACT OF A BALANCED BUDGET AMENDMENT AND THE 
             CONTRACT WITH AMERICA ON THE STATE OF ARKANSAS

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Arkansas state government by $723 million.
       $416 million per year in lost funding for Medicaid.
       $65 million per year in lost highway trust fund grants.
       $16 million per year in lost funding for welfare (AFDC).
       $225 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Arkansas would have to increase state taxes by 16.5 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Arkansas state government by $992 million.
       $571 million per year in lost funding for Medicaid.
       $90 million per year in lost highway trust fund grants.
       $23 million per year in lost funding for welfare (AFDC).
       $309 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Arkansas would have to increase state taxes by 22.7 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Arkansas by $2.1 billion.
       $1.1 billion per year in Medicare benefits.
       $1.1 billion per year in other spending including housing 
     assistance, student loans, veteran's benefits, and grants to 
     local governments.
the impact of a balanced budget amendment and the contract with america 
                       on the state of california

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the California state government by $7.7 billion.
       $3.9 billion per year in lost funding for Medicaid.
       $442 million per year in lost highway trust fund grants.
       $960 million per year in lost funding for welfare (AFDC).
       $2.4 billion per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       California would have to increase state taxes by 9.2 
     percent across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     California state government by $10.6 billion.
       $5.4 billion per year in lost funding for Medicaid.
       $607 million per year in lost highway trust fund grants.
       $1.3 billion per year in lost funding for welfare (AFDC).
       $3.2 billion per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       California would have to increase state taxes by 12.6 
     percent across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in California by $27.9 billion.
       $12.5 billion per year in Medicare benefits.
       $15.4 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                        on the state of colorado

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Colorado state government by $755 million.
       $387 million per year in lost funding for Medicaid.
       $79 million per year in lost highway trust fund grants.
       $36 million per year in lost funding for welfare (AFDC).
       $253 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Colorado would have to increase state taxes by 11.8 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Colorado state government by $1.0 billion.
       $531 million per year in lost funding for Medicaid.
       $108 million per year in lost highway trust fund grants.
       $49 million per year in lost funding for welfare (AFDC).
       $347 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Colorado would have to increase state taxes by 16.2 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Colorado by $3.8 billion.
       $989 million per year in Medicare benefits.
       $2.8 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                      on the state of connecticut

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Connecticut state government by $1.0 billion.
       $587 million per year in lost funding for Medicaid.
       $105 million per year in lost highway trust fund grants.
       $63 million per year in lost funding for welfare (AFDC).
       $253 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Connecticut would have to increase state taxes by 11.2 
     percent across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Connecticut state government by $1.4 billion.
       $805 million per year in lost funding for Medicaid.
       $145 million per year in lost highway trust fund grants.
       $86 million per year in lost funding for welfare (AFDC).
       $348 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Connecticut would have to increase state taxes by 15.4 
     percent across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Connecticut by $2.5 billion.
       $1.5 billion per year in Medicare benefits.
       $1.0 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                        on the state of delaware

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Delaware state government by $158 billion.
       $70 million per year in lost funding for Medicaid.
       $18 million per year in lost highway trust fund grants.
       $9 million per year in lost funding for welfare (AFDC).
       $61 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Delaware would have to increase state taxes by 7.2 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Delaware state government by $217 million.
       $97 million per year in lost funding for Medicaid.
       $25 million per year in lost highway trust fund grants.
       $12 million per year in lost funding for welfare (AFDC).
       $83 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Delaware would have to increase state taxes by 9.8 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Delaware by $526 million.
       $241 million per year in Medicare benefits.
       $284 million per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.
the impact of a balanced budget amendment and the contract with america 
                      on the district of columbia

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the D.C. government by $697 million.
       $183 million per year in lost funding for Medicaid.
       $17 million per year in lost highway trust fund grants.
       $24 million per year in lost funding for welfare (AFDC).
       $473 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       D.C. would have to increase state taxes by 20.4 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     D.C. government by $956 million.
       $252 million per year in lost funding for Medicaid.
       $23 million per year in lost highway trust fund grants.
       $32 million per year in lost funding for welfare (AFDC).
       $650 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       D.C. would have to increase state taxes by 27.9 percent 
     across-the-board to make up for the loss in grants.
       [[Page S3162]] III. A Balanced Budget Amendment and the 
     ``Contract with America'' tax cuts would reduce other annual 
     Federal spending in DC by $6.8 billion.
       $429 million per year in Medicare benefits.
       $6.3 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                        on the state of florida

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Florida state government by $2.7 billion.
       $1.5 billion per year in lost funding for Medicaid.
       $202 million per year in lost highway trust fund grants.
       $170 million per year in lost funding for welfare (AFDC).
       $764 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Florida would have to increase state taxes by 10.2 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Florida state government by $3.6 billion.
       $2.1 billion per year in lost funding for Medicaid.
       $277 million per year in lost highway trust fund grants.
       $233 million per year in lost funding for welfare (AFDC).
       $1.0 billion per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Florida would have to increase state taxes by 14.0 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Florida by $13.4 billion.
       $7.3 billion per year in Medicare benefits.
       $6.1 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                        on the state of georgia

       I. A A Balanced Budget Amendment would reduce annual 
     Federal grants to the Georgia state government by $1.6 
     billion.
       $938 million per year in lost funding for Medicaid.
       $131 million per year in lost highway trust fund grants.
       $101 million per year in lost funding for welfare (AFDC).
       $438 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Georgia would have to increase state taxes by 12.0 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Georgia state government by $2.2 billion.
       $1.3 billion per year in lost funding for Medicaid.
       $180 million per year in lost highway trust fund grants.
       $138 million per year in lost funding for welfare (AFDC).
       $601 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Georgia would have to increase state taxes by 16.5 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Georgia by $5.2 billion.
       $1.9 billion per year in Medicare benefits.
       $3.3 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                         on the state of Hawaii

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Hawaii state government by $328 million.
       $117 million per year in lost funding for Medicaid.
       $62 million per year in lost highway trust fund grants.
       $24 million per year in lost funding for welfare (AFDC).
       $125 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Hawaii would have to increase state taxes by 6.8 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Hawaii state government by $450 million.
       $161 million per year in lost funding for Medicaid.
       $85 million per year in lost highway trust fund grants.
       $32 million per year in lost funding for welfare (AFDC).
       $172 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Hawaii would have to increase state taxes by 9.3 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Hawaii by $1.0 billion.
       $296 million per year in Medicare benefits.
       $716 million per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.
the impact of a balanced budget amendment and the contract with america 
                         on the state of idaho

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Idaho state government by $254 million.
       $118 million per year in lost funding for Medicaid.
       $33 million per year in lost highway trust fund grants.
       $8 million per year in lost funding for welfare (AFDC).
       $95 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Idaho would have to increase state taxes by 9.9 percent 
     across-the-board to make up for the loss in grants
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Idaho state government by $349 million.
       $162 million per year in lost funding for Medicaid.
       $46 million per year in lost highway trust fund grants.
       $11 million per year in lost funding for welfare (AFDC).
       $131 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Idaho would have to increase state taxes by 13.6 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Idaho by $1.2 billion.
       $299 million per year in Medicare benefits.
       $874 million per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                        on the state of illinois

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Illinois state government by $2.6 billion.
       $1.4 billion per year in lost funding for Medicaid.
       $174 million per year in lost highway trust fund grants.
       $155 million per year in lost funding for welfare (AFDC).
       $892 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Illinois would have to increase state taxes by 11.6 percent 
     across-the-board to make up for the loss in grants
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Illinois state government by $3.5 billion.
       $1.9 billion per year in lost funding for Medicaid.
       $239 million per year in lost highway trust fund grants.
       $213 million per year in lost funding for welfare (AFDC).
       $1.2 billion per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Illinois would have to increase state taxes by 15.9 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Illinois by $10.3 billion.
       $5.6 billion per year in Medicare benefits.
       $4.7 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                        on the state of indiana

       I. A Balanced Budget Amendment would reduce annual grants 
     to the Indiana state government by $1.5 billion.
       $956 million per year in lost funding for Medicaid.
       $123 million per year in lost highway trust fund grants.
       $54 million per year in lost funding for welfare (AFDC).
       $357 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Indiana would have to increase state taxes by 13.8 percent 
     across-the-board to make up for the loss in grants
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Indiana state government by $2.0 billion.
       $1.3 billion per year in lost funding for Medicaid.
       $168 million per year in lost highway trust fund grants.
       [[Page S3163]] $74 million per year in lost funding for 
     welfare (AFDC).
       $490 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Indiana would have to increase state taxes by 18.9 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Indiana by $3.5 billion.
       $2.1 billion per year in Medicare benefits.
       $1.4 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                          on the state of iowa

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Iowa state government by $630 million.
       $328 million per year in lost funding for Medicaid.
       $69 million per year in lost highway trust fund grants.
       $35 million per year in lost funding for welfare (AFDC).
       $197 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Iowa would have to increase state taxes by 10.9 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Iowa state government by $864 million.
       $451 million per year in lost funding for Medicaid.
       $95 million per year in lost highway trust fund grants.
       $48 million per year in lost funding for welfare (AFDC).
       $270 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Iowa would have to increase state taxes by 15.0 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Iowa by $2.6 billion.
       $1.2 billion per year in Medicare benefits.
       $1.4 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.
the impact of a balanced budget amendment and the contract with america 
                         on the state of kansas

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Kansas state government by $622 million.
       $355 million per year in lost funding for Medicaid.
       $52 million per year in lost highway trust fund grants.
       $29 million per year in lost funding for welfare (AFDC).
       $186 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Kansas would have to increase state taxes by 13.0 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would requre even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Kansas state government by $853 million.
       $487 million per year in lost funding for Medicaid.
       $71 million per year in lost highway trust fund grants.
       $40 million per year in lost funding for welfare (AFDC).
       $255 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Kansas would have to increase state taxes by 17.8 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Kansas by $2.4 billion.
       $1.1 billion per year in Medicare benefits.
       $1.2 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                        on the state of kentucky

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Kentucky state government by $1.2 billion.
       $690 million per year in lost funding for Medicaid.
       $69 million per year in lost highway trust fund grants.
       $56 million per year in lost funding for welfare (AFDC).
       $341 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Kentucky would have to increase state taxes by 14.5 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would requre even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Kentucky state government by $1.6 billion.
       $947 million per year in lost funding for Medicaid.
       $95 million per year in lost highway trust fund grants.
       $77 million per year in lost funding for welfare (AFDC).
       $468 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Kentucky would have to increase state taxes by 19.8 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Kentucky by $2.9 billion.
       $1.3 billion per year in Medicare benefits.
       $1.6 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                       on the state of louisiana

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Louisiana state government by $2.0 billion.
       $1.5 billion per year in lost funding for Medicaid.
       $94 million per year in lost highway trust fund grants.
       $48 million per year in lost funding for welfare (AFDC).
       $324 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Louisiana would have to increase state taxes by 27.8 
     percent across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would requre even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Louisiana state government by $2.7 billion.
       $2.1 billion per year in lost funding for Medicaid.
       $129 million per year in lost highway trust fund grants.
       $66 million per year in lost funding for welfare (AFDC).
       $444 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Louisiana would have to increase state taxes by 38.2 
     percent across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Louisiana by $3.2 billion.
       $1.5 billion per year in Medicare benefits.
       $1.8 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                         on the state of maine

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Maine state government by $452 million.
       $279 million per year in lost funding for Medicaid.
       $28 million per year in lost highway trust fund grants.
       $24 million per year in lost funding for welfare (AFDC).
       $121 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Maine would have to increase state taxes by 17.5 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would requre even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Maine state government by $621 million.
       $383 million per year in lost funding for Medicaid.
       $38 million per year in lost highway trust fund grants.
       $33 million per year in lost funding for welfare (AFDC).
       $166 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Maine would have to increase state taxes by 17.8 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Maine by $983 million.
       $529 million per year in Medicare benefits.
       $454 million per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.
the impact of a balanced budget amendment and the contract with america 
                        on the state of maryland

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Maryland state government by $1.1 billion.
       $581 million per year in lost funding for Medicaid.
       $83 million per year in lost highway trust fund grants.
       $65 million per year in lost funding for welfare (AFDC).
       $396 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Maryland would have to increase state taxes by 9.9 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax 
     [[Page S3164]] cuts would require even deeper spending cuts, 
     thereby reducing annual Federal grants to the Maryland state 
     government by $1.5 billion.
       $798 million per year in lost funding for Medicaid.
       $113 million per year in lost highway trust fund grants.
       $89 million per year in lost funding for welfare (AFDC).
       $543 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Maryland would have to increase state taxes by 13.5 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Maryland by $8.6 billion.
       $1.9 billion per year in Medicare benefits.
       $6.7 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                     on the state of massachusetts

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Massachusetts state government by $1.9 billion.
       $1.1 billion per year in lost funding for Medicaid.
       $248 million per year in lost highway trust fund grants.
       $135 million per year in lost funding for welfare (AFDC).
       $459 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Massachusetts would have to increase state taxes by 12.6 
     percent across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Massachusetts state government by $2.6 billion.
       $1.5 billion per year in lost funding for Medicaid.
       $340 million per year in lost highway trust fund grants.
       $185 million per year in lost funding for welfare (AFDC).
       $630 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Massachusetts would have to increase state taxes by 17.3 
     percent across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Massachusetts by $6.4 billion.
       $3.4 billion per year in Medicare benefits.
       $3.1 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                        on the state of michigan

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Michigan state government by $2.5 billion.
       $1.4 billion per year in lost funding for Medicaid.
       $140 million per year in lost highway trust fund grants.
       $229 million per year in lost funding for welfare (AFDC).
       $753 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Michigan would have to increase state taxes by 13.2 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Michigan state government by $3.4 billion.
       $1.9 billion per year in lost funding for Medicaid.
       $192 million per year in lost highway trust fund grants.
       $314 million per year in lost funding for welfare (AFDC).
       $1.0 billion per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Michigan would have to increase state taxes by 18.1 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Michigan by $6.8 billion.
       $4.6 billion per year in Medicare benefits.
       $2.3 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                       on the state of minnesota

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Minnesota state government by $1.2 billion.
       $679 million per year in lost funding for Medicaid.
       $102 million per year in lost highway trust fund grants.
       $83 million per year in lost funding for welfare (AFDC).
       $314 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Minnesota would have to increase state taxes by 9.4 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Minnesota state government by $1.6 billion.
       $931 million per year in lost funding for Medicaid.
       $139 million per year in lost highway trust fund grants.
       $113 million per year in lost funding for welfare (AFDC).
       $431 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Minnesota would have to increase state taxes by 13.0 
     percent across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Minnesota by $3.5 billion.
       $1.5 billion per year in Medicare benefits.
       $2.0 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.
the impact of a balanced budget amendment and the contract with america 
                      on the state of mississippi

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Mississippi state government by $864 million.
       $496 million per year in lost funding for Medicaid.
       $61 million per year in lost highway trust fund grants.
       $24 million per year in lost funding for welfare (AFDC).
       $282 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Mississippi would have to increase state taxes by 20.8 
     percent across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Mississippi state government by $1.2 billion.
       $681 million per year in lost funding for Medicaid.
       $84 million per year in lost highway trust fund grants.
       $33 million per year in lost funding for welfare (AFDC).
       $387 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Mississippi would have to increase state taxes by 28.5 
     percent across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Mississippi by $2.3 billion.
       $978 million per year in Medicare benefits.
       $1.3 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                        on the state of missouri

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Missouri state government by $1.3 billion.
       $747 million per year in lost funding for Medicaid.
       $109 million per year in lost highway trust fund grants.
       $62 million per year in lost funding for welfare (AFDC).
       $398 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Missouri would have to increase state taxes by 15.5 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Missouri state government by $1.8 billion.
       $1.0 billion per year in lost funding for Medicaid.
       $149 million per year in lost highway trust fund grants.
       $85 million per year in lost funding for welfare (AFDC).
       $547 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Missouri would have to increase state taxes by 21.2 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Missouri by $5.4 billion.
       $2.4 billion per year in Medicare benefits.
       $3.0 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                        on the state of montana

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Montana state government by $277 million.
       $123 million per year in lost funding for Medicaid.
       [[Page S3165]] $52 million per year in lost highway trust 
     fund grants.
       $12 million per year in lost funding for welfare (AFDC).
       $89 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Montana would have to increase state taxes by 19.8 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Montana state government by $380 million.
       $169 million per year in lost funding for Medicaid.
       $71 million per year in lost highway trust fund grants.
       $17 million per year in lost funding for welfare (AFDC).
       $123 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Montana would have to increase state taxes by 27.1 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Montana by $1.0 billion.
       $298 million per year in Medicare benefits.
       $722 million per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                        on the state of nebraska

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Nebraska state government by $388 million.
       $192 million per year in lost funding for Medicaid.
       $44 million per year in lost highway trust fund grants.
       $23 million per year in lost funding for welfare (AFDC).
       $129 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Nebraska would have to increase state taxes by 13.3 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Nebraska state government by $533 million.
       $264 million per year in lost funding for Medicaid.
       $60 million per year in lost highway trust fund grants.
       $31 million per year in lost funding for welfare (AFDC).
       $177 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Nebraska would have to increase state taxes by 18.3 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Nebraska by $1.7 billion.
       $661 million per year in Medicare benefits.
       $1.0 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.
the impact of a balanced budget amendment and the contract with america 
                         on the state of nevada

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Nevada state government by $227 million.
       $116 million per year in lost funding for Medicaid.
       $32 million per year in lost highway trust fund grants.
       $11 million per year in lost funding for welfare (AFDC).
       $68 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Nevada would have to increase state taxes by 6.2 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Nevada state government by $312 million.
       $159 million per year in lost funding for Medicaid.
       $44 million per year in lost highway trust fund grants.
       $15 million per year in lost funding for welfare (AFDC).
       $94 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Nevada would have to increase state taxes by 8.6 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Nevada by $1.4 billion.
       $354 million per year in Medicare benefits.
       $1.0 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                     on the state of new hampshire

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the New Hampshire state government by $212 million.
       $112 million per year in lost funding for Medicaid.
       $31 million per year in lost highway trust fund grants.
       $11 million per year in lost funding for welfare (AFDC).
       $58 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       New Hampshire would have to increase state taxes by 17.6 
     percent across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     New Hampshire state government by $291 million.
       $154 million per year in lost funding for Medicaid.
       $43 million per year in lost highway trust fund grants.
       $16 million per year in lost funding for welfare (AFDC).
       $79 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       New Hampshire would have to increase state taxes by 24.1 
     percent across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in New Hampshire by $773 million.
       $370 million per year in Medicare benefits.
       $403 million per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                       on the state of new jersey

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the New Jersey state government by $2.5 billion.
       $1.5 billion per year in lost funding for Medicaid.
       $141 million per year in lost highway trust fund grants.
       $129 million per year in lost funding for welfare (AFDC).
       $705 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       New Jersey would have to increase state taxes by 12.7 
     percent across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     New Jersey state government by $3.4 billion.
       $2.1 billion per year in lost funding for Medicaid.
       $194 million per year in lost highway trust fund grants.
       $177 million per year in lost funding for welfare (AFDC).
       $968 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       New Jersey would have to increase state taxes by 17.5 
     percent across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in New Jersey by $6.4 billion.
       $4.0 billion per year in Medicare benefits.
       $2.4 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                       on the state of new mexico

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the new Mexico state government by $524 million.
       $233 million per year in lost funding for Medicaid.
       $70 million per year in lost highway trust fund grants.
       $28 million per year in lost funding for welfare (AFDC).
       $193 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       New Mexico would have to increase state taxes by 12.9 
     percent across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     New Mexico state government by $719 million.
       $320 million per year in lost funding for Medicaid.
       $96 million per year in lost highway trust fund grants.
       $38 million per year in lost funding for welfare (AFDC).
       $265 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       New Mexico would have to increase state taxes by 17.6 
     percent across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would 
     [[Page S3166]] reduce other annual Federal spending in New 
     Mexico by $2.9 billion.
       $440 million per year in Medicare benefits.
       $2.5 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.
the impact of a balanced budget amendment and the contract with america 
                        on the state of new york

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the New York state government by $8.2 billion.
       $5.4 billion per year in lost funding for Medicaid.
       $274 million per year in lost highway trust fund grants.
       $535 million per year in lost funding for welfare (AFDC).
       $1.9 billion per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       New York would have to increase state taxes by 17.4 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     New York state government by $11.2 billion.
       $7.5 billion per year in lost funding for Medicaid.
       $376 million per year in lost highway trust fund grants.
       $734 million per year in lost funding for welfare (AFDC).
       $2.6 billion per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       New York would have to increase state taxes by 23.8 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in New York by $15.2 billion.
       $9.4 billion per year in Medicare benefits.
       $5.7 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                     on the state of north carolina

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the North Carolina state government by $1.7 
     billion.
       $1.0 billion per year in lost funding for Medicaid.
       $136 million per year in lost highway trust fund grants.
       $95 million per year in lost funding for welfare (AFDC).
       $441 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       North Carolina would have to increase state taxes by 11.1 
     percent across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     North Carolina state government by $2.3 billion.
       $1.4 billion per year in lost funding for Medicaid.
       $187 million per year in lost highway trust fund grants.
       $130 million per year in lost funding for welfare (AFDC).
       $605 billion per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       North Carolina would have to increase state taxes by 15.2 
     percent across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in North Carolina by $4.4 billion.
       $2.0 billion per year in Medicare benefits.
       $2.4 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                      on the state of north dakota

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the North Dakota state government by $229 million.
       $105 million per year in lost funding for Medicaid.
       $35 million per year in lost highway trust fund grants.
       $8 million per year in lost funding for welfare (AFDC).
       $81 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       North Dakota would have to increase state taxes by 19.7 
     percent across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     North Dakota state government by $314 million.
       $144 million per year in lost funding for Medicaid.
       $48 million per year in lost highway trust fund grants.
       $10 million per year in lost funding for welfare (AFDC).
       $111 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       North Dakota would have to increase state taxes by 27.0 
     percent across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in North Dakota by $773 million.
       $317 million per year in Medicare benefits.
       $455 million per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                          on the state of ohio

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Ohio state government by $2.8 billion.
       $1.7 billion per year in lost funding for Medicaid.
       $170 million per year in lost highway trust fund grants.
       $212 nillion per year is lost funding for welfare (AFDC).
       $727 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Ohio would have to increase state taxes by 14.4 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     North Dakota state government by $3.9 billion.
       $2.4 billion per year in lost funding for Medicaid.
       $233 million per year in lost highway trust fund grants.
       $290 million per year in lost funding for welfare (AFDC).
       $997 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Ohio would have to increase state taxes by 19.8 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Ohio by $8.2 billion.
       $4.7 billion per year in Medicare benefits.
       $3.5 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.
the impact of a balanced budget amendment and the contract with america 
                        on the state of oklahoma

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Oklahoma state government by $770 million.
       $424 million per year in lost funding for Medicaid.
       $51 million per year in lost highway trust fund grants.
       $51 million per year in lost funding for welfare (AFDC).
       $244 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Oklahoma would have to increase state taxes by 12.4 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Oklahoma state government by $1.1 billion.
       $582 million per year in lost funding for Medicaid.
       $70 million per year in lost highway trust fund grants.
       $69 million per year in lost funding for welfare (AFDC).
       $335 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Oklahoma would have to increase state taxes by 17.0 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Oklahoma by $2.9 billion.
       $1.3 billion per year in Medicare benefits.
       $1.6 billion per year in other spending including housing 
     assistance student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                         on the state of oregon

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Oregon state government by $706 million.
       $342 million per year in lost funding for Medicaid.
       $54 million per year in lost highway trust fund grants.
       $47 million per year in lost funding for welfare (AFDC).
       $263 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Oregon would have to increase state taxes by 12.2 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Oregon state government by $969 million.
       $469 million per year in lost funding for Medicaid.
       [[Page S3167]] $75 million per year in lost highway trust 
     fund grants.
       $65 million per year in lost funding for welfare (AFDC).
       $361 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Oregon would increase state taxes by 16.8 percent across-
     the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Oregon by $2.9 billion.
       $1.3 billion per year in Medicare benefits.
       $1.6 billion per year in other spending including housing 
     assistance, student loans, veteran's benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                      on the state of pennsylvania

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Pennsylvania state government by $3.1 billion.
       $1.8 billion per year in lost funding for Medicaid.
       $211 million per year in lost highway trust fund grants.
       $178 million per year in lost funding for welfare (AFDC).
       $901 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Pennsylvania would have to increase state taxes by 12.7 
     percent across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Pennsylvania state government by $4.2 billion.
       $2.4 billion per year in lost funding for Medicaid.
       $290 million per year in lost highway trust fund grants.
       $244 million per year in lost funding for welfare (AFDC).
       $1.2 billion per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Pennsylvania would have to increase state taxes by 17.4 
     percent across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Pennsylvania by $11.7 billion.
       $7.0 billion per year in Medicare benefits.
       $4.7 billion per year in other spending including housing 
     assistance student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                      on the state of rhode island

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Rhode Island state government by $430 million.
       $255 million per year in lost funding for Medicaid.
       $42 million per year in lost highway trust fund grants.
       $23 million per year in lost funding for welfare (AFDC).
       $109 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Rhode Island would have to increase state taxes by 21.4 
     percent across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Rhode Island state government by $590 million.
       $350 million per year in lost funding for Medicaid.
       $58 million per year in lost highway trust fund grants.
       $32 million per year in lost funding for welfare (AFDC).
       $150 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Rhode Island would have to increase state taxes by 29.3 
     percent across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Rhode Island by $849 million.
       $476 million per year in Medicare benefits.
       $373 million per year in other spending including housing 
     assistance student loans, veterans' benefits, and grants to 
     local governments.
the impact of a balanced budget amendment and the contract with america 
                     on the state of south carolina

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the South Carolina state government by $1.0 
     billion.
       $644 million per year in lost funding for Medicaid.
       $68 million per year in lost highway trust fund grants.
       $31 million per year in lost funding for welfare (AFDC).
       $260 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       South Carolina would have to increase state taxes by 14.3 
     percent across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     South Carolina state government by $1.4 billion.
       $883 million per year in lost funding for Medicaid.
       $94 million per year in lost highway trust fund grants.
       $42 million per year in lost funding for welfare (AFDC).
       $357 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       South Carolina would have to increase state taxes by 19.6 
     percent across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in South Carolina by $3.0 billion.
       $935 million per year in Medicare benefits.
       $2.1 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                      on the state of south dakota

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the South Dakota state government by $231 million.
       $103 million per year in lost funding for Medicaid.
       $39 million per year in lost highway trust fund grants.
       $6 million per year in lost funding for welfare (AFDC).
       $82 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       South Dakota would have to increase state taxes by 24.7 
     percent across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     South Dakota state government by $316 million.
       $142 million per year in lost funding for Medicaid.
       $53 million per year in lost highway trust fund grants.
       $9 million per year in lost funding for welfare (AFDC).
       $113 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       South Dakota would have to increase state taxes by 33.8 
     percent across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in South Dakota by $792 million.
       $281 million per year in Medicare benefits.
       $511 million per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                       on the state of tennessee

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Tennessee state government by $1.5 billion.
       $989 million per year in lost funding for Medicaid.
       $78 million per year in lost highway trust fund grants.
       $60 million per year in lost funding for welfare (AFDC).
       $411 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Tennessee would have to increase state taxes by 19.5 
     percent across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Tennessee state government by $2.1 billion.
       $1.4 billion per year in lost funding for Medicaid.
       $107 million per year in lost highway trust fund grants.
       $82 million per year in lost funding for welfare (AFDC).
       $563 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Tennessee would have to increase state taxes by 26.7 
     percent across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Tennessee by $5.3 billion.
       $1.9 billion per year in Medicare benefits.
       $3.4 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                         on the state of texas

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Texas state government by $4.2 billion.
       $2.5 billion per year in lost funding for Medicaid.
       $340 million per year in lost highway trust fund grants.
       $147 million per year in lost funding for welfare (AFDC).
       $1.2 billion per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Texas would have to increase state taxes by 14.0 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending 
     [[Page S3168]] cuts, thereby reducing annual Federal grants 
     to the Texas state government by $5.7 billion.
       $3.5 billion per year in lost funding for Medicaid.
       $466 million per year in lost highway trust fund grants.
       $202 million per year in lost funding for welfare (AFDC).
       $1.6 billion per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Texas would have to increase state taxes by 19.2 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Texas by $14.8 billion.
       $5.9 billion per year in Medicare benefits.
       $8.9 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.
the impact of a balanced budget amendment and the contract with america 
                          on the state of utah

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Utah state government by $422 million.
       $190 million per year in lost funding for Medicaid.
       $49 million per year in lost highway trust fund grants.
       $22 million per year in lost funding for welfare (AFDC).
       $160 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Utah would have to increase state taxes by 11.4 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Utah state government by $579 million.
       $261 million per year in lost funding for Medicaid.
       $68 million per year in lost highway trust fund grants.
       $31 million per year in lost funding for welfare (AFDC).
       $220 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Utah would have to increase state taxes by 15.6 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Utah by $1.5 billion.
       $323 million per year in Medicare benefits.
       $1.2 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                        on the state of vermont

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Vermont state government by $207 million.
       $89 million per year in lost funding for Medicaid.
       $37 million per year in lost highway trust fund grants.
       $13 million per year in lost funding for welfare (AFDC).
       $68 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Vermont would have to increase state taxes by 17.4 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Vermont state government by $284 million.
       $122 million per year in lost funding for Medicaid.
       $51 million per year in lost highway trust fund grants.
       $18 million per year in lost funding for welfare (AFDC).
       $93 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Vermont would have to increase state taxes by 23.9 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Vermont by $413 million.
       $206 million per year in Medicare benefits.
       $207 million per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                        on the state of virginia

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Virginia state government by $1.0 billion.
       $490 million per year in lost funding for Medicaid.
       $72 million per year in lost highway trust fund grants.
       $49 million per year in lost funding for welfare (AFDC).
       $393 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Virginia would have to increase state taxes by 8.2 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Virginia state government by $1.4 billion.
       $673 million per year in lost funding for Medicaid.
       $99 million per year in lost highway trust fund grants.
       $68 million per year in lost funding for welfare (AFDC).
       $539 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Virginia would have to increase state taxes by 11.2 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Virginia by $8.3 billion.
       $1.9 billion per year in Medicare benefits.
       $6.4 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                       on the state of washington

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Washington state government by $1.3 billion.
       $730 million per year in lost funding for Medicaid.
       $117 million per year in lost highway trust fund grants.
       $126 million per year in lost funding for welfare (AFDC).
       $346 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Washington would have to increase state taxes by 8.4 
     percent across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Washington state government by $1.8 billion.
       $1.0 billion per year in lost funding for Medicaid.
       $161 million per year in lost highway trust fund grants.
       $172 million per year in lost funding for welfare (AFDC).
       $474 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Washington would have to increase state taxes by 11.5 
     percent across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Washington by $4.9 billion.
       $1.5 billion per year in Medicare benefits.
       $3.4 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.
the impact of a balanced budget amendment and the contract with america 
                     on the state of west virginia

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the West Virginia state government by $765 million.
       $488 million per year in lost funding for Medicaid.
       $45 million per year in lost highway trust fund grants.
       $32 million per year in lost funding for welfare (AFDC).
       $199 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       West Virginia would have to increase state taxes by 20.6 
     percent across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     West Virginia state government by $1.0 billion.
       $670 million per year in lost funding for Medicaid.
       $62 million per year in lost highway trust fund grants.
       $44 million per year in lost funding for welfare (AFDC).
       $273 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       West Virginia would have to increase state taxes by 28.3 
     percent across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in West Virginia by $1.7 billion.
       $824 million per year in Medicare benefits.
       $835 million per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                       on the state of wisconsin

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Wisconsin state government by $1.3 billion.
       $694 million per year in lost funding for Medicaid.
       $111 million per year in lost highway trust fund grants.
       $96 million per year in lost funding for welfare (AFDC).
       [[Page S3169]] $349 million per year in lost funding for 
     education, job training, the environment, housing, and other 
     areas.
       Wisconsin would have to increase state taxes by 10.3 
     percent across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Wisconsin state government by $1.7 billion.
       $952 million per year in lost funding for Medicaid.
       $153 million per year in lost highway trust fund grants.
       $132 million per year in lost funding for welfare (AFDC).
       $479 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Wisconsin would have to increase state taxes by 14.2 
     percent across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Wisconsin by $3.4 billion.
       $2.1 billion per year in Medicare benefits.
       $1.3 billion per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.


the impact of a balanced budget amendment and the contract with america 
                        on the state of wyoming

       I. A Balanced Budget Amendment would reduce annual Federal 
     grants to the Wyoming state government by $218 million.
       $55 million per year in lost funding for Medicaid.
       $38 million per year in lost highway trust fund grants.
       $8 million per year in lost funding for welfare (AFDC).
       $118 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Wyoming would have to increase state taxes by 18.7 percent 
     across-the-board to make up for the loss in grants.
       II. A Balanced Budget Amendment combined with the 
     ``Contract with America'' tax cuts would require even deeper 
     spending cuts, thereby reducing annual Federal grants to the 
     Wyoming state government by $300 million.
       $75 million per year in lost funding for Medicaid.
       $52 million per year in lost highway trust fund grants.
       $10 million per year in lost funding for welfare (AFDC)
       $162 million per year in lost funding for education, job 
     training, the environment, housing, and other areas.
       Wyoming would have to increase state taxes by 25.7 percent 
     across-the-board to make up for the loss in grants.
       III. A Balanced Budget Amendment and the ``Contract with 
     America'' tax cuts would reduce other annual Federal spending 
     in Wyoming by $393 million.
       $131 million per year in Medicare benefits.
       $262 million per year in other spending including housing 
     assistance, student loans, veterans' benefits, and grants to 
     local governments.
    balanced budget amendment--estimation of state-by-state effects

       The following description provides information on the 
     estimation and allocation of spending cuts under two 
     scenarios that achieve a balanced budget by FY2002 without 
     tax increases and with Social Security and defense excluded 
     from spending reductions. The second scenario differs from 
     the first in that it also incorporates a set of deficit-
     increasing provisions in the Contract with America (CWA). 
     These provisions are all tax reductions except for a spending 
     increase associated with relaxation of the Social Security 
     earnings test. No specific defense spending increases 
     discussed in the CWA are reflected in the simulations.

              Step 1: Derive size of aggregate budget cuts

       Congressional Budget Office (CBO) baseline estimates of the 
     Federal deficit were taken from Table 4 of the preliminary 
     Economic and Budget Outlook dated January 5, 1995. Equal 
     yearly deficit reductions, beginning in FY1996, were then 
     computed which were sufficient to achieve a balanced budget 
     by FY2002.
       The required cuts take into account the interest savings 
     that would result from lower deficits and debt; a 6.7 percent 
     rate of interest was assumed throughout based on long-term 
     CBO projections of the 10-year Treasury note rate. The 
     estimates are static in nature and reflect no macroeconomics 
     feedback--e.g., lower economic growth resulting from the 
     contractionary effects of deficit reduction or higher growth 
     resulting from lower tax rates. Deficit-reducing spending and 
     tax changes of $248 billion, or 22.5 percent of noninterest, 
     non-Social Security spending, would have to be made in FY2002 
     to achieve a balanced budget. The required cumulative deficit 
     reduction is approximately $1.3 trillion, of which about $0.2 
     trillion occurs through interest savings.
       A similar procedure was used to derive required spending 
     reductions with the CWA's tax cut and Social Security 
     spending amounts (and associated interest carrying costs) 
     added to the CBO deficit baseline. Estimated revenue effects 
     of the proposed tax reductions were obtained from the 
     Treasury Department, Office of Tax Analysis. Annual costs of 
     the proposed relaxation of the Social Security earnings test 
     were taken from a National Economic Council staff working 
     paper, September 20, 1994. The required percentage spending 
     reduction is 30.9 percent in this scenario. The aggregate 
     required cuts in total spending in FY2002 total $340 billion.

            Step 2: Derive allocation parameters for states

       Grants to state and local governments, as well as Social 
     Security, defense, and other Federal spending, are reported 
     in Federal Expenditures by State for Fiscal Year 1993. Our 
     analysis divides intergovernmental grants into four 
     components. Aid to Families with Dependent Children, 
     Medicaid, highway trust fund grants, and all Other. It was 
     assumed that all grants in the first three of these 
     categories went directly to state governments. To estimate 
     the local share of the Other category, we used estimates of 
     total 1992 intergovernmental revenues from Federal to local 
     governments in each state, as reported in the August 1994 
     Census publication Government Finances, 1991-92: Preliminary 
     Report. These state-by-state estimates were divided by the 
     Government Finances estimates of Federal revenues to states 
     and localities combined, less the values of AFDC, Medicaid, 
     and highway grants from the FY1992 edition of Federal 
     Expenditures by State. It should be emphasized that 
     discrepancies between the Government Finances and Federal 
     Expenditures aggregates, resulting from different definitions 
     and sources, make this local vs. state, decomposition of 
     Other grants an imprecise process.
       State tax revenues for the average of the 1990 and 1992 
     fiscal years was also taken from issues of Government 
     Finances. The use of two years at different points in the 
     business cycle was designated to mitigate cyclical influences 
     on projected revenue.

             Step 3: Project FY2002 Grants and State Taxes

       CBO's projected levels for FY2002 for Social Security, 
     Medicare, and most other major spending categories were taken 
     from the above-mentioned CBO report. For defense spending, 
     the Administration's project of FY2000 defense outlays was 
     inflated by the annual rate of growth to total discretionary 
     spending from FY2000 to FY2002 in the CBO projections.
       The projection of grant amounts was also derived from the 
     long-term CBO budget forecast. AFDC grants were projected 
     using the ratio of 2002 to 1993 values of Other Mandatory 
     spending as reported by CBO, respectively, in the January 5 
     report and on page 37 of The Economic and Budget Outlook: 
     Update dated August 1994. (Unpublished figures on FY1993 
     Civil Service and military retirement spending were obtained 
     from CBO.) Highway trust fund grants were projected using the 
     ratio of 2002 to 1993 values of domestic discretionary 
     spending; the 2002 value was estimated as estimated total 
     nondefense discretionary spending multiplied by the FY2002 
     ratio of domestic to the sum of international and domestic 
     discretionary spending in Table 4 of the January 5 report.
       The category of Other grants was decomposed into 
     discretionary and mandatory components. The Other mandatory 
     component was defined to include: Agricultural Marketing 
     Service Funds for strengthening markets (Section 32); child 
     nutrition programs; food stamp grants; special milk program; 
     national grasslands payments to counties; social services 
     block grants; foster care and adoption assistance; assistance 
     for legalized aliens; other Administration for Children and 
     Families grants; and Supplemental Security Income grants. 
     These were projected in the same manner as AFDC, while the 
     residual Other discretionary grants were projected in the 
     same manner as highway grants.
       Total baseline state taxes were projected to move in 
     proportion to nominal U.S. Gross Domestic Product. The 
     projection of GDP for calendar year 2000 was taken from Table 
     1 of the CBO January 5 report and increased by three years of 
     assumed 2.3 percent real growth and 2.8 percent increases in 
     the GDP price deflator. The growth in nominal GDP between 
     1991 and 2002 was converted to a per capita basis. Individual 
     state taxes in FY2002 were then estimated by multiplying 
     1990-1992 state population growth and the growth in U.S. per 
     capita GDP. State population totals for 2000 and 2010 were 
     drawn from the 1994 Statistical Abstract, and our estimates 
     for 2002 were interpolations of the 2000 and 2010 values.

    Step 4: Derive required grant reductions and state tax increases

       The percentage reductions in FY2002 grants and other 
     spending components necessary to achieve budget balance were, 
     by assumption, equal to the aggregate rate computed for all 
     nondefense, non-Social Security spending. Finally, the 
     percentage increase in the state tax levels necessary to make 
     up the dollar loss in Federal grants to each state was 
     computed.--Office of Economic Policy, Department of the 
     Treasury, January 11, 1995.
                                                                    ____

                High Cost of A Balanced Budget Amendment

                           (By Richard Kogan)

       Advocates of the Balanced Budget Amendment to the 
     Constitution do not intend to jeopardize the life savings of 
     America's families, or threaten the stability of the nation's 
     banks. As written, however, the amendment could do just that.
       Currently, America's savings are safe. The Federal Deposit 
     Insurance Corp. (FDIC) 
     [[Page S3170]] guarantees individual deposits in banks and 
     thrift institutions up to $100,000 per account. Depositors 
     rely on the U.S. government to keep its word, quickly and 
     automatically; if a bank goes broke, the government makes 
     good on deposits. Deposit insurance claims are enforceable in 
     court.
       Now look at the Balanced Budget Amendment. It begins, 
     ``Total outlays for any fiscal year shall not exceed total 
     receipts for that fiscal year, unless three-fifths of the 
     whole number of each house of Congress shall provide by law 
     for a specific excess of outlays over receipts by a roll-call 
     vote.'' This deceptively simple concept--that the federal 
     budget must be balanced each eyar--would inadvertently cast 
     doubt over the ``full faith and credit'' of the U.S. 
     government, putting all federal guarantees, including deposit 
     insurance, at risk.
       Here's why. During a severe economic downturn, the risk of 
     bank failure is greatest. An economic downturn also produces 
     (or exacerbates) federal budget deficits as tax revenues 
     decline and spending for programs such as unemployment 
     compensation increases. At such time, the government would 
     lack the extra revenues it could need to cover the large 
     costs of rescuing depositors and the banking system. Under 
     current law, deposit insurance claims are automatically paid 
     as needed, regardless of the deficit. Under the amendment, if 
     deposit insurance payments would cause a deficit, might not 
     those payments be prohibited? Don't forget that the measure 
     would amend the Constitution, while deposit insurance and 
     other such guarantees are only statutes.
       American banking was not always protected. The Great 
     Depression was so steep--the economy shrank almost 30 percent 
     from 1929 to 1933--in part because there was no deposit 
     insurance. Some lost all their savings. A rumor that a bank 
     was in trouble prompted panic, with depositors rushing to 
     withdraw their savings. Even false rumors caused banks to 
     collapse.
       One of President Roosevelt's first acts was to close the 
     banks while Congress enacted deposit insurance. The banks 
     reopened, citizens could redeposit their funds in safety and 
     the economic collapse ended. Deposit insurance became the 
     first and best economic stabilizer. It is one reason that no 
     post-war recession has shrunk the economy more than 3\1/2\ 
     percent.
       Doesn't the FDIC charge annual fees to banks, building up 
     large balances, which would automatically be available in a 
     banking crisis?
       Not after the amendment. It prohibits spending borrowed 
     funds. Incredibly, it also prohibits using accumulated 
     savings; it requires that all federal spending in any fiscal 
     year be covered by that year's revenues. This requirement is 
     like telling a family to finance a new house or a child's 
     college tuition out of that year's wages, no matter how much 
     money the family has in the bank. In this case, the amendment 
     precludes a sudden increase in deposit insurance payments if 
     that increase would cause federal spending to exceed federal 
     revenues in that year, no matter how much the FDIC has ``in 
     the bank.''
       There are two possible ways out. First, Congress could 
     raise taxes or cut other spending by enough to offset deposit 
     insurance costs. But the potential size of those payments 
     shows why they could not be easily offset. The recent 
     restructuring of the savings and loan industry required 
     deposit insurance payments of $156 billion over four years, 
     $66 billion in 1991 alone. And the government's deposit 
     insurance guarantee covers private savings of $2.7 trillion. 
     These amounts are too large to be offset by a single year's 
     tax increases or spending cuts.
       Second, there is the escape hatch. By a three-fifths vote, 
     Congress could choose to pay deposit insurance and allow 
     deficit spending. But it is hardly automatic that Congress 
     would respond in a timely manner (or at all), even in a 
     pending crisis. In August 1941 Congress barely mustered a 
     majority to extend the draft, even though Hitler had already 
     marched across half of Europe. In the current debate, neither 
     the Senate nor the House could find a majority to write into 
     the amendment an exception for recessions. Finding three-
     fifths majorities in each House of Congress is significantly 
     more difficult. By the time Congress fully understands the 
     scope of a developing banking crisis and gathers the three-
     fifths vote (if it can), the problem would have grown, 
     perhaps to a dangerous degree.
       Taking the amendment at face value, then, legal commitments 
     made by the U.S. government would no longer be binding. When 
     economic troubles arose and the banking system, depositors 
     and the economy as whole most needed it, those 
     ``commitments'' could prove ephemeral.
                                                                    ____

                [From the New York Times, Feb. 21, 1995]

The Pitfalls of a Balanced Budget: Dismantling a Decades-Old System for 
                          Softening Recessions

                          (By Louis Uchitelle)

       The unemployment rate, which peaked at 7.7 percent after 
     the last recession, could have reached 9 percent if a 
     balanced budget has been required, Government and private 
     economists estimate. And a laid-off worker who collected 
     $12,000 in unemployment pay might have received only $7,000 
     or so.
       Such estimates of the potential economic impact are not 
     emphasized very much, however, in the debate over the 
     balanced budget amendment. So far, the battle has focused on 
     its value as a tool to shrink government or to discipline 
     spending. But if the amendment is enacted, the side effect 
     would be huge: a system that has softened recessions since 
     the 1930's would be dismantled.
       ``There are risks associated with a balanced budget, and I 
     don't think anyone should deny them.'' said William Hoagland, 
     the Republican staff director for the Senate Budget 
     Committee. ``Nevertheless, the debate on the floor has been 
     dominated by what we must do to get the budget in balance, 
     not what the risks of a balanced budget amendment might be.''
       Mr. Hoagland expressed surprise that the biggest risk--
     deeper, more painful recessions--had not figured 
     significantly in the debate, although Senator Daniel P. 
     Moynihan, Democrat of New York, and Senator Paul S. Sarbanes, 
     Democrat of Maryland, had called attention to this risk in 
     several floor speeches. ``The reason must be that the 
     advocates of a balanced budget see the benefits to the 
     economy as far outweighing the negatives associated with 
     cyclical downturn,'' Mr. Hoagland said. ``That must be what 
     is going on.''
       No benefit seems to hold more sway than the view that the 
     amendment would shrink the Federal Government by restricting 
     its power to tax and to spend. A dollar not collected and 
     spent by the Government is a dollar left in the hands of the 
     private sector. And the private sector invariably invests 
     money more efficiently than the Government, this view holds.
 The ``automatic stabilizers'' of the economy rely on deficit spending

       ``The people have spoken clearly that government is too big 
     and we need to do something about it,'' said Robert Hall, a 
     Stanford University economist who favors smaller government. 
     ``The problem is that the balanced budget amendment is a 
     heavy-handed solution and risky.''
       The biggest risk is to the nation's ``automatic 
     stabilizers,'' which have made recessions less severe than 
     they were in the century before World War II. The 
     stabilizers, an outgrowth of Keynesian economics, work this 
     way: When the economy weakens, outlays automatically rise for 
     unemployment pay, food stamps, welfare and Medicaid. 
     Simultaneous, as incomes fall, so do corporate and individual 
     income tax payments. Both elements make more money available 
     for spending, thus helping to pull the economy out of its 
     slump.
       The problem, of course, is that the stabilizers make the 
     deficit shoot up--by roughly $65 billion as a result of the 
     1990-1991 recession, according to the Treasury Department. 
     Under the balanced budget amendment, Congress and the 
     Administration would be required to get the budget quickly 
     back into balance, through spending cuts, higher tax rates, 
     or a combination of the two--perhaps even in the midst of a 
     recession.
       ``The Government would become, almost inevitably, a 
     destabilizer of the economy rather than a stabilizer,'' said 
     Joseph Stiglitz, a member of the President's Council of 
     Economic Advisers. Many economists share that view.
       Absent the stabilizers, every 73-cent drop in national 
     income in the last recession would have become a $1 drop, 
     said Bradford DeLong, deputy assistant Secretary of the 
     Treasury, who as a Harvard economist studies this dynamic and 
     recently updated his research. Of the 27 cents in cushioning, 
     20 cents came from falling tax revenue and 7 cents from the 
     higher spending.
       Economists outside the Government offer similar estimates. 
     Ray Fair of Yale University, for example, said for every $10 
     billion decline in national income during a recession, the 
     deficit rises by $2 billion, as the stabilizers kick in with 
     their higher spending and lower tax revenue.
       ``We ought not to give up the stabilizers,'' Professor Fair 
     said. ``That would be very Draconian.''
       Nearly every economist agrees that the American economy 
     requires, if not stabilizers, some substitute method for 
     offsetting recessions in an era of balanced budgets. And 
     those who favor the amendment are no exception.
       ``It would be a disaster to lose the stabilizers,'' said C. 
     Fred Bergsten, director of the Institute of International 
     Economics, who endorses the amendment as a necessary step if 
     the nation is to afford the high cost of Social Security and 
     Medicare for the baby boom generation, which reaches 
     retirement age early in the next century.
       Mr. Bergsten notes that the amendment, as now worded, would 
     permit Congress to bring back the stabilizers by a three-
     fifths vote in both houses. The vote would permit the 
     necessary deficit spending to finance the stabilizers.
       While a three-fifths vote is a big hurdle, Mr. Bergsten and 
     others argue that Congress would get used to authorizing the 
     necessary deficits during recessions. Nevertheless, he would 
     prefer a different solution. Once through the painful process 
     of balancing the budget by 2002, as required by the 
     amendment, then the Government should run budget surpluses in 
     years of strong economic growth and full employment, Mr. 
     Bergsten said.
       The surpluses would cover the rising costs of the 
     stabilizers during recessions. ``You could go down to a 
     balanced budget in the hard years, and still give the economy 
     a little stimulus,'' he said.
[[Page S3171]] is monetary policy enough to bolster the u.s. economy in 
                              tough times?

       The Congressional Budget Office has estimated that the 
     surplus needed to pay for the stabilizers during a recession 
     as severe as that of 1981-1982, the worst since World War II, 
     would be 1 percent of the national income during robust 
     periods of full employment, and perhaps as much as 1.5 
     percent.
       That would mean an annual surplus in today's dollars of $70 
     billion to $100 billion, rather than the nearly $200 billion 
     or so in annual deficits expected under current policy. Most 
     of the $200 billion is to help pay for programs like highway 
     construction and new weaponry that have fixed costs and do 
     not fluctuate with the ups and downs of the economy, as 
     unemployment pay, food stamps, tax revenues and the other 
     stabilizers do.
       Some economists--including Milton Friedman, a Nobel 
     laureate in economics who is with the Hoover Institute--hold 
     that the stabilizers, despite the ballyhoo, are no longer so 
     important. The Federal Reserve, through monetary policy, can 
     more than offset their disappearance by lowering interest 
     rates an extra notch or two to give the economy an additional 
     stimulus in hard times.
       ``I have looked at many episodes in the world in which 
     monetary policy went one way and fiscal policy the other, and 
     I have never found a case in which monetary policy did not 
     dominate,'' Mr. Friedman said. He favors a balanced budget 
     amendment that would shrink the Federal Government by putting 
     a ceiling on the tax increases that could be enacted to 
     balance the budget.
       But the Clinton Administration and even Federal Reserve 
     officials question whether monetary policy could alone handle 
     the task of reviving an economy in recession. The 
     stabilizers, they note, kick in automatically--before the 
     Federal Reserve and most economists often realize that the 
     economy is falling toward recession.
       A recession might be well along and getting deeper before 
     the Fed recognized the problem and began to drop rates. The 
     lower rates, in turn, would not be felt in the economy for a 
     year to 18 months, the traditional lag. And even if the Fed 
     acted quickly enough, the economy would behave in new and 
     different ways without the stabilizers.
       ``My guess is that we would get it wrong the first time we 
     went into recession, making that recession much deeper than 
     it should be,'' said a Federal Reserve official, who spoke on 
     condition that he not be identified. ``But we would learn 
     from that experience and do a better job thereafter.''
                                                                    ____

                     [From Newsweek, Jan. 30, 1995]

 Corrupting the Constitution: Balance the Budget, But Not by Amendment

                        (By Robert J. Samuelson)

       The Constitution is not a sledgehammer. It embodies broad 
     principles of government and enduring national values. As 
     such, it commands deep public respect and even reverence. 
     There's a temptation to think that its power and mystique can 
     bludgeon public opinion into convenient consensus on hard 
     issues. It can't, and the exercise shouldn't be tried. The 
     balanced-budget amendment--to be debated by Congress this 
     week--promises just such a popular conversion. The proposal 
     is a very bad idea.
       You should not confuse balancing the budget, which in 
     general is desirable, with the undesirability of using the 
     Constitution to do it. Just because the Constitution requires 
     a balanced budget does not mean that the budget will be 
     balanced. If an amendment were regularly flouted, then the 
     budgetary impasse would become a constitutional crisis. ``The 
     first principle of a conservative should be: don't muck with 
     the Constitution,'' says constitutional scholar Robert 
     Goldwin of the American Enterprise Institute.
       By this standard, Congress has lots of Republicans but few 
     conservatives. The amendment's advocates essentially embrace 
     a theory of immaculate consensus. No one wants to confront 
     the inconsistencies of public opinion--the simultaneous 
     desires for lower taxes, higher spending and no tampering 
     with social security--that cause budget deficits. Instead, an 
     amendment is supposed to dissolve these inconsistencies. 
     Congress can't control ``its deficit addiction without the 
     strong therapy of a constitutional mandate to make it get 
     clean and sober,'' proclaims Orrin Hatch, chairman of the 
     Senate Judiciary Committee.
       All recent major amendment proposals have been similarly 
     inspired; they aimed to pervert the Constitution by using it 
     to settle passionate public disputes. The school-prayer, 
     ``equal rights'' and anti-abortion amendments all fit this 
     description. None succeeded, because the Founders did not 
     intend for the Constitution to be so used. They set high 
     hurdles for amendments (two-thirds congressional approval, 
     then ratification by three quarters of the states). Although 
     Prohibition--the 18th Amendment--overcame these barriers, it 
     showed the folly of using the Constitution for consciousness-
     raising.
       Congress passed it in 1917 in a ``mood of Spartan 
     idealism'' created by World War I, wrote historian Frederick 
     Lewis Allen. If the war would ``end all wars,'' then 
     Americans could imagine an ``era of efficient sobriety!'' The 
     actual result was rampant lawlessness: bootleggers, speak-
     easies and gangsterism. Congress was complicit because--
     caught between demands for tougher enforcement and for 
     repeal--it did neither. Finally, the amendment was repealed 
     in 1933.
       The plain lesson that the Constitution can't singlehandedly 
     impose consensus is now ignored. The amendment's proponents 
     echo the simple moralisms of prohibitionists; note Senator 
     Hatch's identical imagery (``get clean and sober''). The 
     reality is bound to be grittier. Consider three broad 
     possibilities and their probability if Congress passes the 
     amendment.
       It's ratified by the states--and it works. Intimidated, 
     Congress and the president end programs (farm subsidies, 
     public TV) and trim entitlements (social security, Medicare). 
     Because a deficit remains, they also raise taxes. Finally, 
     they pass long-term social-security and Medicare reforms to 
     prevent huge deficits when baby boomers retire. (Probability, 
     generously: 20 percent.)
       It isn't ratified. Congressional passage triggers a 
     lobbying and TV blitz aimed at state legislatures by groups 
     that feel threatened (the elderly, farmers, the poor, etc.). 
     State and local officials realize the amendment could be 
     costly; less federal spending on highways, health care and 
     schools will mean more pressure for local spending. 
     (Probability: 40 percent.)
       It's ratified--and doesn't work as advertised. Congress 
     balks at visible tax increases or entitlement cuts. Or it 
     regularly votes to run deficits by a three-fifths majority, 
     as the amendment permits. Or it resorts to gimmicks to spend 
     outside ``the budget.'' The amendment has no enforcement 
     mechanism: courts refuse to intervene, because budget choices 
     are deemed ``political'' matters. (Probability: 40 percent.)
       Until the 1960s, Americans valued balanced budgets. The 
     respect was rooted in Jeffersonian beliefs that budget 
     balancing checked the ``corruption'' of government, writes 
     political scientist James Savage of the University of 
     Virginia.* Deficits were tolerated in wars and depressions. 
     But the need for discipline was seen, and budgets were 
     balanced in good times. This consensus was destroyed by 
     Keynesian doctrines that deficits could spur the economy. 
     Now, the need is to reverse this: to de-emphasize the 
     budget's use as an economic tool, and to restore a balanced 
     budget as a way of defining what government should and 
     shouldn't do.


                          bipartisan hysteria

       Unfortunately, the balanced-budget amendment serves as an 
     excuse to evade specifics. At present, balancing the budget 
     is not so hard. The deficit equals about 2.5 to 3 percent of 
     national income. Americans will not starve if farm subsidies 
     stop; the elderly will not become destitute if cost-of-living 
     adjustments are trimmed; the economy will not collapse if 
     taxes are raised modestly. Changes are horrific only if any 
     spending cuts or tax increases are considered intolerable. 
     The harder issues involve adjusting programs for baby 
     boomers' retirement.
       Yet, budget hysteria is bipartisan. House Majority Leader 
     Richard Armey won't say how Republicans would balance the 
     budget because ``once members of Congress know exactly, 
     chapter and verse, the pain . . . to get to a balanced 
     budget, their knees will buckle.'' President Clinton condemns 
     GOP silence. But he has not proposed a balanced budget; all 
     the White House plugs is ``deficit reduction.'' Worse, it 
     tries to terrify people about the harsh tax hikes or spending 
     cuts needed to balance the budget.
       The resort to the Constitution is a reckless gambit that 
     could backfire in many ways. It postpones necessary choices 
     and, perversely, could make the choices harder by mobilizing 
     threatened groups against ratification. But mostly it 
     assaults our political culture. The Constitution stands above 
     ordinary disputes; that's why it's respected. The amendment 
     imperils this. Instead of elevating the budget debate, it may 
     lower the Constitution.
                                                                    ____

                [From the New York Times, Jan. 24, 1995]

                 State of the Union? Someday, Paralyzed

                            (By Paul Starr)

       Princeton, N.J. When the Framers replaced the Articles of 
     Confederation with the Constitution, they gave the Government 
     unqualified and unimpeded fiscal powers. Today, a new 
     Republican majority in Congress proposes to overturn that 
     decision. Speaker Newt Gingrich says he intends to reverse 
     the growth of the Federal Government's role in society since 
     1932. The legacy he challenges, however, is not only that of 
     Franklin D. Roosevelt but more fundamentally that of 
     Alexander Hamilton.
       As President Clinton delivers his State of the Union 
     Message tonight, many Americans will wonder about the fate of 
     particular programs and policies in the new Congress. But the 
     larger question raised by the Republicans is the Government's 
     capacity to act, for they propose not just to shrink programs 
     but to impose a permanent constitutional straightjacket that 
     is likely to paralyze the Government in future crises.
       The Constitution is a parsimonious document, unencumbered 
     with detailed policy prescriptions. This restraint expressed 
     confidence in representative government; it left the people's 
     future representatives free to confront problems the Founders 
     knew they could not anticipate. As Hamilton explains in ``The 
     Federalist'' (No. 30), it was imprudent to set any limit to 
     the new government's taxing power because there was no clear 
     limit to the demands that might be placed upon it. The 
     Constitutional Convention deliberately rejected requirements 
     for supermajorities: impediments to revenue-raising had 
     helped make the Articles of Confederation unworkable.
       [[Page S3172]] Today's Republican majority apparently 
     believes it is more capable of making fiscal policy for 
     future generations than were the Founding Fathers. It seeks 
     to prescribe a balanced-budget amendment, to require a three-
     fifths supermajority for tax increases and to prohibit the 
     Government from imposing requirements on the states except 
     when it assumes 100 percent of the costs.
       These measures are frankly intended to disable a Government 
     that many Americans say they no longer trust. Yet those 
     measures severely weaken the Government's capacity to achieve 
     any purpose. They hand weapons to minorities to obstruct 
     majorities: a minority in either house would be able to 
     impede preparations for national defense as well as spending 
     on the poor.
       If in the pursuit of a balanced budget in the year 2002, we 
     cut Medicare and social programs and provoked an inevitable 
     angry reaction, it would be all the harder to find money for 
     purposes that conservatives prefer, whether ``Star Wars'' 
     defense systems, more prisons or intensified border patrols.
       The Government's capacity to act is a resource as much for 
     conservative as for liberal purposes. So those who are 
     planting a time bomb under the welfare state may see it 
     explode in their own faces.
       The comeuppance could be much more serious for the nation 
     than for any party. The dangers would likely be greatest in a 
     recession. If revenue fell along with economic activity and 
     if three-fifths of Congress could not agree to run a deficit, 
     the Government would be forced to aggravate the downturn by 
     cutting public expenditures as well--a recipe for turning 
     recessions into depressions.
       The Pentagon is committed to maintaining forces prepared to 
     fight two wars simultaneously, but a nation with weakened 
     fiscal powers is much less capable of sustaining such 
     commitments. Our enemies would understand this and act 
     accordingly.
       Some critics may dismiss these as empty worries. After all, 
     the amendment, if passed in time, would not require a 
     balanced budget until 2002. But seven years come soon enough. 
     Concerns about the amendment are empty only if the amendment 
     itself is empty of force.
       The requirements for supermajorities are the most dangerous 
     element in the Republicans' plan. But even if they reduced 
     voting requirements to an absolute majority of members of 
     Congress--as many Democrats prefer--it would give undue 
     constitutional force to the norm of budget balancing.
       Denying the Government the routine power to borrow is a 
     surrender to the medieval view of debt that continues to 
     shape popular attitudes. The introduction of credit cards 
     almost three decades ago prompted overwhelming disapproval in 
     public opinion surveys; meanwhile, Americans got the cards in 
     droves.
       There has never been a time--not even during the New Deal--
     when public opinion surveys failed to register overwhelming 
     disapproval of government deficits. Yet Americans' 
     disapproval of deficits ought to be taken as a mandate for 
     constitutional prohibition about as seriously as their 
     disapproval of credit cards was taken as grounds for 
     outlawing charge accounts. Credit cards have not doomed the 
     economy, nor will Federal deficits.
       The problem of the deficit is its long-term rate of growth, 
     which is due almost entirely to projected health care costs. 
     There are no more grounds for making a zero deficit a 
     constitutionally required objective than for denying 
     corporations or families the ability to borrow. Federal 
     deficits of 1 or 2 percent of the gross domestic product are 
     entirely manageable. If the outstanding debt is inflation-
     adjusted annually, deficits of that scale typically do not 
     amount to a real increase in the debt anyway.
       Judge Robert Bork opposes the amendment as unworkable. So 
     do other jurists, who think that if Congress used accounting 
     gimmicks to portray an unbalanced budget as balanced, the 
     courts would have no competence to enforce the amendment. And 
     some state officials worry that the burdens of Federal 
     cutbacks would be passed on to them. If the Senate does not 
     derail the amendment, such objections may well do so.
       The original rationale for constitutional parsimony still 
     stands. We will never know enough about the future to predict 
     the tests that democratic government will face. More than 200 
     years of American history should assure us that the Republic 
     not only can survive without constitutionally imposed fiscal 
     restrictions, it has been better off without them.
       If the Constitution had required a balanced budget, many 
     members of Congress would not sit there today: for one thing, 
     Thomas Jefferson could never have completed the Louisiana 
     Purchase.
       Hamilton's legacy of unimpeded fiscal power has been 
     crucial to a system of government that has brought us through 
     wars, depressions and natural calamities to an unchallenged 
     position as the strongest nation on earth.
       During the Depression, World War II and the cold war, there 
     was a ready-made answer to questions about why we needed a 
     strong Federal Government. The crisis of Government capacity 
     has erupted today in part because there is no longer any 
     shared sense of the Government's overriding mission. But 
     depressions and wars have not been banished forever; rules we 
     adopt now must be good when the world turns bad. 
     Constitutionalizing fiscal policy is bad for the Constitution 
     and bad for fiscal policy. It would make a mockery of one or 
     a failure of the other, or both.
                                                                    ____

               [From the Washington Post, Jan. 22, 1995]

 Any Way Its Proponents Slice It, Balanced-Budget Amendment Is Baloney

                           (By Hobart Rowen)

       The case against a constitutional amendment to balance the 
     budget is overwhelming. It has been hyped by Democrats and 
     Republicans alike as the only way to force reluctant 
     congressmen to make tough decisions, and there is no doubt 
     that a large segment of the public has come to believe this 
     propaganda.
       But the truth is that an amendment to the Constitution for 
     this purpose is bad economics, bad budget policy and bad 
     constitutional policy. By itself, such an amendment would cut 
     neither a dollar nor a program from the federal budget. As 
     Office of Management and Budget Director Alice S. Rivlin told 
     the Senate Judiciary Committee on Jan. 5, ``most of all, it 
     evades the hard choices needed to achieve real deficit 
     reduction.''
       Why is the constitutional amendment bad economics? In an 
     interview, Council of Economic Advisers Chairman Laura 
     D'Andrea Tyson points out that the beauty of the present 
     fiscal system is that it contains automatic stabilizers that 
     moderate economic activity whenever business activity 
     weakens. Thus, when workers lose jobs, unemployment 
     compensation rises and it cushions the slide. If business 
     profits are off, then tax liabilities decline. These events 
     boost the government deficit, thus offsetting to some degree 
     the decline in the private sector.
       ``But the balanced budget amendment would take away these 
     automatic stabilizers when the economy is slowing down,'' 
     Tyson said. It would force the government to raise taxes or 
     cut spending to cover the increasing deficit that a slowing 
     economy was generating. Rivlin puts it this way: ``Fiscal 
     policy would exaggerate, rather than mitigate, swings in the 
     economy. Recessions would tend to be deeper and longer.''
       Meanwhile, the House Republican version of the amendment 
     wrongly (and possibly unconstitutionally) requires a three-
     fifths majority of each house of Congress to increase 
     revenue, run budget deficits or increase the public debt. 
     There is supposed to be a safety valve to permit a deficit in 
     time of real economic weakness. But who in Congress is a good 
     enough forecaster to sense when the safety valve should be 
     opened? As Rivlin said, in all likelihood, ``the damage would 
     be done long before we recognize that the economy is turning 
     down.''
       Why would the amendment also be bad constitutional policy? 
     Not only would it put fiscal policy, as outlined above, in a 
     straitjacket, it would denigrate the document that deals with 
     the big issues--individual rights, the system of separation 
     of powers, the ultimate guarantor of our system of liberties 
     in effect since 1776. It would force the courts to adjudicate 
     disputes certain to arise.
       Meanwhile, what are the hard choices being avoided? The 
     Republicans who are pushing the ``Contract With America'' 
     freely concede that to balance the budget by the year 2002, 
     as called for by the amendment, would cost $1.2 trillion in 
     cuts in the various big entitlement programs--Social 
     Security, Medicare, Medicaid and other pensions. But they 
     aren't prepared to make them. Rep. Richard K. Armey of Texas, 
     House majority leader, said forthrightly that if members of 
     Congress understood the full dimension of what is involved, 
     ``they would buckle at the knees.''
       But wait, there's more than $1.2 trillion involved: Because 
     of the new tax cuts and other ``reforms'' proposed in the 
     Republican ``Contract,'' there is an additional $450 million 
     that would have to be found by 2002--making a net reduction 
     of $1.65 trillion.
       But the story isn't over--and this is the most significant 
     missing piece.
       The bland assumption is that if somehow a miracle is 
     accomplished--the huge $1.65 trillion cuts are made to 
     balance the budget by 2002--the budget will continue to be in 
     balance. Not so! The dirty little secret is that within a few 
     years after 2002, as the Kerry-Danforth entitlement 
     commission report showed, the workplace demographics begin to 
     explode, and with that, the budget deficit. Fewer workers in 
     the labor force supporting Social Security pensioners will 
     drive the Social Security trust fund deep into the red. Once 
     again, the budget will be unbalanced, perhaps more so than 
     before--and the game must start over again.
       Clearly, the balanced-budget amendment is bad business. 
     Congress should reconsider the whole plot. The real goal, in 
     the first place, should not be to balance the budget but to 
     balance the economy. The deficit needs to be cut back 
     sharply, but to aim at a balance in 2002 or 2012 is self-
     defeating. There will be some years ahead when the nation may 
     need to run a deficit--and it shouldn't be afraid to make 
     such decisions.
       The need now is to put aside the gimmickry, forget the 
     constitutional amendment and for the Clinton administration 
     and the Republican Congress to attend to business. A little 
     maturity, please!
                                                                    ____

                [From the New York Times, Feb. 27, 1995]

                          Unbalanced Amendment

       Tomorrow's vote in the Senate on the balanced-budget 
     amendment is crucial for the Republican agenda to chop 
     Government programs into bits. The outcome is also crucial 
     [[Page S3173]] to the nation because the pernicious amendment 
     would do enormous fiscal damage. Proponents are alarmingly 
     within three votes of winning.
       The core of the amendment would require the Government to 
     balance its books unless three-fifths of the House and Senate 
     vote to run a deficit. To the wavering Democrats--John Breaux 
     of Louisiana, Sam Nunn of Georgia, Wendell Ford of Kentucky, 
     and Kent Conrad and Byron Dorgan of North Dakota--here are 
     five unassailable reasons to vote no.


                              unnecessary

       Federal deficits have indeed been too high. That poses a 
     threat that borrowing will siphon savings away from 
     productive private investments.
       But the fact that borrowing must be contained does not 
     imply it ought to be eliminated--any more than family 
     borrowing, to buy a house or pay college tuition, need be 
     eliminated. A prudent rule would keep Federal debt growing 
     less quickly than incomes. This rule would justify deficits 
     of about $200 billion a year, close to current levels.


                               misleading

       Proponents claim the amendment would protect future 
     generations against ruinous interest payments. True, today's 
     children will owe taxes when they grow up to pay interest on 
     Federal debt. But proponents ignore the fact that the tax 
     payments will flow right back to these children as owners of 
     Government bonds.


                             unenforceable

       Because key terms of the amendment--like outlays and 
     receipts--are undefined, Congress will be able to manipulate 
     and evade. Can Congress create independent agencies or find 
     other ways to spend and borrow off the Government books? A 
     Senate committee has already written into the legislative 
     record, used to guide future court decisions, that the 
     Tennessee Valley Authority would be exempt from the 
     amendment. It should take lawyers five minutes to stretch 
     whatever ``principle'' guides that exception to scores of 
     other Government programs.
       The amendment also fails to provide an enforcement 
     mechanism. I might simply become an empty gesture or, worse 
     yet, the courts might step in to tell Congress how much it 
     should tax and where it should spend.


                               Irrational

       Federal bookkeeping lumps ordinary spending with long-term 
     public investments. Congress, forced by the amendment to cut 
     quickly, would go after hugely expensive, though vitally 
     important, investments, such as scientific research, costly 
     laboratories and equipment, job training or other investments 
     that would not produce benefits for years, if not decades.


                                Reckless

       When the economy slows, tax revenues fall off and spending 
     on unemployment insurance and food stamps rises. This 
     automatic rise in the deficit, by triggering spending, serves 
     to mitigate the slowdown. But under the proposed amendment, 
     Congress could easily turn a mild downturn into something 
     worse. Unless a three-fifths supermajority saves the day, 
     Congress would have to raise taxes and cut spending in a slow 
     economy--the opposite of responsible stewardship.
       Take another unintended consequence. When savings and loans 
     went bankrupt during the 1980's, the Federal Government 
     bailed out depositors with borrowed money, thereby preventing 
     a banking panic. But under the proposed amendment, the 
     Government could not react instantly unless a supermajority 
     in Congress approved.
       The balanced-budget amendment appeals to taxpayers who 
     demand that the Government spend their money wisely. But 
     Senators Nunn, Ford, Conrad, Dorgan and Breaux need to 
     recognize that this honorable sentiment cannot be wisely 
     embedded into the Constitution.

  Mr. BYRD. Mr. President, I yield the floor.
  Mr. HATCH. Mr. President, I notice the Senator from Massachusetts is 
here. If I can, I would like to make a few comments.
  Mr. President, the gist of the amendments of the distinguished 
Senator from West Virginia numbered 252 and 254 is that the majority 
provisions of House Joint Resolution 1 are undemocratic and alter the 
fine balance in the Constitution between the branches of Government.
  More specifically, as I understand the distinguished Senator from 
West Virginia, he contends--and I think in the past has eloquently 
debated the balanced budget amendment--that Congress' control over 
taxing, spending, and borrowing is diluted by restraints placed on such 
powers by supermajority requirements of the amendment. According to the 
distinguished Senator from West Virginia, the democracy reflected by 
the present majority requirement of Congress would be dealt a blow if 
this amendment passes.
  Naturally, I disagree. The balanced budget amendment furthers the 
purpose and structure of the Constitution. Indeed, the amendment goes 
to the very heart of the hope of the Framers of the Constitution for 
the constitutional system, a system that would protect individual 
freedom and restrain the size and power of the Federal Government.
  In the latter half of this century, however, the intention of the 
Framers has been betrayed by Congress' own inability to control its 
spending habits. Passage and ratification of the balanced budget 
amendment would restore the constitutional Framers' promises of liberty 
and what the Framers called our republican form of government.
  Mr. President, let me first say what the modern day crisis is. Our 
Nation is faced with the worsening problem of rising national debt and 
deficits and the increased Government use of capital that would 
otherwise be available to the private sector to create jobs or to 
invest in our future. Increased amounts of capital are being wasted on 
merely financing the debt through spiraling interest costs. This 
problem presents risk to our long-term economic growth and endangers 
the well-being of our elderly, our working people, and especially our 
children and our grandchildren. The debt burden is a mortgage on their 
future.
  Mr. President, the time has come for a solution strong enough that it 
cannot be evaded for short-term gain. We need a constitutional 
amendment or requirement to balance our budget. House Joint Resolution 
1, the consensus balanced budget amendment, is that solution. It is 
reasonable. It is enforceable. It is necessary to force Congress to get 
our fiscal house in order. It not only furthers the economic welfare of 
our Republic, it fosters the Constitution's purpose of protecting 
liberty through the framework of limited government.
  James Madison, in explaining the theory undergirding the Government 
he helped to create, had this to say about government and human nature:

       Government [is] the greatest of all reflections on human 
     nature. If men were angels, no government would be necessary. 
     If angels were to govern men, neither external nor internal 
     controls on government would be necessary. In framing a 
     government that is to be administered by men over men, the 
     great difficulty lies in this: You must first enable the 
     government to control the governed; and in the next place 
     oblige it to control itself. A dependence on the people is no 
     doubt the primary control on government; but experience has 
     taught mankind the necessity of auxiliary precautions.

  Now, Mr. President, we are here to debate an auxiliary precaution, 
House Joint Resolution 1, proposing an amendment to the Constitution of 
the United States to require a balanced budget, because our recent 
history has shown that Congress is not under control and will not bring 
spending under control without such a mechanism being placed into the 
Constitution.
  The balanced budget amendment helps restore two important elements in 
the constitutional structure: limited government and an accountable, 
deliberative legislative assembly, both of which are vital to a free 
and vibrant constitutional democracy.
  Deliberative assembly--the essence of whose authority is, in 
Alexander Hamilton's words, ``to enact laws, or in other words to 
prescribe rules for the regulation of society'' for the common good--
was considered by the Framers of the Constitution the most important 
branch of the Government because it reflected the will of the people. 
Yet, as the makers of laws, it was considered the most powerful and the 
one that needed to be guarded against the most.
  Recognizing that in republican government the legislative authority 
necessarily predominates and to prevent elective despotism, James 
Madison, the father of the Constitution, recommended that the 
Philadelphia Convention adopt devices in the Constitution that would 
safeguard liberty. These include bicameralism, separation of powers and 
checks and balances, a qualified executive veto, limiting congressional 
authority through enumerating its powers, and, of course, the election 
of legislators to assure accountability to the people.
  However, in the late 20th century, our century, these constitutional 
processes that Madison termed auxiliary precautions have failed to 
limit the voracious appetite of Congress to legislate in every area of 
private concern, to invade the traditional bailiwick of the States, and 
consequently, to spend 
[[Page S3174]] and spend to fund these measures until the Government 
has become functionally insolvent and the economy placed in jeopardy. 
Congress has been mutated from a legislative assembly deliberating the 
economic interests into the playground of special interests.
  The balanced budget amendment, Mr. President, will go a long way 
toward ameliorating this wrong. It will create an additional 
constitutional process, an auxiliary precaution, if you will, that will 
bring back legislative accountability to the constitutional system.
  The balanced budget amendment process accomplishes this by making 
Federal deficit spending significantly more difficult. Significantly, 
it advances liberty by making it more difficult for the Government to 
fund overzealous legislation and regulation that invades the private 
lives of citizens.
  According to Prof. Harvey Mansfield, Jr., of Harvard, in his 
scholarly book, ``The Taming of the Prince,'' the real genius of our 
Constitution is that, having placed all power in the hands of its 
citizenry, the American people consented to restraints on that power. 
Understanding that direct or pure democracies in history were 
inherently unstable and fickle, the Framers placed restraints on 
popular rule and congressional power, what we now call supermajority 
requirements.
  Senator Byrd is this body's expert on these requirements, but we will 
mention some of them again, that are in the Constitution now. Article 
I, section 3, the Senate may convict on an impeachment vote of two-
thirds; article I, section 5, each House may expel a Member with a two-
thirds vote, a supermajority; article I, section 7, a Presidential veto 
may be overridden by a two-thirds vote of each House, again, a 
supermajority in each House; article II, section 2, the Senate advises 
and consents to treaties, again, by a majority of two-thirds; article 
V, a constitutional amendment requires two-thirds of each House or a 
constitutional convention can be called by two-thirds of the State 
legislatures, three-quarters of the State legislatures must ratify any 
constitutional amendment--all supermajorities; article VII, the 
Constitution itself required ratification of 9 of the 13 States, again, 
a supermajority.
  This is not a democracy. This is a representative republic. Our 
Founding Fathers understood the need to have majorities. The 12th 
amendment requires a quorum of two-thirds of the States in the House to 
choose a President. A majority of States is required to elect the 
President. The same requirements exist for the Senate choosing the Vice 
President; again, a supermajority. The 25th amendment dealing with the 
President's competency and removal requires that if Congress is not in 
session within 21 days after Congress is required to assemble, it must 
determine by a two-thirds vote of both Houses that the President is 
unable to discharge the duties of his office. Now, all of those are 
supermajorities. All of those are part of the Constitution now.
  Mr. President, it is indeed ironic as we debate a constitutional 
amendment following a cloture vote, that arguments are being made that 
mere majorities are more appropriate to fundamental constitutional 
decisionmaking than supermajorities. We recently voted on ending this 
debate, and we were scheduled to vote on that again before we entered 
into an agreement setting a final vote. A substantial majority 
expressed its desire to end the debate. A three-fifths vote of 
Senators--that means 60 Senators--must vote to end debate. Is that rule 
inappropriate in a constitutional debate? Of course not. As a matter of 
fact, I think we would have had the 60 votes had we gone to cloture the 
second time.
 I think that is one reason why the minority agreed to the time 
agreement that we now have before the Senate.

  The Constitution requires that a supermajority approve a 
constitutional amendment. To pass the balanced budget amendment, we 
must have 67 Senators vote for it. Is this inappropriate? Or should we 
allow some number between 26 and 51, or 50 with the Vice President 
casting the tie-breaking vote to approve the balanced budget amendment? 
The Constitution requires that three-quarters of the States ratify the 
balanced budget amendment. Perhaps our majoritarian friends would 
prefer that some number of States between 26 and 51 ratify the 
amendment, with the District of Columbia, Puerto Rico, or Guam casting 
the tie-breaking vote if the States are evenly divided. That is not the 
Constitution, however. The Constitution provides for a supermajority.
  Mr. President, if majority rule were the fundamental principle of our 
Government, as I have heard some in this debate say, we would not have 
the Government we do. We would have a unicameral parliamentary system 
without judicial review and, indeed, without the Bill of Rights or a 
written Constitution, because each of those features of our Government 
is an intrusion into the principle of majority rule, and they are 
certainly not the only examples.
  The first amendment does not say Congress shall not abridge free 
speech unless a fleeting majority wants to. It does not say that 
Congress shall not interfere with the free exercise of religion or 
establish religion unless a majority of those present and voting want 
to. The first amendment takes those options away from even 
supermajorities of Congress, except through constitutional amendment. 
Shall we tear up the Bill of Rights and the Constitution because they 
contain checks on the power of transient majorities? I do not think so.
  As I have said, as Thomas Jefferson said, as even Prof. Laurence 
Tribe has said, the power of transient majorities to saddle minorities 
or future majorities with debt is the kind of infringement on 
fundamental rights that deserves constitutional protection. The Framers 
wished to protect life, liberty and property. They reacted harshly 
against taxation without representation. As I pointed out throughout 
this debate, our deficit spending taxes generations which are not now 
represented. It takes their property and their economic liberty. It is 
wholly appropriate that we at least increase the consensus of those 
currently represented to allow them to shackle those who are not--that 
is, future generations--with the debt, the taxes and the economic 
servitude that go with citizenship in a country with high national 
debt.
  Opponents of the balanced budget amendment charge that supermajority 
requirements will create some new kind of sinister bargaining among 
factions to gain advantage in return for supporting the necessary 
consensus. This objection strikes me as strange because that kind of 
negotiation is as old as the legislative process. It happens now in the 
search for a majority.
  Opponents also charge that the balanced budget amendment writes 
fiscal policy into the Constitution in an inappropriate way. This 
amendment deals with the structural problem in our fiscal 
decisionmaking. We unthinkingly spend money we do not have for 
temporary benefit to our children's long-term harm. But I would note 
that the 16th amendment allows taxes to be levied by Congress. Is that 
not fiscal policy in the same sense as the balanced budget amendment? 
Article I, section 8 allows Congress to collect taxes, duties, imposts 
and excises, to borrow money and to regulate commerce. Are not these 
fiscal policy provisions like the balanced budget amendment? In fact, 
is not the balanced budget amendment simply a process to safeguard 
against overuse of the article I power to borrow? Article VI adopted 
the pre-Constitution debts of the Continental Congress. That was 
certainly a decision of fiscal policy.
  Under the balanced budget amendment, majorities will continue to set 
budget priorities from year to year. Only if a majority attempts to 
borrow money from future generations to pay for its priorities would 
there have to be a supermajority vote. This allows the minority to play 
the conscience of the Nation and to protect future generations from the 
type of borrowing sprees that we have seen in recent decades.
  I would note that those who believe the supermajority vote would be 
the rule rather than the exception betray their mental habit of 
thinking in terms of deficit spending. We must break this habit and 
make deficit spending the exception instead of the rule. The balanced 
budget amendment does not require a supermajority to pass the budget, 
only a budget that is out of balance. The balanced budget amendment 
creates a positive incentive for current 
[[Page S3175]] majorities to avoid borrowing to avoid supermajority 
votes and risking the kind of intrigue opponents say could happen when 
supermajorities are required. This is wholly appropriate and reasonable 
to break Congress of its borrowing habit.
  Finally, Mr. President, the amendments offered by the Senator from 
West Virginia would gut the balanced budget amendment by cutting its 
central provision, the supermajority requirement it places in the way 
of Congress' deficit spending. If either of these amendments were 
adopted, the balanced budget amendment would read in essence: 
``Congress shall not spend money it does not have unless it wants to.''
  Such a balanced budget amendment would be no balanced budget 
amendment at all. It would be the status-quo, business-as-usual, let-
us-keep-rolling-up-the-debt amendment.
  This amendment, or other of these similar amendments, is a poison 
dart aimed at the heart of the last best hope for the fiscal sanity of 
Congress and our country. I urge that they both be defeated.
  Mr. President, it is absolutely clear that to restore the 
constitutional concept of limited government and its protection of 
liberty, as well as to restore fiscal and economic sanity, we must pass 
this balanced budget amendment. We need the supermajority provisions of 
House Joint Resolution 1--a modern day ``auxiliary precaution'' in 
Madison's words--to put teeth into the balanced budget amendment, to be 
a force to end ``business as usual'' here in Congress and, most 
importantly, to foster the liberty of limited government that the 
Framers believed to be essential.
  Mr. SARBANES. Mr. President, I just very quickly want to address the 
argument that was advanced by the chairman of the Judiciary Committee 
in opposition to Senator Byrd's amendments that are pending at the desk 
dealing with the supermajorities.
  In that statement, he asserted as an argument against Senator Byrd's 
contention that these supermajority requirements here were running 
counter to the prevailing theme of the Constitution that a majority 
ought to prevail, the fact that there were some supermajority 
requirements put in the Constitution by the Founding Fathers, for 
example, amending the Constitution or overriding a veto.
  I wish to make the point that the very Founding Fathers who put those 
supermajorities into the Constitution considered at the time whether 
supermajorities ought to be required in order to make decisions, and 
they rejected that concept. So they in effect considered the very issue 
that is before us in this regard and rejected the notion of 
supermajorities.
  So they specifically weighed that question at a time when they did 
include some supermajorities in very special instances. Obviously, 
amending the document is a very special instance, and the veto is an 
essential part of the checks and balances.
  I cite the quote of James Madison in Federalist Paper 58 in which he 
rejects the notion of the supermajorities in order to reach decisions 
and says in fact in the course of that quote, and I will include all of 
it in the Record, ``It would no longer be the majority that would rule. 
The power would be transferred to the minority.'' And he spoke, of 
course, against that proposition.
  There being no objection, the quote was ordered to be printed in the 
Record, as follows:

                            No. 59: Hamilton

       It has been said that more than a majority ought to have 
     been required for a quorum; and in particular cases, if not 
     in all, more than a majority of a quorum for a decision. That 
     some advantages might have resulted from such a precaution 
     cannot be denied. It might have been an additional shield to 
     some particular interests, and another obstacle generally to 
     hasty and partial measures. But these considerations are 
     outweighed by the inconveniences in the opposite scale. In 
     all cases where justice or the general good might require new 
     laws to be passed, or active measures to be pursued, the 
     fundamental principle of free government would be reversed. 
     It would be no longer the majority that would rule: the power 
     would be transferred to the minority. Were the defensive 
     privilege limited to particular cases, an interested minority 
     might take advantage of it to screen themselves from 
     equitable sacrifices to the general weal, or, in particular 
     emergencies, to extort unreasonable indulgences.

  Mr. KENNEDY addressed the Chair.
  The PRESIDING OFFICER (Mr. Grassley). The Senator from Massachusetts 
[Mr. Kennedy] is recognized.
  Mr. KENNEDY. Mr. President, I notice the distinguished Senator from 
Kansas is on the floor and has an important statement. I will be glad 
to yield to her and then be recognized following her statement.
  The PRESIDING OFFICER. The Senator from Kansas [Mrs. Kassebaum] is 
recognized.
  Mrs. KASSEBAUM. Mr. President, I appreciate the Senator from 
Massachusetts yielding for a few moments so I can weigh in and offer my 
observations on the constitutional amendment that we have been debating 
over the past several weeks.
  During these debates, I think we have heard some very thoughtful 
comments, both pro and con, on this important issue. This debate, in 
some ways, seems a fitting symbol for the amendment itself which 
involves a great deal of talk without any specific action.
  As many of my colleagues know, I have long been an opponent of this 
proposed change in the Constitution of the United States. I have said 
it would not get us 1 cent closer to a balanced budget. I have 
contended that it would invite evasive accounting and legal gymnastics. 
I have expressed concern that it would open a whole new frontier for 
judicial review.
  These concerns are not without basis and actual experience. I am sure 
we all remember the lengths we went to in order to get around the 
provisions of the Gramm-Rudman-Hollings Act and other abbreviated 
attempts at deficit reduction. We remember how, in the wake of the 
savings and loan crisis, the Resolution Trust Corporation was created, 
masking billions of dollars from budget totals. Even for this very 
amendment, we have left definitions of crucial language open to 
reinterpretation. Today's outlays may become tomorrow's ``working 
capital.''
  I think many of my colleagues will also remember that in the past, I 
have referred to this amendment as a sham and a gimmick. I do not 
believe it is the panacea to a sound fiscal policy. It has been highly 
effective, however, in both roles by preventing us from focusing on the 
real choices that must be made in the Federal budget and serving as a 
nearly annual diversion that allows us to talk about balanced budgets 
while avoiding the clear and urgent need to adopt a sound fiscal 
policy.
  This may sound, Mr. President, as if I am leading up to expressing a 
vote against a constitutional amendment to balance the budget. But this 
year, I intend to vote for final passage of the balanced budget 
amendment. I do so not as a result of the change in my views or beliefs 
or because of some revelation that this amendment does not suffer from 
the flaws that troubled me in the past. Instead, I will vote for this 
amendment this year simply and solely to eliminate it as an excuse for 
not cutting spending.
 We have been debating this amendment for more than a decade, 
constantly arguing about a change in the Constitution that would force 
us somehow to do what we all know eventually must be done.

  If this seems like a backhanded endorsement to this amendment, it 
certainly is the case. All of the arguments that I have made in the 
past and many of the arguments that have been made in the last few 
weeks are, in my mind, still valid. Unfortunately, Mr. President, the 
arguments against this amendment and my concern about casual changes in 
the Constitution are rendered almost irrelevant by another simple fact 
of our budget life. That fact is that every day our Government issues 
scraps of paper marked IOU that are themselves becoming a deadly weight 
not only to future generations but to the Constitution itself. This 
year, we will issue almost $500 million a day in IOU's. Interest is 
piling up alongside those IOU's high enough to consume 15 percent of 
our spending. To put that in perspective, the budget we received a 
couple of weeks ago calls for us to spend almost as much money next 
year in interest as on defense. If only that meant our world had become 
peaceful and safe. Instead, what it means is that we have put our 
grandchildren in debt and the future of our Government in danger.
  Mr. President, I believe it is time to stop debating this amendment. 
It is time to pass it, get it out of the way, 
[[Page S3176]] take it off the list of excuses we constantly use, and 
move on to the real issue, which is how to balance our Government's 
income with its expenditures, how to lay out a sound fiscal policy 
every year. If this amendment works, then I will be glad to admit that 
I was wrong to ever oppose it. I certainly hope it serves the purpose 
for which it was intended. If it does not work, then it will no longer 
be available as an excuse for failure to achieve sound fiscal policy.
  That, Mr. President, is my reason for supporting this constitutional 
amendment to balance the budget and why I believe it is important for 
us in the Senate to pass it this year.
  Thank you. I yield the floor.
  The PRESIDING OFFICER. By previous order, the Senator from 
Massachusetts is recognized.


                           Amendment No. 267

  Mr. KENNEDY. Mr. President, I ask unanimous consent that the pending 
amendments be temporarily laid aside and that my amendment No. 267 be 
placed before the Senate for the duration of my remarks on the 
amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KENNEDY. Mr. President, during the debate on the proposed 
constitutional amendment, we have heard practically nothing from 
supporters of the proposal regarding how the amendment is to be 
enforced. The reason is clear: The amendment would give the President 
and the Federal courts unprecedented, and unacceptable, roles in 
deciding how Federal funds are to be allocated. My amendment addresses 
the first of these issues--the powers of the President.
  In its current form, the proposed constitutional amendment would give 
the President--in order to avoid an unauthorized deficit--the power to 
impound funds appropriated by Congress. Section 1 of the amendment 
provides that:

       [t]otal outlays for any fiscal year shall not exceed total 
     receipts for that fiscal year, unless three-fifths of the 
     whole number of each House of Congress shall provide by law 
     for a specific excess of outlays over receipts by a rollcall 
     vote.

  In other words, the constitutional amendment would flatly prohibit 
spending from exceeding revenues, unless both the House and the Senate 
authorize the deficit.
  Under article II, section 3 of the Constitution, the President has a 
duty to ``take care that the Laws be faithfully executed,'' and article 
II, section 7, requires the President to take an oath to ``preserve, 
protect and defend the Constitution.''
  In any fiscal year in which it is clear that there will be an 
unauthorized deficit, the President is bound by the Constitution and 
his oath of office to balance the budget and prevent the deficit.
  Such a deficit could occur for a wide range of reasons. Congress may 
lack the political will to cast a vote authorizing a deficit as large 
as the one that it actually anticipates. Or, unanticipated decreases in 
revenue or increases in expenditures may result from natural disasters 
or from a downturn in the economy.
  In these circumstances, the proposed constitutional amendment would 
give the President the power, indeed the duty, to impound appropriated 
funds to prevent the unauthorized deficit from occurring.
  That is not just my opinion. This commonsense reading of the proposed 
constitutional amendment is shared by a broad range of highly respected 
legal scholars and by the executive branch of the Government.
  Assistant Attorney General Walter Dellinger, who as head of the 
Office of Legal Counsel at the Department of Justice is responsible for 
advising the President and the Attorney General on the scope and limits 
on Presidential authority, testified before the Judiciary Committee 
that the proposed constitutional amendment would authorize the 
President to impound funds to ensure that outlays do not exceed 
receipts.
  Harvard Law School Professor Charles Fried, who served as Solicitor 
General during the Reagan administration, testified that in a year when 
actual revenues fall below projections and a bigger-than-authorized 
deficit occurs, section 1 ``would offer a President ample warrant to 
impound appropriated funds.'' Others who share this view include former 
Attorney General Nicholas Katzenbach, Stanford University Law School 
Professor Kathleen Sullivan, Yale University Law School Professor Burke 
Marshall, and Harvard University Law School Professor Laurence Tribe.
  By giving the President impoundment authority, the proposed amendment 
would dramatically alter the allocation of powers set forth in the 
Constitution. As James Madison wrote in The Federalist No. 48,
 ``the legislative department alone'' has the power to tax and spend.

  So, Mr. President, as we mentioned here, we have broad views of 
different high administration officials who have served in the Justice 
Department or in the White House, who are thoughtful men and women and 
constitutional scholars, who believe virtually unanimously, if you 
regard the hearings that were held on the balanced budget amendment by 
Senator Byrd as well as by the Judiciary Committee--virtually 
unanimously that this power of impoundment is very real and that the 
President would have a duty to impound; not just an option, a duty to 
impound should there be an imbalance between receipts and outlays.
  The Constitution gives Congress the primary authority and 
responsibility with regard to raising and spending funds.
  Article I, section 7 states that ``all Bills for raising Revenue'' 
must originate in the House of Representatives.
  Article I, section 8 grants Congress the powers ``to lay and collect 
Taxes, Duties, Imposts and Excises,'' and ``to borrow Money on the 
credit of the United States.''
  Article I, section 9 provides that ``[n]o Money shall be drawn from 
the Treasury, but in Consequence of Appropriations made by Law.''
  Changing the constitutional allocation of powers that has served this 
country well for over 200 years would be a profound mistake.
  I support a statutory line-item veto, and I hope to be able to vote 
for one on the floor this year. But the impoundment authority given to 
the President by this amendment is far broader than a line-item veto.
  The line-item veto simply allows the President to delete or reduce 
specific items in an appropriations bill. But as Assistant Attorney 
General Dellinger testified, the impoundment authority conferred upon 
the President by the proposed constitutional amendment would allow a 
President, confronted with an unauthorized deficit, to order across-
the-board cuts in all Federal programs, abolish entire programs, or 
target expenditures intended for particular States or regions for 
impoundment.
  In the name of deficit reduction, the President could freeze cost-of-
living adjustments for Social Security recipients. He could abolish 
Medicare. He could slash defense spending.
  In the past, Presidents from time to time have asserted that they had 
inherent constitutional authority to impound funds. This issue came to 
a head during the Nixon administration, when President Nixon impounded 
$18 billion from programs he wanted to terminate or reduce.
  He impounded $9 billion appropriated for water treatment facilities. 
He imposed a moratorium on subsidized housing. He cut back on disaster 
relief. He suspended rural and community development programs. He 
withheld almost $2 billion from the Department of Labor and from the 
Department of Health, Education and Welfare.
  Dozens of lawsuits were filed challenging the legality of President 
Nixon's actions. The vast majority of court decisions ruled against the 
impoundment. In 1974, Congress finally resolved the matter by passing 
the Impoundment Control Act to require the appropriated funds to be 
spent--unless the President sends a rescission message to Congress and 
Congress acts to uphold the rescission. The balanced budget amendment 
would scrap this arrangement. As I mentioned, that is the law now. The 
Impoundment Control Act since 1974 is the law guiding the whole issue 
of impoundment.
  The balanced budget amendment would scrap this arrangement, and 
fundamentally change the allocation of powers between the President and 
the Congress.
  In addition to granting authority to the President to impound 
appropriated funds, the amendment would also enable future Presidents 
to assert that 
[[Page S3177]] they have the power unilaterally to raise taxes, duties, 
or fees--in order to generate additional revenue to avoid an 
unauthorized deficit. That was the testimony of Assistant Attorney 
General Walter Dellinger, the chief legal advisor to the executive 
branch, before the Judiciary Committee this year.
  This outcome would drastically transform the allocation of powers 
envisioned by the Framers. No longer would the legislative department 
alone have the power to tax and spend, as Madison promised in The 
Federalist No. 48.
  The fact that the proposed constitutional amendment would confer 
impoundment authority on the President is confirmed by the actions of 
the Judiciary Committee this year. Supporters of the amendment opposed 
and defeated my amendment that would have added the following section 
to the proposed amendment:

       Nothing in this article shall authorize the President to 
     impound funds appropriated by Congress by law, or to impose 
     taxes, duties or fees.

  If the supporters of the proposed constitutional amendment to do not 
intend to give impoundment authority to the President, there is no 
legitimate explanation for their failure to include this clear 
prohibition in the proposed amendment.
  Supporters of the constitutional amendment make two arguments to 
support its assertion that the proposal would not give the President 
impoundment authority. Both are wrong.
  They argue that there will never be an unauthorized, and therefore 
unconstitutional, deficit, because Congress will always step in at the 
end of the year and ratify whatever deficit has occurred.
  That is like arguing the President has the unilateral power under the 
Constitution to declare war, because Congress will always step in to 
ratify a Presidential declaration.
  If their prediction is accurate, then the balanced budget amendment 
is a sham, because it would impose no fiscal discipline whatsoever. But 
if the prediction is wrong--if Congress failed to act before the end of 
a fiscal year to ratify an unauthorized deficit--then all of the 
expenditures by the Federal Government throughout the fiscal year would 
be unconstitutional and open to challenge in the State and Federal 
courts. it is inconceivable that the President, sworn to preserve, 
protect and defend the Constitution, would be found to be powerless to 
prevent such a result.
  Supporters also argue that Congress can specify in the enforcement 
legislation required by section 6 exactly the enforcement mechanism it 
wants, and that the President, as Chief Executive, is duty bound to 
carry out the congressional plan, to the exclusion of impoundment. But 
just because Congress spells out one means of enforcing the amendment 
does not mean that the President could not assert another means.
  As the Supreme Court recognized in In re Neagle, the President's 
obligation to faithfully execute the laws is independent of Congress. 
That duty is not--

       * * * limited to the enforcement of facts of Congress * * * 
     according to their express terms * * * it include[s] the 
     rights, duties and obligations growing out of the 
     Constitution itself. * * * and all the protection implied by 
     the nature of the government under the Constitution[.]

  If an unconstitutional deficit were occurring, Congress could not 
constitutionally stop the President from impounding appropriated funds 
in order to prevent it. As Prof. Kathleen Sullivan testified, the 
proposed constitutional amendment--

       * * * if enacted would, of course, be constitutional law, 
     fundamental law. It would trump [the Impoundment Control Act 
     of 1974] or any other statute designed to umpire disputes 
     between the President and Congress.

  In short, the only certain way to see that the President is not given 
impoundment authority is by adopting the Kennedy amendment.
  This does not even take into consideration the fact that if you have 
subsequent enabling legislation, as suggested by those who support it, 
that the President might veto it. He way say, ``No, I believe that the 
statements and the positions that have been expressed by Charles Fried 
and former Attorney General Katzenbach and Solicitor General Archibald 
Cox and Walter Dellinger and Kathleen Sullivan give me the power to do 
that. They give me the power to do it so I am going to veto the 
implementing legislation.'' And what is to say what would be the 
outcome of such a veto?
  My amendment will make clear that nothing in the balanced budget 
amendment gives the President authority to impound appropriated funds 
or impose taxes, duties, or fees.
  My amendment will not limit Congress' power to give the President 
line-item veto authority. I will not limit the authority already given 
to the President elsewhere in the Constitution, and by the Budget 
Control and Impoundment Act. All it will do is specify that the 
proposed constitutional amendment does not give the President the power 
to impound appropriated funds or impose taxes, duties, or fees.
  We should not sign over to the President the power that Congress has 
had over the purse for over 200 years, simply because some Members lack 
the political courage to make the tough decisions needed to balance the 
budget.
  I urge my colleagues to support the amendment.
  Mr. HATCH. Mr. President, I wish to respond to Senator Kennedy's 
impoundment argument. In each of the years the balanced budget 
amendment has been debated, I have noticed that one specious argument 
is presented as a scare tactic by the opponents of the amendment. This 
year the vampire rising from the grave is presidential impoundment. 
Supposedly, a President, when faced with the possibility of budgetary 
shortfalls after ratification of the balanced budget amendment, will 
somehow have the constitutional authority--nay duty--to arbitrarily cut 
social spending programs or even raise taxes.
  I want to emphasize that there is nothing in House Joint Resolution 1 
that authorizes or otherwise allows for impoundment. It is not the 
intent of the amendment to grant the President any impoundment 
authority under House Joint Resolution 1. Indeed, House Joint 
Resolution 1 imposes one new duty, delegates one new authority, on the 
President: To transmit to Congress a proposed budget for each fiscal 
year in which total outlays do not exceed total receipts. In fact, 
there is a ripeness problem to any attempted impoundment: Up to the end 
of the fiscal year the President has no plausible basis to impound 
funds because Congress under the amendment has the power to ameliorate 
any budget shortfalls or ratify or specify the amount of deficit 
spending that may occur in that fiscal year.
  Moreover, under section 6 of the amendment, Congress must--and I 
emphasize must--mandate exactly what type of enforcement mechanism it 
wants, whether it be sequestration, rescission, the establishment of a 
contingency fund, or some other mechanism. The President, as Chief 
Executive, is duty bound to enforce a particular requisite 
congressional scheme to the exclusion of impoundment. That the 
President must enforce a mandatory congressional budgetary measure has 
been the established law since the nineteenth century case of Kendall 
v. United States ex rel. Stokes, 37 U.S. (12 Pet.) 542 (1838). In 
Kendall, Congress had passed a private act ordering the Postmaster 
General to pay Kendall for services rendered. The Supreme Court 
rejected the argument that Kendall could not sue in mandamus because 
the Postmaster General was subject only to the orders of the President 
and not to the directives of Congress. The Court held that the 
President must enforce any mandated--as opposed to discretionary--
congressional spending measure pursuant to his duty to faithfully 
execute the law pursuant to article II, section 3 of the Constitution. 
The Kendall case was given new vitality in the 1970's, when lower 
Federal courts, as a matter of statutory construction, rejected 
attempts by President Nixon to impound funds where Congress did not 
give the President discretion to withhold funding. For example, State 
Highway Commission v. Volpe, 479 F.2d 1099 (8th Cir. 1973). Unless 
Congress grants the President impoundment power, the President, as a 
practical matter, will not be able to impound funds under this 
amendment.
  [[Page S3178]] Let me stress again that section 6 of House Joint 
Resolution 1 requires Congress to enforce and implement the amendment 
by appropriate legislation. This is not a delegation of power to 
Congress, similar to that of the 14th, 15th, 16th, and 19th amendments, 
whereby Congress has the discretion whether or not to exercise its 
enforcement power. Congress must enforce the balanced budget amendment 
by appropriate legislation. This is a powerful statement that evidences 
a preclusion of unilateral presidential action.
  The position that section 6 implementing legislation would preclude 
Presidential impoundment was seconded by Attorney General Barr at the 
recent Judiciary
 Committee hearing on the balanced budget amendment. Testifying that 
the impoundment issue was in reality incomprehensible, General Barr 
concluded that ``the whip hand is in Congress' hand, so to speak; under 
section 6 [the] Congress can provide the enforcement mechanism that the 
courts will defer to and that the President will be bound by.''

  Further, the notion that Congress would stand idly by while the 
President threatens to, or, in fact, does invade Congress' spending 
authority, is not realistic as a practical matter. We simply would not 
stand for it.
  What we have here then, is an argument based on a remote possibility. 
Under the remote possibility scenario of an impoundment, we would have 
to preclude any possibility, however, remote, in the amendment. The 
amendment would look like an insurance policy. Why preclude something 
in the Constitution that in strong probability could never happen, and 
which Congress could preclude by legislation?
  Finally, the Kennedy amendment, as worded, would prohibit Congress 
from delegating to the President in implementing legislation any 
rescissionary authority. This is what Congress did in Gramm-Rudman-
Hollings. Why limit the tools that Congress may employ to balance the 
budget in the future?
  As to the President's hypothetical power to raise taxes, this is not 
even a remote possibility. It is a constitutional impossibility. 
President's simply do not have the power to raise taxes and the 
balanced budget amendment does not alter this. This power is 
exclusively delegated to Congress by the Constitution in article 1. All 
the balanced budget amendment does is to limit Congress' spending, 
taxing, and borrowing powers.
  Several Senators addressed the Chair.
  The PRESIDING OFFICER. The Senator from Missouri.
  Mr. ASHCROFT. Mr. President, in 1788, Alexander Hamilton recognized 
that deliberations on the Constitution would by no means be, as he put 
it, ``decorous and genteel.'' Much too much was at stake. Instead, he 
predicted there would be ``a torrent of angry and malignant passions'' 
that would be let loose during ``the great national discussion.''
  Well, Mr. President, we are having a great national discussion. We 
can be thankful that we are having it on a basis which is appropriate 
and genteel. At the same time, we must answer some of the charges that 
have been made, as well as examine further some of the arguments that 
are being raised against the balanced budget amendment.
  Just moments ago, in this Chamber, the Senator from Maryland came to 
us with the suggestion that the supermajority that is required in this 
amendment--and, as we all know, in the proposed amendment there is a 
supermajority of 60 percent required to raise the national debt--is 
undemocratic to the extent that it inappropriately gives to a minority 
of people, the 40 percent, the right to block the will of the 60 
percent.
  I agree that it is important for us all to agree that we do not want 
to have supermajority requirements everywhere, particularly where it is 
not important. But we also know that the Constitution itself contains a 
variety of supermajorities that are included in the Constitution 
because there are some things it is vital to protect.
  Indeed, the Senator from Maryland pointed out that we have a 
supermajority requirement for overriding the President's veto. But the 
reasoning behind prohibiting supermajorities in the main is to keep one 
group from unduly imposing its will on another group. The reason we 
believe generally in simple majorities is that we believe that people 
who are represented ought to be represented on an equal footing.
  However, there is a special situation about which we debate here 
today concerning the national debt. And it is not about one group in 
America displacing the cost of its consumption to another group now 
existent in America. What we are talking about is the displacement of 
the costs of current programs that we now benefit from onto the next 
generation, who are not currently represented at all. It is in truth a 
problem about allowing one group to impose its will on another group--
another group upon whom this debt is being imposed who are not even 
here to protest.
  Mr. President, we have tried over and over again as a body--in the 
United States--to somehow preclude this recurring debt problem by 
binding the next Senate. We had the Gramm-Rudman-Hollings Act, then we 
had Gramm-Rudman, and then we had the budget deals of 1990 and 1993. We 
have not been able to get one Senate to bind the next Senate to the 
necessary discipline to restrain this Government from going deeper and 
deeper into debt. Unfortunately, while the Senate cannot bind the next 
Senate, the Senate certainly binds the next generation to the current 
debt.
  So, when we are talking about a group that is yet to come into 
existence--the next generation of Americans whose toil has not yet 
produced the first of its wages--I think it is essential that we have 
the capacity to require a supermajority vote.
  Mr. President, in the deliberations we also frequently hear that 
there is no need for us to have this kind of amendment to the U.S. 
Constitution. It is argued that there is authority now for the U.S. 
Congress to do what is right. There is authority for the U.S. Congress 
to do what is right and to live within its means.
  Frankly, it is only part of what a Constitution stands for, what a 
Constitution's function is, to provide authority to do what is right. 
The other half of the Constitution's function and purpose is to 
prohibit that which is wrong. If we come to the conclusion that 
spending the resources of the next generation is wrong, we cannot rely 
on the fact that there is authority in the Constitution for the 
Congress to act properly. We must prohibit the Congress from doing that 
which is wrong.
  The mere authority to do that which is right has been insufficient. 
We have had in the last 60 years only seven balanced budgets. We have 
had authority to balance the budget in every one of those 60 years, yet 
we have not had the fiscal discipline to balance the budget. It is 
agreed, we have had the authority to do what is right. What we need now 
is a prohibition against doing what is wrong.
  It is wrong to spend your neighbor's resources. It is wrong to take 
those things which are not yours. It is simply wrong. It is part of the 
consensus that we all have when we first understand right from wrong. 
Yet we in Congress continue to recklessly spend the resources of the 
next generation without their consent.
  The idea of placing a prohibition on the actions of Congress is not 
new. As a matter of fact, as a precondition for ratifying the U.S. 
Constitution, the States demanded that there be a Bill of Rights that 
clearly curtailed the ability of Congress to do things that were wrong. 
The first five words of the Bill of Rights are ``Congress shall make no 
law.''
  Again, I reiterate Mr. President, it is very important that the 
Constitution not only include authority to do that which is right, but 
to prohibit the Congress from doing those things which are wrong. And 
this is a fundamental function of the Constitution that is as old as 
the Bill of Rights and the Constitution itself.
  It is in this context, then, that we need a balanced budget amendment 
to the Constitution. When you think of the things which were said by 
those at the beginning of this Republic which inspire us now--such as 
Nathan Hale saying on his way to the gallows, a patriot willing to give 
his life, ``I regret that I have but one life to lose for my country.'' 
I think sometimes that the Congress regrets that there are but one 
[[Page S3179]] or two generations to pay for the excesses of the 
Congress.
  As a matter of fact, I do not believe we can have any confidence that 
the debt which we now have could be paid off within one generation, or 
even perhaps within two generations. But I do have confidence that if 
we now take this act of principled discipline and begin to prohibit our 
profligate spending, we will begin to move away from the kind of 
deficits which have characterized this country for far too many years.
  It is in this context that we must have this great discussion, Mr. 
President. It is in this context that we must understand the need for 
the U.S. Congress to send to the States for ratification an amendment 
to the Constitution which would impose upon the Congress of the United 
States the very same discipline under which virtually every State in 
the United States operates.
  It is the discipline of practice, of living within the resources that 
are available, of living within the resources which have been 
contributed by those whose representatives are in the elected bodies--
the legislative branches of the States. We should engage in the same 
practice at the national level. Indeed, we should live within the 
resources that we are willing to gather now--we should not attempt to 
take the resources of the next generation.
  The ability to take the resources of the next generation is unique to 
the U.S. Congress. No family in America finds its children encumbered 
by the debts of their parents. No matter how profligate the spending of 
a father may be, the children are not asked to endure the debts of the 
father. While the Congress cannot bind the next Congress, it can and 
does bind the next generation. It is time for the Constitution to be 
amended so that we do indeed curtail this practice which deprives 
individuals affected of representation--a practice, again, which 
imposes on the next generation a kind of taxation, a kind of 
confiscation of their wealth without any participation whatsoever in 
the development of the priorities their resources are allocated for.
  It is wrong, Mr. President, and we need to stop it. I yield the 
floor.
  Mr. GRAHAM addressed the Chair.
  The PRESIDING OFFICER. The Senator from Florida.


                      Amendments Nos. 259 and 298

  Mr. GRAHAM. Mr. President, on Friday, I proposed two amendments, 
which will be voted on tomorrow. I would like to use this opportunity 
to briefly discuss those amendments, and why I believe they are so 
critical, prior to the passage of this constitutional amendment and its 
possible ratification by the States.
  I commence by saying that it is my intention to vote for the balanced 
budget amendment. I do so with great regret. I consider the very debate 
that we are having today, and over the past several days, an admission 
of failure. It is an admission of failure in a basic quality of the 
American character, and that is the quality that each generation has 
not only the responsibility to attend to its own affairs, but to leave 
this country as a stronger and better place for our children and 
grandchildren. That, in fact, has been the history of America for over 
200 years. Regrettably, it is the generation of our children that may 
be the first generation to find that they are not better off, that they 
do not have greater opportunities personally, economically, 
educationally than did our generation and preceding generations.
  We have broken that contract, that intergenerational contract of 
America. The balanced budget amendment, therefore, is the regrettable 
response to that broken contract. If there were reason to believe that 
we were prepared to reform Federal spending without having to go to the 
draconian extreme of a constitutional amendment, with all of its 
implications, many of which are unforeseen, if we had not broken that 
contract, if we had shown some discipline in the past or demonstrated 
our serious intention to do so in the future, then I would not vote for 
this constitutional amendment. But the fact is that we have done 
neither. We have been profligate in the past, and every indication is 
that we will continue to be in the future.
  I will cite two examples from each of the major political parties. 
The President has submitted a budget this year which calls for 
approximately a $200 billion addition to our national debt--$200 
billion of deficit, and about the same level of projected deficit 
through the next 5 years. The Republicans' Contract With America calls 
for a balanced budget, but it also calls for increased spending, 
particularly in the area of Defense, and it calls for tax cuts which, 
over the next 10 years, will cost the Treasury in excess of $700 
billion.
  Neither the President's budget nor the Republicans' Contract With 
America adds up. Thus, we are at the point that we are considering a 
constitutional amendment to place shackles on ourselves so that we will 
not be as able to sin in the future as we have in the past.
  My criticism of this amendment, Mr. President, is that its reality 
does not live up to its rhetoric. It is less than it is purported to 
be; it is less than it should be. It is not, as it has been described 
by some of its most fervent advocates, the ironclad amendment that will 
protect the fiscal future of America.
  This amendment, however, is likely to be a permanent part of the 
Constitution of America in the form that we submit it to the States. I 
believe the States are likely to ratify this amendment. The history of 
the United States is that we have had 27 constitutional amendments. 
With the exception of the amendment on prohibition that was repealed 
some 13 years after it was adopted, no other amendment has been 
repealed. No other amendment has been modified. So I am operating on 
the assumption that what we pass in this Senate, what the States 
ratify, will be in the Constitution of the United States for the 
foreseeable future. And it is against that long stretch of time that we 
must evaluate whether this amendment meets our rhetoric and the 
public's expectation.
  In my opinion, the combination of the provisions in section 1, which 
provide that total outlays for any fiscal year shall not exceed total 
receipts for any fiscal year; section 2, which states that the limit on 
the debt of the United States held by the public shall not be increased 
without a three-fifths vote; and section 7, which states that total 
receipts shall include all receipts to the U.S. Government, total 
outlays shall include all outlays of the U.S. Government, results in a 
constitutional amendment that will tolerate--will almost assure that we 
will grow the national debt by $3 trillion over the next 25 years.
  While the public is being led to believe that we are passing an 
amendment that is going to assure fiscal responsibility, we are going 
to be passing an amendment that will almost have the opposite effect of 
assuring a dramatic increase in our national debt.
  How is that going to happen? Well, the first component of that, as 
this chart indicates, is going to happen whatever we do. Between now 
and the year 2002, which is the earliest fiscal year to which this 
amendment will apply, we are going to add approximately $1 trillion to 
our current $4.942 trillion national debt. So that we will reach the 
year 2002 with a national debt of $6 trillion. It is the next $2 
trillion that we have the opportunity to avoid. The combination of 
those three sections that I summarized will provide that we will 
account for our national deficit by an accounting system that says you 
take in all of the income and you subtract all of the expenditures, and 
if you are in balance on that basis, then you have met the strictures 
of the constitutional amendment.
  The fact is that for the next period, from now until approximately 
the year 2018, our Social Security Program is going to be generating 
enormous surpluses. These surpluses will reach a peak of over $3 
trillion--a $3 trillion Social Security surplus. Every one of those 
dollars generated as a surplus in the Social Security system is a 
dollar against which we can spend for any purpose. Use of the surplus 
will not be limited to Social Security spending.
  So the effect of this amendment, with its requirement that Social 
Security be integrated into the rest of the Federal budget, is to 
tolerate a $2 trillion increase in the national debt between now and 
the year 2018.
  But it could be worse, Mr. President. If, for instance, this or 
future Congresses decide to manipulate Social Security and the handful 
of other trust funds that will be contributing to this 
[[Page S3180]] large debt held by Social Security and other trust 
funds, we can have further opportunities to spend, cut taxes, and still 
appear to be balancing the budget.
  The aviation trust fund provides us with a good example of how 
Congress has misused a Federal trust fund. Every time an American or a 
foreign visitor purchases an airline ticket within the United States, 
they must pay a Federal transportation tax. The tax revenue then goes 
into an aviation trust fund. Legislation passed by this Congress stated 
that the proceeds of that trust fund were to be used to finance 
America's aviation system. It helps to pay for the very complex 
communications system that protects the navigation and the safety of 
aircraft. It goes, in part, to expanding our system of airfields and 
airports and terminals and other activities which benefit aviation in 
this country.
  The fact is that for a period of years, particularly during the 
1980's, we did not spend the money that was coming into that aviation 
trust fund. The primary reason we did not spend the money was not 
because we had suddenly decided we were going to become extra 
conservative in the area of aviation spending, but rather because every 
dollar we did not spend out of that trust fund added to its surplus and 
contributed to the masking of the Federal budget deficit. I think that 
while we were artificially reducing the reported deficit, we were 
tragically contributing to a degeneration of the best aviation safety 
system in the world. And we are all aware of some of the recent 
consequences of that degeneration. So I do not believe that we ought to 
be encouraging Congress to continue that pattern of behavior.
  Finally, let me say on this point, Mr. President, I am concerned that 
some of the strongest advocates of this constitutional amendment are 
contributing to this public perception that we are going to be passing 
an ironclad constitutional amendment. Let me just refer to a few of the 
statements that were published over this weekend and which caught my 
attention. I am certain they also caught the attention of many of my 
colleagues.
  First was an article in the Washington Post, dated Sunday, February 
26, entitled ``Congress May Ask Historic Gamble by States,'' a 
discussion of this constitutional amendment. I ask unanimous consent 
that the text of this article be printed in the Record.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

               [From the Washington Post, Feb. 26, 1995]

               Congress May Ask Historic Gamble by States


 balanced budget amendment variously characterized as offering ``glide 
                            path'' or crash

                            (By Eric Pianin)

       If the Senate approves the proposed balanced budget 
     amendment Tuesday, Congress will ask the states to take a 
     historic gamble that some say will free future generations 
     from onerous debt and others warn could ruin the economy, 
     disrupt vital government services and devastate the social 
     safety net.
       For nearly 60 years, the fight over a constitutional 
     amendment to force the government to live within its means 
     except in times of war has largely been an academic exercise. 
     But in the wake of the Republican takeover of Congress, the 
     House has overwhelmingly approved the measure, 300 to 132, 
     and supporters in the Senate are within a couple of votes of 
     the two-thirds majority needed to adopt the amendment and 
     send it on to the states for ratification.
       Republican leaders--including House Budget Committee 
     Chairman John R. Kasich (Ohio) and Senate Judiciary Committee 
     Chairman Orrin G. Hatch (Utah)--say passage of a balanced 
     budget amendment is essential to GOP plans to impose fiscal 
     discipline on an unruly and often cowardly Congress and put 
     the government on a seven-year ``glide path'' to eliminating 
     the deficit.
       With a balanced budget amendment in place, they insist, the 
     Republicans can cut taxes, protect Social Security from 
     reductions, beef up defense and still eliminate the deficit 
     by the year 2002--all without much upheaval or suffering.
       ``It isn't like we're trying to haul a Mack truck--attach 
     ourselves to a Mach truck--and then pull it 100 yards with 
     the power of our own bodies,'' Kasich said recently. 
     ``There's an impression out there this is somehow impossible 
     or terribly difficult. It's not that at all.''
       But critics--such as Sens. Robert C. Byrd (D-W.Va.), Paul 
     S. Sarbanes (D-Md.) and Paul D. Wellstone (D-Minn.)--warn the 
     opposite: If the amendment is approved, it would make the 
     government powerless to respond quickly to recessions and 
     other economic crises and force dismantling of agencies and 
     programs crucial to the poor and the middle class.
       Others, including Sen. Sam Nunn (D-Ga.), also argue the 
     amendment would disrupt the balance of power among the three 
     branches of government, strengthening the hand of the 
     president to impound funds any time
      Congress violated the constitutional strictures and opening 
     the door to judicial intervention on congressional fiscal 
     policy.
       Critics also complain Republicans have refused to detail 
     how they intend to achieve a balanced budget within seven or 
     eight years. And they say the Social Security trust fund 
     would become an irresistible target for budget-cutters early 
     next century, despite assurances from House Speaker Newt 
     Gingrich (R-Ga.) and Senate Majority Leader Robert J. Dole 
     (R-Kan.) that Social Security would be exempted.
       ``No one is going to escape the wrath of the balanced 
     budget mandate,'' Byrd said in a recent Senate speech.
       The new Republican leadership has premised much of its 
     economic and budgetary strategy on passage of the budget 
     amendment, centerpiece of the House GOP's ``Contract With 
     America.'' Many proponents favor the amendment on moral 
     grounds, saying its adoption would help spare their children 
     and grandchildren from the economic burdens of a national 
     debt approaching $5 trillion.
       Passage of the balanced budget amendment is also a vital 
     pretext for the larger goal of dramatically shrinking size of 
     government--dismantling or repackaging large chunks of it. 
     Sen. Connie Mack (R-Fla.) said last week, ``This is a 
     fundamental debate about those who believe more government 
     will solve our problems and those who believe less 
     government, less taxing and less spending will give us more 
     freedom.''
       As a foretaste, Republican House appropriators last week 
     voted to cut $17 billion from current spending for housing, 
     health care, nutrition, clean water, job training and other 
     programs. Moreover, the House Economic and Educational 
     Opportunity Committee voted to repeal the National School 
     Lunch Act and fold school feeding and other nutritional 
     programs for the poor into block grants for states to 
     administer.
       While these budgetary actions caused an uproar among angry 
     Democrats and social welfare activists, the cuts and program 
     changes were a drop in the bucket compared with what would be 
     required under a balanced budget amendment.
       Studies by the Congressional Budget Office, the Treasury 
     and Center on Budget and Policy Priorities show Congress 
     would have to reduce projected spending over the next seven 
     years by as much as $1.4 trillion to balance the budget and 
     pay for the Republicans' $200 billion package of tax cuts. In 
     the year the proposed amendment would take effect, 2002, 
     Congress would have to cut an estimated $357 billion of 
     spending to meet the constitutional requirement.
       The Republicans have promised a relatively painless 
     prescription for achieving the deficit, by redesigning costly 
     entitlement programs like Medicare and Medicaid, 
     consolidating other programs into block grants and slowing 
     the rate of growth of spending from a projected 5.4 percent 
     to 3.2 percent.
       ``I won't call it horrific cuts,'' said Sen. Larry E. Craig 
     (R-Idaho), a leading proponent of the balanced budget 
     amendment. ``I'm talking about reductions of the rates of 
     growth. There isn't going to be one dime cut below this 
     year's budget in next year's spending.''
       But liberal and conservative policy groups say the ``glide 
     path'' to a balanced budget will be far bumpier than the 
     Republicans let on. Also, it will be virtually impossible to 
     balanced the budget in seven years if Republicans insist on 
     fencing off large portions of the federal budget from 
     spending cuts, they say.
       ``You have to be willing to take down defense and future 
     Social Security benefits, and you have to meanstest Medicare 
     and you have to eliminate a lot of cats' and dogs' 
     programs,'' said William Niskanen, an economic adviser to the 
     Reagan administration and head of the Cato Institute, a 
     conservative think tank. ``Arithmetically, it's not difficult 
     to do, but that begs the question of whether it's politically 
     difficult.''
       Under the amendment, the president would be obliged to 
     submit a balanced budget each year and Congress would have to 
     adopt a budget with outlays no greater than the projected 
     revenues for the coming year, unless three-fifths of the 
     House and Senate agree to allow a deficit.
       The amendment would also require a three-fifths majority in 
     each chamber to raise the ceiling on the amount of debt the 
     government can incur, and a simple majority to raise taxes. 
     The provisions would be waived in times of war or threats to 
     national security.
       Although it is called a balanced budget amendment, the 
     measure does not guarantee a balanced budget in any year, 
     only that Congress certifies it is attempting to stay within 
     the project revenues. If, as commonly happens, revenue or 
     spending estimates prove faulty, the government could still 
     close its books showing a deficit. However, if annual 
     deficits get out of hand and push the overall national debt 
     to the legal ceiling, it would take a three-fifths 
     ``supermajority'' to raise the limit to allow additional 
     borrowing.
       The biggest problem with the amendment, critics say, is 
     that it would rob the Congress 
     [[Page S3181]] of flexibility in responding to economic 
     crises, such as recessions, or emergencies similar to the 
     mass failures of savings and loan associations. Programs like 
     unemployment insurance, food stamps and other welfare 
     benefits currently kick in automatically whenever 
     unemployment surges. But under a balanced budget amendment, 
     it would take supermajorities in the House and Senate to 
     approve the emergency funding.
       ``That kind of extreme fiscal policy makes a small 
     recession worse,'' President Clinton said in his radio 
     address yesterday. ``In its most exaggerated form, it's what 
     helped turn the economic slowdown of the 1920s into the Great 
     Depression of the 1930s.''
                       text of proposed amendment

       Following is text of proposed balanced budget amendment:
       Resolved by the Senate and House of Representatives of the 
     United States of America in Congress assembled (two-thirds of 
     each House concurring therein). That the following article is 
     proposed as an amendment to the Constitution of the United 
     States, which shall be valid to all intents and purposes as 
     part of the Constitution when ratified by the legislatures of 
     three-fourths of the several states within seven years after 
     the date of its submission to the states for ratification:

                               Article --

       Section 1. Total outlays for any fiscal year shall not 
     exceed total receipts for that fiscal year, unless three-
     fifths of the whole number of each House of Congress shall 
     provide by law for a specific excess of outlays over receipts 
     by a roll call vote.
       Section 2. The limit on the debt of the United States held 
     by the public shall not be increased, unless three-fifths of 
     the whole number of each House shall provide by law for such 
     an increase by a roll call vote.
       Section 3. Prior to each fiscal year, the president shall 
     transmit to the Congress a proposed budget for the United 
     States government for that fiscal year, in which total 
     outlays do not exceed total receipts.
       Section 4. No bill to increase revenue shall become law 
     unless approved by a majority of the whole number of each 
     House by a roll call vote.
       Section 5. The Congress may waive the provisions of this 
     article for any fiscal year in which a declaration of war is 
     in effect. The provisions of this article may be waived for 
     any fiscal year in which the United States is engaged in 
     military conflict which causes an imminent and serious 
     military threat to national security and is so declared by a 
     joint resolution, adopted by a majority of the whole number 
     of each House, which becomes law.
       Section 6. The Congress shall enforce and implement this 
     article by appropriate legislation, which may rely on 
     estimates of outlays and receipts.
       Section 7. Total receipts shall include all receipts of the 
     United States government except those derived from borrowing. 
     Total outlays shall include all outlays of the United States 
     government except for those for repayment of the debt 
     principal.
       Section 8. This article shall take effect beginning with 
     fiscal year 2002 or with the second fiscal year beginning 
     after its ratification, whichever is later.

  Mr. GRAHAM. Mr. President, in this article, this statement appeared:

       The amendment would also require a three-fifths majority in 
     each Chamber to raise the ceiling on the amount of debt the 
     Government can incur.

  It goes on to state:

       If annual deficits get out of hand and push the overall 
     national debt to the legal ceiling, it would take a three-
     fifths supermajority to raise the limit to allow additional 
     borrowing.

  That is clearly untrue.
  The constitutional amendment in the clearest words--and it is ironic 
that the text of the amendment was printed inside the article that I 
have just read--states that ``the limit on the debt of the United 
States held by the public''--held by the public--``shall not be 
increased without a three-fifths vote.''
  By the year 2018, only approximately half of the total national debt 
will be held by the public. The rest of the national debt will be held 
primarily by Social Security and other Federal trust funds which are 
not subject to the limitation of this constitutional amendment.
  In a response to the President on Saturday, one of our colleagues 
made this statement.

       Americans know this measure would require Washington to 
     start living within its means and balancing its budget like 
     families and most State governments must do. That's why about 
     80 percent of Americans support it.

  If 80 percent of Americans believe that this would require Washington 
to start living within its means and operating like a typical American 
household, they are supporting this amendment for the wrong reasons and 
they are about to be severely disappointed.
  Finally, on one of the Sunday talk shows, one of our colleagues, in 
discussing the amendment, challenged a statement that this amendment 
would require 60 votes to raise taxes, correctly challenged that 
statement by saying:

       No, you don't need 60 votes under this amendment to 
     increase revenues. You need 60 votes to increase the debt 
     ceiling.

  That is not what the amendment provides. You do not need 60 votes to 
increase the debt ceiling. You need 60 votes to increase the amount of 
debt held by the public, which will be by the year 2018 only about half 
of our national debt. All the other debt that the Government borrows is 
outside of the three-fifths requirement. And it is that other 
availability of borrowing that is going to drive our national debt to 
almost $8 trillion by the year 2018.
  I have one other item from the weekend news that I want to discuss in 
a moment where I think there has been a misstatement.
  So these are some of the realities of the amendment that we are about 
to pass. It is an amendment which does not live up to its rhetoric. 
What is going to be the principal consequence of this gap between 
reality and rhetoric? The principal consequence of this deficiency in 
reality as opposed to the rhetoric with which the amendment is being 
sold is going to be aimed, targeted, focused on our Social Security 
system and primarily on those Social Security beneficiaries born after 
the year 1954.
  If you were born after the year 1954--and I see some people in this 
Chamber who I think meet that standard--listen: Social Security is 
going to be used to mask the extent of the real deficits of the United 
States.
  Let me just give you a few figures at 5-year intervals. In 1980, the 
reported national debt--this is reported on integrated, budgeted, total 
revenues versus total receipts including Social Security--the deficit 
was reported at $73.8 billion in 1980. When you look at the Social 
Security trust fund in 1980, the Social Security trust fund was running 
in a deficit. It had a deficit of $1.1 billion. So the real deficit of 
the general operations of Government was $72.7 billion; that is, the 
reported deficit minus the degree to which it incorporated the 
necessity to finance the deficit of Social Security.
  By 1985, the reported deficit had jumped to $212.3 billion. And by 
1985, as a result of the changes made in Social Security in 1983 when 
Social Security was converted from a pay-as-you-go system to a surplus 
system--one that had this print line of developing large surpluses in 
order to be prepared to meet the needs of that population largely born 
after World War II and particularly after 1954--we had a surplus of 
$9.4 billion. So the real deficit in the general accounts of the 
Federal Government, that is everything other than Social Security, was 
$221.7 billion. That is 1985.
  In 1990, the reported deficit, $221.4 billion. The real deficit, 
after you eliminate the mask of Social Security surplus, was $279.6 
billion.
  In 1995, reported deficit, $176 billion. It would appear that we had 
made significant progress in controlling the deficit. But because there 
has been a significant increase in Social Security surpluses, the real 
deficit was $245 billion, or not so much progress. By the year 2000, 
according to the Congressional Budget Office's latest report, dated 
January 1995, the reported deficit will be $284 billion. The Social 
Security surplus will equal $96 billion. So the real deficit, the 
deficit in all of our ongoing governmental accounts, will be $380 
billion--$380 billion.
  That is just a foretaste of what it will be like 5 years later when, 
according to the Congressional Budget Office, we have a reported 
deficit of $421 billion and a Social Security surplus of $137 billion 
for a real deficit of $558 billion. That is what we are experiencing in 
terms of the direction of the budget.
  That brings me to my fourth and final weekend news communique. A 
leading Washington Post columnist wrote in an article entitled ``Fool's 
Amendment,'' that the redink hemorrhage this constitutional amendment 
is supposed to stop is not a chronic condition, it is actually a 
phenomena of the 1980's which has washed over into the 1990's, but it 
is a dubious proposition to rewrite the permanent charter of Government 
to correct for the follies of one decade.
  [[Page S3182]] I am afraid, my friends, that the facts indicate this 
was not just a decade-long aberration, that we did not just lose our 
way for one 10-year period. In fact, we seem to have lost this 
fundamental character of America of generational responsibility. We are 
masking the extent to which we are lost by these increasing Social 
Security surpluses. We are lost with no indication that we are about to 
find a compass.
  Why is Social Security in the target of this issue? It is because 
that any future attempts to reform Social Security--and clearly Social 
Security cries out for some reform--are going to be stymied by the fact 
that those very reforms will be seen as, and in fact will be, means to 
further mask the deficit. Those reforms will not be used for the 
principal purpose of assisting Social Security to be a sound, reliable, 
retirement system for the indefinite future. They will be used as a 
means of generating additional surplus so we can have even more 
spending, even more tax cuts, even more borrowing.
  Third, the increased national debt will lead to increased national 
annual debt payments. Under this constitutional amendment, the amount 
of deficit that we will add from the year 2002 through the year 2018 
will be between $120 billion and $140 billion. That is $120 billion to 
$140 billion that our children and grandchildren and their children and 
grandchildren are going to be asked to pay.
  There will be no net national savings increase as a result of this 
amendment between 1995 and the year 2018.
  Mr. President, we reformed the Social Security system in the early 
1980's, in order to build a surplus to meet our future obligations. By 
statute, that fund can only be invested in a particular form of 
Treasury notes which, incidentally, are restrained so they are 
nontransferable. How are we going to pay for all those notes when this 
large wave of Americans, particularly those born after 1954, arrive and 
begin to ask for their benefits?
  The theory was that the rest of the national budget would be in 
balance during this period, and we would use the Social Security 
surpluses for real investments in America, in our economic growth, in 
making our country stronger so that it would be in a position after the 
year 2018 to meet this enormous indebtedness.
  In fact, we have not been doing that. We have been using the Social 
Security surplus to fund our annual deficits. This amendment will allow 
Members to continue to use our Social Security surplus to fund our 
annual deficits and add $12 trillion to that national debt.
  We are facing, Mr. President, a gigantic truck wreck beginning in 
about the year 2015. We are still operating in a surplus, but the rate 
of increase in that surplus is beginning to decline. I remember an old 
joke told about a trucker who was in a class, studying new techniques 
in driving trucks. The teacher used a method of instruction in which he 
would ask students different hypothetical questions to see how they 
would respond in emergency situations. One of the questions that was 
asked was, ``Joe, suppose you are riding on a mountainous road in 
northern New Mexico. You are 200 yards from the top of the hill, and 
you look up and there is another truck that has just crested the hill. 
You can tell it is out of control, and you can tell it is going over 
100 miles an hour. What would you do?'' Joe said, ``I would turn to my 
relief driver, Ray, who is sleeping in back of me, and wake him up.'' 
The driver was shocked. ``You would do what? You would wake up your 
relief driver in that kind of an emergency situation?'' Joe said, ``I 
sure would, because Joe never has seen a truck wreck like the one we 
are about to have.''
  Well, friends, we need to wake up America because we have not seen a 
truck wreck like the one we will have which will begin in about the 
year 2015, no longer having the enormous annual surpluses but reversing 
to the point where we will have deficits.
  And what type of deficits? The period of about the year 2020 or 
2025--and it sounds like a long time from now; we hope we will be here 
to see it--about that time, we will be running deficits in the Social 
Security of in the range of $350 billion to $400 billion a year. We 
will be spending out that much more than we will be taking in. That is 
not an aberration. That is the way the system was designed in order to 
create a core of assets that will be able to meet this future demand.
  If you could analogize this to a household, the Jones household has 
earnings of $40,000. Unfortunately, the Joneses have not been very 
prudent and they have gotten into a pattern over the last 2 or 3 years 
of spending $50,000. So every year, their indebtedness goes up and they 
get a little more in the hole. Well, good news and bad news has just 
occurred for the Jones family. Their favorite uncle died, and the uncle 
left an inheritance, part of which goes to the Jones family.
  Now, this is a somewhat unusual inheritance. The Jones family is 
going to receive $15,000 a year for the next 10 years. They are very 
happy about that. But the uncle has imposed a requirement on them. He 
loves the Jones' two children. They are his favorite nephew and niece, 
and he wants to see that they go to college. So he is going to require 
as a condition of receiving this $15,000 over each of the next 10 years 
that the Jones family commit that they will send these two children to 
college.
  They estimate that it will cost $10,000 a year per child to send them 
to college. What do the Joneses do? Do they put the $15,000 aside in 
some trust fund to meet this obligation to send their children to 
school, as their beloved uncle wanted? No. They take the money and they 
start to spend it. They actually increase their annual spending from 
$50,000 up to $55,000, so now they are spending the $40,000 they make 
and the $15,000 they got from their favorite uncle, and they live very 
well for the next 10 years.
  At the end of the 10 years, the $15,000 no longer is there. They are 
back to $40,000, having gotten themselves into the lifestyle of a 
$55,000-a-year family, and they have this obligation to send their two 
children to college.
  It is not far off from what our family of America will face in about 
the year 2018. We will no longer have the Social Security surplus, but 
we will have to meet the retirement obligations that we have made to 
our older Americans. We are setting up another type of clash, and that 
will be a confrontation between classes of Americans. We are setting up 
a potential confrontation between those Americans who will be in the 
work force in the decade of the 2020's and those Americans who will be 
retired, because we will be asking those people in the work force to 
work harder. There will be fewer of them to support the large number of 
retirees. We will ask them to pay excessively higher taxes in order to 
meet those accumulated obligations.
  Further, there will not be the kinds of student financial aid that 
maybe the Jones family thought they would get for their two children 
because we cannot afford student financial aid anymore.
  There is going to be a generational clash in America. There could 
also be a clash between older Americans and better-off Americans. There 
is going to be a temptation to manipulate Social Security in order to 
make the surplus even greater so that some of those obligations in the 
Contract With America that have this $700 billion-plus price tag from 
now until the year 2005 can be met. This concerns me.
  So we are going to be fraying the basic social relationship between 
and among important groups of Americans. And we are doing all of this, 
Mr. President, unnecessarily. We do not have to do this in order to 
pass this constitutional amendment. We will pass a better, a stronger, 
a significantly more conservative amendment if we will but take a 
series of actions in the next few hours.
  It would be my hope that we would take as preferred action, No. 1, 
the passage of the amendment that the Senator from California, Senator 
Feinstein, has offered which takes Social Security out of the rest of 
the Federal budget. It would deal with the principal issues raised 
particularly in section 1 and in section 7 that I discussed earlier.
  If we fail to pass the Feinstein amendment, we ought to adopt the 
first of my two amendments which says: If we are going to have a three-
fifths vote to raise the limit of debt held by the public, let us make 
it a three-fifths vote on all national debt. The Social Security funds 
should not be more exposed than the other sources 
[[Page S3183]] from which the Congress can borrow money.
  Let us all play on a level playing field. Let us have a three-fifths 
vote for lifting our public debt limit. Let us do what the reporter in 
the Washington Post, and what two of our colleagues apparently think we 
are doing in this amendment, by requiring a three-fifths vote to raise 
the ceiling on borrowing. We are not doing that in this amendment. We 
should.
  Finally, and I particularly would like to direct this comment to the 
chairman of the Budget Committee who probably understands these issues 
as well as anybody in this Chamber. If we continue with the outline of 
fiscal policy found in this amendment, using the Social Security 
surpluses as an additional area of borrowing, with only a majority vote 
required, we will be masking the extent of our other spending or tax 
cuts. As a result, in 2018 we will carry an $8 trillion debt, about $3 
trillion of which is held by the Social Security System.
  In 2019, we begin this dramatic drawdown of the Social Security fund. 
The surplus will drop from $3 trillion to zero by the year 2028. How 
are we going to fill this triangle on this chart? The triangle 
represents the national debt that we have accumulated by borrowing from 
Social Security, but which now we are going to have to start repaying 
to the beneficiary. How are we going to fill that void?
  Under the balanced budget amendment, a three-fifths vote would be 
required to borrow from the public. This amendment will worsen this 
gigantic truck crash by saying that over a 10-year period, we have to 
borrow $3 trillion additional from the public and do it, we must have a 
three-fifths vote. At an absolute minimum, I think at least we ought to 
adopt my second amendment. The second Graham amendment which says that, 
when the Social Security program moves into a deficit position, we 
should be able to refinance the program by a simple majority vote. If 
we were able to borrow from Social Security at a majority vote, why 
should we not be able to pay off the beneficiaries with a majority 
vote?
  In addition, I would like to comment on the issue of judicial review. 
As the advocates have stated on this issue, as well as others, how much 
judicial interference there would be in enforcing this amendment? All 
of these matters can be handled pursuant to the language in section 2 
which states:

       The Congress shall enforce and implement this article by 
     appropriate legislation which may rely on estimates of 
     outlays and expenditures.

  I think that there is an obligation owed by us to the American people 
to tell them how we are going to do that. I believe that the outcome of 
the balance budget amendment has been misrepresented. We should outline 
the implementing legislation. I believe that the advocates of this 
legislation ought to present to us between now and approximately 23 
hours from now that language. Certainly, the bill's advocates have 
drafted this language. The objectives and strengths of this legislation 
are being regularly commented upon. Making public that language might 
help to alleviate some of the concerns that myself and others have 
raised during this debate.
  I think we have a right to see what the implementing language will 
actually say so that we can assess whether we think it will protect the 
Social Security System, and other important areas that have been 
stated.
  Or finally, and this, again, goes to the chairman of the Budget 
Committee, if we pass this amendment without either the modifications 
that address the serious problems of integrating Social Security into 
the rest of the Federal budget, and without the ability to analyze the 
implementing legislation, then I think the Budget Committee needs to 
lead our colleagues by pledging that we are not going to succumb to the 
temptation to borrow an additional $2 trillion between the year 2002 
and 2018. Instead, the Senate will produce a budget plan that, in fact, 
will get us in balance, without having to use the Social Security 
surplus. That we will, rather than adding to the national debt, be 
adding to the Nation's savings account.
  I think that a commitment by the leadership of the Senate and the 
Budget Committee that they would take that course of action would be of 
considerable relief to the American people, it would certainly be of 
considerable relief to this Senator.
  So, Mr. President, in closing, the American people are poised for a 
disappointment. It is not the first time. This Congress, over many 
years, has stated that its intention was to act with fiscal 
responsibility. You could list the amendments, bills, the proposals 
that have had that as their objective. In every one of those instances, 
the American people have been disappointed. They have felt that they 
have been misled. That has contributed to the fact that the public 
standing of this institution has reached almost historic lows.
  It is in our hands to do otherwise. It is in our hands to pass a 
balanced budget amendment which will live up to our rhetoric. It is in 
our hands to pass a balanced budget amendment which will provide a 
strong deterrent to further additions to the national debt. It is in 
our hands to pass a balanced budget amendment that will protect what 
has been one of the great social programs in this Nation's history, a 
program that has lifted the America's seniors out of poverty, given 
them a level of respect and dignity in their retirement years. We 
should protect the Social Security system, a system that now stands in 
the gun sight of this amendment.
  All of those things are within our power to do and to do beginning 23 
hours and 5 minutes from now. The question is, will we? Thank you, Mr. 
President.
  Mr. DOMENICI addressed the Chair.
  The PRESIDING OFFICER (Mr. Thompson). The Senator from New Mexico.
  Mr. DOMENICI. I thank the Chair.
  I might say to my friend from Florida, I only have about 15 minutes, 
and if the Senator does not mind, with reference to the questions the 
Senator has posed to me regarding the Social Security trust fund, I 
will come back to the floor on another occasion before the vote if I am 
granted time and I will explain my version of what the Senator has just 
described.
  Frankly, I think the issue is one of a unified budget and whether we 
should abandon the unified budget or not. I am a staunch proponent of 
the unified budget which has everything on board for economic purposes 
and for deficit purposes. I believe I can explain to the Senator that 
the changes the Senator is talking about would be accomplished by 
majority vote, not by supermajority vote, because of the residuals we 
are talking about, and the residuals come about by passing laws that 
change things, and those laws are passed by simple majorities. But I 
will go into that in more detail with the Senator at another time.
  I came today, Mr. President, because over the weekend there was a lot 
of talk about what I choose to call what ifs. There were some what ifs 
that Senator Moynihan used on ``Meet the Press.'' There is a what if 
this morning by a columnist named Richard Kogan, who used to be a 
staffer on the House Budget Committee. And I would like to talk about 
this a bit because this constitutional amendment will not leave us 
without some what ifs. I think there will be some.
  I propose that the what ifs we are going to have to address are less 
dangerous to America's future than if we do nothing and leave the 
budget process and leave the Constitution alone and continue the 
profligate spending that we have.
  I was lucky over the weekend to go for 4 hours to the city of Detroit 
and then moved next door to Oakland County to conduct a hearing with my 
distinguished friend, the new Senator from Michigan [Mr. Abraham], and 
a very large crowd of participants, including their Governor.
  It is interesting, Mr. President, that on that day on the front page 
of the Detroit paper was a good picture of money, and it was 43 million 
dollars' worth of money. It was, ``What Does $43 Million Look Like?'' 
It indicated that the night before last they were drawing their 
lottery, which they call a lotto, and somebody might win $43 million.
  I would like the American people to know that it is interesting that 
it took that much space to show $43 million, and yet in 1 day the 
deficit of the United States is increased by about $500 million, which 
is about 12 times that $43 million. I left a dollar with Senator 
[[Page S3184]] Abraham and said buy me one of those lottery tickets and 
make the U.S. Government the beneficiary, and if we win we will get $43 
million. It turns out there were three winners so we would only have 
gotten $15 million.
  But essentially, if we would have won the $43 million and put it 
against the deficit, which exists even though Americans are working and 
paying taxes to try to pay our current expenses, it would have taken 
care of 2 hours of the accumulated deficit of the United States for the 
year--2 hours, $43 million.
  Now, frankly, that is what brings me to the floor and that is what 
brings me in support of an effort on our part to produce within our 
Constitution a mandate that we stop this kind of profligate spending 
which is going to cause America to have little economic future 15 or 20 
years from now when my good friend from Florida is worried about how we 
are going to pay the Social Security recipients, and I am worried about 
that. But I am also worried about what is going to remain for anybody 
else, including my grandchildren and their children, who are going to 
have to work--in one case it is suggested that to pay this bill, if we 
do not get the costs under control, the marginal tax rates would have 
to be 82 percent.
  Now, who is going to work in America and what kind of future do you 
have if that is the case?
  So there are a lot of what ifs, and one of the what ifs is what would 
we do if our banking system or our savings and loan system suffered a 
very big loss and we had to come up with the money to bail it out.
  Well, Mr. President, let me suggest there is nothing in this 
constitutional amendment which says you must have a three-fifths vote 
to conduct the business of the U.S. Government, whatever that business 
is.
  What it does say is if you want to do it in a way that is unbalancing 
the budget and you must borrow more money to do it, you need three-
fifths.
  So it is a matter of priorities and choices. And for those who think 
we will not have the wherewithal to prevent the big recessions from 
occurring and harming us more if we have this amendment than if we did 
not, might I suggest that we can be accused of a lot of things but we 
cannot be accused of being totally ignorant and stupid. We will have to 
draw our laws after we have this amendment in place--and I hope it is 
in place within the next couple of years--we will have to draw the laws 
with reference to security of banks, security of savings and loans, 
recessions and, yes, even unemployment compensation so as to comply 
with this law. We will have to choose some priorities. We may in fact 
have to set up better reserves in some of these funds so that at the 
end of the year we do not have to push ourselves out of balance in 
order to meet these kinds of requirements.
  So for those who want to continue with a whole laundry list of what 
ifs, I would just suggest what if we do not do anything about this 
deficit. That is the biggest what if.
  Some would say just go ahead and cut the deficit, cut programs. Some 
of us have been trying for a long time. Presidents have been around, 
four, five, or six, and we have only had one balanced budget or two in 
that whole period of time.
  What we need is the American people speaking throughout our country 
in a loud and clear voice that says enough is enough. And what if we do 
not put this in the Constitution and force ourselves, and, yes, force 
the American people to accept less from their Government rather than 
more?
  Now, in trying to get the deficit better under control, when we have 
our great constituents, our friends from our home States, coming before 
us saying, ``Not my program, somebody else's,'' let me say in my State 
I pledge only fairness, that my State in this restraint and this 
restructuring of Government will be treated fairly. But I cannot say 
that every single program and every single entitlement that we 
currently spend, that we currently have programmed in where they will 
increase every year--in the case of Medicare and Medicaid at 10.5 or 11 
percent ad infinitum--I will not have to say who is going to pay for 
that. And if we have to get the deficit under control, what are we 
going to change if we do not change yours?
  So the bigger what if is not what if we have a bank failure or what 
if we have a recession or what if we have more unemployment.
  I would remind the Senate, if you are wondering whether the Senate 
can work its will even against difficult voting requirements for 
something like unemployment, I would like to put in the Record the 
unemployment compensation extension which occurred, believe it or not, 
when the rule of law in the Senate said you cannot spend any more money 
because you would violate the pay-as-you-go requirement, much like we 
are going to have with this constitutional amendment, and somebody said 
we have to pay for unemployment, we still need 6 or 8 months of 
extended benefits. What do we do? What do we do? Eighty-eight Senators 
voted to do it; 88 Senators voted to do that because it was needed.
  Now, that is the what if. If we have not planned to take care of 
that, we will vote on it, just like we do everything else. And who 
knows, we may even do the next one by a simple majority for we might 
cut something and say cut this and pay for something that is more 
important. We do not choose to do that very often even in crisis in our 
great country and in our great Senate and House.
 We choose to say we have to spend some more because there is a crisis 
upon us.

  There are stabilizers in our economy now. Where I now see this new 
diagram of how our economy has been up and down since the turn of the 
century, including the Great Depression, and it used to be that our 
economy went in broad sweeps like this and now in the last few years we 
are just in narrow sweeps like this because we have a lot of 
stabilizers in it. The biggest one is the Federal Reserve Board. It now 
controls things so we do not have those big ups and downs. I do not 
think we are ever going to have them again. Is it suggested that the 
stabilizers in our Government--unemployment compensation, the Federal 
Reserve Board putting more money on the market or making less 
available, reducing short-term interest rates if they can, in crises, 
extending unemployment when we need to, making sure that banks really 
cannot go totally broke from the standpoint of diminishing our currency 
value--we have all those things in place. Are we going to wipe all 
those out just because we are insisting that it is enough to spend $1.6 
trillion and perhaps we should not spend $1.7 trillion? Should we not 
be prudent enough to keep the stabilizers in?
  So I believe those arguments are truly, truly red herrings. For those 
who think we ought to control the American economy by turning spending 
on and off, the Keynesian idea of economics, frankly they will remain 
people who think that is what we ought to do. And there will remain 
those who do not think we ought to do that. And, frankly, I am 
confident that we are going to find our way within the implementing 
language for this amendment to do what we must to be prudent and 
rational with reference to a strong American economy.
  I would like to make two other points. First, all of the changes 
required to reach results within the framework of this constitutional 
amendment require simple majorities. It was thought at one point the 
Constitution may have in it three-fifths vote on taxes. That is not in 
the Constitution, in this amendment. So whatever you want to change to 
make the deficit go up or down, tax more, cut more, create less of an 
entitlement or a bigger entitlement--those are all done by simple 
majority. It is the residual of the simple majority votes that end up 
with the deficit being too big or too little.
  My final point is it is amazing to this Senator that there is now an 
argument that we should not have a three-fifths vote to borrow more 
money and break the concept of a balanced budget at a point in time. 
There is an argument we should not have three-fifths.
  My friends and fellow Americans, you must be bound by something. The 
simple majority got us where we are, voting for everything and refusing 
to cut; voting for taxes, and then not voting to cut spending. Those 
are all a result of simple majority votes.
  Should we have a constitutional amendment--what a joke--that says you 
must be in balance unless a simple 
[[Page S3185]] majority says you do not have to be? Why go through the 
trouble of passing it? That is the rule today. That is what Senator 
Harry Byrd from Virginia did 18 years ago in the U.S. Senate. He passed 
a substantive law of the land that said you shall no longer have any 
deficits, starting 1 year from now.
  That stayed on the books while we incurred deficits, because when 
Congress votes the last vote, the last law governs. So if we had a 
constitutional amendment that did not have some kind of supermajority, 
where would it stand on a roster of enforceability, of something with 
teeth? It would have zero teeth.
  So, for those who do not like the three-fifths, they must be saying 
one of two things. We will really solve the budget with simple majority 
votes, although we have been unable to do it heretofore; it will be 
done. Or they must be saying it should be stronger than three-fifths. I 
thought that was an argument I might hear. I thought I might hear an 
argument that there should be no way to avoid a balanced budget--three-
fifths, six-fifths, who cares? You cannot do it.
  This amendment is pretty well thought out. Because most things will 
get done by simple majorities around here, which is the good way to do 
it, the democratic way, the majoritarian vote idea is a paramount idea 
in American democracy. However, we are merely suggesting that the debt 
is getting too big. The annual deficits seem never to be controllable. 
So when it comes to borrowing money to pay for this deficit, increasing 
the debt, that you have to have a supermajority. I think it is the only 
way we are going to get there. In fact, I will confess when they were 
looking for ways to enforce a constitutional amendment, and if you look 
back in history we have had a number of them, they have been 
enforceable by different mechanisms, I concurred wholeheartedly as 
budget chairman that this was probably the best way--put a limitation 
on the public debt.
  I believe when we are finished arguing tomorrow about the unified 
budget and Social Security--and I hope to bring that to the floor and 
talk about it--that essentially everyone will understand that the 
unified budget governs everything in it and that essentially if you 
want to change things you change them by simple majority and you are 
not going to borrow any more or any less, based upon the Social 
Security trust fund, because those calculations are already in the 
unified budget concept by definition.
  I will go into that in more detail tomorrow because I believe that is 
the case. I do not believe the argument that you can borrow all you 
want from Social Security because you are only governed under this 
amendment when increasing the publicly held debt; I do not think that 
is a valid argument. I think they are one and the same when it comes to 
the unified budget. It is no easier to do one or the other under the 
unified budget and I will try to do a better job on that tomorrow.
  So, in conclusion, this Senator has been through many, many ``what 
ifs?'' Many times we have said what if we would have done this, we 
would be in better shape than we are. What if the 1986 budget that 
Senator Dole and I put through the Senate had been accomplished, where 
would we be? We would be very far along in terms of the deficit, 
ridding ourselves of it. But it did not happen. So the what ifs on the 
side of the equation that says what if we do not do this, put this 
constitutional amendment in place, far outweigh the other what ifs 
about how we will solve some other smaller problem within the huge, 
huge notion of borrowing to pay for our current debts and interest that 
we have incurred.
  I will close today by suggesting to the senior citizens of the United 
States, if I were advising what policy should be adopted I would say 
whatever policy the Congress of the United States and the President are 
going to be firmly committed to that is most apt to have sustained 
economic growth over a 20- or 25-year period of time. Whatever that 
policy is, with reference to fiscal policy, we better support it. I 
will guarantee that for all that is being said on the floor about the 
future of the Social Security trust fund and how much have we borrowed 
and how much have we not borrowed and what are we going to do 12 years 
from now and 20 years from now, I will say to every senior in America 
there is little chance that what is expected of Social Security will 
ever occur in a 20- or 25-year timeframe, unless you can extract from 
your legislators and policymakers that they have done the very best 
they can to create an environment for sustained economic growth. 
Without it Social Security is doomed, the pensions of the future are 
doomed, and the trust fund is not going to mean much.
  I believe a balanced budget approach like this is a start down the 
road of the best fiscal policy we can have, comparing what we have been 
able to do and what we have promoted and propped up and levied against 
the people of this country over the past 20 to 25 years.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Rhode Island.
                         against the amendment

  Mr. PELL. Mr. President, after much deliberation, I have concluded 
that I should not support the balanced budget amendment and will vote 
against it when the final vote is taken in the Senate tomorrow.
  The proposed amendment is appealing on the surface, but underneath 
there are a host of problems. I believe its objectives are unrealistic 
and possibly detrimental, and I fear that it could place intolerable 
burdens on the States.
  I find myself in basic disagreement with the philosophy of the 
proposed amendment. As our distinguished colleague from New York, Mr. 
Moynihan, has so eloquently reminded us, the Federal budget is not 
supposed to be in perpetual balance. Those of us who experienced the 
economic cycles preceding World War II have a special respect for the 
wisdom of John Maynard Keynes, who showed us that government should 
save when times are good so that it can spend when times are bad.
  The balanced budget amendment is the antithesis of that sensible 
doctrine. Its ritualistic requirement for balance in each fiscal year 
disregards the random vagaries of economic cycles, precluding the 
timely operation of automatic stabilizers such as unemployment 
insurance and bank deposit insurance during downsizings when they are 
most needed.
  Likewise, the ritual requirement to achieve balance might deter the 
accumulation of budget surpluses in good years, since the pending 
amendment might tend to promote unreasoning tax slashes, instead of the 
prudent salting away of a surplus.
  I also fear that the rapid withdrawal of some $1.6 trillion in 
Federal spending in the arbitrary time frame of the next 7 years could 
virtually wreck the economy, especially if it should coincide with a 
period of high interest rates or a recession. And I am particularly 
concerned about the impact of a cumulative loss of $1.8 billion in 
Federal spending to the small State of Rhode Island over the same 
timeframe.
  Finally, Mr. President, I recoil at the notion of using our 
Constitution for the purpose of imposing bookkeeping rules. I doubt 
that this amendment will stand the test of timelessness which has 
sustained the wisdom of the Framers for 200 years.
  From the perspective of the year 2095, it may appear rather anomalous 
that the U.S. Senate spent the month of February 1995 trying to mandate 
for all time that our books should be balanced, down to the last dollar 
and cent, at the end of each 12-month period. My guess is that--if the 
amendment is approved--a disenchanted electorate will have repealed it 
long before the century passes.
  Of course, we can and should continue to do everything we can to cut 
Government spending and reduce deficits. But we already have ample 
authority to do so and should simply get on with the task.
  In my mind, there is no need for a constitutional amendment. The 
Constitution should not contain a balanced budget amendment, and I 
would trust that it does not succeed. I realize the political appeal of 
the very title of a balanced budget amendment is immense. It is not an 
open and shut case one way or the other. Many of us have proposed 
different ways at different times. I voted for it in the past. But it 
is a close call. But my conclusion is that the best interests of the 
Nation would be served by not passing the balanced budget amendment.
  [[Page S3186]] The judgment against this proposal was best summed up 
by the columnist David Broder when he wrote that it is ``a bad idea 
whose time has gone.'' The time and place to stop it is here and now. I 
urge its rejection.
  I yield the floor.
  Mr. PRYOR addressed the Chair.
  The PRESIDING OFFICER. The Senator from Arkansas.
  Mr. PRYOR. Mr. President, I thank the Chair for recognizing me.
  Mr. President, before I make a few short remarks, I would like, if I 
might, to compliment the distinguished Senator from Rhode Island. He 
and I have talked about this issue of the balanced budget on several 
occasions. I have been in what you might call sort of soul-searching 
meetings with the Senator from Rhode Island. I have watched him--I do 
not want to say in his agony--in attempting to reach a decision about 
his vote. But I certainly have seen him trying to search for the proper 
role to take and the proper answer to give to his constituents and ours 
with regard to this all-important vote that we will take tomorrow.
  Mr. President, please allow me to compliment my very distinguished 
friend from Rhode Island, not only on his decision, but on the very 
thoughtful way in which that decision was reached.
  Mr. PELL. I thank my friend, the Senator from Arkansas.


                           Amendment No. 307

  Mr. PRYOR. Mr. President, on Friday I talked briefly about an 
amendment that I am going to call up for a vote tomorrow. The number of 
this amendment, for the purposes of our staff who might be watching the 
monitor at this time, is amendment number 307.
  Mr. President, this amendment is very simple. In fact, it is only one 
sentence long. I am going to take the liberty of reading amendment 307 
that we will consider tomorrow, and I will do that at this time. On 
page 3 of the constitutional amendment, between lines 8 and 9, the 
following sentence would be inserted:

       It is the intent of Congress that each State should, as a 
     part of the ratification process, submit to Congress 
     recommendations for reductions in direct and indirect Federal 
     funds provided to the State and its residents (based on the 
     State's allocation of Federal funds) necessary to balance the 
     State's share of the Federal deficit.

  That new sentence I would attempt to add by amendment 307 to the 
proposed constitutional amendment before us at this time.
  Mr. President, I call this--and I think I can call it this in all 
truth and honesty--a States' rights amendment. This is an amendment 
that would belong to the people as their right to tell the Congress how 
the cuts should be made in our respective States.
  Back in the middle part of January the Department of Treasury came 
out with what I consider to be a very thorough study of how each State 
would be impacted and affected by a constitutional amendment to balance 
the budget by the year 2002.
  Mr. President, I hold this study in my hand. And from time to time, I 
have been given the opportunity to discuss with my colleagues in the 
Senate how each of our States represented by this body would be 
affected by this particular amendment that will be voted on sometime 
during the course of the legislative day tomorrow.
  For example, the Treasury Department has indicated that the State of 
Arkansas from which I come, a small State of around 2.5 million people, 
would have to increase State taxes--not Federal taxes, State taxes--by 
16.5 percent across the board to make up for the loss of grants, should 
the balanced budget amendment pass, and the Federal budget is balanced 
by the year 2002.
  Also, Mr. President, we would see a cut in about $1.1 billion a year 
in Medicare benefits to our State, and another $1.1 billion per year in 
other programs where the Government allocates the money to the States.
  There are going to be severe cuts to each State. My amendment 
basically would say that the people of the State--through or via their 
own State legislatures sitting at the proper time, during the debate on 
whether or not to ratify this amendment by the respective States, would 
tell their State legislators sitting in their respective general 
assemblies how the people feel these allocations should be effectuated 
in the State.
  The State legislatures would be looking at the allocation of cuts 
based upon the total Federal funds received today. That would be the 
basis of the formula that the States would be employing in recommending 
to the Federal Government, the Federal Congress, the national Congress, 
how these Federal funds, these cuts, should be implemented out in the 
States.
  This would give the people of our country a very, very rare 
opportunity. It would provide our people the opportunity to tell 
Congress where these cuts should be made. It would provide the people 
of America the right basically to petition Congress,
 in an informal, nonbinding way, say as what we believe out in the 
country, the priorities should be in allocating cuts in Federal 
spending back to the States.

  Mr. President, we have just gone through a very, very lengthy several 
days of session in the Senate with regard to the issue of unfunded 
mandates. Let me say that this is not an unfunded mandate. This is not 
even a mandate. This is something merely declaring the intent of the 
Congress, that the States would have the opportunity to show us where 
these cuts and where this pain could be best allocated. We think it is 
fair; we think it is simple. It speaks to the issue in one simple 
sentence that we hope will be accepted by this body tomorrow.
  Some might say, if we accept this amendment, even though it is just 
one sentence, then we are going to have to go back and have a 
conference with the House of Representatives to reconcile any 
differences. We would do this because we have dared to differ with the 
House just by adding this one sentence. Mr. President, I do not really 
buy that argument, because it is very rare indeed that we approach the 
eve of a historic vote on an amendment such as this, which will change 
forever the basic relationships of the three branches of Government. We 
would be forever changing the way Government deals with how we finance, 
how we structure the American economic system.
  This is a crucial, critical vote tomorrow. In the 1 or 2 days' time 
that might be expended in a conference between House and Senate 
conferees--conferences are done all the time; it is normal and it is 
natural to have conferences on differences between the two bodies--I 
feel they can work out. If not this language, at least the spirit of 
this language to be encompassed in the final draft of the amendment, so 
as to give the people of America the opportunity to speak to the 
Congress, to say where these cuts should occur.
  Mr. President, once again, the people of the State would speak during 
the ratification process. This is presupposing--maybe wrongfully, I do 
not know--that there will be 67 votes tomorrow to ratify this amendment 
to balance the budget. But, Mr. President, in my opinion, it is very, 
very important because we have now lost the fight on the people's right 
to know how Congress will balance the Federal budget, and at least we 
will have some safeguard, some measure of the impact on the States, 
should this amendment receive 67 votes. And before the States ratify or 
fail to ratify this amendment, we would have the opportunity for the 
people to express to us how they feel as to the allocation of this pain 
that we will feel.
  Mr. President, I will conclude by saying that this is, as we have all 
known for a long time, going to be a very close vote. We are seeing 
many phone calls come into our offices, and letters and telegrams; 
there is no question about that. That should be encouraged because the 
people should express how they feel about altering the Constitution of 
the United States in this way. But I am just very hopeful that all of 
the people in the country who are watching this particular debate on 
this issue of the balanced budget amendment, I am just hoping, Mr. 
President, they will realize that most of us in this body want and 
desire and are committed to a balanced budget. Some of us do not feel 
at this time that the proper way to achieve that balanced budget is to 
put it in the Federal Constitution.
  I, for one, do not feel that we should wait until the year 2002 to 
begin trying to balance the budget. I think that we have to begin that 
process now, as we did in 1990, as we did in 1993. We have to continue 
on that cycle in order to 
[[Page S3187]] find ourselves, to place ourselves on the glidepath to a 
balanced budget. I think, too, that many people who might be watching 
this argument must realize that we cannot in this country violate a 60-
year-old contract that we have had and have maintained with the people 
of this country relative to their Social Security trust funds, which 
some fear will be used to balance the budget.
  Mr. President, we know that in this amendment, we have voted down the 
amendment which would have exempted Social Security funds from the 
balanced budget amendment. I say, and say without reservation, that 
this was one of the more critical votes that we dissected and explored 
with regard to this constitutional amendment.
  Finally, Mr. President, I think there is another issue that hangs out 
there and haunts us and, in fact, taints this constitutional amendment 
as proposed. This is the issue of the judiciary's role in interpreting 
what we did, and also, the role that the Federal judges might well play 
in implementing the constitutional amendment to balance the budget, and 
their having the ability to raise taxes to balance the Federal budget.
  Mr. President, I am not talking about the U.S. Supreme Court having 
that ability. I am talking about Federal district judges perhaps having 
the opportunity, or seizing the opportunity, to come forward and say 
that the Congress has not balanced the budget; therefore I, acting 
under the authority vested in me as a Federal district judge in 
Nashville, TN, or Little Rock, AR, or Oshkosh, WI, or wherever the case 
may have arisen, to enjoin the issue of taxation.
  Under the constitutional amendment, we are going to see taxation 
without representation, Mr. President--that is my firm belief--in the 
event that we pass the Federal balanced budget constitutional amendment 
on tomorrow.
  Tomorrow is a critical vote, and I just hope that the people of our 
country will realize that this has not been a delaying tactic, that we 
have wanted to fully explore the momentous decision that we have to 
make on tomorrow.
  Mr. President, I respectfully submit that on both sides of the aisle, 
we have conducted this debate in a manner where I hope the people--
whether they agree or disagree with our decision--will at least say 
that the U.S. Senate is a great deliberative body and that we have 
carried out our mission, I hope, with sincerity and a commitment to the 
cause that we are attempting to serve.
  Mr. President, I see my very good friend from Connecticut, and he is 
not ready to speak just now. Therefore, I will suggest the absence of a 
quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DODD. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DODD. Mr. President, I rise again today to discuss the balanced 
budget amendment and to provide what I hope will be some constitutional 
historical perspective on this issue.
  Let me begin by commending my colleagues for the fact that we have 
had an opportunity now over the past several weeks to thoroughly debate 
and discuss this issue. As my colleague from Arkansas just noted, I 
think the institution has been well served by this debate. It is 
exactly what the framers intended; that, on matters of deep and 
profound concern to the Republic, this body act in a deliberate 
fashion. And there can be no matter more serious than an effort to 
amend the Constitution of the United States. And certainly, when we 
attempt to do so, a thorough and complete debate and discussion of the 
implications of that decision ought to be the business of this body for 
however long it takes.
  I particularly want to commend the efforts of my colleague from West 
Virginia, Senator Byrd, who is, I believe all recognize in this body, 
regardless of party, truly one of the great historians, one of the 
great minds when it comes to the Constitution, and to the rules of the 
Senate. I suspect that all of our colleagues have benefited directly 
from his historical perspective and his leadership on making Members 
aware of the implications of a constitutional amendment of this 
significance.
  Mr. President, the congressional leadership of the new majority is 
now advocating the most sweeping rewrite of the U.S. Constitution in 
two centuries. In addition to the matter before us--the balanced budget 
amendment--many in the new leadership are advocating amendments on tax 
limitation, term limits, line-item veto, unfunded mandates, school 
prayer, and flag burning. Mr. President, that is seven constitutional 
amendments that the new Republican leadership hopes to pass in this 
Congress.
  Other than the Bill of Rights, composed of 10 amendments, all 
ratified in 1791, making so many changes to the Constitution so fast 
would be utterly and totally unprecedented.
  Throughout our history, we have changed the Constitution only 
occasionally. Since 1791, we have amended the document an average of 
only once every 12 years. We amended the constitution only four times 
during the entire 19th century--that is three fewer amendments than the 
new majority leadership wants to adopt in the next 2 years alone.
  It is certainly not unusual for the winning party in an election in 
this country to seek adoption of its legislative agenda. That is 
democracy and that is as it should be. What is unusual, Mr. President, 
about the new leadership's plans is the desire to enact its agenda not 
by statute but into the permanent Constitution of this Nation, the 
organic law of our country.
  These proposals are even more surprising, I might add, coming from 
some who are self-styled conservatives who profess to believe in 
cautious, reasoned, and judicious change.
  The Constitution is not a set of fraternity bylaws to be amended with 
each new pledge class. It should reflect not the popular winds of the 
time, but the sacred principles of all time.
  As a country, we have never supported governing by means of 
constitutional amendment. Since the adoption of the U.S. Constitution, 
10,831 constitutional amendments have been proposed in the U.S. 
Congress, but only 17 of those amendments have ever been ratified, if 
you exclude the Bill of Rights. That is fewer than one-quarter of 1 
percent of all amendments ever proposed.
  Why do I mention that? The procedural hurdles to ratification of 
constitutional amendments are very, very hard for a very, very good 
reason. An amendment that may look perfectly reasonable today may prove 
to be unnecessary or even dangerous, not to mention silly, down the 
road.
  A few examples from history I think will make this point.
  In 1808, one of my predecessors from Connecticut, Senator Hillhouse, 
proposed to limit the President's annual salary to $15,000 a year by 
writing it into the Constitution of the United States. Now, I am 
hesitant about citing that example because it may enjoy some popular 
support today, given the reactions the people have to people serving in 
public life. But Senator Hillhouse figured that surely this was a 
generous offer at the time.
  In 1838, the Nation was scandalized when one Member of Congress 
killed one of his colleagues during a duel. This led to the 
introduction of a constitutional amendment to bar individuals 
implicated in dueling from ever holding elective office by changing the 
Constitution.
  In the latter half of the 19th century, a great concern over the 
abuse of patronage led to repeated amendments mandating the popular 
election of postmasters and deputy postmasters in the country. Imagine 
what that would do to the political process today?
  In the opening decades of the 20th century, there was increasing 
alarm over the number of divorces in the country that led Senator 
Ransdell of Louisiana to offer a constitutional amendment to prohibit 
divorce in the United States.
  In 1919, a growing concern over the evils of drinking led to the 18th 
amendment, prohibiting the sale or manufacture of alcoholic beverages 
in the United States. The amendment, as most will recall, was a 
failure--prohibition was widely flouted. Congress's only choice was the 
unseemly one of adopting yet a new constitutional amendment to repeal 
the previous one.
  [[Page S3188]] My point, Mr. President, in mentioning these 
amendments is not to ridicule those who offered them nor to question 
their motives at the time. In fact, many of these proposals were 
undoubtedly reasonable, or at least thought to be so, at the time they 
were suggested. But, Mr. President, as I recite them, I think all would 
agree that they would not have stood the test of time.
  Over time, I believe that a balanced budget amendment will fare no 
better.
  I would like to take a few moments, if I could, and add a little 
historical perspective to our debate on balanced budgets.
  Much has been said in the last few days and weeks about our current 
Federal deficit and debt problems. I would concur with my colleagues 
about the importance of reducing our debt. It is clearly a drag on our 
economy and a burden on all Americans.
  I, however, strongly differ, Mr. President, with my colleagues in 
their interpretation of our current deficit problems as a recent 
development in our Nation's history.
  This chart to my left, Mr. President, lays out the historical 
perspective, beginning in 1794 and moving up to 1994 of surpluses and 
deficits as a percentage of our spending.
  This chart reveals that there have been wide variations in spending 
patterns throughout our history. We have had surpluses as high as 102 
percent of Federal spending in 1835--in this area--and deficits as 
great as 89 percent of Federal spending in 1862 during the Civil War--
this bottom line down here.
  The chart also illustrates that our current difficulties are small 
relative to deficits that our Nation has experienced in the past. When 
we compare the high-water marks of past deficit spending with the worst 
of the Reagan era deficits, we find that the depth of our current 
deficit cycle is much smaller.
  That is the period from here, beginning at about 1959, and going to 
the present, these smaller lines back and forth.
  In 1983, at the height of our current deficit problems, the Federal 
deficit was 26 percent of overall spending. It is now about 13 percent 
of overall spending. Let me quickly add, there is no question that 
these rates are far too high, but they have been far worse--and we have 
recovered.
  We have run deficits in half of our last 200 years. Most of the major 
bumps and squiggles that you see on the chart are readily explainable. 
The War of 1812, the panic of 1837, and the depression that followed--I 
have already mentioned the Civil War, the bottom line here--World War 
I, over here, and World War II, as well, where deficits were incurred.
  Without the so-called discipline of a balanced budget amendment, we 
were able to get out of those difficult deficit cycles.
  One huge deficit swing that is not reported on this chart is 
President Thomas Jefferson's 1803 decision to make the Louisiana 
Purchase.
  Jefferson borrowed $15 million, an amount $4 million greater than the 
entire Federal budget for that year, to acquire the new territory.
  Based on a letter he wrote, a number of my colleagues have cited 
Jefferson as a supporter of a balanced budget amendment.
  I think my colleague from Texas, Senator Gramm, is one who made 
specific reference to it. I point out that Thomas Jefferson would have 
found it a good bit more difficult to make this purchase if a vote on 
waiving the Constitution to permit an unbalanced budget had been 
required in 1805. Today our colleague from Texas might be running for 
the Presidency of Texas rather than the Presidency of the United 
States.
  The Louisiana Purchase does not show up on the chart because of an 
accounting distinction. The appropriation is not shown here because our 
chart excludes receipts from borrowing. If borrowing had been included, 
the Louisiana Purchase would be twice as deep as the largest dip in the 
chart caused by the Civil War.
  Jefferson knew that the Constitution did not explicitly grant 
authority to purchase new land, and that concerned him. He considered a 
constitutional amendment to permit such authority. But he realized, Mr. 
President, that the opportunity to buy the new land could be lost 
through a lengthy ratifying process. So despite his constitutional 
reservations, he sought congressional approval to add both vast new 
territory and a staggering public debt to our young Nation.
  Mr. President, the historical perspective reinforces, I think, a very 
important point. Balanced budgets have not been a natural part of our 
national experience. Nor should we expect them to be.
  Clearly, balanced budgets are desirable. I do not think there is any 
debate about that point. But they are not our only goal. Providing 
economic and military stability, raising living standards, promoting 
adequate savings and investment, and reacting repeatedly to unforeseen 
events, are also critically important objectives.
  It is unrealistic, in my view, to expect any great nation to achieve 
all of these goals in every given year. In America, we elect our 
representatives to make difficult decisions and to balance competing 
needs. If we amend our Constitution to require balanced budgets we 
elevate one goal above other equally important objectives. We 
fundamentally change our ability to respond to complex and changing 
circumstances.
  It is a law of physics, Mr. President, and of life, that every action 
has a reaction. Some we can anticipate, others we cannot. One reaction 
we can expect is that balancing our budget in economic recessions will 
destabilize our economy and increase the volatility of the financial 
markets.
  Laura Tyson, the President's Chief Economic Adviser, recently noted 
that had a balanced budget requirement been in effect during the last 
recession, it would have thrown 800,000 people in this country out of 
work. Historically, deficit spending has functioned as an important 
fiscal tool to stabilize the economy and moderate fluctuations in the 
business cycle.
  When the economy is in recession, the Federal Government takes in 
less money. That is stating the obvious. A balanced budget requirement 
would compel Congress to match declining revenues with increased taxes 
or spending cuts. In the process, Mr. President, it would force the 
Congress to renege on promises to provide a critical safety net to our 
citizens just when it is needed the most, and it would impede our 
ability to hasten recovery by providing a fiscal stimulus when it, too, 
was needed most.
  Changing the Constitution is not like adopting a simple statute that 
can be modified or appealed in that Congress or succeeding Congresses. 
Constitutional amendments must be held to the highest possible 
standard. Indeed, the language we insert into the Constitution will 
very likely stay there as long as this Republic stands. Generation 
after generation will live with the consequences of our constitutional 
decisions.
  Henry Clay said, 140 years ago:

       The Constitution of the United States was made not merely 
     for the generation that then existed, but for posterity--
     unlimited, undefined, endless, perpetual prosperity.

  The key to the Constitution's ability to endure is its simplicity, 
Mr. President. That is why making the Constitution too long and too 
specific runs the risk of damaging the entire document. The Framers 
understood that danger when they wrote the Constitution two centuries 
ago.
  Edmund Randolph of Virginia was one of a handful of delegates to the 
Constitutional Convention charged with turning the general principles 
agreed upon into constitutional language. Before getting down to 
drafting, Randolph briefly spelled out his philosophy of Constitution 
writing:

       In the draft of a fundamental constitution, two things 
     deserve attention: (1) To insert essential principles only, 
     lest the operations of Government should be clogged by 
     rendering those provisions permanent and unalterable, which 
     ought to be accommodated to times and events; and (2) to use 
     simple and precise language, and general propositions, 
     according to the example of the several constitutions of the 
     several States; for the construction of a constitution 
     necessarily differs from that of law.

  While the U.S. Constitution has endured, many of our State 
constitutions have come and gone. As the constitutional scholar Martin 
Landau has pointed out, there have been more than 200 State 
constitutional conventions since 1789, as States have had to shelve 
[[Page S3189]] detailed Constitutions that became obsolete and overly 
restrictive. As Landau writes:

       State Constitutions, notoriously complicated, cluttered, 
     and rigid, have come and gone--tossed away as outmoded, 
     inelastic, and maladaptive instruments.

  That is a fate, Mr. President, we do not want to visit on our 
national Constitution. We must ensure that it remains a brief, lucid 
statement of general principles, not a highly specific legislative 
vehicle.
  I invite my colleagues to read the entire Constitution with all of 
its amendments and then immediately read this proposed amendment. Like 
me, I think you may find this to be a jarring exercise, moving from the 
simple elegance of our existing Constitution to the arcane complexity 
of this proposed addition.
  This balanced budget amendment has eight sections and 292 words in 
it. That is more words, Mr. President, than the first five amendments 
that establish some of our most enduring and fundamental liberties: The 
freedom of speech, the freedom of religion, the freedom of assembly, 
the right to petition the Government, the right to bear arms, freedom 
from unreasonable search and seizure, and the right to a jury trial. 
There are less words included in those five amendments than is proposed 
by this amendment.
  Mr. President, our current deficits are too high. We all know that. 
They need to be reduced. As a direct result of President Clinton's 
leadership, we have made significant progress on this problem. The 
deficits are declining for 3 straight years in a row, the first time, I 
might add, that that has happened since the Truman administration.
  For the first time since the 1960's, the Federal Government is 
collecting more in revenues than it is spending on programs. Our most 
recent deficits are not due to overspending on Federal programs but 
rather to the payment of interest on the debt accumulated during the 
1980's. According to the Council of Economic Advisers, our budget would 
be in balance by 1996 if it were not for required interest payments on 
the debt run up from 1981 to 1992.
  It is important, though, that we take a broad view of deficit 
spending and learn from our past history. I refer my colleagues again 
to this chart of 200 years of Federal spending. Throughout our entire 
history, we have experienced great peaks and valleys in Federal 
spending patterns. Over the last 40 or 50 years we have had relative 
stability. This amendment threatens to compromise our economic 
stability and to do great damage to our economy.
  We ought not to look just at this most recent period and ignore the 
spending patterns throughout our history. And, we ought not to look at 
most recent experience and deny 205 years of constitutional history in 
the process. That would be a grave mistake.
  Mr. President, we have a serious obligation to confront our fiscal 
difficulties. We do not have the right to visit on the Constitution of 
the United States a highly questionable solution to a contemporary 
problem. The answer to our present-day frustrations should not be 
sought by cluttering up the perpetual life of our democracy. To do so, 
I believe, would be a decision that we will live to severely, severely 
regret.
  I urge my colleagues to reject this proposal when the vote occurs 
tomorrow.
  Mr. President, I yield the floor.
  Mr. DeWINE addressed the Chair.
  The PRESIDING OFFICER. The Senator from Ohio.
  Mr. DeWINE. Mr. President, I rise today in very strong support of a 
balanced budget amendment to the Constitution.
  I will begin by asking unanimous consent that this letter that was 
released today signed by 219 economists from throughout the country who 
have endorsed the balanced budget amendment be printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

 Balanced Budget Amendment--An Open Letter To Congress, February, 1995

       It is time to acknowledge that mere statutes that purport 
     to control federal spending or deficits have failed. It is 
     time to adopt constitutional control through a Balanced 
     Budget Amendment. In supporting such an amendment, Congress 
     can control its spending proclivities by setting up control 
     machinery external to its own internal operations, machinery 
     that will not be so easily neglected and abandoned.
       Why do we need the Balanced Budget Amendment now, when no 
     such constitutional provision existed for two centuries? The 
     answer is clear. Up until recent decades, the principle that 
     government should balance its budget in peacetime was, 
     indeed, a part of our effective constitution, even if not 
     formally written down. Before the Keynesian-inspired shift in 
     thinking about fiscal matters, it was universally considered 
     immoral to incur debts, except in periods of emergency (wars 
     or major depressions). We have lost the moral sense of fiscal 
     responsibility that served to make formal constitutional 
     constraints unnecessary. We cannot legislate a change in 
     political morality; we can put formal constitutional 
     constraints into place.
       The effects of the Balanced Budget Amendment would be both 
     real and symbolic. Elected politicians would be required to 
     make fiscal choices within meaningfully-constructed 
     boundaries; they would be required to weigh predicted 
     benefits against predicted tax costs. They would be forced to 
     behave ``responsibly,'' as this word is understood by the 
     citizenry, and knowledge of this fact would do much to 
     restore the confidence of citizens in governmental processes.
       It is important to recognize that the Balanced Budget 
     Amendment imposes procedural constraints on the making of 
     budgetary choices. It does not take away the power of the 
     Congress to spend or tax. The amendment requires only that 
     the Congress and the Executive spend no more than what they 
     collect in taxes. In its simplest terms, such an amendment 
     amounts to little more than ``honesty in budgeting.''
       Of course, we always pay for what we spend through 
     government, as anywhere else. But those who pay for the 
     government spending that is financed by borrowing are 
     taxpayers in future years, those who must pay taxes to meet 
     the ever-mounting interest obligations that are already far 
     too large an item in the federal budget. The immorality of 
     the intergenerational transfer that deficit financing 
     represents cries out the correction.
       Some opponents of the Balanced Budget Amendment argue that 
     the interest burden should be measured in terms of percentage 
     of national product, and, so long as this ratio does not 
     increase, all is well. This argument is totally untenable 
     because it ignores the effects of both inflation and real 
     economic growth. So long as government debt is denominated in 
     dollars, sufficiently rapid inflation can, for a short 
     period, reduce the interest burden substantially, in terms of 
     the ratio to product. But surely default by way of inflation 
     is the worst of all possible ways of dealing with the fiscal 
     crisis that the deficit regime represents.
       Opponents also often suggest that Congress and the 
     Executive must maintain the budgetary flexibility to respond 
     to emergency needs for expanding rates of spending. This 
     prospect is fully recognized, and the Balanced Budget 
     Amendment includes a provision that allows for approval of 
     debt or deficits by a three-fifths vote of those elected to 
     each house of Congress.
       When all is said and done, there is no rational argument 
     against the Balanced Budget Amendment. Simple observation of 
     the fiscal record of recent years tells us that the 
     procedures through which fiscal choices are made are not 
     working. The problem is not one that involves the wrong 
     political leaders or the wrong parties. The problem is one 
     where those whom we elect are required to function under the 
     wrong set of rules, the wrong procedures. It is high time to 
     get our fiscal house in order.
       We can only imagine the increase in investor and business 
     confidence, both domestic and foreign, that enactment of a 
     Balanced Budget Amendment would produce. Perhaps even more 
     importantly, we could all regain confidence in ourselves, as 
     a free people under responsible constitutional government.

  Mr. DeWINE. Mr. President, this particular letter was solicited by 
the American Legislative Exchange Council and I believe, when read, 
will indicate the strong support these economists have for the balanced 
budget amendment and why they feel it is necessary.
  I agree with the statement of the Senator from Connecticut that 
tomorrow will be a very historic day. He and I come down on different 
sides of this issue. Many of his comments and many of the comments that 
have been made in the last 5 weeks on this floor against the balanced 
budget amendment may seem to make some sense. And quite frankly, I do 
not believe anyone in this Chamber is happy about the fact that at this 
point in our history, we have come to the point where we have to pass, 
or at least many of us believe we have to pass, a balanced budget 
amendment.
  Never before have we been this close to passing a balanced budget 
amendment and, quite candidly, I am not sure if we do not pass it 
tomorrow we will ever really have a good opportunity to do it again. 
For the balanced budget 
[[Page S3190]] amendment to pass, the time is now. If we cannot pass a 
balanced budget amendment in the current political climate in this 
country--after having seen what happened in 1992 when everyone in this 
country voted for change in frustration and then in 1994 where people 
again voted for change, where today 80 percent of the American people 
want a balanced budget amendment--if we cannot pass it today, I am not 
sure that we ever can.
  Last November, the American people voted for change. For 25 
consecutive years, Congress has failed to balance the budget. The last 
time we balanced a budget in this country I was a senior in high 
school, 25 years ago. Congress has amassed a $4.7 trillion national 
debt that our children and our grandchildren and our great 
grandchildren are going to have to deal with. That, Mr. President, is 
what the American people voted to change in 1994.
  For decades, they have heard promises from Congress. The American 
people, people that I talk to, are tired of promises. They want action. 
They are tired of words. They want a balanced budget and they want a 
balanced budget amendment. They know that Congress is simply incapable 
of balancing the budget unless it is forced to balance the budget. 
Eighty percent of the American people support the balanced budget 
amendment because they realize that unless we change the budget process 
in a fundamental way, we are not going to change the result of the 
budget process. Let us make no mistake about this, only a 
constitutional amendment can create this fundamental change.
  As long ago as 1921, Congress was trying to change the budget process 
by statute. This strategy clearly has not worked. At least six 
different times, maybe more, this Congress has passed statutory 
balanced budget requirements, all to no avail. History proves that 
Congress cannot balance the budget by statute, and it has been true no 
matter which party was in power. When we had a Republican President, we 
had a deficit. When we had a Democrat President, we have had a deficit. 
When we had a Democrat Senate, we had a deficit and, yes, even with a 
Republican Senate, we have had a deficit, too.
  There is no better evidence of the bankruptcy of this statutory 
approach than the current budget that was sent to Capitol Hill by the 
President. The President's budget proposes deficits in the neighborhood 
of $200 billion, but even more shocking, there really is no serious 
attempt to balance the budget in what people on Capitol Hill refer to 
as the outyears and what people away from the beltway refer to as the 
future.
  As far, Mr. President, as the eye can see with the President's budget 
proposals, we have nothing but red ink. This budget proposal proves 
beyond a shadow of a doubt that America's fiscal policy is 
fundamentally misguided. Clearly, we need to change course, and if we 
do not change course, if the balanced budget amendment is voted down, 
the result will be a bleak future, indeed, for the next generation of 
Americans.
  We are already paying over $235 billion--$235 billion--a year in 
interest on the national debt. That is eight times what we currently 
invest in education. It is 50 times what we invest in job training 
programs. Every year we add to this mountain of debt, every year we are 
committing more of tomorrow's resources, our children's resources, to 
pay for Congress' failures today.
  By the year 2003, just 8 years from now, spending on entitlements and 
interest alone will exceed 70 percent of the whole Federal budget. Take 
out defense and you leave just 15 percent of the budget for all the 
discretionary spending--all the discretionary spending--on our domestic 
needs; less than 15 percent cumulative total for education, for job 
training, for Women, Infants and Children Program, and for all the 
other programs that help the American people at home; just 15 percent 
of the budget for all these programs combined.
  We have heard a lot of talk on the floor about how a balanced budget 
amendment will stop us from being able to help the neediest in society, 
how a balanced budget amendment will unduly penalize our children, and 
how it will make it very, very difficult for us to invest in our 
future. I believe that just the opposite is true; that unless we pass a 
balanced budget amendment, future Congresses, future generations will 
have no money left to invest in our young people.
  Mr. President, following up on these figures, if you go out to the 
year 2012, just 17 years from today, there will be nothing left in the 
budget for these social needs--zero, no money at all for our children. 
Every last red cent in the Federal budget will go to entitlements and 
interest payments.
  The year 2012 has special significance for my wife and myself, 
because just a year before that, our grandson, Albert, will graduate 
from high school. In the year 2012, our daughter, Anna, should be in 
her first year of college. If we do not act today, Albert, Anna, and 
other children will pay a severe human cost.
 Tomorrow we face a decision about their future, and it is of historic 
significance. Let us prove by our vote tomorrow that we can put 
partisanship aside and that we can for once act together in the long-
term best interest of our country and of our children.

  Mr. President, let us just admit that well-intentioned people of both 
parties, of both parties, have failed to enact a responsible Federal 
budget. Therefore, let us do what is necessary to fix the problem. If 
we do not do it today, it may never happen. And future Americans will 
ask why, why, why the Congress, faced with a clear and well informed 
mandate from the American people, chose once again to defend a fiscal 
process that had already created a debt of nearly $5 trillion.
  Some people would have us believe that this constitutional amendment 
is a quick fix; that it will not solve the real problems of fiscal 
policy, but when I go home to Ohio that is not what I hear. That is not 
what I hear from people back home. This is not something the people of 
Ohio want to do any more than we do. It is something, however, that 
they are convinced we have to do as a last resort.
  In the short term, passing the balanced budget amendment is no quick 
fix. It will create a monumental challenge for this very Congress 
because for the first time in a generation we will not be permitted to 
take unlimited spending demands and just tack them on to the deficit. 
Future Congresses will have to deliberate, will have to make the best 
choices they can and will have to be judged by the American people on 
the results that are produced.
  Over the short term this will not be pleasant, but over the long term 
this constitutional amendment is the greatest gift we can make to 
future generations. Last week, a columnist in the Wall Street Journal 
warned Senators that their grandchildren will remember the votes they 
cast on this amendment. I believe the author of that article was 
correct. That is why I am proud to vote yes on this very historic 
measure. I urge my colleagues to do the same.
  Mr. President, I yield the floor.
  Mr. THOMAS. Mr. President, I rise in support of the balanced budget 
amendment.
  We will have talked about it tomorrow for 30 days. We talked about 
the pros and cons. We have debated and discussed it. Actually, I 
suspect it is fair to say that most everything that can be said has 
been said. I suppose the thing that has not happened is not everybody 
said it yet, and that seems to be why we go on as we do. It is not a 
new topic. It is not as if this issue just came up. It has been talked 
about for years. As a matter of fact, it has been voted on in the last 
several years.
  Mr. President, you and I came from the House. We talked about it last 
year. We voted on it last year. It was voted on here. So it is not a 
new topic.
  Interestingly enough, everyone who rises says, yes, I want to balance 
the budget; of course, we need to balance the budget. But we have been 
26 years and have not balanced the budget. They rise and say, well, but 
we do not need an artificial discipline to do that; we just simply need 
to do it.
  It is true. We have not done it. We have not done it for 26 years.
  Many who oppose it have been here for a very long time, and I am not 
critical of that. But it has not happened. Many who oppose it have been 
in very important positions dealing with the budget. They have not 
balanced it. And you can argue about the reasons why. You can argue 
that it is difficult to have an amendment in the Constitution. But the 
fact is if you want to change the way things happen you 
[[Page S3191]] have to change the process. You cannot continue to do 
things the same way you have been doing them for 26 years and expect 
some kind of different result.
  I think the people of this country expect the decision. I am 
delighted that we are coming to a decision tomorrow. I think we have 
been too long.
  I respect the notion that the Senate is here to deliberate, to take 
longer, I suspect, than the House typically takes. Nevertheless, there 
comes a time when the question needs to be brought to a decision, and 
that is what voting is for and we are going to do that.
  I have a hunch that many of the things we have talked about have 
really been sort of a reason, a justification for voting no when in 
fact the big difference is a philosophical difference. It seems to me 
there is a great deal more involved here. As important as the financial 
aspect is, as important as the morality of being fiscally responsible 
is, there is also a broader question. That question is what kind of a 
Federal Government do you see us having? What do you see as the role of 
the Federal Government? Do you see it as an ever-increasing bureaucracy 
that grows continuously year after year?
  If you take a look at a chart--I did not bring a chart--of spending, 
spending has continued to go up. Last year and even this year, in this 
budget, in my hometown paper it said administration cuts. It leads you 
to believe there is less spending than the year before. Not so. 
Spending has gone up. Spending is going up 5.5 percent. Spending has 
gone up every year. Spending will go up under the budgets that are 
being talked about in the House. So spending continues to go up.
  There is a philosophical difference, however, as to whether you see 
the Government as ever growing or whether you see it as being limited, 
whether there ought to be a transfer or movement toward emphasizing 
State and local governments more, the private sector more, more 
personal responsibility, or do we continue to do more and more in the 
Federal Government. That is part of what we are talking about here--not 
only the money but also the role of the Federal Government.
  We have heard a great deal just today about how there are exceptions, 
there are times when things need to be done, and that is, indeed, true. 
It also in the budget amendment allows for exceptions. It allows for 
changes. It does take a majority, or a supermajority to do it. But 
there is no reason why it cannot be done if it is justifiable and, 
indeed, it can be.
  People and the legislatures of this country I think deserve an 
opportunity to vote on a constitutional amendment, if it goes there, 
and it should. We have talked about the Founding Fathers having not put 
it into the Constitution, but I recall Thomas Jefferson said if there 
was one change he could make, it would be to limit overspending.
  I had the honor the other day to read George Washington's Farewell 
Address again, and he spoke to it. Let me quote.

       As a very important source of strength and security, 
     cherish public credit. One method of preserving it is to use 
     it as sparingly as possible, avoiding occasions of expense by 
     cultivating peace, but remembering, also, that timely 
     disbursements, to prepare for danger, frequently prevent much 
     greater disbursements to repel it.

  And then he said:

       Avoiding likewise the accumulation of debt, not only by 
     shunning occasions of expense, but by vigorous exertions, in 
     time of peace, to discharge the debts. . . .

  We have not done that. And that is what this is all about. This 
provides the discipline to make the tough decisions that we have to 
make.
  So there are reasons to do it. It is morally and fiscally 
responsible. Ask anyone should we balance the budget, should we spend 
more than we take in on a consistent, 26-year basis? The answer is no, 
of course not.
  Ask anyone, should we have to balance the budget? The answer is yes, 
of course, we should. We hear it every day: I am for a balanced budget. 
We do not do it. There is no reason to expect that we will unless we 
change the process. Is the current situation out of control? Of course, 
it is.
  Do the States do it? Of course, they do. I come from a legislature in 
which the Constitution provides for a balanced budget. We do it. We 
live with it. It works. And we can deal with it.
  So, tomorrow we vote, and I am delighted for that. I think it will be 
a very important vote. I think it will be a crucial vote. I think it is 
a vote that helps not only to shape the future in terms of spending but 
to shape the future in terms of the kind of Government and the 
extensiveness of Government that we have. If there was one thing that 
was clear from this November's election, at least the people whom I 
represent said we have too much Government and it costs too much. We 
have too much Government and it costs too much. That is what this vote 
is about, doing something about that.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. CHAFEE. Mr. President, there is no greater problem facing the 
country today than our continued failure to balance the Federal budget. 
Unfortunately, this is not a new phenomenon, as has been pointed out 
here on the floor by earlier speakers. Over the past 33 years, we have 
balanced the budget once and that was a quarter of a century ago in 
1969. Had the Social Security program not generated a surplus, we would 
not have balanced the budget in that year either. Furthermore, the 
forecast put out by the Congressional Budget Office and the 
administration show that absent dramatic action on our part, these 
deficits are not going to end any time soon. It is not that we are just 
on the edge of ending the deficits through normal action, absent this 
balanced budget amendment.
  For example, CBO predicts that the deficit in the year 2005, 10 years 
from now, could be as high as $421 billion. The President's budget, 
which was released early this month, forecasts Federal deficits of 
approximately $200 billion for each of the next 5 years. So in the next 
5 years the President himself predicts we are going to have $200 
billion of deficits. The Congressional Budget Office says 10 years from 
now those $200 billion deficits are going to rise to $421 billion a 
year.
  Even worse than this dire prediction of what is going to happen is 
that the President has taken little action to address this problem. The 
$81 billion of deficit reduction in the President's plan is really 
relatively minor when it is realized that this $81 billion of deficit 
reduction occurs over 5 years, and, $60 billion of those savings come 
from keeping spending at the current level, not from making any cuts; 
just from keeping it where it is.
  Why is it bad that the Federal Government routinely spends more than 
it takes in? We are told in soothing tones by the administration that 
it is very important to note that the deficits for each year in the 
future are going to be a lower percentage of the gross domestic 
product. That is somehow meant to be grand news. What the 
administration tells us is do not worry, that for each of the future 
years the deficits are going to be a smaller part, an ever decreasing 
part of the Federal budget each year. Somehow that is meant to be good 
news, even though the dollar amounts of the deficits constantly grow.
  The problem is that every year we run a deficit we have to borrow to 
fund the shortfall. From the beginning of our country until today, we 
have incurred a debt--I believe the Senator from Ohio touched on this--
we have incurred a debt of about $5 trillion with the overwhelming 
portion of that accumulated over the past 15 years. The cost of 
servicing that debt, the gross interest, will total $339 billion in 
1995. In 1995, just to pay the gross interest on the debt is $339 
billion. This is the second largest expenditure in the Federal budget 
after Social Security. To put this number in perspective, our gross 
interest expense for 1994, this $339 billion, is more than the entire 
budget of the country 20 years ago. Just imagine if we were not 
spending that $339 billion, what we could do to improve our education, 
or to spend some of that money--not all of it but some of it--to help 
our education, help our health care system, or to bolster our efforts 
to fight crime.
  Aside from diverting resources that could be used for much better 
purposes, the deficit also puts a tremendous strain on our national 
economy. The most notable effect of this is on our interest rates. Alan 
Greenspan, who is 
[[Page S3192]] Chairman of the Federal Reserve, recently testified 
before the Finance Committee. This is what he said:

       Investors here and abroad are exacting from issuers of 
     dollar-denominated debt an extra inflation risk premium that 
     reflects not their estimate of the most likely rate of price 
     level increase over the life of the obligation, but the 
     possibility it could prove to be significantly greater.

  Let us translate that into English we all can understand. What Mr. 
Greenspan was talking about was a risk premium. What is a risk premium? 
A risk premium is the extra amount that anyone who issues debt, anyone 
who issues a long-term bond, must pay in interest because the buyers of 
that bond can predict with some measure of surety what the rates will 
be in the future but they have to add to it a factor, what Mr. 
Greenspan called the risk premium, because the country is running such 
large deficits that the fear of inflation is always there; the fear 
that inflation will come, that the Government will print money in order 
to get rid of this deficit. Thus this risk premium is added to any 
issuance--Ford Motor Co. or the U.S. Government--anybody who issues 
bonds that might last, for example, 20 years. If the buyer of that bond 
were assured that this country was on a process of balancing its 
budget, then he would not seek that risk premium and the bonds could be 
issued at a lower interest rate. Thus these artificially high interest 
rates affect all Americans. Families pay a risk premium when they 
borrow money for a home or when they borrow money for a new car or to 
finance their children's education.
  The Federal deficit also has a negative effect on future economic 
growth. Our potential to expand the economy in the United States is 
directly linked to the amount we invest in physical and human capital. 
What are we talking about, physical or human capital? We are talking 
about new machinery or we are talking about training the work force, 
bringing its skills up to date. We are talking about providing a 
foundation for increasing our output of goods and services. With this 
higher productivity comes a higher standard of living in our country. 
To achieve this, however, we must have a pool of national savings from 
which the investment can be made.
  Unfortunately, our national savings rate has declined dramatically 
over the last decade, partly because the Federal Government has engaged 
in what is known as dissaving. In other words, it is not saving money, 
it is borrowing money through this deficit spending. The Federal 
Government's reliance on borrowing to pay its bills crowds out the 
private sector. The Federal Government comes in, has to borrow money--
obviously there is not money left to lend at a low rate to you and me 
and businesses and others who want to borrow.
  The worst consequence of this fiscal irresponsibility is that we are 
jeopardizing the economic futures of our children and grandchildren. We 
are living beyond our means and we are passing the bill to these future 
generations.
  Recently I ran across a paper which discussed the idea of 
generational accounting. What does this mean? It is the process of 
measuring how Government policies affect the distribution of income and 
wealth among different generations. To make this comparison, the 
authors calculated the lifetime net tax rates. My generation--I was 
born in the 1920's--is facing a net tax rate over our lifetimes of 26 
percent. Of everything we earn, 26 percent will go for taxes. For 
somebody who is born in 1991, the lifetime net tax rate is not 26 
percent, it is 34 percent. That is not so bad, you say--34 percent. I 
can handle that, perhaps.
  But according to this analysis, if we do not take action to improve 
the Federal domestic situation, future generations, generations born, 
grandchildren born, children born, individuals born, starting in 1995, 
1996, 1997 will face lifetime tax rates not of 26 percent, not of 34 
percent, but of 70 percent. In other words, future generations can look 
forward to handing over 70 cents of every dollar earned to the 
Government if we do not reverse our course.
  For the past few years the administration has also included a 
generational analysis in its budget documents. Unfortunately, the 
President chose to delete that section from this year's budget. But the 
figures were similar to the ones I just pointed out. Why will future 
generations face such a daunting tax bill? Consider the obligations we 
have levied upon them. The Social Security program has been generating 
surpluses.
  The surpluses will turn. They will no longer start, will end, and 
pretty soon the program will not be bringing in surpluses. That is in 
the year 2013. That leaves workers in the middle of the next century 
with a hefty bill to pay to provide retirement benefits for those who 
are retiring today. On top of that, we have incurred this $5 trillion 
in debt, which I mentioned before. That is likely to increase by $750 
billion even with the passage of this balanced budget amendment. 
Obviously, at some point, all of this has to be repaid.
  What exactly does the balanced budget do? Very simply, it prohibits 
Federal outlays from exceeding Federal receipts unless a three-fifths 
majority of both Houses of Congress approves a specific deficit. In 
other words, it says that Congress can only spend what it is willing to 
collect in taxes, unless Congress determines a specific reason for and 
a legitimate reason for running a deficit. This could happen if there 
is a recession, if there is a natural disaster. Absent those 
situations, the country has to run a balanced budget.
  This amendment will make fiscal responsibility the norm rather than 
the exception. As has been said, the Federal Government has run a 
deficit for 25 straight years. There have been Republican Presidents. 
There have been Democratic Presidents. There have been Republican 
Senators. There have been Democratic Senators. Neither body is free 
from blame. The truth is there has not been the will to make the tough 
decisions to balance the budget.
  I listen to these people say there is no need to have this, that all 
we have to do is show some courage. But the truth of the matter is, we 
have not shown that courage. So we have to go to this artificial 
procedure, and the Senator from Connecticut says it has more words than 
the first five amendments. So what? What does that prove?
  The amendment before us today demands the same fiscal responsibility 
from the President that it establishes for Congress. The administration 
has to submit a balanced budget.
  I am grateful that the sponsors have not sought to include a three-
fifths majority requirement for raising revenue. That was discussed. 
You have to have 60 votes to increase taxes. That was rejected by the 
House, and rightfully so. That provision would be disastrous for this 
country because it would significantly hamper our ability to govern. 
Facing a deficit, Congress would in all likelihood be forced to cut 
spending rather than to raise revenue because the latter--to raise 
revenue--requires 60 votes.
  I support spending cuts over tax increases but feel it would be 
unwise to tilt the playing field against raising revenue. In other 
words, you need 60 votes to increase taxes but you only need 51 votes 
to cut spending. I would not support this amendment if it had the 
three-fifths majority for raising revenue. But fortunately, it is not 
in there.
  The amendment includes a process whereby the requirements can be 
waived by a simple majority for any year in which the country is in war 
or when the United States is engaged in a military conflict. I think 
these are legitimate circumstances.
  In section 7 of the amendment, it states that the total receipts, all 
receipts, of the U.S. Government except those derived from borrowing 
and total outlays should include outlays for the U.S. Government except 
those for the repayment of debt principal. What this means is that 
every dollar that comes in to the Treasury and every dollar that goes 
out of the Treasury will be counted in determining whether the budget 
is balanced.
  Again, this makes sense. This is the way we run our families. We 
count the dollars that come in and the dollars that go out, except for 
borrowing, obviously.
  Much of the efforts to derail this resolution has centered on 
excluding certain programs from the balanced budget amendment. This all 
started in the Judiciary Committee when an effort was made to exclude 
Social Security. I find this inconceivable. Why would we adopt as part 
of the Constitution an exclusion for Social Security or any 
[[Page S3193]] other aspect of the Federal budget? I am for protecting 
the fiscal soundness of the Social Security system. But it is absurd to 
exempt a program that represents 29 percent of all Federal receipts and 
22 percent of all outlays. A big chunk of the budget would be 
disregarded in all of this process, if that had been adopted. Thank 
goodness, it was rejected.
  Exempting Social Security receipts would provide a perverse incentive 
for future Congresses to shift Social Security revenues to the general 
fund. This should be very attractive since the program currently 
collects more in revenue than it pays out in benefits. But this would 
undermine the actuarial balance of the Social Security trust fund, and 
would certainly require draconian changes in the future in order to 
stave off bankruptcy when the baby boomers retire.
  Critics of the balanced budget amendment have argued that it is a 
sham, that it avoids, as I mentioned previously, the tough choices 
required to balance the budget. I disagree. What this represents is the 
first and most important step in a long and difficult journey to fiscal 
responsibility. It symbolizes the tide has finally changed; we are 
committed to living within our means, and we are willing to embody that 
principle in the basic document of the Nation, on which the foundation 
of all our Government rests; namely, the Constitution.
  Other fiscal disciplines we have enacted, while they are important--
and I voted for every single one them--have not done the job. The 
Gramm-Rudman-Hollings deficit control laws, the firewalls, the 
discretionary spending caps, the pay-as-you-go rules--all of these we 
have tried. As I say, I voted for every single one of them, and have 
supported them when they have attempted to be amended. But they failed 
to break the attractive lure of deficit spending.
  Opponents have also argued we should not pass a balanced budget 
amendment until the supporters of it outline specifically how we reach 
that goal. This is nonsense, in my judgment. It is like a doctor saying 
you have to lose 40 pounds. ``I am not going to lose 40 pounds until 
you tell me specifically how I am going to do it.'' Well, the objective 
is, if you want to keep your health, you had better lose that 40 
pounds. There are a variety of ways you can do it. You can work those 
out yourself, as long as you get there, to lose the 40 pounds. You can 
go on a diet. You can eat less. You can go through health plans. You 
can exercise more. You can try different approaches. But the end result 
is you have to get there. That is what we have said.
  The so-called right-to-know amendment to the resolution before us 
really is a smokescreen thrown up by those who had no intention of 
supporting this proposal, whether or not we had outlined the specifics 
as to how we are going to get there. The fact is, there is no agreement 
upon the path to reach a balanced budget. The path that I would 
subscribe to is likely different from the path that others would 
subscribe to. Any plan will be the product of numerous compromises and 
the give and take of a normal political process. All that is going to 
take place once the requirement is established.
  To those who do not support the resolution before us, the question 
is: What would you do? How would you get there? Are you content with 
the current situation where the annual deficits exceed $200 billion, 
and in the foreseeable future going up greater than that? Ten years 
from now, it will be $451 billion, as I said. Do people believe we can 
put this problem off for another day; that somehow it is going to get 
easier? Do you believe we are improving our children's future by 
dropping this massive debt in their laps? Every previous effort to 
balance the budget without an amendment to the Constitution has been a 
failure, as I mentioned. Why has that been the case? The answer is 
simple. Once the targets become too difficult to meet, Congress changes 
the law or budgets.
  This resolution makes it difficult for us to avoid our 
responsibilities. The task is monumental, but the consequences for our 
failure are far worse. If this amendment is defeated, the ones who will 
be hurt the most are future generations of this country.
  So for our children's and our grandchildren's sake, and for those of 
future generations, I fervently hope that this balanced budget 
amendment is approved here, and approved in the States likewise.
  I thank the Chair.
  Mr. BURNS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BURNS. Mr. President, I rise today in strong support of the 
balanced budget amendment to the Constitution. I do not think I have 
seen a time in my life when we have approached a crossroads where the 
decision could be clearer, especially when we have people all over this 
country at all levels of government--from the county level, the city 
level, the State level--reassessing the primary role of government. 
What is the mission of government? What is the mission of a city 
government, of a county government, or of the government that most of--
and, of course, the legislatures that are in session across our Nation 
today
 reassessing the role and what their missions really are? And, yes, we 
are going through that here in this town, the role of the Federal 
Government. There will be some who will simplify things and say that 
the role of the Federal Government is simply to deliver my mail and 
protect my shores. Other than that, that is about as much as I need out 
of Washington, DC. But we know it goes a little further than that. 
Anybody that has any degree of responsibility understands there is more 
to it than that. Nonetheless, the elections of November 8, as bad as 
someone would like to admit, did tell us to sit down and rethink just 
exactly what the role and mission of the Federal Government really are.

  I can honestly say that this issue has really been talked about and 
studied for the last 4 weeks, completely aired on all ramifications of 
it, and that is the way the Senate is supposed to work. I could not 
agree more with my friend from West Virginia, who probably has the 
strongest sense of the duty and the responsibility of this body. I 
think we on this side of the aisle have approached it the same way. 
There has been no real serious move to cut off debate, as we want to 
hear all sides of this story, because we are talking about a subject 
that has very serious ramifications from this town, to the White House, 
to the courthouse. But we must take stock, and it is what I believe 
would put America back onto the road of steady economic growth and 
stability.
  After years of talking about balancing the budget, instead of just 
tinkering around the edges of the deficit, it is time now to take 
action. It will impose a discipline on the budget process, and it will 
impose a discipline on this Congress. Past efforts to balance the 
budget have just been able just maybe, at times, to put dents in the 
deficit, but no dent at all in the national debt that keeps climbing. 
We hear two words being interchanged a lot in our news accounts--debt 
and deficit. They say, if you cut the deficit, you are cutting the 
debt. Well, basically you are only cutting the degree to which debt is 
accumulated. We deficit spend and we create or accumulate debt.
  So this will put more than a dent in it, we hope. This measure would 
actually put some teeth into the efforts to balance the budget. In 
other words, we might turn the old saying around and say the bite will 
be worse than the bark. So on this issue the bottom line is one of 
responsibility--responsibility to every citizen in our country and 
future generations and to economic prosperity. It is time that Congress 
lives up to its future obligations and, of course, take responsibility 
for our actions. We have to ask the American people to help us. This is 
a crisis. It is as much a crisis to our economic freedom as it is if we 
were in war and our political freedoms were at stake.
  I am being told by the citizens of Montana, yes, we are willing to 
fight this with you. We cannot do it alone here in this body or in the 
other body, the House of Representatives, or in this Government, unless 
we get support and cooperation from every citizen across this great 
land. They understand what is at stake. They understand that it takes 
sacrifice. They understand in their daily dealings with everybody else 
in the business world, or the paternal world, that they have some 
obligation to their communities, their churches, their schools, and 
their 
[[Page S3194]] friends, and they are willing to go down the road 
shoulder to shoulder and help us get this done. It is obligations, and 
not only ours here, but also for every man, woman, and child that lives 
in this great country. We have been living on the credit card for quite 
a while. Now is the time to put away those credit cards, get serious 
about paying off the overdue account, the incessant spending; and 
borrowing, of course, must cease. The debt of more than $4.7 trillion 
is going to continue to climb, unless we get America's help--help to 
keep this Government from this business of spend and borrow, spend and 
borrow.
  There have been a couple of packages that have come up that had tax 
hikes in them in the last 5 years that I can remember. I voted against 
each one of those because not only inside that was taxes, new taxes 
imposed on this country in one way or the other; some called it user 
fees, and some were called something else. Nonetheless, it was an 
increase in taxes because there was no cutting on the other side.
  I have heard a lot of folks stand on this floor and be critical of 
the Reagan years when we, yes, cut taxes, but we did not stop our 
spending. There is enough blame in that to go around for everybody. I 
was not here then.
  So we will break the cycle of continued deficit spending at the risk 
of our long-term economic security. We cannot and must not ruin our 
health now for short-term gains. So the reckless spending must come 
first and be put under control. For as long as I have been here, I have 
been concerned with spending. It is difficult to challenge the balance 
of the needs of our country with revenues we do not have without 
resorting sometimes to more taxes or higher debt. We had an obligation 
and we had to fulfill that obligation. Now we must find a way to 
balance obligation with responsibility.
  We have heard the arguments here against the balanced budget 
amendment. The arguments show more than anything else how this is not a 
gimmick. There are those we have heard say this is a political gimmick 
and that we are posturing with the American people. But I tell the 
American people that nothing could be further from the truth. Forty-
seven other States, including my State of Montana, already maintain a 
balanced budget. I was a Yellowstone County commissioner, the largest 
county in Montana. We were forced to live within that budget. We had a 
special initiative called 105 that we could not raise property taxes in 
order to provide the needs and services in a county called I-105.
  We dealt with that. We also had, in the middle of the 1980's, a 
declining tax base. Agricultural land went in the tank. We maintained 
that. We were forced to balance the budget, so we made some of those 
very, very, very tough decisions.
  And those people who were in charge of the different departments in 
the county came in and said, ``OK, we can do it with this, if there are 
promises for later.'' But we could not promise anything later, so we 
lived within that budget.
  I tried to keep my own family on a budget and every time we got off 
of it, we paid for it. We paid for it every time.
  So it is time the Federal Government becomes an institution which has 
to take care of its checkbook, too. The challenge lies with all of us. 
The challenge is the spending priorities for our Nation. It will force 
us to set priorities to see what this mission is all about, this goal 
or role of Government.
  The Federal Government consumes 23 percent of the GDP now. The 
current projected growth rate of spending at 2 percent a year is a lot 
faster, 2 percent faster, than our economy. So what do you do? You pull 
up your belt and the reins at the same time.
  If seems funny to me that we are reluctant to set priorities. What is 
really important to us as a community? Would it surprise you that there 
are actually organizations that are not Government organizations that 
are willing to assume the responsibility of taking care of those things 
that add to the quality of life of our own neighborhoods and much our 
own communities? Would it surprise you that service clubs and many 
organizations and our churches and how many fraternal organizations are 
willing to take on a little bit of responsibility for the quality of 
life of all the citizens that live in that community? They are not 
asking the Government for anything. They say, ``Just stand back. Let us 
take care of ourselves.''
  You know, we used to do that. We used to build great homes. We used 
to build facilities to take care of our own, so to speak. What happened 
to that? Did Big Brother step in and say, ``We can do it better,'' and 
so they loosened the ties that we had in our communities?
  They worked pretty good for a long time; built a great and free 
nation. No other nation is as free economically, politically, or even 
in private rights as this country is. No other country can feed and 
clothe itself as well as this country can. No other country has a food 
production and processing and distribution system like this country 
has.
  Government did not build it. Americans built it, because of not only 
a sense of duty but also a sense of feeding and clothing ourselves in 
this great society.
  So there is plenty of room to cut in the $1.6 trillion budget. I am 
sure that we can cut out a little waste and look at the priorities that 
we are going to have to set in order to keep this society on an even 
keel.
  Balancing the budget is going to take some hard decisions, some 
political, very distasteful decisions, but the reward will be a 
balanced budget and a more prosperous America. And the real growth of 
America will start at the grassroots.
  It may surprise more of our friends that the new wealth created by 
any society, the new wealth starts with the soil. It is renewable. It 
comes every year. And, God willing, it will feed and clothe us forever. 
As we look at that, then we must get our house in order here.
  So I beg my colleagues, I implore them, to pass this balanced budget 
amendment. There will not be a more important vote that you will cast 
for responsibility--and, yes, an obligation to the American people--
than this vote you will cast this week on the balanced budget 
amendment.
  I want to congratulate my friend from Illinois, Paul Simon, who is on 
the floor, for the work he has done with this. His roots are in 
southern Illinois, where traditions of communities and families go 
deep, a great sense and a great tide of the land, middle America, that 
understands what communities are all about. They know it takes money to 
provide Government services. They also know it takes responsibility and 
a little bit of reality to make it work here in America.
  This is an important vote. It is an important vote for all of us who 
call ourselves Americans.
  I know that there are those who would make the argument that we are 
tinkering around with the Constitution. But I think it was even 
Jefferson who feared the day when we could learn to borrow money 
against future collections on taxes.
  Even George Washington--and the other day, Senator Craig Thomas, of 
Wyoming, read George Washington's Farewell Address; and I had the great 
privilege of reading that myself--one of his fears was public debt.
  But Jefferson went on to say that this Constitution every now and 
again needs to reflect the needs of the time, to be changed to deal 
with the needs or the emergencies of the time. So those who would fear 
change, I do not think this change is not unwarranted.
  A vote ``yes'' on this amendment would do much to restore the 
accountability and responsibility of this Congress in the eyes of all 
citizens in this country.
  Thank you, Mr. President.
  I yield the floor.
  Mr. ABRAHAM addressed the Chair.
  The PRESIDING OFFICER (Mr. Ashcroft). The Senator from Michigan.
  Mr. ABRAHAM. Thank you, Mr. President.
  I rise today, once again, one final time, in strong support of the 
balanced budget amendment to the Constitution and to urge my colleagues 
to support this amendment.
  Last November the American people sent a clear signal to Washington. 
They made clear that they are tired of business as usual. They made 
clear that they no longer will accept, or re-elect, representatives who 
do not take 
[[Page S3195]] their responsibilities seriously. They made clear that 
we must put our financial house in order.
  Only when we have re-established order can we again represent the 
people's interests as we should. Only when we have re-established the 
discipline necessary to make hard choices can we begin again to 
recognize what is important and what is not so important.
  Only when we begin to balance our own budgets--to sit down and decide 
how much of the people's money we can afford to spend--will we again 
have fully earned their trust.
  The simple fact is that we are spending more than we should as a 
government. We are spending the people's money on things the people do 
not need, or that the people of a free country can more safely and 
efficiently provide for themselves.
  The people demanded a more efficient government this past November. 
They also demanded a smaller Government. One that is more careful in 
how it spends their money and more careful not to interfere unduly with 
their lives.
  We have a bloated, inefficient Government because for decades 
Congress has not felt the need to sit down and decide what it has a 
right to spend the people's money on, and what we must, as a 
government, do without.
  You see, those who oppose the balance budget amendment, or complain 
that it will cause too much pain, ignore the pain our current 
irresponsible deficit spending already causes. Our spiraling debt 
inflates interest rates, it causes economic dislocation--and higher 
taxes on the American people. Worse, it leaves our children and 
grandchildren a legacy of debt.
  After all, every year we must pay hundreds of billions of dollars to 
retire old debt, even as we add new debt. Our current irresponsible 
spending causes economic pain; pain which will only get worse if we 
allow it to continue.
  This amendment will not suddenly eliminate Federal spending. It will 
not even suddenly eliminate deficit spending. Until the year 2002 we 
will continue to spend more than we take in--only at a less horrifying 
pace. But this amendment will reintroduce discipline to the budgeting 
process and help us get a grip, once again, on our spending priorities.
  It will force those of us in this Chamber to actually sit down and 
decide what our priorities ought to be. Instead of spending money on 
everything, we will, for a change, debate which programs we should, and 
should not, fund at the taxpayers' expense.
  The amendment will help reduce the size of Government by severely 
limiting the option to borrow money. Currently, when faced with demands 
for more spending, the Congress makes the easy choice to borrow money. 
Under the balanced budget amendment, Congress will be forced to make 
the tough choices.
  In this way, unless we are in the midst of a crisis severe enough to 
produce a supermajority in favor of deficit spending, Congress will be 
forced to control its appetite for spending, or select the even less 
desirable alternative of raising taxes.
  No longer will we be able to borrow against our childrens' future. No 
longer will we be able to continue increasing the size of Government, 
oblivious to its costs to our pocketbooks and our liberties. No longer 
will Government be able to duck responsibility for the way it spends 
the people's money.
  Mr. President, I remember well what the folks in Michigan told me 
when I was campaigning for the Senate a few months back. From Detroit 
to the Upper Peninsula, from Grand Rapids to Saginaw, Michiganders all 
expressed the same confusion about the way Congress does business. They 
could not understand why Congress could not operate the way they did in 
their families or the way businesses did in trying to meet a bottom 
line.
  The people did not ask for a fancier bookkeeping method that will 
make it look as if the budget is balanced when it really is not. They 
did not ask for a balanced budget except for this or that program. A 
balanced budget means just that. If you put spending programs off 
budget you are simply fooling yourself and the American people.
  But the people were not asking that we budget exactly as if we were a 
family. The big difference between Congress and a family is that a 
family is spending its own money. Congress, on the other hand, is 
spending money entrusted to it by the people.
  If a family decides to buy a home it will go into debt as it invests 
for the future. But the Government is not a family. Government is the 
servant of families. It is our duty to spend no more of families' hard-
earned money than we need to.
  And massive public spending projects all too often are boondoggles 
rather than good investments for America's families.
  In fact, it seems to me we should not even need to debate the need 
for a balanced budget amendment because over the last 25 years Congress 
has proved that it is incapable of managing effectively the Nation's 
pursestrings.
  And President Clinton's latest budget makes clear that he has no 
intention of doing anything to fight the deficit in the years ahead. 
According to his own budget projections, Federal spending will grow 
from $1.5 trillion in 1995 to over $1.9 trillion at the turn of the 
century.
  Deficits will remain near $200 billion in every year through the year 
2000. That means that between now and the end of the century we will 
add well over $1 trillion to the deficit.
  I think that the choice is clear. Either we continue spending 
trillions of dollars we do not have, or we get our financial house in 
order. Either we give up on the idea of getting our spending under 
control, or we pass a balanced budget amendment. Either we do the job 
we were sent here to do, or we continue to spend our childrens' and 
grandchildrens' money and leave them to foot the bill.
  Now, some of my colleagues have said that they like the idea of a 
balanced budget--but they fear one or another horrible unintended 
consequence of this amendment. From judicial budget writing to 
Presidential impoundment, some Senators fear there are dangers lurking 
in this amendment, dangers to our status as an institution and to the 
Republic itself.
  Mr. President, we must not shrink before these phantom dangers. This 
amendment is a model of clear, concise drafting. It does a single 
thing, and does it well. It says that Congress now must balance its 
budgets the same way families and businesses do--by spending no more 
than it takes in.
  I will not restate all the arguments again here. But it is clear to 
me that this simple, policy-centered amendment will provide the 
discipline we in this institution need to rethink our priorities and 
get spending under control--and nothing else.
  We should concern ourselves less with phantoms and more with our 
responsibilities to our Nation and to our families.
  Mr. President: My family is important to me. I work in large part so 
that I can pass on something to them. I hope I can pass on a little 
wisdom. I want to make sure I pass on some decent habits of hard work 
and honesty. And I also want to pass on as much economic opportunity 
and security to them as I can.
  Trillions of dollars in debt is not my idea of a good inheritance to 
leave to my kids. Neither is a government that has gotten out of 
control, that spends money with little idea of what is important, that 
has no discipline in its budgeting procedures, that interferes with the 
daily lives of its citizens simply because to do so is cost-free.
  Let Members protect our children from debt and from irresponsible 
government. Let Members limit government and expand freedom. Let 
Members pass the balanced budget amendment.
  I yield the floor.
  Mr. SIMON. Mr. President, I probably agree with the editors in the 
New York Times 90 percent of the time. Today they have an editorial on 
``Unbalanced Amendment,'' which shows an emotional attachment to a 
position that I do not think is very rational. I ask unanimous consent 
that their editorial, be printed in the Record at this point.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                          Unbalanced Amendment

       Tomorrow's vote in the Senate on the balanced-budget 
     amendment is crucial for the Republican agenda to chop 
     Government programs into bits. The outcome is also crucial 
     [[Page S3196]] to the nation because the pernicious amendment 
     would do enormous fiscal damage. Proponents are alarmingly 
     within three votes of winning.
       The core of the amendment would require the Government to 
     balance its books unless three-fifths of the House and Senate 
     vote to run a deficit. To the wavering Democrats--John Breaux 
     of Louisiana, Sam Nunn of Georgia, Wendell Ford of Kentucky, 
     and Kent Conrad and Byron Dorgan of North Dakota--here are 
     five unassailable reasons to vote no.
       Unnecessary.--Federal deficits have indeed been too high. 
     That poses a threat that borrowing will siphon savings away 
     from productive private investments.
       But the fact that borrowing must be contained does not 
     imply it ought to be eliminated--any more than family 
     borrowing, to buy a house or pay college tuition, need be 
     eliminated. A prudent rule would keep Federal debt growing 
     less quickly than incomes. This rule would justify deficits 
     of about $200 billion a year, close to current levels.
       Misleading.--Proponents claim the amendment would protect 
     future generations against ruinous interest payments. True, 
     today's children will owe taxes when they grow up to pay 
     interest on Federal debt. But proponents ignore the fact that 
     the tax payments will flow right back to these children as 
     owners of Government bonds.
       Unenforceable.--Because key terms of the amendment--like 
     outlays and receipts--are undefined, Congress will be able to 
     manipulate and evade. Can Congress create independent 
     agencies or find other ways to spend and borrow off the 
     Government books? A Senate committee has already written into 
     the legislative record, used to guide future court decisions, 
     that the Tennessee Valley Authority would be exempt from the 
     amendment. It should take lawyers five minutes to stretch 
     whatever ``principle'' guides that exception to scores of 
     other Government programs.
       The amendment also fails to provide an enforcement 
     mechanism. It might simply become an empty gesture or, worse 
     yet, the courts might step in to tell Congress how much it 
     should tax and where it should spend.
       Irrational.--Federal bookkeeping lumps ordinary spending 
     with long-term public investments. Congress, forced by the 
     amendment to cut quickly, would go after hugely expensive, 
     though vitally important, investments, such as scientific 
     research, costly laboratories and equipment, job training or 
     other investments that would not produce benefits for years, 
     if not decades.
       Reckless.--When the economy slows, tax revenues fall off 
     and spending on unemployment insurance and food stamps rises. 
     This automatic rise in the deficit, by triggering spending, 
     serves to mitigate the slowdown. But under the proposed 
     amendment, Congress could easily turn a mild downturn into 
     something worse. Unless a three-fifths supermajority saves 
     the day, Congress would have to raise taxes and cut spending 
     in a slow economy--the opposite of responsible stewardship.
       Take another unintended consequence. When savings and loans 
     went bankrupt during the 1980's, the Federal Government 
     bailed out depositors with borrowed money, thereby preventing 
     a banking panic. But under the proposed amendment, the 
     Government could not react instantly unless a supermajority 
     in Congress approved.
       The balanced-budget amendment appeals to taxpayers who 
     demand that the Government spend their money wisely. But 
     Senators Nunn, Ford, Conrad, Dorgan and Breaux need to 
     recognize that this honorable sentiment cannot be wisely 
     embedded into the Constitution.

  Mr. SIMON. Mr. President, I would like to comment on the editorial.
  First, they say it is unnecessary. Federal deficits have indeed been 
too high. That poses a threat that borrowing will siphon savings away 
from productive private investments.
  Clearly, that has happened already. The Federal Reserve Bank of New 
York said between 1978 and 1988 the deficit cost 5 percent growth in 
our national income.

       But the fact that borrowing must be contained does not 
     imply it ought to be eliminated--any more than family 
     borrowing, to buy a house or pay tuition need be eliminated.

  I will get into that because that is stressed later.

       A prudent rule would keep Federal debt growing less quickly 
     than incomes. This rule would justify deficits of about $200 
     billion a year, close to current levels.

  That is what the GAO calls stumbling along at the present level. But, 
in fact, the CBO forecast is that those deficits are going to escalate, 
and escalate significantly. We have shown we do not have the political 
will to do anything about it.
  That is the simple reality. In 1986, this House, by one vote, failed 
to pass the balanced budget amendment. Then the debt was $2 trillion. 
Now it is $4.8 trillion and we are hearing the same arguments again, 
that we can do this without a balanced budget amendment.
  Second, they say the amendment is misleading.

       Proponents claim the amendment would protect future 
     generations against ruinous interest payments. True, today's 
     children will owe taxes when they grow up to pay interest on 
     Federal debt. But proponents ignore the fact that the tax 
     payments will flow right back to these children as owners of 
     Government bonds.

  I would make three points here. One is, Thomas Jefferson said one 
generation should no more be willing to accept the debts of a previous 
generation than the debts of another country. Thomas Jefferson was 
right. Second, this argument that this interest just flows back into 
our own hands ignores the reality that we have somewhere between $650 
and $800 billion owned by other countries, people in other countries. 
In fact, foreign aid to the wealthy of other countries is at least 
double the foreign economic assistance we give to poor people. And that 
foreign economic assistance to the wealthy is through our indebtedness. 
Third, this editorial ignores the redistribution effect of the 
interest.
  Who pays the interest in our country? By and large, people of limited 
means. Who collects the interest? Those who have enough means to own 
the T-bills. That is not the average citizen.
  That is redistributing money to those who are more fortunate. It is 
interesting, of the $339 billion we are estimated to pay for interest 
this year, that is roughly twice what we will spend on our poverty 
programs,
 11 times what we will spend on education, and 22 times what we spend 
on foreign economic assistance.

  Then they say it is unenforceable. If it were unenforceable, my good 
friend--and he is my friend--Senator Byrd, would not be fighting this 
amendment like he is. Of course, it is enforceable. They say the 
amendment fails to provide an enforcement mechanism. When you require a 
three-fifths vote for the increase of the debt, you have a very 
powerful enforcement mechanism.
  They say it is irrational, Federal bookkeeping lumping ordinary 
spending with long-term public investments, a point they made earlier. 
The reality is, while a family has to borrow for a home or a college 
education, the Federal Government does not, and frankly, even a State 
the size of Illinois does not have to. I served in the State 
legislature for 14 years and served 4 years as Lieutenant Governor. A 
State the size of Missouri--and I do not mean this disrespectfully of 
the State of the Presiding Officer--is in a little different situation 
than a large State. But in the State of Illinois, frankly, we do not 
need to do it and the Federal Government does not need to do it.
  It is interesting that the long-term investment has gone down as the 
deficit has gone up. In fact, the argument is just the reverse, and I 
would point out also--and I mentioned this on the floor several times, 
and the Presiding Officer has heard me mention this, I am sure--when 
President Eisenhower, to his great credit, proposed the Interstate 
Highway System, the largest single capital project in the history of 
humanity, he suggested issuing bonds. Senator Albert Gore, Sr., the 
father of our present Vice President said, ``Let's not issue bonds. 
Let's increase the gasoline tax and do it on a pay-as-you-go basis.'' 
Fortunately, he prevailed.
  As of a year and a half ago, the estimate was we had saved $750 
billion in interest.
  Then they say it is reckless; when the economy slows, tax revenues 
fall off and spending on unemployment insurance and food stamps rise. 
This automatic rise in the deficit by triggering spending serves to 
mitigate the slowdown. Study after study, including the unanimous 
report of the Joint Economic Committee of Congress, then chaired by 
Senator Lloyd Bentsen, said we respond too slowly in emergencies. And 
because of the deficit, we have simply been unable to respond.
  When President Clinton suggested that we spend $15 billion on a jobs 
program to stimulate the economy, and $15 billion is not much in a $6 
trillion economy, we were not able to get $15 billion passed. I voted 
for it, but we could not do it.
  Former Assistant Secretary of the Treasury Fred Bergsten, who served 
under Jimmy Carter, said that if we would plan for a 2-percent surplus 
and 
[[Page S3197]] then we could have a triggering mechanism so the 
President could respond when unemployment passed a certain level in any 
region, then we could respond quickly. We can respond just as quickly 
and more quickly with a constitutional amendment.
  Finally, let me make three other points. One is the New York Times 
editorials have consistently ignored economic history, and I have to 
say the Washington Post editorials have done the same. They just act as 
though we are dealing by ourselves with an absolutely new initiative 
and no other nation has ever gone through this debt before.
  The reality of the history of nations is that they pile up debts and 
pile up debts and then they become so bad they start monetizing the 
debt; they start printing money. And we are headed to do the same 
thing. Nations have done that historically when they get around 9, 10, 
11 percent, except in a wartime situation where there is a freeze on 
private and public spending.
  We are heading, according to CBO, to 18 percent. We can take a chance 
that we will be the first Nation in history to be able to do that 
without monetizing the debt. But what a chance for the future of these 
pages and my children and my grandchildren. We should not be doing it.
  Second, it ignores the reality that the General Accounting Office and 
CBO and Data Resources, Inc. and everyone says if we balance the 
budget, we will improve the standard of living of our country. GAO says 
balance the budget and in two decades you will have an increase in the 
standard of living of approximately 36 percent. That type of economic 
information is totally ignored by this New York Times editorial.
  And finally, not so much in this editorial but in others, and all the 
horror stories that have been spread around here about what is going to 
happen to social spending, what is going to happen to this or what is 
going to happen to that, how do we get there? There are two options.
  One is if you do not make any changes in Social Security and if 
interest rates do not go down, and every projection is that they will 
go down but you would have some savings on interest because you would 
not have as much of a large deficit, we would have to limit non-Social-
Security spending growth to 1.7 percent between now and the year 2002. 
That is doable.
  Let me put it another way. Revenue in the year 2002 will be 
approximately $300 billion greater than what we will spend this year. 
What we have to do between now and the year 2002 is to control the 
growth of spending so it does not exceed that amount. That is doable.
  Is it going to cause a little pain? Of course, it will. If there were 
not pain, why, we could pass a balanced budget; we would have done it a 
long time ago. We need the discipline of something to force us to do 
the right thing. So my hope is that tomorrow we will do the right 
thing. This is my 21st year in Congress. This is the most important 
vote I will have cast in those 21 years. We are talking about the 
future of our country.
  We make a lot of short-term decisions because of one thing or 
another, and I am as guilty of that as anyone. Here is one where we 
ought to ask ourselves not which party is going to benefit, not what it 
is going to do to each of us politically--and I realize it is easy for 
me since I am not going to be running for reelection--we ought to be 
asking what is going to happen to the future of our country. I think if 
we ask that question and dig, the answer is fairly obvious.
  Mr. GLENN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Ohio.
  Mr. GLENN. Mr. President, the real question here has been brought out 
repeatedly in this debate. What we have heard over and over and over 
again is that we need the balanced budget amendment because we need 
something to force us to act responsibly; we need something to give us 
political courage; we need something that says, ``I am going to put a 
gun to my head and I'm going to say I'll shoot if you don't prevent me 
from spending again.''
  We need the discipline. We have heard that word over and over. And we 
have heard repeatedly, both here and over in the House, the term 
``political will.'' They say this forces us to have the ``political 
will.''
  Well, Mr. President, I do not believe that anyone worthy of being a 
U.S. Senator needs such legislation to gain political will--if they are 
doing their job properly. We are capable of spelling out just what 
steps we need to take, and our knees will not buckle when we know the 
truth, as was stated by one of the Members of the House. How do I know 
that? Because just 2 short years ago, the Congress voted for the 
largest deficit reduction package in history. Why so many people refuse 
to remember that, I do not know.
  With passage of that single bill, the budget deficit was cut by over 
$500 billion. And, I must add, we had to do it without a single 
Republican vote in either the House or the Senate. In fact, the Vice 
President had to break the tie in the Senate.
  President Clinton said 2 years ago, in both public and private 
conversations, that the most important thing is health of the economy.
  His campaign commitment on deficit reduction was not just election 
year rhetoric. In the first year of his Presidency, he presented a 
clear agenda for deficit reduction. He offered us real specifics, not a 
lot of rhetoric but real specifics--a program that combined both 
spending cuts and new taxes. He had the guts to do that.
  Mr. President, how did we do that? The President made his proposals. 
The Democratic Congress responded, and said OK, we will take on your 
deficit reduction agenda. We know it is going to mean tough votes, but 
we are going to do this.
  So it came up here to the Hill, and we farmed it out to various 
committees, and the committees were given assignments, so much of a cut 
per committee. And those were tough cuts and tough votes--tough, tough 
votes. And they were brought back here to the floor where we voted them 
out of the Senate. They went to conference with the House, and the 
conference package came back. And we voted it out--a tough vote as 
reflected by the fact some Members of the Senate were probably not 
reelected because of their vote on this package.
  I do not know why--with the deficit reduction record we've achieved 
over the past couple of years--the Republicans do not do the same thing 
right now. Instead of talking about grand ideals--be specific. Do not 
say trust us and we will tell you later how we are going to do this. 
That is not how we did it during that reconciliation vote in August 
1993, less than 2 years ago. We stood up and made the hard choices at 
that time, and that is what we should do in dealing with the deficit. 
That was a tough package in the Senate and in the House. In fact, it 
came up to a 50-50 tie, one of the more dramatic moments in recent 
years in the Senate, and the Vice President had to break the tie during 
the vote in the Senate.
  Now, that bill became law despite the lack of bipartisan support, and 
we are now seeing our third year of declining deficits. Why do people 
ignore that? When that bill was passed, our deficits were going up and 
they were estimated to be close to $300 billion a year. The next year 
they went down to $250 billion. They are estimated to be around $190 
billion a year now. But the proponents of this bill make a lot out of 
the fact that the President said, well, we are going to have deficits 
of $200 billion a year from here out into the near future.
  I do not like that either, but I can tell you what we ought to be 
concentrating on. Instead of a balanced budget amendment with all of 
its disadvantages, we should be concentrating on how to continue this 
trend of deficit reduction. For the first time since Harry Truman, we 
have seen consecutive years of deficit reduction.
  The President deserves a lot of credit for that, and the Democratic 
Congress deserves a lot of credit for that because we are the ones who 
put it through. I think we should be taking great pride in that.
  We do not need a balanced budget amendment to give us guts. Political 
courage should not stop at the middle aisle in this Chamber. It should 
be all across this Chamber. We demonstrated less than 2 years ago that 
that is the way to cut the deficit; not by some legislation that is 
supposed to instill a false sense of courage or a political will that 
we would lack otherwise. This new 
[[Page S3198]] sense of courage is supposed to come from the fact that 
we will blame hard choices on the balanced budget amendment.
  We do not have to say that we lack responsibility or political will. 
We can do it. We know we can do it because the Democrats in this Senate 
did it before. And we can be very, very proud of that.
  Mr. President, when we have asked for specifics during this lengthy 
debate on whether taxes would be raised or on what would be cut, we 
have been stonewalled on the other side and amendment after amendment 
after amendment has been voted down to show that they mean business 
over there. They are not going to tell us how we will go about cutting 
programs or what will be threatened. They just want the balanced budget 
amendment to hide behind.
  Now, what if I would say to those watching at home, your Social 
Security is going to be cut.
  Oh, no, no, no, the proponents of the amendment say, we plan to take 
that off the table. That is going to be off budget.
  Well, if that is the case, then your Medicare is going to be cut. Oh, 
no, no, no, they say, that is not going to be cut. We are going to 
leave that off budget over here some place. Well, we know that national 
defense needs to be continued. It is not going to be cut substantially. 
In fact, the proposal is to increase national defense just a little 
bit, and I go along with that.
  Now, if you take Social Security, you take Medicare, and you take 
defense off, what does that result in? I can tell you, if you are going 
to put a balanced budget amendment in, it means that every other 
function in the budget has to be cut by well over 30 percent-- every 
other function: AIDS research, cancer research, you name it.
  Oh, well, we would not cut those. That means something else then is 
going to get cut double so you can keep up with AIDS research and 
cancer research and the other programs we would like to keep.
  Now, what if we included a couple of the other things I think would 
probably not be voted out here. Take tax cuts. Those are going to be 
put in. Take veterans programs, veterans retirement off, civilian 
retirement for civil service people who have retired. If you just add 
those things to it, do you know what we come up with?
  We come up with the fact that every other function in the Federal 
Government would have to be cut by over 50 percent--every other 
function of Government--including health and safety matters--every 
other function of Government. And yet we are supposed to vote for this 
and say we are going to put a gun to our heads and say we are going to 
force ourselves into this straitjacket so we will have this balanced 
budget amendment to hide behind when we start cutting such programs.
  Mr. President, I disagree with this approach. We need to be honest. 
If certain programs are going to be on the table, the American people 
need to know they will not be sacrosanct.
  But some people who say we would not dare cut Social Security would--
these same Senators--would not vote to exempt Social Security from the 
balanced budget amendment here on the Senate floor just last week. They 
would not vote to set Social Security aside. No, it is still on the 
table. So believe me, whether they like to say so or not, your Social 
Security benefits are in danger because everything is still in play. 
Everything is still in play. And to the States that are so concerned 
about unfunded mandates out there, wait until you look at that billions 
of dollars you are receiving every year for environmental concerns--
just for environmental concerns such as clean air and clean water.
  What happens to that? You can bet that is going to get cut back, and 
so all the Governors who have been here so concerned about this--and 
some of them supporting a balanced budget amendment--better look to 
what is going to happen to their Federal funding once something like 
this goes through.
  Mr. President, I believe we have had a good debate here in the Senate 
on the balanced budget amendment. We did not push it through for the 
sake of press releases and false deadlines. We did not set ourselves so 
many days and say we have to do this or else, because we take 
amendments to the Constitution very seriously in the Senate--very, very 
seriously indeed.
  I believe that the debate in the Senate has served to unearth some 
other very serious flaws with the balanced budget amendment. I wish to 
spell out what some of these other problems are besides the ones I have 
already mentioned--and to explain why I believe they make this balanced 
budget amendment unacceptable.
  Mr. President, as I stated earlier, the first step should have been 
to map out a plan to reach a balanced budget. That is why I supported 
the so-called right-to-know-amendment offered by the distinguished 
Democratic leader, Senator Daschle. We are now hearing there will be 
plans announced at a later date to balance the budget by the year 2002.
  Mr. President, when I talk to people back home in Ohio and when I 
visit back home in Ohio, people throughout Ohio feel they have a right 
to know up front how their lives are going to be affected, how their 
Social Security will be affected, how their Medicare will be affected, 
how their retirement will be affected, how their children will be 
affected.
 They want to know up front how we intend to achieve a balanced budget.

  Mr. President, while we debate the balanced budget amendment, we are 
seeing more headlines about tax cuts than about deficit reduction. Many 
of the proponents of the amendment, who should be laying out deficit-
reduction proposals, are busy preparing tax-cut plans. Does that sound 
familiar? It reminds me of the very strategy that added more than $3.5 
trillion to our national debt. Then, like today, there was a lot of 
talk about balancing the budget but almost no talk about how to get 
there. Instead we had feel-good budget plans. Cut taxes, smile, be 
happy--it is morning in America.
  What did we do back then? We cut taxes by one-fourth over a 3-year 
period of time, 5 percent the first year, 10 percent for each of the 
next 2 years. That was supposed to result in such economic growth we 
would not wind up losing money, we would wind up earning more in 
revenue because of the increased economic activity.
  It just did not work. That is what gave us the additional $3.8 
trillion in debt that occurred over the 12 years before the Clinton 
administration. I take some Democratic responsibility for some of that, 
and for this reason. Back during the Jimmy Carter years when he was 
President, remember, we had 21-percent interest rates and 17-percent 
inflation rates for a while. Everybody was scared. I was, too. I was 
afraid what money I had was in jeopardy during a situation like that. I 
think that lack of control of the national economy is one of the things 
that led to the election of President Ronald Reagan. Then he came in 
and made his big proposals for supply-side economics, and those went 
into effect, and we have seen the budget deficit going up--not only the 
budget deficit but the national debt going up ever since.
  If we do everything the proponents say they want to do, take defense, 
Social Security, and Medicare off the table, we are faced with a 
prospect, as I said earlier, of more than 30-percent cuts. Everything 
else in the Federal budget would have to have about by more than 30 
percent cut.
  And as I've said, we are not entirely sure if that will be the case 
because the same proponents of the amendment who say they feel Social 
Security should be off the table, voted against an amendment to exempt 
Social Security from the balanced budget amendment. They say the same 
about veterans benefits. They say they will not cut veterans programs. 
But then they turn around and vote down an amendment to exempt veterans 
programs. So nobody is exactly sure where they stand with this 
amendment. It is all speculation because no one is being told what will 
be cut, whether taxes will be raised or anything else, for that matter.
  I submit that my constituents in Ohio are the taxpayers and they have 
a right to know in advance what the impact is going to be on their 
lives if we put the balanced budget amendment into effect. We can spell 
out for the American people how we will reduce the budget. We do not 
need a balanced budget amendment. We on the Democratic side did that in 
the summer of 
[[Page S3199]] 1993. President Clinton made his proposals that led to 
deficit reduction of more than. We did it, and we did it without a 
single Republican vote from the other side of the aisle.
  So this idea that we do not have political courage, we do not have 
guts enough to make some of these hard decisions, fall on deaf ears, as 
far as I am concerned. We did it and we can do it again. What I would 
like to see, instead of these $200 billion deficits continuing as 
projected, is for us to come up with real proposals for continued 
reductions. What we should be doing instead of debating a balanced 
budget amendment, is try to decide how we will keep that reduction 
going.
  I want to see us achieve a balanced budget by the year 2002. I think 
we should start moving in that direction immediately--start working on 
it right now. I intend to support an amendment offered by my 
distinguished colleague from Arkansas, Senator Bumpers, which will 
require that our congressional budget resolutions from here on map out 
specifically how to reach a balanced budget by the year 2000.
  Do we have courage enough to do that? I hope we do. Real political 
courage is a true alternative to the balanced budget amendment. The 
problem with the balanced budget amendment is that it brings with it so 
many unintended consequences. First, it threatens the separation of 
powers, so carefully laid out in the Constitution. According to former 
solicitor and Federal Judge Robert Bork, the balanced budget amendment, 
and I quote him, ``Would likely result in hundreds if not thousands of 
lawsuits around the country, many of them on inconsistent theories, and 
providing inconsistent results.''
  In fact, the judicial consequences of the proposed amendment have 
brought together an unexpected alliance of legal scholars who oppose 
the amendment. Conservatives such as Bork and Robert Fried and liberals 
such as Archibald Cox and Laurence Tribe all think it is a serious 
mistake.
  I fear activist Federal judges, trying to enforce the balanced budget 
amendment, would place themselves in the role of elected officials. 
These judges, appointed for life and insulated from the people, could 
usurp the power to tax and spend from elected officials. I believe our 
Founding Fathers, who fought a revolution against taxation without 
representation, would be shocked at that potential prospect. If the 
judiciary had a case before them and said, OK the Congress has not 
balanced this budget as the Constitution requires, what shall we do? 
Would they then say we will just cut certain programs? Or will they say 
one of the options is to tax? They might give the remedy. No one says 
they cannot do that. How do we deal with that? Some say the Missouri 
versus Jenkins precedent which opened up such a possibility should not 
be read in this way. Some state the courts have grown less activist and 
less likely to enter this sphere.
  I remind my colleagues, the Constitution will last throughout future 
generations of Americans. The judiciary of the future may or may not be 
activist, and it will be interpreting evolving precedents that we 
cannot predict. That is why I have and will continue to support 
amendments to the balanced budget amendment to add predictability to 
the area of judicial review and ensure the balanced budget amendment 
will not simply become a full employment act for lawyers.
  I am also deeply concerned about the impact of the amendment during 
tough economic times. There has been a great deal of discussion on the 
floor about this topic by other Senators. In times of economic 
downturn, our economy would be placed on autopilot. The economic 
downturn would cause an unpredictable hemorrhage of revenues. Tax 
increases and massive spending cuts would be forced just at the time 
when a fragile economy could not sustain them. We could not do the 
countercyclical spending that has held us out of more depressions since 
those days of the Great Depression. And that is just what turned a 
recession into the Great Depression in the 1930's, that lack of ability 
to make countercyclical spending.
  The supermajority requirements of the amendment would have a minority 
of legislators, deciding the fate of all Americans during these times. 
This same minority would be deciding the fate of Ohioans--or people 
anyplace else in the country, for that matter--who are hit by natural 
disasters. Over the years, tornadoes and floods have ravaged different 
parts of the country, as well as my own State of Ohio. The Federal 
Government always came to our aid. With this amendment in place, 
legislators who have never been to Ohio nor visited other areas 
impacted by disasters, would suddenly have veto power over Government 
compassion. Tough luck, you are on your own.
  That is why I support an amendment offered by my friend from 
California, Senator Boxer, to provide flexibility in cases of natural 
disaster.
  Another area of very great concern to me also is that of national 
defense.
  The amendment has a military conflict waiver which is extremely 
important but it certainly does not go far enough. What happens if 
America faces a military threat, not a conflict? Will we be able to 
gear our forces up in time? If you look back over our military history 
at military spending, we have operated since the days of the Spanish-
American War on basically a 17-year cycle. It is really striking to 
look at the figures. Almost on an exact 17-year cycle we have seen 
buildup of 7 years, followed by a 10-year reduction in the military: 7-
year buildup, then a 10-year builddown. Military spending follows that 
persistent trend almost exactly--except for World War II, where the 
peak was displaced by about 4 years. But every 17 years, we seem to 
decide the world is safe and that we can cut back on our military 
budget. Then something always happens which makes us reconsider, and we 
begin building up again to prepare for whatever the new threat is; 
threats that we could not foresee, threats that we could not define 
when we made the cuts to begin with.
  Military preparedness is not something that just happens overnight 
when we suddenly see a new threat. Congress is charged in the 
Constitution with the awesome responsibility of providing for the 
common defense of all of our people. Yet today, we are debating an 
amendment to the Constitution which I fear may not allow Congress to 
live up to that responsibility. There are trouble spots throughout the 
world that could erupt at any time.
  What will our adversaries think if they know we have no ability to 
rise to the occasion? What about our allies? I know that many here in 
Congress signed the Contract With America. But we all took an oath to 
support and defend the Constitution of the United States. That 
certainly takes precedent over the Contract With America.
  Mr. President, I want us to achieve a balanced budget. We took an 
important step toward a balanced budget 2 years ago. We need to take 
the same sort of action in this Congress. I simply do not believe that 
this balanced budget amendment, as it currently is crafted, is a wise 
course to follow. We have had 3 consecutive years of deficit reduction. 
It went from about $300 billion, down to a little under $250 billion, 
down to about $190 billion right now. What we need to do is plan to 
continue that, not just going out with $200 billion into the indefinite 
future, as the President's budget has proposed.
  Mr. President, I come back again to where I started my remarks; that 
is, to ask: Why do we need this amendment to our Constitution? We are 
told by the other side that we need it for political courage, we need 
it for political will, we need it for discipline. We demonstrated 
political courage, political will, and discipline less than 2 years ago 
in this very Chamber when we voted a $500 billion budget deficit 
reduction package. That was a tough package. Putting it together 
involved many tough votes. We did it upfront in a responsible manner. 
We were honest. People knew exactly what we were voting on. We were 
accountable to the people we represent. We went home and explained why 
we voted the way we did. We did not hide behind some balanced budget 
amendment that gives cover for those hard votes.
  I think the way to go is to repeat what we did less than 2 years ago 
on this floor, and lay out a plan of how we will continue the deficit 
reduction program that President Clinton first presented, and we 
enacted into law. It has been effective; it has worked.
  Mr. President, I yield the floor.
  [[Page S3200]] Several Senators addressed the Chair.
  The PRESIDING OFFICER. The Senator from North Carolina.
  Mr. HELMS. I thank the Chair.
  It's is no exaggeration to suggest Mr. President, the Senate is about 
to make one of the most momentous decisions in the history of the 
Nation--on the question of whether to add a balanced budget amendment 
to the Constitution.
  On the eve of this significant vote, it is instructive to consider 
the counsel of our Founding Fathers on this matter. Thomas Jefferson 
said in 1816 that ``To preserve our independence, we must not let our 
rulers load us with perpetual debt. We must make our election between 
economy and liberty, or profusion and servitude.''
  Mr. Jefferson thereby laid out the choice before the Senate--liberty 
or servitude. Congress, having become enslaved to deficit spending, has 
refused for decades to stop the practice of spending money it does not 
have.
  How enormous is the Federal debt? For nearly 3 years, Mr. President, 
I have made a daily report to the Senate regarding the Federal debt--
down to the penny as of the close of business the preceding day. As of 
close of business this past Friday, February 24, the debt stood at 
$4,838,340,250,340.71. On a per capita basis, every man, woman, and 
child in America owes $18,366.42.
  The taxpayers had to fork over $203 billion in 1994 just to pay the 
interest on this massive debt, and that, on a per capita basis, amounts 
to $1,138.76 for every American man, woman, and child.
  One looks back in time to see where we stood.
  Mr. President, when I was sworn in as a Senator in January 1973, I 
was distressed that long ago, that Congress had been spending far more 
than it took in--year after year. Deficit spending had become a way of 
legislative life.
  So on July 19, 1973, I offered S. 2215, a bill to require a balanced 
budget. It was cosponsored by the then distinguished Senator Harry F. 
Byrd. On that day, July 19, 1973--if you can believe this--the Federal 
debt stood at a relatively small figure of $455,570,163,323.85. Today, 
22 years later, the Federal debt has skyrocketed to $4.3 trillion. The 
historical tables of the 1996 budget reveal that the interest on the 
money borrowed by Congress since 1973, cost the taxpayers 
$3,209,417,000,000.
  Imagine if Congress had passed a balanced budget amendment in 1973 as 
proposed by Senator Harry F. Byrd and me, the American taxpayers could 
have been saved more than $3.2 trillion in interest alone.
  The American people have difficulty comprehending the enormity of a 
trillion dollars. I went into the cloakroom the other day, and several 
Senators were sitting around. I said, ``How many million are in a 
trillion?'' One said ``100,000.'' Another one said, ``I do not know.'' 
And a third one said, ``Don't give us that. What is it?"
  I said, ``There are 1 million millions in a trillion.'' Bear in mind 
that the U.S. Government--meaning the taxpayers of this country--owes 
$4.8 trillion. That dead cat lies at the doorstep of the U.S. Senate 
and the House of Representatives. We cannot get around it. No President 
can spend a dime that is not first authorized and appropriated by the 
Congress of the United States.
  If I may return for a moment to one of my American heroes, Mr. 
Jefferson, he also said that ``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.''
  Amen, Thomas Jefferson.
  That just about tells it all, certainly in terms of the moral 
injustice that we have been heaping upon our children and their 
children and their children. Nobody suggests that balancing the budget 
will be easy. It will be tough. It really boils down to a matter of 
doing what we were elected to do, and that is leveling with the people 
of this country.
  I can debate for hours the contention that accepting a balanced 
budget amendment is not constitutional. However, statements like that 
do not make sense. I do not denigrate anybody who uses their best 
argument to try to defeat something that I happen to believe in.
  There was another eloquent President, by the way, who spoke one time 
of a rendezvous with destiny. What destiny will the U.S. Senate choose 
tomorrow? What legacy will we vote tomorrow for generations yet to 
come?
  Mr. President, I ask unanimous consent that the text of S. 2215, the 
balanced budget bill offered by the then Senator Harry Byrd, Jr., and 
myself, on July 1973 be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 2215

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled, That this 
     Act may be cited as the ``Emergency Anti-Inflation Act of 
     1973''.


                          findings and purpose

       Section 1. (a) The Congress of the United States hereby 
     determines that--
       (1) the Federal Government is now and has been expending 
     funds during the fiscal yer for nontrust fund budget items in 
     excess of revenues received from all nontrust sources,
       (2) such fiscal policy by the Federal Government has 
     resulted in substantial borrowing from both public and 
     private sources,
       (3) the aggregate of such borrowing has resulted in an 
     exorbitant national debt totaling more than $450,000,000,000,
       (4) this debt will continue to increase so long as the 
     Federal Government spends more than it receives,
       (5) the Federal Government is now paying annual interest on 
     the national debt in excess of $20,000,000,000, and
       (6) this interest payment is annually increasing as a fixed 
     expenditure in the Federal budget.
       (b) The Congress further determines that--
       (1) deficit spending by the Federal Government has resulted 
     in inflation in the Nation's economy and a lessening in the 
     value of the dollar in terms of its ability to purchase goods 
     and services in foreign and domestic markets,
       (2) unless this deficit spending on the part of the Federal 
     Government is discontinued a severe economic depression will 
     result.
       (c) The purpose of this Act is to require the President to 
     submit to the Congress a budget in which nontrust fund 
     expenditures do not exceed revenues received by the 
     Government from nontrust sources.
       Sec. 2. The nontrust fund expenditures of the Government of 
     the United States during each fiscal year shall not exceed 
     its revenues from all nontrust sources for such year.
       Sec. 3. (a) The President shall submit a budget pursuant to 
     the Budget and Accounting Act of 1921, as amended, in which 
     nontrust fund expenditures do not exceed nontrust fund 
     revenues for each fiscal year.
       (b) The provisions of this section may be adjusted to 
     reflect any additional revenues of the Government received 
     during a fiscal year resulting from tax legislation enacted 
     after the submission of the budget for such fiscal year.
       Sec. 4. This Act shall apply only in respect of fiscal 
     years beginning after June 30, 1974.

  Mr. HELMS. Mr. President, I yield the floor.
  Mr. DORGAN addressed the Chair.
  The PRESIDING OFFICER (Mr. Frist). The Senator from North Dakota.
  Mr. DORGAN. Mr. President, it is not usual to hear the Senator from 
North Carolina quote Franklin Delano Roosevelt, but I appreciated 
listening to his presentation and, as always, his presentation is 
interesting and heartfelt.
  The issue that we debate today in the Congress is not an ordinary 
issue or one of passing interest. It is about changing the U.S. 
Constitution. I know there are some people who serve in this body who 
support a menu of changes to the Constitution. You name it, they 
support it. The Senator from Arkansas said the other day--and I have 
not counted them--there has been nearly one proposal to change the 
Constitution every day that we have been in session since the first of 
the year, and 11,000 proposals have been offered to change the 
Constitution since the Constitution was written.
  I have described on this floor before a day in my life that I shall 
always remember. I was one of 55 persons to go back to an assembly room 
in Constitution Hall and celebrate the 200th birthday of the writing of 
the Constitution. Two-hundred years previous, fifty-five white, largely 
overweight men, sat in that room in Philadelphia. We know that because 
we know who was there. We know the stories about how they had to keep 
the shades drawn during that hot Philadelphia summer in that room, 
because it got very warm while 
[[Page S3201]] they were trying to craft a Constitution. There were 
some of the most brilliant minds in the history of this country 
convening there. Absent, of course, was Thomas Jefferson, who was in 
Europe at the time. But he contributed nonetheless substantially to the 
Bill of Rights and especially to the writing of the first amendment's 
free speech clause.
  As I said, there are some who seem to want to support virtually every 
proposed change to the Constitution, like human weather vanes spinning 
in the winds of the public passion of the moment. Others are opposed to 
changing the Constitution under any case, ever. The Founding Fathers 
who wrote the Constitution actually provided for a process to make 
changes to it. Still, they made it very difficult, and changes have 
been made only on very rare occasions. We are trying to decide today 
and tomorrow whether this should be one of those occasions.
  I am not someone who believes that we should reject change in every 
circumstance. But I am, I suppose, a conservative, if you can forgive 
the use of the word in this Chamber, because it is confusing to try to 
understand these days who conservatives and liberals really are. I am 
conservative when it comes to changing the Constitution. I believe it 
ought to be done only on rare occasions and only in circumstances of 
extraordinary need. Harold Wilson once talked about the only human 
institution which rejects progress or change is the cemetery. Change is 
a part of our lives. Yes, indeed, even change in the Constitution may 
be part of our lives when it is necessary.
  Each of us, as other speakers have indicated, takes an oath when we 
come to the Senate to serve, and that oath is to uphold the 
Constitution. I do not think anyone takes that oath lightly. All of us 
understand the circumstances and the meaning of that oath. All of us 
understand, as well, that it is not just public passion that should 
persuade this body or the House to decide to change the Constitution. 
Our system of Government, I think, has worked for over 200 years 
because people have had faith in this system.
  When I sat there in that room, 200 years after the writing of the 
Constitution, 55 of us went back in to recreate the event on its 200th 
birthday. As I indicated, it was written by 55 white men. So 55 of us--
men, women, and minorities--went back into that room, and in a very 
solemn ceremony, celebrated the 200th anniversary of the writing of 
this wonderful document. I grew up in a small town, went to a small 
school and studied George Washington, and here I was in this chamber 
where George Washington's chair was at the front of the room--the very 
chair he sat in while presiding over the Constitutional Convention; it 
was still in the front of this room. Franklin sat over there, and 
Madison, Mason. It was a wonderful experience to sit in that room. It 
kind of gave you goose bumps to understand the history that was created 
there--the crafting of a document called the Constitution, which has 
represented the framework of self-government in the most successful way 
in recorded human history. There is no record of a society that has 
practiced self-government as successfully as has this country.
  So I think now about sitting in that room and I think about the 
people who must have sat there 200 years ago as they tried to 
understand what kind of a framework would work. What kind of fabric 
would reach over a couple of centuries and more--maybe a couple of more 
centuries--and allow for our system of government to work? And one must 
admit that even with 11,000 different proposals to change the 
Constitution, those who wrote it originally did a masterful job. It is 
an extraordinary document in the history of civilization.
  As I have said, it works because in people's minds and hearts there 
represents an acceptance that self-government is something they agree 
with and believe in and think represents the best hope for this country 
to make progress. We are now, as all of us understand, facing a 
difficult set of circumstances in our country. We face, I think, a debt 
crisis of sorts. It is a debt crisis with respect to fiscal policy--
that is, the Government spends more money than it takes in, and a debt 
crisis, additionally, in our trade policy. This year was the largest 
trade deficit in the history of this country, or any country, for that 
matter.
  How did we come to that point and what causes all of this? It is 
interesting if you listen to some of the political dialog. And this is 
done deliberately, and I understand that. It is, gee, you know 
something, the Members of Congress come to take their seat in the U.S. 
Senate Chamber and the first thing they want to do is cast another vote 
to spend more money. But all of us understand what happens. The reason 
we spend more money this year than last year is that there is an 
automatic pilot on entitlements, and this year we will spend much, much 
more on health care than last year.
  Why? For two reasons.
  In Medicaid, more people are poorer and the health costs are going 
up. In Medicare, more people are reaching Medicare age, more people are 
triggering that eligibility, and health care costs are going up. 
Therefore, we spent a lot more on health care this year than we did 
last year because health care costs in many cases have been running 
double and triple the rate of inflation and there is never a vote on 
that, just to use health care as an example. That is on automatic pilot 
and it increases and increases and increases.
  And so the point of it is, it is not a case where there are 100 
people voting to say, ``Yes, let's increase that.'' It is an 
entitlement program that is now latched to inflation and whose costs 
move up every single year.
  Revenue does not do the same. In fact, the income tax system and the 
personal exemption, for example, is indexed exactly the other way. As 
inflation increases, you then increase the personal exemption, so there 
is not an automatic increase in revenue. So you have an automatic 
increase in the cost of entitlements because of inflation because they 
are hooked to it and accelerate, and the revenue system is hooked just 
the opposite way so that it will not increase automatically. And we 
have created then this mismatch in policy and it just cannot exist; it 
cannot continue to exist.
  I think all of us in this Chamber understand we have a circumstance 
in this country where we routinely have higher expenditures than we 
have revenue. And what happens to the difference? Well, we simply 
charge it. We issue more bonds and the children then are faced with 
more and more debt.
  The deficit at this point is roughly $180 billion. But that is not 
the honest deficit. The honest deficit at this point would be the $180 
billion, plus the $70 billion in Social Security surplus this year. 
That is used to reduce the $250 billion back to $180 billion. The real 
deficit is about $250 billion.
  That is the way the accounting system works, unfortunately. It should 
not work that way. We need to try to address that.
  We have a Social Security system that is now raising more money than 
it expends. The reason we have that is because Congress decided in 1983 
that we were going to face a crisis in Social Security at some point 
and we had to start saving for it.
  In 1983, I was serving on the House Ways and Means Committee. We had 
to write the Social Security reform bill. A lot of people do not 
understand the magnitude of that bill. It increased FICA taxes for both 
the employee and the employer. Certainly, all of them understand that. 
It even stretched out the retirement age from 65 to 67. I bet a lot of 
people do not know that is in the law. But it begins after the turn of 
the century. It is phased in very gradually.
  But this Social Security reform package made a lot of changes. One 
intent of that package was to try to require a savings each year in 
order to meet the need when the baby boomers retired after the turn of 
the century, when the largest baby crop in American history hits 
retirement. Then we have serious financial problems with Social 
Security.
  So the approach to reform that and respond to it was to say, ``Let us 
have each year a forced savings in the Social Security system.'' And 
this year, incidentally, it is about $69 billion. We will take in $69 
billion more in the Social Security system in revenue than we will 
spend out. Therefore, the surplus this one year will be nearly $70 
billion.
  [[Page S3202]] Why are we doing that? Again, to save it for after the 
turn of the century when we are going to need it.
  Now, is it being saved? No; I mean, technically there is a bond that 
goes in the trust fund but, as all of us understand, the money is still 
used and it is customarily referred to as a pool of money that reduces 
what we call the Federal deficit. The Social Security revenues are used 
as an offset to reduce the operating budget deficit of the Federal 
Government.
  And the fact is that we cannot continue to do that. That breaks the 
promise with the workers. It breaks the promise with the senior 
citizens. Either we are going to save the money or we are not going to 
save the money. But let us not have a charade in which we say we are 
going to tax you to raise more money than we need to spend at this 
point and we promise to save it, but we really will not because it will 
be used to offset spending.
  Well, I think that there is general agreement by Members in this 
Chamber that we have a debt crisis, a real problem. And what do we do 
about it?
  We just heard the speaker before the last, Senator Glenn from Ohio. 
He accurately portrayed 2 years ago, when we had a very significant 
budget debate and we were asked to vote on a budget bill that cut the 
deficit over 5 years by $500 billion, we had to find all the votes for 
it on this side of the aisle. Not even one vote--one would expect 
somebody would vote wrong accidentally from time to time; you know, 
just not quite understand it. You expect to get one vote from the other 
side just as a result of an accident. But we could not even get one 
vote.
  So we had to figure out how we could come up with a plan that cut the 
budget deficit by $500 billion. Some of it was not very popular. But I 
was perfectly happy to do that because that is our job. We are required 
to do that. We ought to do a lot more of it. And we did it. So we 
passed this Budget Deficit Reduction Act and the deficit has gone down.
  I mean, the deficit was around $270 billion. It has gone down about 
$90 billion or so. Actually, the real deficit is $250 billion. And, you 
know, if you take the Social Security out, it was over $300 billion. 
Now it is down to about $250 billion.
  But the point is, the deficit reduction package reduced the Federal 
deficit, but people did not like it very well because the medicine is 
not medicine that tastes very good. It is bitter-tasting medicine.
  So we have come here today with another set of challenges and that 
is, following on the heels of 2 years ago when we passed the Deficit 
Reduction Act, and understanding that we did not pass health care 
reform and understanding that health care costs keep going up, not just 
up a bit but way up in the long term, the question is how do you then 
respond to an even greater challenge in the outyears? Do you continue 
to have increasing Federal deficits now in the outyears, because we 
have not been able to control health care costs? Or do we find a way to 
do something about that?
  Some say, ``Well, let's change the Constitution. Let's put in the 
Constitution a requirement that in 7 years, we balance the budget.''
  I am willing to consider that. I have voted for a constitutional 
amendment in the past. I hope I will vote for one in the future, and I 
may vote for this one, depending on a couple of caveats. I am going to 
raise those questions today, as I have raised them earlier today with 
those who have been the principal authors of this legislation.
  The question is not whether we do something. The question is how we 
do something about this debt crisis. Do we pass a constitutional 
amendment to balance the budget? If we do, what kind of amendment will 
we pass?
  Will we, after we consider a constitutional amendment to balance the 
budget and vote on it, if we enact it, restore some thread of 
confidence with the American people?
  No, we will not have done anything, not even one penny's worth of 
progress to responding to the debt issue, by passing the constitutional 
amendment. No one here would stand, in my judgment, and allege that 
doing anything to deal with the deficit is going to be a part of this 
constitutional amendment.
  The fact is, the amendment is simply words that will be a part of the 
constitution. Now, that is important, very important. But, in and of 
itself, it does nothing to advance even one penny's worth towards 
reducing the deficit. That will have to be accomplished by a series of 
other steps, including taxing and spending decisions that the Congress 
will have to confront. It can confront them with or without a 
constitutional amendment.
  The question is, what would provide the greatest likelihood to 
advance toward the solution to this debt problem?
  And let me ask a couple of questions that I have asked rhetorically 
today of those who are the principal sponsors.
  The first has to do with Social Security. I know that we are told 
that the Social Security System is a system that is important to 
everyone in this Chamber, and everyone believes that we ought to 
protect and preserve the system. We continue to hear that time and time 
again.
  We also hear virtually everyone say that the design to collect more 
money now for the Social Security System and have an enforced surplus 
to be saved until after the turn of the century when we need it is a 
design that virtually everyone subscribes to and believes in.
  So we had a vote on this constitutional amendment, on an amendment 
offered by Senator Reid, that said, ``All right. Let's change this so 
that the definition of expenditures and receipts in the constitutional 
amendment to balance the budget does not include expenditures and 
receipts of the Social Security System.''
  The reason? Because if you include expenditures and receipts of the 
Social Security System--a system which, incidentally, is going to run 
very large surpluses in the coming years that we are going to need to 
save--if you do that, what you do is you create a circumstance by 
design that says we will balance the budget by using the Social 
Security trust funds to do so.
  Well, you know, you would have to keep faith with one or the other, 
but you cannot keep faith with both. Either we say to the senior 
citizens and the workers who contribute the money that goes into this 
trust fund that this is saved and we pledge that it is a dedicated tax 
put in a trust fund to be used only for one purpose, or we do not.
  Then you say: Well, we are collecting this dedicated tax. Yes, it is 
regressive. Yes, we agreed to do it for Social Security, but we have 
changed our minds. It is now going to be part of the operating budget 
deficit and it will be used to lower the general operating budget 
deficit of the United States.
 One of the two will be the case.

  The question the Senate has to answer is which one of those two? We 
are told, ``Well, we really cannot do much about that at this point. 
Maybe that could be accomplished in implementing legislation in which 
we describe what expenditures and receipts mean.''
  If that is possible, and it may be possible that we describe what 
expenditures and receipts mean in the implementing legislation and they 
do not mean Social Security receipts and expenditures, then that will 
solve the problem, in my judgment. That can be done by passing that 
portion of the implementing legislation prior to the vote tomorrow on 
the constitutional amendment to balance the budget.
  There is a way for that to be accomplished. If that is accomplished, 
that will resolve my concerns with respect to the use of the Social 
Security revenues because the Senate will have spoken on that issue. 
But the Senate has to make a decision: Is it going to allow in this 
amendment the use of the Social Security reserves or surpluses to 
balance the operating budget deficit, or is it going to use them to 
save for the future?
  It is not going to be both. It will be one or the other. We have 
already had one occasion in which the implication was that we would use 
the Social Security surpluses or trust funds to balance the operating 
budget deficit. If that is the case, that is not satisfactory to me.
  If, on the other hand, we are willing to say in implementing 
legislation, prior to the vote tomorrow, that expenditures and receipts 
from the Social Security System are not included in the constitutional 
amendment as expenditures and receipts, as a matter of definition, then 
that resolves the problem, at least from my standpoint.
  So the question whether that is resolved is not up to me. The 
question of 
[[Page S3203]] whether that is resolved is a matter of intent with 
respect to those who offer the amendment and whether we can, through 
amendment tomorrow, by passing part of the implementing legislation, 
deal with that issue.
  Let me mention the second issue that has been well discussed, and 
that is the issue of enforcement. Senator Nunn has raised, and I think 
appropriately so, the question of how will the constitutional amendment 
be enforced? Are we creating a constitutional amendment on fiscal 
policy and asking the courts to be involved in taxing and spending 
decisions, if, in fact, the Congress does not respond appropriately to 
what the Constitution requires?
  If the answer to that is, yes, we will have the courts enforce the 
constitutional provision on the balanced budget, then I think there is 
serious concern by a number of other Senators. This can be resolved 
easily, and it can be resolved quickly. It can be resolved by precisely 
the addition of the amendment that was accepted last year ago when we 
debated this.
  Senator Danforth offered and the Senate accepted the provision on 
enforcement that deals with the declaratory judgment capability. That 
is exactly the way to solve this. Senator Nunn has raised the issue. 
Others have. I say from my standpoint, we really ought to respond to 
this issue in a forthright way. I think it can be responded to in a 
forthright way. If that is the case, if that is dealt with, then, once 
again, I raise no objections about that issue.
  I would like very much to see Congress advance a solution to this 
debt crisis. That solution may very well be a constitutional amendment 
to balance the budget. But I would not be comfortable supporting a 
constitutional amendment to balance the budget if riding on that vote 
was $3/4 trillion of Social Security revenue used in the future to 
offset operating budget expenditures in order to show a lower deficit 
for the Federal Government but which, at the same time, would mean we 
would not have saved in the Social Security system that which we 
promised to save.
  It seems to me that the fate of this constitutional amendment to 
balance the budget will be determined tomorrow by a judgment made by 
those who offer the amendment on how they resolve, at least from my 
standpoint, those two questions. What is the will of the Senate with 
respect to the use of $3/4 trillion of Social Security funds? Are those 
trust funds going to be used to balance the operating budget deficit, 
or are they going to be saved?
  We are told it is hard to sift through all of this. It is hard 
because of procedural circumstances. We are told that it is difficult 
to do these things. Look, when we are passing a change in the U.S. 
Constitution, this Senate should work its will to make sure that that 
change is exactly the kind of change we want and the country needs.
  The last thing I want to do is make a mistake in amending the U.S. 
Constitution, because that is a mistake that cannot easily be 
corrected. This is not, in my judgment, bumper sticker politics or 
sloganeering. It is deadly serious business when we are talking about 
changing the basic Constitution of this country.
  I have said before and I will say again, I think the debt crisis in 
this country is sufficiently serious to warrant this serious discussion 
about changing the Constitution, and I would be a part of those who are 
willing to change the Constitution if the two issues I have mentioned 
are resolved. If they are not resolved, I will not be a part of that 
change. The decision is not a decision I will make. The decision is a 
decision that will be made by those who are crafting this and whether 
they will allow the will of the Senate to be expressed on this issue of 
the use of $3 to $4 trillion of Social Security funds and on the issue 
of enforcement.
  Some say, ``Well, you voted for the balanced budget amendment 
previously.'' Yes, I have. It was different in the sense that it 
contained the enforcement provision provided by Senator Danforth. This 
does not. If they do that, it will make me more comfortable.
  And one other thing has changed that is fundamental. We now have 
something called a Contract With America which proposes at the same 
time that we face a serious debt crisis in our country, a massive tax 
cut, ingeniously, in the mind of some, concocted so that a smaller part 
of it occurs in the first 5 years of budget scoring and a much larger 
portion occurs in the second 5 years, a tax-cut proposal that will 
reduce revenues in 10 years by some $3 to $4 trillion, it is estimated.
  I think it is very difficult to have a serious discussion about a tax 
cut at a time when we are also having a serious discussion about 
changing the Constitution because this country has a debt crisis. In my 
own view, the job of the U.S. Senate is to find a way to cut spending. 
And, yes, we ought to be tough and cut spending and cut spending, and 
use the money to cut the deficit.
  Now, there is a judicious way to cut spending and another way to cut 
spending. You do not have to do it with a meat ax, and you can do it 
with some judgment and some discipline. I confess that I am confused by 
those who are the loudest voices for changing the Constitution so that 
we would require a balanced budget, and who on the other side of their 
coverall pockets are saying, ``We also want a $3 to $4 trillion tax 
cut. And we want more defense spending, and we also, by the way, want 
to resurrect Star Wars at the same time.''
  I have no idea where these arithmetic books come from, but they did 
not use them in my home school. I hope, as we work through all of this 
agenda, that we will come to a more focused agenda; that is, a 
determination by all Members, to head towards the same common goal: 
Relieve this country of a debt crisis that is getting worse, see if we 
can move towards a balanced budget, and try to do the right thing for 
this country's future.
  I am willing to take risks. And I think we should be willing to take 
risks these days to try to respond to this problem; if not for us, then 
certainly for our children. But I am not willing to cast a vote for a 
constitutional amendment unless it is the right constitutional 
amendment, and I am hoping that, in the coming day or so, a couple of 
the problems that we have had discussed at length discussions can be 
addressed. If that is the case, I will vote for the constitutional 
amendment. If it is not the case, then those who have written this 
proposal will end up short of votes to pass this proposal.
  Mr. President, I will be on the floor again tomorrow, and I assume we 
will have additional discussions. I say again that the decision of 
whether this constitutional amendment to balance the budget is enacted 
by the Senate is a decision that will be made by those who advance it, 
and whether or not they will allow the Senate to work its will on these 
two questions, from my standpoint, the use of the Social Security 
reserves and trust funds and, also, the question of enforcement.
  Mr. President, I yield the floor.
  Mr. GORTON addressed the Chair.
  The PRESIDING OFFICER. The Senator from Washington.
  Mr. GORTON. Mr. President, I have listened with great interest to the 
remarks of the distinguished Senator from North Dakota who, it seems to 
me, has made three points or sets of reservations about the balanced 
budget amendment rather than two.
  One is the failure to exempt Social Security from all calculations 
under the amendment; the second is the absence of any provision in the 
amendment that will prevent the courts of the United States from 
arrogating to themselves the right to write balanced budgets; and third 
is the impact on attempting to balance the budgets of various proposals 
in the House of Representatives for reductions in taxes.
  I say with all the sincerity at my command with respect to those 
concerns of the Senator that two of the three, it seems to me, rather 
argue in favor of supporting this constitutional amendment than they do 
against it. The third is, as I believe the Senator from North Dakota 
knows, a concern which I share and share deeply.
  Let me take the first two points first. The first question that 
arises with respect to Social Security is, is the Social Security 
System protected in some way by a defeat of this constitutional 
amendment in a way that it is not by its passage? Well, Mr. President, 
the answer to that question is clearly no. In fact, I am convinced that 
the Social Security System of this 
[[Page S3204]] country will be stronger and more secure with the 
passage of this constitutional amendment in its present form than it 
will be either without a constitutional amendment at all or, 
alternatively, with a specific exemption in the constitutional 
amendment itself.
  It is clear that the Senator from North Dakota, who is genuinely 
agonized by the choice in front of him, does wish that we balance our 
budget, does feel that the present system has failed to do so. And yet 
with each year that passes under the present system, the pressure on 
Social Security and, for that matter, on all other vital forms of 
spending in the United States, increases by reason of the failure of 
this and other administrations and the Congress to deal with problems 
of the deficit.
  No one can feel that early in the next century when this country, if 
we make no changes in the way in which we operate, will literally have 
no money left for anything other than a handful of entitlements, no 
person can feel that under those circumstances Social Security will not 
be changed. It will, and it will be changed to the detriment of the 
recipients of Social Security retirement income.
  Bringing our fiscal house in order, therefore, protects rather than 
threatens the Social Security System. And if, as I believe and the 
Senator from North Dakota believes, that we are not going to bring our 
house in order unless we establish some kind of external discipline, 
why then, Mr. President, the passage of this amendment in its present 
form is a protection for Social Security rather than a threat to it.
  An addition to this amendment of a specific exemption for Social 
Security, I think, perhaps threatens the system even more because it 
will provide, by such a huge exception to the requirement for a 
balanced budget, an overwhelming temptation directed at future 
Congresses to redefine what is in Social Security, to include in the 
system all kinds of benefits which will go to the same classes of 
people who benefit from Social Security today that are not now defined 
as Social Security or, alternatively, in order to balance the budget, a 
reduction in the Social Security payroll tax and, therefore, in present 
surpluses in that system and a transfer of that taxing authority to the 
general fund in order to balance the budget.
  So an exemption of Social Security written into the Constitution will 
not protect the system. A rejection of the constitutional amendment 
will not protect the system. The system will, I am convinced, be 
protected best by treating the budget deficit for what it is: A 
terrible threat to the country, a threat which Congress and Presidents 
have been unable or unwilling to meet in the past, and dealing with it 
through a constitutional amendment which requires all parties, everyone 
in the country, but most particularly future Presidents and future 
Members of Congress to be a part of the solution rather than a part of 
the problem.
  The difficulty, of course, is that Social Security receipts and 
disbursements are receipts and disbursements of the United States. The 
payroll tax is a tax. Disbursements are disbursements. Markets, the 
economy of the United States, are not fooled by saying that money goes 
into and comes out of one pocket rather than another. If we are to 
balance the budget, we must balance it with all receipts and all 
expenditures, and those who are recipients of Social Security will be 
best off if we recognize that fact because if we fail to do so, they 
will be threatened along with everyone else.
  On a second subject, Mr. President, I had not previously heard that 
one of the arguments against this constitutional amendment is a set of 
proposals in the House of Representatives with respect to tax cuts. The 
President of the United States himself in his budget submission has 
proposed tax reductions somewhat more modest than those in the so-
called Contract With America, probably less effective in rebuilding our 
economy and opportunity for economic growth in the United States.
  But again, with respect to a more liberal Member on the other side of 
the aisle who opposes the tax reductions contained in the Contract With 
America, it would seem to me that the existence of those promises would 
be rather an argument in favor of this constitutional amendment than an 
argument against it, since it is obvious that a requirement that the 
budget be balanced by the year 2002, as a matter of constitutional law, 
will require all Members of Congress--those who favor tax reductions 
and those who do not--to look much more carefully at the budget 
implications of each and every action, whether that action refers to 
spending or to taxing policies.
  The third point made by the Senator from North Dakota, on the other 
hand, is one with which this Senator agrees. This Senator was one of 
several on this side of the aisle who voted in favor of an amendment 
proposed by the distinguished senior Senator from Louisiana a week or 
so ago to make clear that the responsibility for budget decisions, 
after the passage of this amendment, rests exactly where it does now: 
With the President and with the Congress of the United States, subject 
to the heavy discipline this amendment requires.
  I do not wish courts substituting their judgment for the judgment of 
those who are elected by the people of the United States to make these 
vital and important decisions for the people of the country by any 
stretch of the imagination. And I hope--I think it is perhaps 
possible--that that kind of change may be made in this constitutional 
amendment. I am delighted with the thoughtful attitude toward it by the 
Senator from North Dakota.
  That is a proposal which, in my mind, would strengthen this 
constitutional amendment. The other proposal would weaken it and would 
weaken the Social Security System at the same time.
  Now, having listened to the last hour or so of debate on this floor, 
I am reminded of the set of categories with which I was impressed on 
the very first day of the debate on this constitutional amendment; and 
that is that Members of this body are divided into three groups with 
respect to the budget of the United States.
  There is clearly a group of liberal Members, that does not include 
the Senator from North Dakota, that simply does not believe in a 
balanced budget at all, who like the status quo, who favor the present 
system, who believe that deficits are not harmful to economic growth or 
to the prosperity of the people of the United States of America.
  Those Members are and should be opposed to a constitutional amendment 
which makes an unbalanced budget a much more difficult task to 
undertake than it is at the present time.
  There is, in addition, Mr. President, a second group, a group 
represented at least in the original instance by the remarks of the 
distinguished senior Senator from Ohio about 1 hour ago, who tell us 
that they believe deeply and passionately in a balanced budget but that 
we ought to do it ourselves; that we should not engage in a change in 
the Constitution; that it is simply a matter of discipline.
  Then there is the third and largest group--whether it includes 67 
Members or not will be determined about 24 hours from right now--a 
third and larger group which believes that the present system is 
broken, that a balanced budget is desirable--in fact it is imperative 
if we are to do our duty to generations yet to come--which in many 
cases has tried varying formulae for bringing the budget into balance 
without a change in the fundamental system itself and observe simply as 
a result of our history that it has not worked; that the system is 
broken; that we need a radical change, a new direction; and that that 
new direction is represented by the amendment to the Constitution which 
is before us right now.
  The difficulty with opposition to this amendment, in my view, Mr. 
President, is just this. The first and second categories tend to have a 
fuzzy distinction between them, tend to meld into one another. The 
distinguished Senator from Ohio began his speech by demanding a 
discipline on the part of Members of the Congress: do the job 
ourselves, do what we were sent here to do, do not ask for 
constitutional changes in order to do it. Then he launched into a 
criticism of all of the possible ways of reducing spending so that the 
budget might be balanced. He seemed to move, in other words, from 
category 2 into category 1. We should discipline ourselves; we should 
balance the budget on our own hook; but it would be a terrible threat 
to deal with any of the 
[[Page S3205]] really expensive spending programs which in total result 
in our having a budget that is unbalanced.
  It is in that second category, it seems to me now, that the President 
of the United States falls. We have heard a great deal about the fiscal 
discipline and the political courage that was involved in passing the 
budget here just 2 years ago which significantly increased taxes 
without significantly reducing spending and resulted in, or was 
coincident with at the time of rising economic growth, a relatively 
modest decline in the budget deficit.
  However, that budget year is over, and we now have a proposal from 
the President that never, even under very rosy economic growth 
projections, results in a budget deficit of significantly less than 
$200 billion a year as far as the eye can see--5 years, 10 years, 
beyond that period of time--which suggests some modest tax reductions 
and even more modest spending reductions. It overwhelmingly lacks 
courage, a status quo budget, and it is perhaps the best single 
illustration of why we must pass this constitutional amendment.
  When a President, who made deficit reduction the heart of his message 
during his first year as President, abandons that goal totally, lock, 
stock, and barrel, by the third year of his Presidency, it is clear we 
need to change the system under which we operate.
  Of course, it is exactly that change which is proposed in this 
constitutional amendment. The dynamics of its passage and its 
ratification by the people of the United States will clearly be 
dramatic. If this proposal were a part of the Constitution of the 
United States today, the President of the United States could not 
validly have submitted the budget to us which he has before us right 
now. He would be required by his oath of office, by the Constitution of 
the United States itself, to be a part of the solution rather than part 
of the problem. Political cowardice would instead be political folly, 
an abandonment of a constitutional duty.
  Many of us here might not like the proposals of this President with 
respect to balancing the budget, but he would have been required to 
propose such a course of action. And for those of us who dislike it, we 
would have been required to come up with an alternative.
  Now, anyone can speak of the desirability of balancing the budget in 
the abstract and the lack of desirability of cutting any spending 
programs in reality, and there is no penalty for taking such a course 
of action. As and when this proposal becomes a part of the Constitution 
of the United States, there will be a huge penalty for such a course of 
action. Presidents and Members of Congress will be required to come up 
with budgets that either reduce spending or increase taxes or both. And 
if at some time there is a return to the majority of those who believe 
in higher taxes--a group clearly not in the majority today--they will 
be able to do so. There is nothing in this constitutional amendment 
that prevents balancing the budget on the backs of taxpayers of the 
United States. There is a clear majority in this body right now who 
will not do so. But if an election campaign is run successfully on the 
proposition that we need higher taxes, a Congress which wins on that 
platform will be able to do so. By the same token, those who believe 
that spending needs to be cut will be under the gun; they will be 
required to produce; and the President will be required to come up with 
some kind of proposal or another, better and more responsible than the 
proposal that we received from this President this year.
  The dynamics of this constitutional amendment, Mr. President, are 
simply this: Everyone in elected office will have to be a part of the 
solution. Everyone will have to be a part of the game rather than 
allowing the challenge simply to be kicked down the road, left to the 
next administration, to the next Congress, to the next group of people 
who come here.
  How much better off we would be had a proposal such as this been 
passed some years ago, but if we have learned anything in the course of 
the last decade or decade and a half, it is that the most sincere 
statutory solutions, like Gramm-Rudman, do not work because they get 
abandoned as soon as the shoe begins to pinch.
  There is, in my view, no solution to the fiscal problems facing this 
country--no solution that will free our economy, no solution that will 
create more and more opportunities for the present generations and 
generations yet to come except to make the kind of changes proposed in 
this constitutional amendment.
  It is clear that tomorrow's vote is going to be absolutely vital for 
the future of this country. It is clear that a majority of the people 
of the country want this constitutional amendment. It is clear that a 
majority of the Members of this body want that constitutional 
amendment.
  What remains unclear is whether the necessary two-thirds in this body 
will follow logic, reason, and the will of their constituents and refer 
this constitutional amendment to the States of the United States for 
ratification.
  The PRESIDING OFFICER. The Senator from Texas.
  Mrs. HUTCHISON. Mr. President, I appreciate what the Senator from 
Washington has just been saying. I have been on the floor listening to 
him. He is one of the people I admire most in this body. He has been 
the attorney general of his State. He knows the legalities and the 
importance of doing this as a constitutional amendment. I am very 
pleased he is one of the leaders in this effort.
  I would just like to say it is the most important vote that I will 
cast in my public life. That is how important the vote tomorrow is, in 
my opinion, for our future generations of this country. So I do think 
we need to focus on the basic issues.
  The first one is why? Why do we need this to be a constitutional 
amendment? The national debt is a cancer on this country and we are 
passing it to our children and grandchildren. It is now over $4 
trillion; $17,600 for every man, woman, and child in this country. For 
a family of four this is over $70,000 in debt. If a family of four has 
a $70,000 debt, that is a big responsibility. That is a burden on the 
shoulders of that family. You have to pay it out over time and it is 
not easy. In fact, every family of four in this country has the $70,000 
debt that we will only be able to erase if we pass this amendment 
tomorrow. It is soaking up capital that we need for investment in our 
businesses, and it is 26 percent of our budget that we are paying in 
interest.
  That money could be going into investment capital for investment in 
equipment that would create jobs, that would help our economy and would 
help the people of our country get back to work. But instead, that 
money is just going to pay interest on the national debt.
  It has been getting worse just in the last few years. Since 1975, 20 
years ago, our per capita debt has increased more than sevenfold. So it 
is something that is getting worse, not better. In fact, the per capita 
debt has increased $900 just since we started debating this amendment 
earlier this month. It is $900. You have seen the charts. It just keeps 
going up as we talk. We must take drastic action. This is for the 
Constitution.
  Let us take some of their arguments. Their arguments are: Do it by 
statute. We can do it if we have the resolve to do it. But in fact we 
have tried for the last 30 years to do what was right and Congress 
found it was always easier to spend than it was to cut. They found it 
was even easier to tax than to curb that voracious appetite for 
spending. I think we have to take the very important step of getting 
this country back on track. We have tried to do it by statute. We tried 
Gramm-Rudman. We tried the 1990 budget agreement. But every time 
something comes up and Congress wimps out and we do not start balancing 
the budget. We must have a constitutional mandate if it is really going 
to work. We have tried everything else. If we are going to do what is 
right we must do it by amendment.
  Some of the opponents say: Tell us where you are going to cut. We 
will probably vote with you if we know where you are going to cut. It 
would be a year from now before we could get through all of these 
arguments and then go to the argument of how we are going to make these 
cuts on sort of a try it basis, not for real.
  No, every business and every household in America cuts their budget 
the same way. They determine what is the priority, what is the revenue, 
and then 
[[Page S3206]] they say: OK, here is what we have to spend. They do not 
say here is what I would like to spend and I will just take care of it 
later. They do what every State does, they find out what the revenue is 
and then they prioritize their needs. I do not know why the Federal 
Government does not get it. I do not know why the U.S. Congress cannot 
figure out that we, too, can do what every State, every business and 
every household in America does and that is determine what the revenue 
is and then decide what the spending priorities are. That is the 
responsible way to approach the budget.
  There have been legitimate arguments on the issue of exempting Social 
Security. I think a lot of people have thought why do you not set 
Social Security aside? Of course we believe Social Security is 
inviolate. But we are talking about amending our Constitution. We have 
seen what Congress has already done to Social Security without one vote 
by any Republican in the Congress, on the House side or the Senate 
side. Taxes were increased on Social Security.
  I do not think we can assume Congress is going to do the responsible 
thing. Let us see what would happen if we exempted Social Security. All 
of a sudden more things would be moved into Social Security. We would 
have Social Security take up welfare; perhaps Medicaid. Everything that 
Congress wanted to stuff outside of the quota that will be established 
with a balanced budget amendment would just be locked into Social 
Security and there is nothing to prevent it.
  If you are going to exempt anything you cannot have a balanced budget 
amendment. It will not be effective if anything is exempted out because 
whatever it is will then get everything that Congress wants to put in 
that will not count against the restraints that we will put on 
ourselves through a balanced budget amendment to our Constitution.
  I am going to support Social Security and the veracity of our Social 
Security system as long as I am in public life. But if we take that 
outside of this constitutional amendment we will not protect Social 
Security. It will be the opposite. We will make Social Security more 
precarious than it is now because we will not have the ability to say: 
This is the budget. Here is the revenue. And we are going to live 
within our means like every family and every business and every State 
in this country strives to do.
  Senator Paul Simon, the Senator from Illinois, has been one of the 
prime movers in the balanced budget amendment. I admire and respect him 
greatly. Last year, when he cosponsored this amendment, he got all 
wound up and he said the reason that there were so many heroes at the 
Alamo is because there was no back door.
  I love Senator Simon but I had to come down on the floor and say to 
my distinguished colleague that his facts were wrong but his point was 
right. The fact is, there was a back door at the Alamo. It was a line 
drawn in the sand and every man at the Alamo was given the choice of 
crossing the line to fight for the independence of Texas, or to leave 
at that time. And every man at the Alamo voluntarily walked across that 
line, and Jim Bowie was carried in his stretcher across that line, to 
say we are going to commit ourselves to fight for the independence of 
Texas and we are going to voluntarily close that door. So they were 
heroes. They were real American heroes.
  But Senator Simon was making a point, and the point was right. That 
is the same thing that we can do right here tomorrow; that is, close 
the back door, become a hero. The vote tomorrow is what is right for 
the long-term future of this country. That is what will close the door, 
and we will do it in a responsible manner because it is the right thing 
to do for our children to stop this $18,000 debt that they have over 
their heads right now. Yes. This is the most important vote that we 
will ever cast.
  Thomas Jefferson, one of our Founding Fathers, must have feared that, 
in all of the thinking about what might come in the future, perhaps 
there would be a tendency to spend more money because he probably 
sensed that it is human nature to want to spend the money to do the 
good things that all of us would like to do. Two hundred years ago, 
Thomas Jefferson 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.

  Thomas Jefferson went on to say:

       There does not exist an engine so corruptive of the 
     government and so demoralizing of the nation as a public 
     debt. It will bring us more ruin at home than all of the 
     enemies from abroad.

  He realized that this is not something that should be done just by 
statute. If it is really going to have teeth, he questioned whether it 
should not go into the framework of our Government, the policy 
statements that will last through the generations. And I think his 
instincts were right, and they have been proven so as our country has 
gone headlong into over a $4 trillion debt. While Thomas Jefferson was 
very farsighted, I do not think even he could have foreseen a $4 
trillion debt. But he knew that there was the possibility that weak 
Congresses would spend now and pay later.
  We have the ability to do what I think Thomas Jefferson thought we 
should have done in the first place; that is, put in our framework of 
Government, if we think something is so important, that we will put it 
on our priority list and we will pay for it now, and if it is not that 
important, it does not meet the test of responsible governing.
  So I hope that we will take this monumental opportunity that we have 
tomorrow. It is probably the best chance we are going to have in my 
lifetime to do what is right to get this country back on track and to 
pass a balanced budget amendment to our Constitution so that our State 
legislatures, while they are meeting now, will have the opportunity to 
ratify or not ratify, but will have the opportunity to vote on this 
very important framework of Government issue. And I hope we do the 
right thing.
  Thank you, Mr. President.
  Mr. LEVIN addressed the Chair.
  The PRESIDING OFFICER (Mr. Bond). The Senator from Michigan.
  Mr. LEVIN. Mr. President, there are three amendments that I have 
offered which I want to describe tonight to the body.
  First, I am offering two amendments regarding the vote of the Vice 
President of the United States in the two situations in which the 
balanced budget amendment calls for a constitutional majority. Section 
4 states:

       No bill to increase revenues shall become law unless 
     approved by a majority of the whole number of each House by a 
     rollcall vote.

  Section 5 states:

       Provisions of this article may be waived for any fiscal 
     year in which the United States is engaged in military 
     conflict which causes an imminent and serious military threat 
     to national security and is so declared by a joint resolution 
     adopted by a majority of the whole number of each House which 
     becomes law.

  So the question has arisen in debate as to whether or not the 
language in these provisions ``the whole number of each House'' would 
deny the Vice President of the United States a vote to break a 50-to-50 
tie. While it is clear that 51 votes would be necessary under this 
provision, it is unclear whether the Vice President would be denied a 
vote in an equal division of 50 to 50. Why should he or she be so 
denied? The Vice President is not denied a vote in a 50-to-50 tie 
situation anywhere else in the Constitution. The proponents of the 
balanced budget amendment in the House and the Senate have not agreed 
about the effect of this language. In the House of Representatives, the 
chief sponsor of this constitutional amendment, Representative Schaefer 
of Colorado, stated in the Congressional Record on January 26:

       This language is not intended to preclude the Vice 
     President in his or her constitutional capacity as President 
     of the Senate from casting a tie-breaking vote that would 
     produce a 51-50 result.

  Representative Schaefer goes on to say:

       Nothing in section 4 of the substitute takes away the Vice 
     President's right to vote under such circumstances.

  However, the principal Senate sponsor, the Senator from Utah, stated 
on the floor of the Senate on February 16 
[[Page S3207]] that the Vice President would be denied the deciding 
vote in a 50-50 situation. He went on to cite the example of the 
President's 1993 deficit reduction package, which was passed by a 51 to 
50 vote with the Vice President casting the deciding vote, as 
legislation which would not have passed had this constitutional 
amendment then been in effect.
  Mr. President, the two amendments which I have offered are very 
straightforward. One makes it clear that the Vice President has a vote. 
If that fails, the other would say that he does not.
  Think for a moment about a future situation like the Persian Gulf 
war. A future President required to make a decision about the 
deployment of thousands of American troops, in a situation in which he 
might not know if they would be attacked or required to enter into 
hostilities, might well not be able to assess whether the outlays 
required to support those troops would exceed the balanced budget 
because he does not know if hostilities will occur. But he would be 
reluctant, properly, to deploy those troops without the certain 
knowledge that they would be unequivocally given the necessary 
resources to support them in the field, if attacked or if needed. 
Approval of such authority might be a close question as it was in the 
case of the gulf war.
  What if we faced a 50-to-50 vote to waive under section 5? With the 
language unclear, is it not likely that the Vice President would be in 
the chair, and that he or she would vote? Would there then be a point 
of order raised that his vote was unconstitutional under section 5? 
What if the Senate voted 50 to 50 on the constitutional point of order? 
The Vice President might then break that tie. Might not the law 
providing the waiver then be subject to a lawsuit arguing that it was 
unconstitutional because the Vice President had voted? Should we invite 
this sort of constitutional crisis by leaving ambiguity in the 
amendment? I say no.
  I would prefer that we approve the first of these amendments, thus 
preserving a vote for the Vice President. I urge my colleagues to vote 
against tabling amendment No. 310. However, Mr. President, I hope that 
those who believe that the Vice President should have no vote in such 
circumstances would support amendment No. 311.
  Logically, every Senator, in my view, should support one amendment or 
the other. A vote to table both is a vote to leave this proposed 
constitutional amendment ambiguous on a matter of considerable 
importance. I will reiterate one critical point. The chief sponsors in 
the House have specifically indicated in a formal answer on the record 
that it is not intended to deny the Vice President a vote in these 
circumstances. The chief sponsors in the Senate have denied that it is 
intended to deny the Vice President a vote in these circumstances. This 
is not a record which should be allowed to remain in this condition. 
The stakes are simply too huge and we should clarify this one way or 
the other.
  Mr. President, the constitutional amendment we would be voting on 
tomorrow does not balance the budget. By its own terms, some future 
Congress would still need to adopt enforcement and implementation 
legislation to achieve a balanced budget. The argument has been made 
that we have tried everything. We have tried legislation; we have tried 
statutes; we have tried passing laws. Why not a constitutional 
amendment?
  The argument goes: ``We can't depend on legislation, so let's try a 
constitutional amendment.''
  So what does the constitutional amendment do? It depends on the same 
kind of legislation. The exact same kind of legislation needs to be 
enacted under the terms of this constitutional amendment which the 
sponsors of the amendment say has previously been ineffective.
  The constitutional amendment may sound fiscally conservative, but it 
will delay the day of reckoning for up to 7 years and it will still 
depend upon congressional action for there to be a reckoning even then.
  I have offered an amendment to the constitutional amendment. My 
amendment would require this Congress to pass the needed enforcement 
legislation and not pass the buck to a future Congress to pass the 
enforcement legislation, which is so critical if this constitutional 
amendment be effective.
  My amendment provides that the constitutional amendment, if we adopt 
it tomorrow, would be submitted to the States for ratification only 
after we have enacted legislation specifying the means for implementing 
and enforcing its call for a balanced budget.
  Now, there are two advantages to this approach. First, it places the 
responsibility on us instead of leaving it to the future. Second, the 
States would be informed how the enforcement mechanism would work so 
they could consider that in their ratification deliberations.
  First, Mr. President, there is no doubt that for this amendment to be 
effective, a Congress must pass enforcement or implementing 
legislation. Section 6 reads that:

       The Congress shall enforce and implement this article by 
     appropriate legislation.

  This is different from most other amendments to the Constitution and 
most other provisions in the Constitution.
  For instance, the 14th amendment says that ``Congress shall have the 
power to enforce,'' but it is not dependent upon the Congress adopting 
legislation. The 15th amendment says that ``Congress shall have the 
power to enforce.'' Again, a court decision has decided it is not 
dependent upon Congress adopting enforcement language. The 19th 
amendment, ``Congress shall have the power to enforce''; the 23rd 
amendment, ``Congress shall have the power to enforce''; the 24th 
amendment, ``Congress shall have the power to enforce''; the 26th 
amendment, ``Congress shall have the power to enforce''; the 18th 
amendment, ``Congress and the several States shall have concurrent 
power to enforce.''
  The 13th amendment, the amendment which abolished slavery, provides 
that ``Congress shall have the power to enforce.'' But the 13th 
amendment, like the others I have described, is not dependent on 
legislation. It is enforceable without legislation.
  It would be unthinkable, I believe, for any of us to believe that the 
13th amendment, or an amendment like it, would pass which said 
something like the following: Slavery will be abolished in this country 
when Congress enacts legislation to abolish it.
  The 13th amendment and the other amendments which I have described 
are self-enforcing. They do not depend upon legislation for them to be 
enforced.
  Mr. President, the importance of the need for Congress to adopt 
implementing legislation has been discussed and described by many, many 
people. The most recent Director of the Congressional Budget Office, 
Mr. Reischauer, said the following about this issue. He said, ``First 
of all,'' and here I think he is in agreement with most, if not all, of 
us, ``a large reduction in Government borrowing is highly desirable.'' 
But then he said that ``A balanced budget amendment, on its own, does 
not advance the chances for lowering Federal borrowing.''
  ``A balanced budget amendment, on its own, does not advance the 
chances for lowering Federal borrowing.'' He put it another way in his 
testimony. That ``A balanced budget amendment, in and of itself, is not 
a solution, rather it is only a repetition in an even louder voice of 
an intention that has been stated over and over again during the course 
of the last 50 years.'' He went on to say that ``A balanced budget 
amendment, in and of itself, will neither produce a plan nor allocate 
responsibility for producing.'' In perhaps his most pointed comment, he 
said that ``Without credible legislation for the transition that 
embodies an effective mechanism for enforcement''--an effective 
mechanism for enforcement-- ``Government borrowing is not going to be 
cut.'' And he concluded that thought by saying, ``But the transitional 
legislation and the enforcement mechanism are 95 percent of the battle. 
If we could get agreement on those,'' he said, ``we would not need a 
constitutional amendment.''
  Yet, this constitutional amendment depends on there being an 
agreement on an enforcement mechanism by a future Congress.
  Supporters and sponsors of this legislation have said in the past, 
over the years that this constitutional amendment was being considered, 
that enforcement legislation is critical to its success.
  [[Page S3208]] Senator Domenici, back in 1982, said that ``Congress 
is going to have to pass some very difficult enabling legislation to 
carry out the purposes of this amendment.''
  Senator Thurmond, in August of 1992, said: ``The amendment would not 
be self-enforcing. There would be a clear responsibility upon Congress 
to develop procedures to ensure that it is capable of satisfying its 
new constitutional responsibilities under the proposed amendment.'' 
Again, he said back in 1982, ``There is no serious question that 
Congress will have to develop effective implementing legislation.''
  Senator Hatch, the prime sponsor of this legislation, in March of 
1986, said the following:

       There is no question that Congress would have to pass 
     implementing legislation to make it effective. In that sense, 
     it is not self-executing. It would be the obligation of 
     Congress, after the amendment is passed by both Houses and 
     ratified by three-quarters of the States, to, of course, 
     enact legislation that would cause a balanced budget to come 
     about.

  The committee report for this legislation says the following:

       Congress has a positive obligation to fashion legislation 
     to enforce this article. An amendment dealing with subject 
     matter as complicated as the Federal budget process must be 
     supplemented with implementing legislation.

  In a colloquy that I had with Senator Simon the last time that this 
amendment was before this body, we had the following questions and 
answers:

       Mr. Levin. . . . How would the monitoring of the flow and 
     receipts of outlays be done to determine whether the budget 
     for any fiscal year is on the track of being balanced? Would 
     this require implementing legislation?
       Mr. Simon. There would have to be monitoring, and future 
     legislation would have to take care of the implementation of 
     that monitoring.
       Mr. Levin. What exactly is the definition of receipts and 
     outlays? Specifically, would the receipts and outlays to the 
     Bonneville Power Administration be receipts and outlays of 
     the United States pursuant to this constitutional amendment? 
     Would the answer to these questions require implementing 
     legislation?
       Mr. Simon. Implementing legislation will be needed on some 
     of these peripheral questions. . .
       Mr. Levin. . . . In an instance in which the Office of 
     Management and Budget and the Congressional Budget Office 
     disagree with each other on what a level of outlays is, how 
     will the dispute be resolved so that it can be determined 
     whether or not outlays exceed receipts?
       Mr. Simon. Future legislation will have to take care of 
     this.
       Mr. Levin. Who will determine the level of receipts and 
     whether a revenue bill is ``a bill to increase revenues"? . . 
     .
       Mr. Simon. That will also have to be determined through 
     future legislation.
       Mr. Levin. At what point will it be determined that outlays 
     will in fact exceed revenues and that action such as a tax 
     increase, spending cuts, or tapping into a rainy day fund 
     will be required? . . .
       Mr. Simon. . . . future legislation will work out the 
     details.

  The importance of enforcement legislation is recognized inside the 
constitutional amendment itself. In section 6--and the report of the 
committee makes it clear that within section 6 it says that the 
Congress shall enforce and implement this article by appropriate 
legislation--the words of section 6, in the words of the committee 
report:

       This section recognizes that an amendment must be 
     supplemented with implementing legislation.

  Again, Senator Hatch, the distinguished chief sponsor of this 
legislation, said as recently as January 30 that:

       Moreover, under section 6 of the amendment, Congress must, 
     and I emphasize must, mandate exactly what type of 
     enforcement mechanism it wants, whether it be sequestration, 
     rescission, or the establishment of a contingency fund.

  Mr. President, there have been a number of critical questions raised 
during this debate that have also been left to enforcement legislation. 
There is the question of impoundment. Will the President have the right 
to impound under this constitutional provision? The answer is, that 
will be determined by implementing legislation.
  Then the question is, what is the role of the courts? An absolutely 
essential question for many Members of this body, indeed a question so 
essential that some votes may be dependent upon making certain that the 
courts will not be able to raise taxes or to veto appropriations.
  And, by the way, the chief sponsor in the House said specifically in 
a question and answer colloquy that a court could have the right to 
veto an appropriation or a revenue.
  These are absolutely essential questions to not be left ambiguous. 
The answer is future enforcement legislation will determine whether or 
not the court will have any such authority.
  Well, it is not good enough to leave the critical issues and the 
teeth to future enforcement legislation when this Congress can and 
should adopt that legislation prior to this amendment going to the 
States, assuming, again, that it passes the Senate tomorrow. There is 
no reason why we should not accept the responsibility of deciding what 
is in that enforcement legislation, what the teeth will be, what the 
sequestration mechanism will be, and not just simply kick the 
enforcement can down the road.
  If we do that, it means there is no hook. We are off the hook for 7 
years, at least, because 2002 is the first year it is enforced. And we 
may find there is no hook then.
  Mr. President, it has been said if this constitutional amendment is 
adopted, that we will adopt some future implementation legislation; 
because we have all taken an oath to uphold the Constitution, that that 
will increase pressure on Members to adopt enforcement legislation.
  First of all, our oath to the Constitution does not require, does not 
assure, we will be able to agree on any particular mechanism or set of 
procedures to carry out the constitutional amendment if it is adopted. 
The oath we take is not a group oath, it is an individual oath. As 
individuals, we would be duty bound to carry out the intent of the 
Constitution, of course, duty bound to support an endorsement 
mechanism, presumably. But that is far different from language being 
self-enforcing, because there is no assurance that a majority of the 
Congress would agree on the same mechanism, even though every Member 
might carry out his constitutional duty and vote for one enforcement 
mechanism or another.
  To the extent that the Constitution adds some pressure to reach a 
majority decision on an enforcement mechanism, that pressure would be 
significantly enhanced and made much more real if the Senate adopts my 
amendment tomorrow.
  Under my approach, the pending constitutional amendment--assuming, of 
course, that two-thirds of the Congress votes for it--would be sent to 
the States for ratification only after the enforcement legislation is 
passed. And to the extent that there is a hammer on Members in the 
language of the pending amendment to adopt enforcement language down 
the road, there is a hammer on Members to adopt the enforcement 
legislation if the pending constitutional amendment is not sent to the 
States for ratification until after we adopt that enforcement mechanism 
legislation.
  Now, without my amendment, if we adopt a constitutional provision 
tomorrow, it is but an empty promise. It would allow the Congress to 
put off adopting the credit implementation legislation, and therefore 
allow the argument to be made that the deficit was cured, although, in 
fact, the strong medicine has not even been taken.
  There are two advantages, again, to adopting this amendment. First, 
it places the responsibility on this Congress instead of leaving it to 
a future Congress. We should not kick that enforcement can down the 
road to some uncertain time and some uncertain fate. Enacting a clear 
mechanism for enforcing the constitutional amendment before the 
amendment goes to the States is a way of assuring that we meet our 
responsibility instead of abdicating it.
  Second, the States would be informed how that mechanism would work so 
that they could consider that in their ratification deliberations. This 
would not be a long delay. We were given assurances by the Senator from 
Utah the other night relative to part of the enforcement legislation as 
it relates to the courts, assurances that were given to the Senator 
from Georgia, that that could be worked out during a summit by the end 
of the summer. I believe he said this need not be a long delay. This is 
just a matter of months to be sure 
[[Page S3209]] that we do not just say, in a constitutional amendment, 
some future Congress should adopt enforcement legislation to achieve a 
balanced budget.
  My amendment, if adopted, would make sure that if we adopt a 
constitutional amendment, that before we send it to the States for 
ratification, that we adopt an enforcement mechanism to achieve a 
balanced budget. That will make it much more likely. I am very 
concerned that enforcement mechanism would be adopted and that it would 
then be subject to the scrutiny of the States in determining whether or 
not they should ratify this amendment.
  Mr. President, I thank the Chair. I yield the floor.
  Mr. HATCH. Mr. President, I will not be long. I understand that the 
Senator from Maryland would like to speak.
  I would like to point out one more time about our balanced budget 
debt tracker. We only have 1 more day to go. We might as well finish 
what we started, and that is after the 27th, we were $22 billion in 
debt; after the 28th, we will be up to $23 billion; the 28th day, we 
have added to our deficit of $4.8 trillion since the beginning of this 
debate. Frankly, we are now in day 29, and here we are, as we debated 
this matter, we are now up to $24,053,760,000 in additional debt to the 
baseline of $4.8 trillion since we started debating. We will be adding 
one more of these green debt tracker slots tomorrow, the 30th day since 
we started debate on this matter.
  It is apparent this will go up every day we do not pass a balanced 
budget amendment. It is apparent we will have to have $300 billion a 
year in added deficits, maybe $350 billion a year in added deficits 
every year that we do not do something about this. So this balanced 
budget debt tracker is a very, very, important indication of just where 
we are going.
  We have to do something about it. Everybody admits that. Are we going 
to do business as usual, which is where we have been for the last 60 
years--certainly, the last 36 years, when we have only balanced the 
budget once--or are we really going to do something new here, something 
that would work, to put the pressure on Presidents to have to do 
something about bringing the budget into balance, and something that 
would put pressure on Members of Congress to make priority choices 
among competing programs?
  If we do not do that, we are mortgaging the future of our children 
and grandchildren. I hate to see that. Tomorrow is a big day. By the 
end of the day, we will know whether we passed a balanced budget 
amendment, and I hope we will. I will limit my remarks to that and the 
chart tomorrow, and hopefully we can finish tomorrow in a short time.
  Mr. President, the opponents of the balanced budget amendment seem to 
have an infatuation with requiring the implementation plans before we 
pass the balanced budget amendment. This latest version requires us to 
pass the implementing legislation before we pass the amendment itself. 
This is, to say the least, a peculiar way of proceeding.
  This amendment is a requirement that we put the cart before the 
horse. Mr. President, how can we implement a constitutional amendment 
which has not yet been ratified?
  If the Framers worked as this proposal suggests we should, all 
Federal laws would have had to be passed before there was even a 
Congress to pass them. Does the Senator believe we should have had to 
choose all the jurors for a trial before we adopted the sixth 
amendment? Or pass the 1964 Civil Rights Act before we adopted the 14th 
amendment?
  This type of amendment is a perfect example of why we need the 
balanced budget amendment. Congress is always looking for a way out--a 
way to stave off responsibility. And the Congress knows that the 
balanced budget amendment means that it will be held responsible for 
its actions.
  It also confuses the debate about the rule with the debate about 
outcomes within the rule. The proponents are interrupting the 
discussion of the rules until the outcomes within the rules can be 
determined. It is like stopping the discussion of the rules of a poker 
game until it can be determined what hands will be dealt. We need to 
establish this new regime of rules before we can start implementing it.
  Mr. President, I have made it as clear as I possibly can that after 
the balanced budget amendment is ratified, I will be more than happy to 
work with any Member of the Senate in drafting the implementing 
legislation. I cannot do any more than that. It is simply not possible 
to do as the proposed amendment seeks, to pass the implementing 
legislation before the balanced budget amendment is ratified.
  I hope we can put this proposal aside and move back the real issue at 
hand--will we stop the Government's slide into an endless pit of debt 
or stand idly by and watch as the country falls into economic crisis?
             in opposition to the balanced budget amendment

  Mr. MOYNIHAN. Mr. President, the distinguished scholars and 
administrators of the Jerome Levy Economics Institute of Bard College 
placed an advertisement in this morning's Washington Post which 
delineated the perils of writing economic policy into the U.S. 
Constitution. This document deserves the fullest attention of the 
Senate and I ask unanimous consent that the entire text be printed in 
the Record.
  There being no objection, the item was ordered to be printed in the 
Record, as follows:

               [From the Washington Post, Feb. 27, 1995]

                       An Invitation to Disaster

       The Balanced Budget Amendment would destroy the ability of 
     the United States government to prevent economic depressions, 
     to respond to natural disasters, to protect the savings of 
     tens of millions of working Americans, and, over time, to 
     enable the economy to grow.
       The ability of the federal government to pump money into an 
     ailing economy has time and again in the postwar era limited 
     the depth and duration of a recession and prevented a 
     depression. During the 1957-58 recession, the Eisenhower 
     administration deliberately increased the deficit. That 
     strategy brought a rapid end to the decline. During every 
     recession thereafter, either by design or through 
     circumstance, a deficit was crucial in containing and ending 
     the decline. For example, tax reductions adopted in 1981 were 
     not planned as a counter-recession tactic, but the enacted 
     cut that took effect in 1982 was the key to the recovery that 
     began in that year.
       Floods in the Midwest, hurricanes in the Southeast, and 
     earthquakes in California during recent years prompted the 
     federal government to spend hundreds of millions to relieve 
     suffering and limit damage. Scientists who study natural 
     phenomena warn against worse disasters. The balanced budget 
     amendment would keep the federal government from dealing with 
     such calamities.
       Occasional man made disasters have occurred throughout the 
     history of capitalism--for example, the savings and loan 
     debacle of the 1980s. Had the federal government not been 
     able to provide the money to validate the deposits of 
     millions of ordinary citizens, their losses and runs on 
     saving and commercial banking institutions would have 
     recreated 1932. To assume that financial crises will never 
     recur is unrealistic.
       The balanced budget amendment ignores the nature of our 
     monetary system. The Federal Reserve and the commercial banks 
     issue money against their holdings of federal debt. Under a 
     balanced budget amendment, the debt will not increase. 
     Eventually the system will not be able to create the money 
     the economy needs in order to grow.
       The Jerome Levy Economics Institute.
     S Jay Levy,
                                                         Chairman.
     Leon Levy,
                                                        President.
     Hyman Minsky,
                                            Distinguished Scholar.
     Dimitri Papadimitriou,
                                               Executive Director.
     Edward V. Regan,
                                             Distinguished Fellow.
     David A. Levy,
                           Vice Chairman, Director of Forecasting.
  Mr. CHAFEE. Mr. President, there is no greater problem facing the 
country today than our continual failure to balance the Federal budget.
  Unfortunately, this is not a new phenomenon. Over the past 33 years 
we have balanced the budget once, one-quarter of a century ago in 1969. 
Had the Social Security program not generated a surplus, we would not 
have balanced the budget in that year either.
  Furthermore, the forecasts put out by the Congressional Budget Office 
and the administration show that, absent dramatic action on our part, 
these deficits will not end any time soon. For example, CBO predicts 
that the deficit in the year 2005 could be as high as $421 billion.
  The President's budget, which was released early this month, 
forecasts Federal deficits of approximately $200 billion for each of 
the next 5 years, and gives no promise that they will decline 
[[Page S3210]] anytime after that period. Even worse, the President has 
taken little action to address this problem.
  In the President's plan, $81 billion of deficit reductions are 
relatively minor when it is realized those occur over 5 years; $60 
billion of those cuts come from keeping discretionary spending at 
today's level.
  Why is it bad that the Federal Government routinely spends more than 
it takes in?
  We are told in soothing tones by the administration that the deficits 
are each year predicted to be a lower percentage of the gross domestic 
product. That is somehow meant to be grand news, even though the dollar 
amounts of the deficits constantly grow.
  The problem is that every year we run a deficit, we must borrow to 
fund the shortfall. From the beginning of our country until today, we 
have incurred a debt of about $5 trillion, with the overwhelming 
portion of that accumulated over the past 15 years.
  The cost of servicing that debt will total $339 billion in 1995, 
making interest the second highest single Federal expenditure after 
Social Security.
  To put this number in perspective, our gross interest expense for 
1995 is more than the entire Federal budget 20 years ago. Imagine how 
this money could be used to improve our education, or better our health 
care system, or bolster our efforts to combat crime.
  Aside from diverting resources that could be used for much better 
purposes, the deficit also places a great strain on the national 
economy. The most notable effect is on interest rates.
  Alan Greenspan, Chairman of the Federal Reserve Board, recently 
testified before the Finance Committee on this subject. According to 
Chairman Greenspan ``investors here and abroad are exacting from 
issuers of dollar-denominated debt an extra inflation risk premium that 
reflects not their estimate of the most likely rate of price level 
increase over the life of the obligation, but the possibility that it 
could prove to be significantly greater.'' This risk premium is 
directly the result of our large Federal budget deficits.
  These artificially high interest rates affect all Americans. Families 
pay this risk premium when they borrow money for a home, for a new car, 
to finance their children's education.
  The Federal deficit also has a negative effect on future economic 
growth. Our potential to expand the economy is directly linked to the 
amount we invest in physical and human capital. Newer and better 
machinery, and a work force whose skills are continually updated, 
provide the foundation for increasing our output of goods and services. 
With this higher productivity comes a higher standard of living.
  To achieve this, however, we must have a pool of national savings 
from which this investment can be made. Unfortunately, our national 
savings rate has declined dramatically over the last decade, in part 
because the Federal Government has engaged in a policy of dissaving 
through its deficit spending. The Federal Government's reliance on 
borrowing to pay its bills crowds out the private sector, making it 
more difficult for it to obtain financing.
  But the worse consequence of this fiscal irresponsibility is that we 
are jeopardizing the economic futures of our children and 
grandchildren. We are living beyond our means and passing along the 
bill to future generations.
  I recently ran across a paper which described this problem. The paper 
discussed the idea of generational accounting, which a process of 
measuring how Government policies affect the distribution of income and 
wealth among different generations rather than simply over a 5- or 10-
year budget period.
  To make this comparison, the authors calculated lifetime net tax 
rates for various generations. My generation will face a
 lifetime net tax rate of 26 percent. This compares to a lifetime net 
tax rate of 34 percent for a person born in 1991.

  What is troubling is the gloomy forecast for future generations. 
According to this analysis, if we do not take action to improve our 
fiscal situation, future generations will face lifetime tax rates that 
approach 70 percent. In other words, future generations can look 
forward to handing over 70 cents of each dollar earned to the 
Government if we do not reverse our present course.
  For the past few years the administration has also included a 
generational analysis in its budget documents. Its analyses generated 
results that were similar to the figures just mentioned. Unfortunately, 
the President chose to delete this section from this year's budget.
  Why will future generations face such a daunting tax bill? Consider 
the obligations we have levied upon them. The Social Security Program, 
while solvent today, faces drastic long-term problems once the baby-
boom generation--born in the 1950's--retires. The surpluses, that the 
program is currently generating, will reverse in the year 2013 and will 
quickly evaporate, leaving workers in the middle of the next century 
with a hefty bill for providing retirement benefits for those working 
today.
  On top of that, the general fund has amassed $5 trillion in debt to 
date and is likely to add $750 billion more even with the passage of 
the balanced budget amendment. At some point that debt must be repaid.
  What exactly does the balanced budget amendment do? Very simply, it 
prohibits Federal outlays from exceeding Federal receipts unless a 
three-fifths majority of both Houses of Congress approve a specific 
deficit.
  In other words, it says that Congress can only spend what it is 
willing to collect in taxes, unless Congress determines that there is a 
legitimate reason for running a deficit. Such a situation could arise, 
for example, if the country fell into a recession or was hit with a 
natural disaster. But those would be the exceptions which Congress 
would expressly authorize. The balanced budget constraint on Congress 
would be comparable to that which every American family faces.
  Mr. President, this amendment makes fiscal responsibility the norm 
rather than the exception.
  The Federal Government has failed to balance its budget for 25 
straight years. Over this period there have been both Republicans and 
Democrats in the White House, and the Senate has had both Republican 
and Democratic majorities. Neither party is free from blame. The truth 
is, there has not been the will to make the tough decisions necessary 
to balance the budget
  The amendment before the Senate today demands the same fiscal 
responsibility from the President that it establishes for Congress. It 
requires the administration to submit a budget to Congress in which 
outlays do not exceed receipts. I think that makes perfect sense. It 
recognizes that both branches of Government must participate in this 
very difficult task if we are to succeed.
  In addition to requiring a balanced budget, the amendment requires a 
majority of the whole number of each House of Congress to approve, by a 
rollcall vote, legislation raising revenue. Frankly, this is not a 
critical component of this proposal, because historically most tax 
bills have passed Congress with constitutional majorities.
  However, I am grateful that the sponsors have not sought to include a 
three-fifths majority requirement for raising revenue. That issue was 
considered and rejected by the House, and rightly so. That provision 
would be disastrous for this country, because it would significantly 
hamper our ability to govern. Facing a potential deficit, Congress 
would, in all likelihood, be forced to cut spending rather than raise 
revenue because the latter would be much more difficult to accomplish. 
While I support spending cuts over tax increases, it would be unwise 
for us to tilt the playing field against raising revenue as part of the 
Constitution. I would not support this amendment if the three-fifths 
majority for raising revenue were included in it.
  The amendment includes a process whereby its requirements could be 
waived by a simple majority for any year in which a declaration of war 
is in effect or where the United States is engaged in military conflict 
which causes an imminent threat to national security. I think those are 
legitimate circumstances to warrant deficit spending, and the amendment 
provides the appropriate amount of flexibility to adequately address 
them.
  Mr. President, the amendment encompasses the entire Federal budget. 
Section 7 states that ``total receipts shall include all receipts of 
the United 
[[Page S3211]] States Government except those derived from borrowing'' 
and that ``total outlays shall include all outlays of the United States 
Government except for those for repayment of debt principal.''
  What this means is that every dollar that comes into the Treasury and 
every dollar that goes out of the Treasury will be counted in 
determining whether the budget is balanced.
  Again, this makes eminent sense and is exactly the way every family 
in America must manage its fiscal affairs.
  Much of the effort to derail this resolution has centered on 
excluding certain programs from the balanced budget requirement. In 
fact, this assault began during the amendment's consideration in the 
Judiciary Committee, when an effort was made to exclude Social 
Security.
  Mr. President, I find it inconceivable that we would consider 
adopting, as part of the Constitution, an exclusion for Social Security 
or any other aspect of the federal budget. I am firmly behind 
protecting the fiscal soundness of the Social Security System, but I 
think it is absurd to exempt a program that represents 29% of all 
Federal receipts and 22% of all Federal outlays.
  The true folly with this effort to protect Social Security is that by 
applying different rules to that program it becomes a magnet for 
efforts to circumvent the balanced budget amendment. Other federal 
programs will begin to find their way under the Social Security 
umbrella, and we will have achieved little if anything in the way of 
deficit reduction. This loophole, once opened, would be very difficult 
to shut.
  Exempting Social Security receipts would also provide a perverse 
incentive for future Congresses to shift Social Security taxes revenues 
to the general fund. This action would be particularly attractive since 
the program currently collects more in revenue than it pays out in 
benefits. But such an action would seriously undermine the actuarial 
balance of the Social Security trust fund, and would almost certainly 
require draconian changes in the future in order to stave off 
bankruptcy when the baby boom generation retires. The irony of the 
exemption for Social Security is that, unless our fiscal house is in 
order, we won't be able to meet our Social Security obligations. And 
unless Social Security is factored into the balanced budget equation, 
we will not get our fiscal house in order.
  Critics of the balanced budget amendment argue that it is a sham; 
that it avoids the rough choices required to balance the budget. I 
strongly disagree.
  What it represents is the first and most important step in a long and 
very difficult journey to fiscal responsibility. It symbolizes that the 
tides have finally changed; that we are committed to living within our 
means, and that we are willing to embody that principle in the document 
that sets forth the foundation on which our whole system of government 
operates.
  Other fiscal disciplines we have enacted, while important, have not 
done the job. The Gramm-Rudman-Hollings deficit control laws, the 
firewalls, the discretionary spending caps, and the pay-as-you-go rules 
have failed to break the attractive lure of deficit spending.
  Opponents have argued that we should not pass a balanced budget 
amendment until its supporters outline specifically how we plan to 
reach that goal. That was the so-called right-to-know amendment to the 
resolution before us. But this is simply a smokescreen thrown up by 
those in this Chamber who have no intention of supporting this 
proposal, whether or not a plan is outlined.
  The fact is, there is no agreed upon path to reaching a balanced 
budget. The path that I would prescribe is likely to be different than 
the paths that other members might advance. Any plan that will be 
adopted to reach this goal, will be the product of numerous compromises 
and the give and take of the normal political process. All of that will 
take place once the requirement is established. The appropriate time 
frame for outlining how to balance the budget is after we have 
committed ourselves to making that the law of the land. It is the 
process that we are trying to change with this proposal.
  To those who do not support the resolution before us I ask: What is 
your plan? Are you content with the current situation where annual 
deficits exceed $200 billion for the foreseeable future? Do you believe 
that if we put this problem off for another day, it will get easier? Do 
you believe that we are improving our children's futures by dropping 
this massive debt in their laps?
  Mr. President, every previous effort to balance the budget without an 
amendment to the Constitution--that is, by statute--has failed to 
achieve that goal.
  Why has that been the case? The answer is simple.
  Once the targets become too difficult to meet, we simply changed the 
law. This resolution makes it difficult for us to avoid our 
responsibility. The task is monumental, but the consequences for our 
failure are far worse. If this amendment is defeated, the ones who will 
be hurt the most are the future generations of our nation.
  Ms. SNOWE. Mr. President, as I have done on so many previous 
occasions in Congress, I rise today in strong support of a balanced 
budget amendment to the Constitution of the United States.
  It is my hope--and that of the American people--that we will pass 
this amendment tomorrow and begin to chart a new course for this 
Nation.
  And there is now question that our Nation needs to change direction--
both politically and economically, and put an end to the fiscal status 
quo. That message was made clear to all of us after the results of last 
November's elections. It is time to hear and act on that clarion call 
for change.
  Tomorrow, we will have a chance to put to an end some of the 
hallmarks, some of the monuments, of America's status quo: our growing 
national debt and annual deficits.
  I graduated from the University of Maine in 1969, and since the day I 
graduated, Congress has been unable--even unwilling--to pass one 
Federal budget that would have brought revenues in line with 
expenditures. That's right--we have not experienced one balanced budget 
since 1969, 26 years ago. It is almost hard to believe that we haven't 
passed a balanced budget since the year America put a man on the Moon. 
But with today's $4.7 trillion debt, we could walk to the Moon and back 
on a bridge of dollars bills stacked end to end from that debt.
  As I have said before, this 26-year dry stretch represents one of our 
Nation's worst losing streaks, and it is Congress' very own fiscal 
losing streak.
  But, today, we stand at the precipice of monumental change--the kind 
of change the American people voted for last November. The kind of 
desire for change that brought me here to this Chamber as a U.S. 
Senator. Today's vote on this measure will help the American people, 
``to know the change and feel it,'' in the words of the English poet, 
John Keats.
  Today is our opportunity to rise to the occasion and meet the 
expectations of the citizens of this country, or, we merely do nothing 
and uphold the malaise of economics-as-usual.
  Passing the balanced budget amendment will help restore a lost sense 
of confidence and trust that our institutions of Government have been 
lacking for the past generation. Tomorrow's vote marks our generations' 
chance to make a positive difference for all other future generations 
of Americans. And as we act on this proposal, we should remind 
ourselves that what we do--or do not do--tomorrow on the floor on this 
amendment affects a generation that currently has no say, no voice, and 
no vote.
  But they will pay the price. They will foot the bill. They will bear 
a terrible burden.
  While today's vote has the promise of marking a new beginning for 
America, we must understand that it is only part of the means to the 
end--not the end of the process itself. If and when we decide to pass 
this balanced budget amendment, we begin a process that our Founding 
Fathers envisioned to be in the best interest of democracy and the 
welfare of the American people.
  Let us be clear about one thing: with tomorrow's vote, we will not be 
ratifying the balanced budget amendment. We will merely be giving the 
50 States the opportunity--the chance--to ratify the amendment before 
us. Congress has an obligation and a responsibility to let the American 
people's voice be heard throughout the Nation, in every 
[[Page S3212]] state capital. Seventy-eight percent of the American 
people support the balanced budget amendment, according to a recent 
survey by KRC Research and Consulting. Nearly three-quarters of all 
Democrats--73 percent--support the amendment, 88 percent of all 
Republicans, and 79 percent of all unenrolled voters.
  Mr. President, I am confident that, when given the chance, the States 
and the American people will say ``yes'' to a new regimen of spending 
within our means; they will say ``yes'' to fiscal responsibility, they 
will say ``yes'' to putting our Nation's fiscal house in order on a 
permanent basis, and they will say ``yes'' to a Congress accountable to 
them and their needs.
  After almost 4 weeks of continuous debate in the Senate and almost 13 
years after this Chamber passed this same measure by one vote, and 
after 26 years of continuous deficits and growing debts, it is hard to 
believe we have again come to this point.
  We have arrived at this juncture not necessarily by choice, but 
because economic and financial circumstances have compelled us to act. 
Our failure to take responsible action to end years and years of 
spiralling debt and deficit spending in the past is forcing our hand 
today. But make no mistake about it, tomorrow's vote is about 
tomorrow's generation.
  Although the figures and statistics about our debts and deficits have 
often been mentioned during Senate debate on the balanced budget 
amendment, they bear repeating once again in order to show the American 
people--and opponents of this measure--the devastating costs of our 
fiscal irresponsibility and lack of action.
  I think the American people and opponents of this measure need to be 
reminded that, since 1980, our national debt has grown from $1 trillion 
to a staggering $4.7 trillion for a growth rate of 309 percent. And our 
national debt is expected to grow to a whopping $6.3 trillion by 1999, 
for a growth rate of 453 percent since 1980. And an astounding 17 
percent of our national debt--$800 billion--is held by other nations or 
people in other nations--so even control over our own indebtedness has 
been handed to foreign banks and foreign creditors.
  The American people and opponents of this measure need to be reminded 
that in the next 5 years alone, the personal burden of this debt and 
these interest payments for every American man, woman, and child will 
rise from $17,938 to $22,909--that's growth of nearly $5,000 in just 5 
years.
  In fact, it should be pointed out that the Office of Management and 
Budget has already estimated that if we continue our current cycle of 
deficit spending, future generations--those who will inherit a Nation 
beset by fiscal problems we could not solve--will be forced to suffer a 
tax rate of 82 percent in order to pay the bills we left behind.
  The American people and opponents of this measure need to be reminded 
that the annual interest we pay on our ever-increasing national debt 
has grown almost exponentially, rising from $177 billion in 1982--the 
only year when the Senate passed this measure--to almost $300 billion 
in 1994. And our annual interest payments are expected to balloon to 
$373 billion in 1999, for a 219-percent growth rate between 1982 and 
1999.
  To appreciate the impact of interest costs on our annual deficits, 
one only need look at the chart behind me. If we continue our current 
fiscal course, the interest costs related to servicing the debt will 
continue to exceed our total annual deficits.
  The American people and opponents of this measure need to be reminded 
that every day, we add $819 million in daily interest to the national 
debt. That figure will rise to $1 billion in interest every single day 
of the year. In fact, as I speak here for about 8 minutes on behalf of 
the balanced budget amendment, we will have added almost $5 million to 
the debt. Unfortunately, even when I do stop speaking, the debt keeps 
on growing--and growing, and growing like the ``Energizer Bunny of our 
fiscal irresponsibility.''
  The American people and opponents of this measure need to be reminded 
that these interest payments on the debt already consume 14 percent of 
our annual Federal budget. These interest payments consume 57 percent 
of all personal income taxes each year, while the interest payments we 
make on our debt are eight times higher than what we spend on our 
children's education, 50 times higher than what we spend on job 
training for our workers, and 55 times higher than what we spend on 
Head Start programs. With these interest payments out of the way, 
Congress can finally prioritize its spending to where the American 
people want their tax dollars to be spent.
  The American people are painfully aware that the estimates of future 
deficits aren't getting any smaller no matter how much Congress 
procrastinates its fiscal discipline. Only a few months ago, the 
Congressional Budget Office told Congress that the estimated deficit in 
the current fiscal year would reach $162 billion, steadily rise upward 
to $197 billion by 1998, and climb again to $257 billion in the year 
2000, and $319 billion in 2002.
  The CBO now estimates that the deficit will be higher than prior 
projections by an average of $25 billion per year over the next 5 
years. This year's deficit has already been increased to $176 billion, 
$222 billion in 1998, $284 billion in 2000, and $421 billion in 2005. 
Not only that, but between now and 2002, we will add a cumulative total 
of nearly $2 trillion to the existing debt if we make no change in 
fiscal policy.
  But the American people also need to know that these numbers have a 
direct impact on their lives and on the future of their families. And 
they need to know that a balanced budget amendment would have a 
positive impact on their futures and on the economy of the Nation.
  The New York Federal Reserve Board, in an often referred to study, 
showed how America lost five percent growth in gross domestic product--
a loss in economic growth that translates into a 3.75 million job loss 
during the decade spanning 1979 and 1989--jobs in rural America, jobs 
in our inner cities, jobs on America's farms, and jobs for America's 
youth.
  The Concord Coalition study showed that a loss of national 
productivity has caused a sharp decline in America's family incomes, 
resulting in an average family income of $35,000 rather than the 
estimated $50,000 it would have been in the absence of our structural 
deficits and burgeoning debt.
  In June 1992, the General Accounting Office released a report showing 
a gradual decline in America's quality of life and standard of living 
if our deficit spending is not brought under control. But the report 
also showed that if we did balance the budget by the year 2001, then by 
the year 2020 the average American will have real growth in quality of 
life and income by 36 percent.
  The econometrics firm DRI/McGraw Hill reported that a balanced budget 
is worth $1,000 a year to the average American household over the next 
10 years. A balanced budget would boost long-term economic growth: 
national interest rates would drop by 2.5 percent and by the year 2002, 
half the savings that is said to be needed in our budget simulations 
could come from lower interest costs.
  So the balanced budget amendment is not a gimmick--it does yield 
positive results. Most importantly, it puts into law what Congress has 
been unable and unwilling to do for the past two decades: that is, 
muster the courage and discipline necessary to balance the budget 
without an amendment to the Constitution.
  Over the years--and often to stem the tide toward a balanced budget 
amendment--Congress has tried to balance the budget through statutory 
means. And on each and every one of these efforts Congress has failed.
  The simple fact is statutory laws are easy to ignore. They are a 
paper tiger. During the past 26 years, Congress has operated without 
this amendment, but with eight statutes designed to lower or eliminate 
deficits. Looking at this chart, it is clear what the results have 
been. Passing this amendment is the only way--our last choice, our last 
resort--to put our fiscal house in order.
  I share the sentiments of whose who say Congress should be able to 
balance the budget without a constitutional amendment. But it is also 
said that you can learn from history. Mr. President, if the past 26 
years have taught us anything, it is that Congress and the President 
are unwilling and unable to balance the budget absent a force 
[[Page S3213]] greater than politics. That force is the Constitution of 
the United States.
  If the states ratify this amendment, Congress will be beholden to a 
law with as much weight as the original Bill of Rights. Congress will 
be prohibited from ignoring annual deficits. We will be compelled by 
law to act. Each of us in this Chamber will have a duty to follow our 
solemn oaths of office to uphold and protect the Constitution. When we 
pass this measure, we will be beholden to following through on that 
oath.
  Mr. President, today we can make history. Today, we should make 
history. We can make history by molding a better, brighter future for 
the next generation and for every generation thereafter. I hope today 
we will make the right kind of history, and chart a new course for 
America, one where balanced budgets and fiscal responsibility become 
the norm, and not the exception to the rule.
              vice president and balanced budget amendment

  Mr. HATCH. Mr. President, the issue arises as to how House Joint 
Resolution 1 effects the obligations of the Vice President, as 
President of the Senate, to vote in case of a tie vote in the Senate.
  Article I, section 3 of the Constitution provides that the ``Vice 
President shall be President of the Senate, but shall have no Vote, 
unless they be equally divided.'' By the plain meaning of this 
provision, the Vice President is not a Member of the Senate; he is 
merely the presiding officer--President of the Senate--a neutral 
umpire, and, thus, cannot vote or take part in the deliberations of the 
Senate. The only exception to this is where there exists a tie vote. In 
that case, to ``secure at all times the possibility of a definitive 
resolution of the body, it is necessary that the [Vice President] 
should have only a casting vote.'' The Federalist No. 68 (Hamilton).
  But the situation where the Vice President can break a tie vote only 
applies to a simple majority vote, the run-of-the-mill ordinary vote of 
the Senate. Where the Constitution, however, provides for a 
``supermajority'' vote, in situations where the Framers of the 
Constitution feared the passions of majority rule would retard reasoned 
deliberation, there really is no occasion for a tie vote and therefore 
the Vice President may not vote.
  These include the two-thirds vote requirement of each House to 
override a veto; the two-thirds vote requirement of the Senate to give 
its advice and consent to treaties; and the two-thirds vote requirement 
of the Senate to convict on impeachment.
  The balanced budget amendment's supermajority provisions, whether the 
three-fifths number of the whole number of each House of Congress [sec. 
1 waiver to allow outlays to exceed receipts; sec. 2 waiver to increase 
the limit on the debt], or the ``constitutional majority'' provisions--
a majority of the whole number of each House--[sec. 4 requirement to 
raise revenue; sec. 5 requirement to waive amendment when the U.S. is 
involved in a military action that is a threat to national security]--
would work the same way as the Constitution's other supermajority 
provisions.
  Because these ``supermajority'' votes require a supermajority vote of 
the ``whole number of each House of Congress,'' and it is clear that 
the Vice President is not a member of either House, these provisions, 
like the two-thirds vote in the Senate for treaties, are exceptions to 
the simple majority vote general rule that the Vice President may vote 
in cases of a tie in the Senate.
  Moreover, the Vice President would not have a vote because these 
supermajority provisions would mandate that a tie-vote would be 
meaningless. For instance, 60 votes in the Senate would be required to 
raise the debt ceiling--where three-fifths is required under section 2 
of the amendment, and 51 votes would be needed to raise taxes, as 
required by section 4.
  Mr. SPECTER. Mr. President, I have sought recognition to comment 
briefly on the issue of the potential issue of the jurisdiction of the 
Federal courts to decide matters under the constitutional amendment for 
a balanced budget if it is passed and ratified. I think it is important 
that courts not have jurisdiction to intervene in any controversy where 
the issue is the raising of taxes or the cutting of expenses, which 
would be the issues under the balanced budget amendment, because it is 
not a judicial function.
  I think the preferable course is to have within the body of the 
amendment itself a flat statement that the Federal courts--no courts--
would have jurisdiction over any controversy arising out of the 
balanced budget amendment.
  We have seen in a case originating in Kansas City, MO, the State of 
the distinguished Presiding Officer, a situation where the courts 
actually ordered the imposition of taxes which, in my view, is not in 
any conceivable regard a judicial function. If there is any core 
legislative function, it is the raising of taxes. We elected officials 
are responsible to our constituents, and that is a core legislative 
function. But it happened and it was upheld by the Supreme Court of the 
United States in the celebrated 5-to-4 decision a few years ago.
  There is a major issue as to whether the Congress has the authority, 
through legislation, to take away the jurisdiction of the Supreme Court 
or the Federal courts on a constitutional issue. There is a post-Civil 
War case, ex parte McCardle, which suggests that Congress has that 
jurisdiction. In my legal judgment, that case is not valid for any 
matter which is current today.
  I believe that it is very unwise for the Congress to have legislative 
authority to take away the jurisdiction of the Supreme Court of the 
United States, for example, on a first amendment issue. That was a 
matter which was discussed extensively during the confirmation 
proceedings of Chief Justice Rehnquist, when after some discussion 
Chief Justice Rehnquist concluded that the Congress would not have the 
authority to take away the jurisdiction of the Federal courts on a 
matter involving the first amendment. When we got to other amendments, 
the fourth amendment, fifth amendment and sixth amendment, Chief 
Justice Rehnquist would not give the same response, nor would he 
respond to the difference of the authority of Congress to take away 
jurisdiction of the first amendment contrasted with the fourth, fifth 
or sixth amendments.
  I give that very brief review to suggest that there may well be a 
question as to whether the Congress, through enabling legislation, 
could take away the jurisdiction of the courts to intervene on a 
controversy arising out of this balanced budget amendment. It is my 
hope that we will yet address that issue within the confines of the 
amendment itself. It may well be that critical votes necessary to pass 
the balanced budget amendment will depend upon our ability to find a 
way to satisfy those Senators. I believe that it is so important to 
pass the constitutional amendment for a balanced budget that I continue 
to support the amendment, even though an amendment offered to the 
constitutional amendment for a balanced budget failed in an effort to 
put within the balanced budget amendment itself a prohibition of 
Federal court jurisdiction. It gets sort of complicated when we talk 
about it, Mr. President.
  I think the factors are clear. I think that our legislative history 
is clear. Aside from putting in a prohibition of Federal court 
jurisdiction, our legislative history is clear that it is congressional 
intent on the balanced budget amendment that the Federal courts should 
not have jurisdiction. But even the question of congressional intent is 
a muddy field, with some Justices--notably, Justice Scalia--saying he 
will not look to congressional intent but only to the body of the 
language itself.
  So I will conclude by saying that I hope we have made it clear as a 
matter of Senate intent, congressional intent, that the courts should 
not have jurisdiction over any controversy under the balanced budget 
amendment, and with the extra hope that we may make it plain in the 
body of the amendment itself before we conclude.
  I yield the floor.
  Mr. SARBANES addressed the Chair.
  The PRESIDING OFFICER. The Senator from Maryland.
  Mr. HATCH. Will the Senator yield for just a unanimous-consent 
request?
  Mr. SARBANES. Yes.
  Mr. HATCH. Mr. President, I ask unanimous consent that ``A Balanced 
Budget Amendment,'' an open letter to Congress from all kinds of 
economists, 
[[Page S3214]] doctors of economics, be printed in the Record. And I 
also ask unanimous consent that a column by William Safire on this 
matter also be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

  Balanced Budget Amendment--an Open Letter to Congress, February 1995

       It is time to acknowledge that mere statutes that purport 
     to control federal spending or deficits have failed. It is 
     time to adopt constitutional control through a Balanced 
     Budget Amendment. In supporting such an amendment, Congress 
     can control its spending proclivities by setting up control 
     machinery external to its own internal operations, machinery 
     that will not be so easily neglected and abandoned.
       Why do we need the Balanced Budget Amendment now, when no 
     such constitutional provision existed for two centuries? The 
     answer is clear. Up until recent decades, the principle that 
     government should balance its budget in peacetime was, 
     indeed, a part of our effective constitution, even if not 
     formally written down. Before the Keynesian-inspired shift in 
     thinking about fiscal matters, it was universally considered 
     immoral to incur debts, except in periods of emergency (wars 
     or major depressions). We have lost the moral sense of fiscal 
     responsibility that served to make formal constitutional 
     constraints unnecessary. We cannot legislate a change in 
     political morality, we can put formal constitutional 
     constraints into place.
       The effects of the Balanced Budget Amendment would be both 
     real and symbolic. Elected politicians would be required to 
     make fiscal choices within meaningfully-constructed 
     boundaries; they would be required to weigh predicted 
     benefits against predicted tax costs. They would be forced to 
     behave ``responsibily,'' as this word is understood by the 
     citizenry, and knowledge of this fact would do much to 
     restore the confidence of citizens in governmental processes.
       It is important to recognize that the Balanced Budget 
     Amendment imposes procedural constraints on the making of 
     budgetary choices. It does not take away the power of the 
     Congress to spend or tax. The amendment requires only that 
     the Congress and the Executive spend no more than what they 
     collect in taxes. In its simplest terms, such an amendment 
     amounts to little more than ``honesty in budgeting.''
       Of course, we always pay for what we spend through 
     government, as anywhere else. But those who pay for the 
     government spending that is financed by borrowing are 
     taxpayers in future years, those who must pay taxes to meet 
     the ever-mounting interest obligations that are already far 
     too large an item in the federal budget. The immorality of 
     the intergenerational transfer that deficit financing 
     represents cries out for correction.
       Some opponents of the Balanced Budget Amendment argue that 
     the interest burden should be measured in terms of percentage 
     of national product, and, so long as this ratio does not 
     increase, all is well. This argument is totally untenable 
     because it ignores the effects of both inflation and real 
     economic growth. So long as government debt is denominated in 
     dollars, sufficiently rapid inflation can, for a short 
     period, reduce the interest burden substantially, in terms of 
     the ratio to product. But surely default by way of inflation 
     is the worst of all possible ways of dealing with the fiscal 
     crisis that the deficit regime represents.
       Opponents also often suggest that Congress and the 
     Executive must maintain the budgetary flexibility to respond 
     to emergency needs for expanding rates of spending. This 
     prospect is fully recognized, and the Balanced Budget 
     Amendment includes a provision that allows for approval of 
     debt or deficits by a three-fifths vote of those elected to 
     each house of Congress.
       When all is said and done, there is no rational argument 
     against the Balanced Budget Amendment. Simple observation of 
     the fiscal record of recent years tells us that the 
     procedures through which fiscal choices are made are not 
     working. The problem is not one that involves the wrong 
     political leaders or the wrong parties. The problem is one 
     where those whom we elect are required to function under the 
     wrong set of rules, the wrong procedures. It is high time to 
     get our fiscal house in order.
       We can only imagine the increase in investor and business 
     confidence, both domestic and foreign, that enactment of a 
     Balanced Budget Amendment would produce. Perhaps even more 
     importantly, we could all regain confidence in ourselves, as 
     a free people under responsible constitutional government.
       Dr. Burton A. Abrams, University of Delaware; Dr. Ogden 
     Allsbrook, Jr., University of Georgia; Dr. Robert Andelson 
     (Ret), Auburn University; Dr. Annelise Anderson, Stanford 
     University; Dr. Terry L. Anderson, Political Economy Research 
     Center; Dr. Richard Ault, Auburn University; Dr. Charles 
     Baird, California State University--Hayward; Dr. Charles 
     Baker, Northeastern University; Dr. Doug Bandow, Cato 
     Institute; Dr. Eric C. Banfield, Lake Forest Graduate School 
     of Management;
       Dr. Andy Barnett, Auburn University; Dr. Carl P. Bauer, 
     Harper College; Dr. Joe Bell, SW Missouri State; Dr. James 
     Bennett, George Mason University; Dr. Bruce L. Benson, 
     Florida State University; Dr. John Berthoud, National 
     Taxpayers Union; Dr. Michael Block, University of Arizona; 
     Dr. David Boaz, Cato Institute; Dr. Peter J. Boettke, New 
     York University; Dr. Jeffrey Boeyink, Tax Education 
     Foundation;
       Dr. Cecil Bohanon, Ball State University; Dr. Donald J. 
     Boudreaux, Clemson University; Dr. Samuel Bostaph, University 
     of Dallas; Dr. Dennis Brennen, Harper College; Dr. Charles 
     Britton, University of Arkansas; Dr. Eric Brodin, Foundation 
     for International Studies; Dr. Richard C.K. Burdekin, 
     Claremont McKenna College; Prof. M.L. Burnstein, York 
     University; Dr. Henry Butler, University of Kansas; Mr. Ian 
     Calkins, American Legislative Exchange Council;
       Dr. W. Glenn Campbell, Hoover Institute; Dr. Keith W. 
     Chauvin, University of Kansas; Dr. Betty Chu, San Jose State 
     University; Dr. Will Clark, University of Oklahoma; Dr. J.R. 
     Clarkson, University of Tennessee; Dr. Kenneth Clarkson, 
     University of Miami; Dr. J. Paul Combs, Appalachian State 
     University; Dr. John Conant, Indiana State University; Dr. 
     John F. Cooper, Rhodes College; Mr. Wendell Cox, American 
     Legislative Exchange Council;
        Dr. Mark Crain, George Mason University; Dr. Ward Curran, 
     Trinity College; Dr. Coldwell Daniel II, Memphis State 
     University; Dr. Michael R. Darby, U.C.L.A.; Dr. Otto A. 
     Davis, Carnegie Mellon University; Dr. Ted E. Day, University 
     of Texas--Dallas; Dr. Louis De Alessi, University of Miami; 
     Prof. Andrew R. Dick, U.C.L.A.; Dr. Tom Dilorenzo, Loyola 
     College (MD); Mr. James A. Dorn, Cato Institute;
       Dr. Aubrey Drewry, Birmingham Southern College; Dr. Gerald 
     P. Dwyer, Jr., Clemson University; Dr. Robert B. Ekelund, 
     Jr., Auburn University; Dr. Peter S. Elek, Villanova 
     University; Dr. Jerry Ellig, George Mason University; Dr. 
     John M. Ellis, University of California; Dr. Kenneth G. 
     Elzinga, University of Virginia; Dr. David Emanuel, 
     University of Texas-Dallas; Dr. David J. Faulds, University 
     of Louisville; Mr. Richard A. Ford, Free Market Foundation; 
     Dr. Andrew W. Foshee, McNeese University;
       Dr. William J. Frazer, University of Florida; Dr. Eirik G. 
     Furuboth, University of Texas-Arlington; Dr. Lowell Galloway, 
     Ohio State University; Dr. David E. R. Gay, University of 
     Arkansas; Dr. Martin S. Geisel, Vanderbilt University; Dr. 
     Fred R. Glahe, University of Colorado; Dr. Paul Goelz, St. 
     Mary's University; Dr. Robert Gnell, Indiana State 
     University; Mr. John C. Goodman, National Center for Policy 
     Analysis; Dr. Kenneth V. Greene, S.U.N.Y.--Binghamton;
       Dr. Paul Gregory, University of Houston; Dr. Gerald 
     Gunderson, Trinity College; Dr. James Gwartney, Florida State 
     University; Dr. Claire H. Hammond, Wake Forest University; 
     Dr. Daniel J. Hammond, Wake Forest University; Dr. Ronald W. 
     Hanson, University of Rochester; Dr. David R. Henderson, 
     Hoover Institution; Dr. Robert Herbert, Auburn University; 
     Dr. A. James Heins, University of Illinois; Dr. John Heinke, 
     Santa Clara University;
       Dr. Alan Heslop, Claremont McKenna College; Dr. Robert 
     Higgs, Independent Institute; Dr. P.J. Hill, Wheaton College; 
     Dr. Mark Hirschey, University of Kansas; Dr. Bradley K. 
     Hobbs, Bellarmine College; Dr. Randall Holcombe, Florida 
     State University; Dr. Steven Horwitz, St. Lawrence 
     University; Dr. Doug Houston, University of Kansas; Dr. David 
     A. Huettner, University of Oklahoma; Dr. William J. Hunter, 
     Marquette University;
       Dr. Thomas Ireland, University of Missouri; Dr. Jesse M. 
     Jackson, Jr., San Jose State University; Dr. Gregg A. 
     Jarrell, University of Rochester; Dr. Thomas Johnson, North 
     Carolina State University; Dr. David L. Kaserman, Auburn 
     University; Dr. Robert Kleiman, Oakland University; Dr. David 
     Klingaman, Ohio University; Dr. W.F. Kiesner, Loyola 
     Marymount University; Dr. David Kreutzer, James Madison 
     University; Dr. Michael Kurth, McNeese State University; Dr. 
     David N. Laband, Auburn University;
       Dr. Everett Ladd, University Connecticut; Dr. Harry 
     Landreth, Centre College; Dr. Stanley Leibowitz, University 
     of Texas--Dallas; Dr. Dwight Lee, University of Georgia; Dr. 
     David Levy, George Mason University; Dr. Dennis Logue, 
     Dartmouth College; Dr. Robert F. Lusch, University of 
     Oklahoma; Dr. R. Ashley Lyman, University of Idaho; Dr. 
     Jonathon Macey, Cornell University; Dr. Yuri Maltsev, 
     Carthage College;
       Dr. Alan B. Mandelstamm, Roanoke, Virginia; Dr. George 
     Marotta, Hoover Institute; Dr. J. Stanley Marshall, The James 
     Madison Institute; Dr. Merrill Mathews, Jr., National Center 
     for Policy Analysis; Dr. Richard B. Mauke, Tufts University; 
     Dr. Margaret N. Maxey, University of Texas--Austin; Dr. 
     Thomas H. Mayor, University of Houston; Dr. Paul W. McAvoy, 
     Yale University School of Management; Dr. Robert McCormick, 
     Clemson University; Dr. Paul McCracken, University of 
     Michigan;
       Dr. Myra J. McCrickard, Bellarmine College; Dr. J. Houston 
     McCulloch, Ohio State University; Dr. Robert W. McGee, Seton 
     Hall University; Dr. Mark Meador, Loyola College (MD); Dr. 
     Roger Meiners, Clemson University; Dr. Lloyd J. Mercer, 
     University of California; Dr. Richard Milam, Appalachian 
     State University; Dr. Dennis D. Miller, Baldwin Wallace 
     College; Dr. Stephen Moore, Cato Institute; Dr. John Moore, 
     George Mason University;
       Dr. John Moorhouse, Wake Forest University; Dr. Laurence 
     Moss, Babson College; Mr. Bob Morrison, Tax Education Support 
     Organization; Dr. Timothy Muris, George Mason 
     [[Page S3215]] University; Dr. J. Carter Murphy, Southern 
     Methodist University; Dr. Gerald Musgrove, Economics America; 
     Dr. Ramon Myers, Stanford University; Dr. Michael Nelson, 
     Illinois State University; Dr. William A. Niskanen, Cato 
     Institute; Dr. Geoffrey Nunn, San Jose State University;
       Dr. M. Barry O'Brien, Francis Marion University; Dr. David 
     Olson, Olson Research Company; Dr. Dale K. Osborne, 
     University of Texas--Dallas; Dr. Allen M. Parkman, University 
     of Mexico; Dr. E. C. Pasour, Jr., North Carolina State 
     University; Dr. Timothy Patton, Ambassador University; Dr. 
     Judd W. Patton, Bellevue College; Dr. Sam Peltzman, 
     University of Chicago Graduate School; Dr. Garry Petersen, 
     Tax Research Analysis Center; Dr. Manfred O. Peterson, 
     University of Nebraska;
       Dr. Steve Pejovich, Texas A&M University; Dr. Timothy 
     Perri, Appalachian State University; Dr. William S. Pierce, 
     Case Western Reserve University; Dr. Sally Pipes, Pacific 
     Research Institute; Dr. Yeury-Nan Phiph, San Jose State 
     University; Dr. Rulon Pope, Brigham Young University; Dr. 
     Robert Premus, Wright State University; Dr. Jan S. Prybyla, 
     Pennsylvania State University; Dr. Alvin Rabushka, Stanford 
     University; Dr. Don Racheter, Central College;
       Dr. Ed Rauchutt, Bellevue University; Dr. Robert Reed, 
     University of Oklahoma; Dr. John Reid, Memphis State 
     University; Dr. Barrie Richardson, Centenary College; Dr. H. 
     Joseph Reitz, University of Kansas; Dr. James Rinehart, 
     Francis Marion University; Dr. Mario Rizzo, New York 
     University; Dr. Jerry Rohacek, University of Alaska; Dr. 
     Simon Rottenberg, University of Massachusetts; Dr. Roy J. 
     Ruffin, University of Houston; Mr. John Rutledge, Rutledge & 
     Company Inc.;
       Dr. Anandi P. Sahu, Oakland University; Dr. Thomas R. 
     Saving, Texas A&M University; Dr. Craig T. Schulman, 
     University of Arkansas; Dr. Richard T. Seldon, University of 
     Virginia; Dr. Gerry Shelley, Appalachian State University; 
     Dr. William Shughart II, University of Mississippi; Mr. 
     William E. Simon, William E. Simon & Sons; Dr. Randy Simmons, 
     Utah State University; Dr. Daniel T. Slesnick, University of 
     Texas--Austin; Dr. Frank Slesnick, Bellarmine College;
       Dr. Daniel Slottje, Southern Methodist University; Dr. Gene 
     Smiley, Marquette University; Dr. Barton Smith, University of 
     Houston; Dr. Lowell Smith, Nichols College; Mr. Robert Solt, 
     Iowans for Tax Relief; Dr. John Soper, John Caroll 
     University; Dr. Michael Sproul, U.C.L.A.; Dr. Richard Stroup, 
     Montana State University; Dr. Michael P. Sweeney, Bellarmine 
     College; Prof. Ronald Teeples, Claremont McKenna College; Dr. 
     Clifford Thies, University of Georgia; Dr. Roy Thoman, West 
     Texas State University;
       Dr. Henry Thompson, Auburn University; Dr. Mark Thornton, 
     Auburn University; Dr. Walter Thurman, North Carolina State 
     University; Dr. Richard Timberlake, University of Georgia; 
     Dr. Robert Tollison, George Mason University; Prof. George W. 
     Trivoli, Jacksonville State University; Dr. Leo Troy, Rutgers 
     University; Dr. Gordon Tullock, University of Arizona; Dr. 
     Norman Ture, Institute for Research on the Economics of 
     Taxation; Dr. Jon G. Udell, University of Wisconsin;
       Dr. Hendrik Van den Berg, University of Nebraska; Dr. T. 
     Norman Van Cott, Ball State University; Dr. Charles D. Van 
     Eaton, Hillside College; Dr. Richard Vedder, Ohio University; 
     Dr. George Viksnins, Georgetown University; Dr. Richard 
     Wagner, George Mason University; Dr. Stephen J.K. Walters, 
     Loyola College (MD); Dr. Alan R. Waters, California State 
     University; Dr. John T. Wenders, University of Idaho; Mr. 
     Brian S. Wesbury, Joint Economic Committee; Dr. Allen J. 
     Wilkins, Marshall University; Dr. James F. Willis, San Jose 
     State University; Dr. Gene Wunder, Washburn University; Dr. 
     Bruce Yandle, Clemson University; Dr. Jerrold Zimmerman, 
     University of Rochester.
                                                                    ____

                            [From the Essay]

                          Balance That Budget

                          (By William Safire)

       Back in 1972, when the Federal budget reached $245 billion, 
     Congress took a look at that year's deficit--$15 billion--and 
     decided the budget was out of control.
       Wilbur Mills, chairman of House Ways and Means, took 
     emergency action: he rammed through a bill delegating to the 
     President the power to cut the budget any way he wanted when 
     it exceeded $250 billion.
       President Nixon was ready, but the Senate was not; in 
     blocking that radical action, which would have transferred 
     more power than the line-item veto, senators argued that 
     ``there is no reason we cannot cut the budget deficit 
     ourselves.''
       They failed. During the Carter Administration, with 
     national debt mounting, Virginia Senator Harry Byrd proposed 
     an even more Draconian bill to balance the budget, and this 
     one passed both houses and was signed into law. P.L. 95-435 
     stated: ``Beginning with Fiscal Year 1981, the total budget 
     outlays of the Federal Government shall not exceed its 
     receipts.''
       Brave words. Because subsequent laws control, the mere 
     passage of a deficit budget for 1981 nullified the Byrd law. 
     Then came the Gramm-Rudman Act in the mid-80's, supposedly 
     imposing real fiscal discipline for our generation; all that 
     remains of that pass at self-restraint is Phil Gramm running 
     for President saying he told us so.
       Thus is demonstrated that budget-balancing statutes are hot 
     air, and our experience shows that all protestations about a 
     ``responsible'' Congress someday balancing the budget are 
     groundless.
       Meanwhile, the national debt has soared from a piddling 
     $373 billion when Wilbur Mills sought drastic
      action to $5 trillion today. The interest we must pay on 
     that debt now exceeds all we spend on national defense.
       Worse, from the perspective of the budget our children will 
     have to face, these are the good old days. Their tax dollars 
     will be consumed by paying interest on the deficits we run 
     today, leaving nothing for their own good life. They will 
     condemn their parents' current profligacy as cruelly 
     reckless.
       That's why the Gingrich House has already passed the 
     Balanced Budget Amendment to the Constitution as the 
     centerpiece of its contract, and why four out of five 
     Americans support its passage when the vote comes up in the 
     Dole Senate tomorrow.
       A third of the Senators could block it; minority rule is 
     still possible.
       With all Republicans except Mark Hatfield united behind the 
     balancing amendment, and with most Democrats opposing such 
     deficit demolition, key votes among the undecided are 
     Senators Byron Dorgan and Kent Conrad. Never has so much of 
     the nation's future rested on the decision of two guys from 
     North Dakota.
       Another potential savior of liberal spenders is Sam Nunn of 
     Georgia who wants ironclad guarantees that the amendment will 
     not be enforceable in court, lest some Federal judge wind up 
     as de facto budget director.
       But an unenforceable law would mock the Constitution. Let 
     the legislative history show that in the event of imbalance, 
     the Congress and the states intend any judicial injunction to 
     apply to all spending and taxing as a lump, with no 
     discretion left to judges to choose which spending to cut. If 
     enjoined by the court from running a red-ink government at 
     all the Congress would be forced to do its duty and balance 
     the budget.
       A few points for the gentlemen from North Dakota:
       1. By voting yes, they would empower the people back home 
     (including North Dakotans and Georgians) to join in deciding 
     this great question; 75 percent of the states must vote to 
     ratify or the amendment fails.
       2. If the pendulum of public opinion swings, a future 
     generation can choose new taxes over spending cuts as a means 
     of balancing the nation's accounts. There's room for a shift 
     back to activist government centralized in Washington, if 
     that's what our children want.
       3. President Clinton has just surrendered to red ink. His 
     own pusillanimous budget, which makes not even the easy 
     choices, helplessly projects another trillion in debt--and 
     that assumes his rosy economic projections come true.
       That last item is the crusher. Publicly bowing to personal 
     and political defeat by the deficit, Mr. Clinton has turned 
     the budget helm over to Congress. That branch has 
     demonstrated how it needs to lash itself to the mast of the 
     Constitution.

  The PRESIDING OFFICER. The Senator from Maryland.
  Mr. SARBANES. Mr. President, a good deal of the debate thus far has 
failed to focus on what I regard as one of the most important factors 
to be considered as we address this amendment to the Constitution--how 
the balanced budget amendment might affect the economy. What impact 
will the amendment have on jobs, on incomes, and on the long-term 
standards of living of the American people.
  It is my strongly held view that a balanced budget amendment could, 
under certain economic circumstances, cause significant harm to the 
economy. Requiring a balanced budget in each and every year, as this 
proposed amendment requires, regardless of the economic situation, 
would hamper the ability of the Federal Government to lessen the impact 
of recessions.
  A balanced budget amendment would make economic recessions more 
severe than they might otherwise be. The reason for that is that 
currently the Federal budget helps to lessen the impact of recessions 
through what are called automatic stabilizers.
  These automatic stabilizers allow spending to increase and revenue to 
fall during times of economic hardship. When the economy goes into a 
downturn, headed toward a recession, the automatic stabilizers start to 
work. Spending on Federal Government programs, such as unemployment 
compensation and food stamps, automatically increase as the economy 
goes into recession, as more people lose their jobs and become eligible 
for these programs.
  In addition, as people earn less money as a result of a recession, 
they pay less in taxes. The way our system is currently constructed, 
these changes in spending and taxes occur automatically. These 
automatic stabilizers reduce the damage done to the American 
[[Page S3216]] economy and to American families by the recession.
  The balanced budget amendment would force the Government to raise 
taxes and to cut spending in recessions, at just the moment that 
raising taxes and cutting spending will do the most harm to the economy 
and aggravate the recession; in other words, it would work directly 
counter to cushioning or ameliorating the impacts of the recession.
  This chart shows the percent change in gross domestic product, 
beginning back in the 1880's and coming forward to the present. Since 
World War II and the concept of automatic stabilizers we have lessened 
the severity of economic downturns. As a consequence of the economic 
downturn there was greater job loss and less revenue into the Treasury. 
There were also increased expenditures out of the Treasury for 
unemployment insurance and for medical care and food stamps. The 
increased expenditures and loss of revenue allow a deficit to take 
place in an economic downturn and work to support incomes and stimulate 
the economy.
  In the post-World War II period, we have allowed that to happen 
without trying to balance the budget in an economic downturn. Prior to 
World War II we tried to balance the budget in an economic downturn. 
President Hoover did it before the Great Depression.
  Previously, when we tried to do this, the business cycle went through 
tremendous fluctuations. Prior to economic stabilizers the growth in 
the economy would go from boom to bust. We used to have very deep 
valleys of negative growth. In fact, during the Depression, we had 15-
percent negative growth. From 1929 to 1933 we had a 30-percent drop in 
our gross national product, almost a one-third drop in gross national 
product.
  So prior to World War II, we had these tremendous fluctuations, and 
in the postwar period, using the automatic stabilizers, we have been 
able to effectively eliminate periods of negative growth. We still have 
fluctuations, but they are much shallower and most of them have taken 
place above the positive growth line.
  In fact, Charles Schultze, in testimony he gave concerning the 
balanced budget amendment said, and I quote him:

       A balanced budget amendment would be bad economics. Federal 
     revenues automatically fall and expenditures for unemployment 
     compensation rise when recessions occur. The deficit 
     necessarily rises. This budgetary behavior is a very 
     important economic stabilizer. It helps sustain private 
     incomes during recession and thus keeps sales, employment and 
     production better maintained than they otherwise would be.

  And he goes on to state:

       The American economy in the postwar years has been far more 
     stable than it was between the Civil War and the Second World 
     War, even if we exclude the Great Depression from the 
     comparison. In the period between the Civil War and the First 
     World War, the American economy spent about half the time in 
     expansion and half in contraction.
       In the period since 1946, the economy spent 80 percent of 
     the time expanding and only 20 percent contracting. In the 
     years after the Second World War, fluctuations in the 
     American economy around its long-term growth trend were only 
     half as large as they were in the period 1871 to 1914. Many 
     people who have studied the period, credit an important part 
     of the increased economic performance to the automatic 
     stabilizing characteristics of the Federal budget.

  Under the proposed constitutional amendment, this stabilizing force 
would be seriously threatened. The first year of a recession would turn 
an initially balanced budget into deficit, but under the proposed 
constitutional amendment, the Congress would be required to bring the 
budget back into balance by large tax increases or spending cuts 
imposed as the recession was still underway.
  Of course, to do that would only drive the recession downward and 
move the economy even deeper, deeper into these valleys.
  Let me just talk a little bit about how the fiscal stabilizers work 
in terms of keeping income up during an economic downturn.
  This chart illustrates how automatic stabilizers work.
  Between the second quarter of 1990 and the fourth quarter of 1991, 
real personal income from all sources before taxes and without 
transfers fell by 2 percent.
  In other words, we went into an economic slowdown, and personal 
income began to decline. Transfer payments including unemployment 
insurance, food stamps, and medical care increase. These payments do 
not increase incomes up to the level that they were earning, but it 
gives them a percentage of what they were earning so they are not 
completely wiped out. They have some income continuing to come in.
  So as you start this deep decline in wages, families were able to 
keep up their after-tax income and after-transfer income. So these 
payments offset or cushioned what was happening as a consequence of the 
recession. The reason this happens is that Government fiscal policy 
helps to stabilize incomes.
  During the 1990-92 recession family incomes before taxes and before 
any transfer income fell by $70 billion, but their incomes after taxes 
and with the transfer income rose by $92 billion. So we were able to 
cushion the economic downturn, and we did it because we got income 
support from these fiscal stabilizers. You get direct income support 
through unemployment insurance, and you get a decrease in the tax 
burden as a consequence of the economic slowdown.
  Now, had the balanced budget amendment been in effect, these income 
stabilizers would not have been available, real disposable incomes of 
American families would have been almost $100 billion lower, and the 
recession would have been much, much deeper. It is for this reason that 
an article in the New York Times only a few days ago said, and I quote 
its heading, ``The Pitfalls of a Balanced Budget, Dismantling a Decades 
Old System for Softening Recessions.'' The article goes on to say, and 
I quote it:

       If the amendment is enacted, the side effects would be 
     huge. A system that has softened recessions since the 1930's 
     would be dismantled.

  And further on, the article states:

       The biggest risk is to the Nation's automatic stabilizers 
     which have made recessions less severe than they were in the 
     century before World War II. The stabilizers work this way: 
     When the economy weakens, outlays automatically rise for 
     unemployment pay, food stamps, welfare and Medicaid. 
     Simultaneously, as incomes fall, so do corporate and 
     individual income tax payments. Both elements make more money 
     available for spending, thus helping to pull the economy out 
     of its slump.

  Now, we would run the risk, without the automatic stabilizers which 
help to offset the downturn, of putting the economy back in the boom-
and-bust cycle which was particularly marked in the late 1800's and 
through the first half of this century and which prompted the comments 
made by Charles Schultze with respect to how we have managed to offset 
the economic downturns since the end of World War II. As he pointed out 
in his statement, the American economy in the postwar years, post-World 
War II years, has been far more stable than it was between the Civil 
War and the Second World War. And as he states, ``Many people who have 
studied the period credit an important part of the improved economic 
performance to the automatic stabilizing characteristics of the Federal 
budget.''
  Some of my colleagues have argued, we can waive the amendment with 60 
votes. I do not know of constitutional principles that are waivable, 
but they say we will come along and we will get a 60-vote supermajority 
and we will waive the requirement of an annual balance in order to 
address the recessionary situation.
  The difficulty with this is that the automatic stabilizers work 
automatically, and they take effect immediately. The stabilizers, which 
prevent these deep fluctuations, begin as soon as the economy softens. 
They begin before the economic downturn is generally recognized.
  Various votes have been cited in the Chamber by others who say, we 
took a vote and extended the unemployment insurance, and this vote 
passed by a large majority, so clearly if we were into difficulties, we 
will get the majorities necessary in order to waive the balanced budget 
amendment and run the deficit to offset the recession.
  The first point I wish to make is that we have not always gotten 
those votes for the extension of unemployment insurance. In the 1982 
recession, for example, there was a vote that failed to get the 60-vote 
requirement. So it is not accurate to say that whenever the 
[[Page S3217]] issue is presented, the Congress has always responded--
and particularly not responded in a timely fashion.
  Second, those votes that people cite are votes for a further 
extension of unemployment insurance beyond what the basic program 
provides by law. But the application of the fiscal stabilizers begins 
with the use of the basic program. There is no vote taken here to 
institute the basic program. The basic program begins automatically as 
the economy slows down, and we rely upon that basic program to cushion 
the economic downturn.
  If the economic downturn is severe, there is a necessity to extend 
the basic program. On that extension, it has on occasion been approved 
by large votes and on other occasions not so approved.
  So it is not at all clear that the vote necessary to waive the 
amendment would be forthcoming, and in any event it is crystal clear 
that the vote comes very late in the day after we have already started 
on the downward slope. Therefore, our ability to check that downward 
movement to avoid these kinds of fluctuations will be markedly limited 
under the balanced budget amendment. We are inviting the prospect of 
going from these fluctuations over the business cycle without the deep 
moves into negative growth back to the very fluctuations that marked 
the economy in the century before the post-World War II period.
  This matter may seem somewhat far removed because we have not had a 
great depression for a long, long time. But I simply want to underscore 
that what these deep plunges into negative growth represent very severe 
unemployment, the likes of which we have not seen in the post World War 
II period: Very extensive business failures--bankruptcies, farm 
foreclosures. So we would be crippling our ability to address economic 
downturns.
  Laura Tyson, when she was the chair of the President's Council of 
Economic Advisers stated in an article entitled, ``It's a Recipe For 
Economic Chaos'':
       Continued progress on reducing the deficit is sound 
     economic policy, but a constitutional amendment requiring 
     annual balance of the federal budget is not. The fallacy in 
     the logic behind the balanced budget amendment begins with 
     the premise that the size of the federal deficit is the 
     result of conscious policy decisions. This is only partly the 
     case. The pace of economic activity also plays an important 
     role in determining the deficit. An economic slowdown 
     automatically depresses tax revenues and increases government 
     spending on such programs as unemployment compensation, food 
     stamps and welfare.
       Such temporary increases in the deficit act as ``automatic 
     stabilizers,'' offsetting some of the reduction in the 
     purchasing power of the private sector and cushioning the 
     economy's slide. Moreover, they do so quickly and 
     automatically, without the need for lengthy debates about the 
     state of the economy and the appropriate policy response.

                           *   *   *   *   *

       A balanced budget amendment would throw the automatic 
     stabilizers into reverse. Congress would be required to raise 
     tax rates or cut spending programs in the face of a recession 
     to counteract temporary increases in the deficit. Rather than 
     moderating the normal ups and downs of the business cycle, 
     fiscal policy would be required to aggravate them.

  That is exactly what used to happen when we experienced the boom and 
bust cycles prior to World War II, and when we talked about the panics, 
the great panic of 1893, and 1922, and 1929.
  Mr. President, I ask unanimous consent that the article by Laura 
Tyson be printed in the Record at the conclusion of my remarks.
  The PRESIDING OFFICER (Mr. Abraham). Without objection, it is so 
ordered.
  (See exhibit 1.)
  Mr. SARBANES. Mr. President, I want to address one other feature of 
this proposal for a balanced budget amendment. We do not have a capital 
budget at the Federal level and therefore the analogy that is drawn, 
where people say the State and local governments balance their budgets, 
why does the Federal Government not balance its budget--is completely 
false. Most States run deficits under the accounting principles used to 
compute the Federal budget. States have balanced budget requirements 
but they have a capital budget separate and apart, which they finance 
by borrowing.
  We had two Governors who testified that having a balanced budget 
requirement helped them maintain a good credit rating.
  The question was then, ``Why do you need a good credit rating if you 
have to have a balanced budget?''
  Of course the answer was they expected to borrow in the future. In 
fact the Governors acknowledged that their budget balance is required 
only on their operating budget and that they make active use of a 
capital budget for which borrowing is permitted. Individuals, of 
course, borrow. Most people could not buy a home or a car if they had 
to have an annually balanced budget of the sort that this amendment 
requires because they would not be able to make a capital investment. 
It is prudent economics to make wise capital investments in your future 
and to depreciate the capital asset over its useful life.
  Let me just turn to the question of the failure of this amendment to 
distinguish between different types of spending and the impact that 
those different types of spending would have on fiscal policy. The 
first is deposit insurance. It must be understood, this amendment 
requires an annual balance; the outlays and the receipts must be in 
balance. Between 1988 and 1991, substantial outlays were used to close 
insolvent thrifts and transfer their assets to the Resolution Trust 
Corporation. As these assets have been sold in recent years, they have 
begun to yield a smaller but still sizable stream of net revenue back 
to the Treasury. This kind of flexible response to a major national 
financial crisis would have been prevented by the year-by-year lockstep 
approach of the balanced budget amendment, which makes no account for 
anticipated future receipts.
  The amendment actually requires the current outlays for deposit 
insurance be matched with current spending cuts or tax increases. This 
would produce a strong downward pressure on the economy because deposit 
insurance payments do not add to current economic activity. They 
replace moneys which depositors already considered as in the bank, 
while the offsetting cuts or taxes would subtract for current activity.
  There was an interesting article that appeared in this morning's 
paper entitled, ``The High Cost of a Balanced Budget Amendment.'' Mr. 
President, I ask unanimous consent that article
 appear in the Record at the conclusion of my remarks.

  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 2.)
  Mr. SARBANES. It is stated there:

       Advocates of the Balanced Budget Amendment to the 
     Constitution do not intend to jeopardize the life savings of 
     America's families or threaten the stability of the nation's 
     banks. As written, however, the amendment could do just that.

  What happens now is, as soon as you encounter a problem, the deposit 
insurance fund covers those deposits. But in order to do that, your 
outlays have to exceed your receipts in the year in which you are 
making that coverage.
  Insurance claims are automatically paid as needed, regardless, under 
the deficit. Under the amendment, if deposit insurance payment would 
cause a deficit, might not those payments be prohibited?

       During a severe economic downturn, the risk of bank failure 
     is greatest. An economic downturn also produces (or 
     exacerbates) federal budget deficits, as tax revenues decline 
     and spending for programs such as unemployment compensation 
     increases. At such a time, the government would lack the 
     extra revenues it could need to cover the large costs of 
     rescuing depositors and the banking system. Under current 
     law, deposit insurance claims are automatically paid as 
     needed, regardless of the deficit. Under amendment, if 
     deposit insurance payments would cause a deficit, might not 
     those payments be prohibited?

  So it is a very important question as we consider the amendment 
before us. Furthermore, I have difficulty in understanding under the 
amendment how, with respect to both Social Security and unemployment 
compensation, we would be able to use the balances that we build up in 
those trust funds in order to cover future years? How would we be able 
to expend those balances since by definition to do so your outlays 
would be exceeding your receipts in that particular fiscal year. We 
regard that as wise policy. We build up these surpluses in the instance 
of the Social Security System in anticipation of retirement of the baby 
boom generation, and with the unemployment system we build them up 
during better economic times in order to pay benefits during 
recessions.
  [[Page S3218]] How would those surpluses be used in the future when 
the baby boomers retire or when the next recession hits since you would 
have an excess of outlays over revenues in the Social Security trust 
fund with respect to Social Security and in the unemployment insurance 
trust fund with respect to unemployment insurance?
  So this requirement of an annual balance between outlays and receipts 
fundamentally undermines the economic prudence associated with 
anticipatory budget. This is budgeting which we have done consistently, 
and I think wisely. We build up the funds in the trust fund and spend 
them during difficult times by anticipating the future expenditures.
  Mr. President, the New York Times today in an editorial entitled 
``Unbalanced Amendment'' addresses this point. I ask unanimous consent 
that the editorial be printed in the Record at the conclusion of my 
remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 3.)
  Mr. SARBANES. Mr. President, this editorial addresses this point of 
the automatic stabilizers and our ability to avoid these very deep and 
severe economic downward plunges.
  I quote the editorial:

        When the economy slows, tax revenues fall off and spending 
     on unemployment insurance and food stamps rises. The 
     automatic rise in the deficit by triggering spending serves 
     to mitigate the slowdowns, but under the proposed amendment 
     Congress could easily turn a $1 million downturn into 
     something worse. Unless a three-fifths supermajority saves 
     the day, Congress would have to raise taxes and cut spending 
     in a slow economy, the opposite of responsible stewardship. 
     Take another unintended consequence. When savings and loans 
     went bankrupt during the 1980's, the Federal Government 
     bailed out the depositors with borrowed money, thereby 
     preventing a banking panic. But under the proposed amendment 
     the government could not react instantly unless a 
     supermajority in Congress approved.

  Before people start saying we could get a supermajority vote to waive 
the amendment, let me just remind them of the extremely close votes 
that we had here on the floor of the Senate with respect to providing 
the funds to cover the closing out of the failed S&L's.
  Mr. President, I regard the vote coming tomorrow as a critical vote 
for a number of reasons, but in particular because I am extremely 
apprehensive that by eliminating our ability to conduct a rational 
fiscal policy to offset economic downturns, we will again plunge our 
economy into the severe up and down boom and bust cycles which we 
experienced consistently through our history. This is not hypothetical. 
This is not conjecture. This is what happened.
  This chart only shows GDP back to the 1880's, but we could have taken 
it back farther, and it would have shown the same severe up and down 
fluctuations. We have been able to moderate those movements of the 
business cycle during the post-World War II period. People have become 
accustomed to the more moderate business cycle. Many simply assume that 
somehow the business cycle will continue as it were. But the business 
cycle remains with us. As the ups and downs prior to World War II show, 
we have succeeded in ameliorating the business cycle, cushioning it as 
it begins a downward path. So that we have avoided the very deep 
plunges that we previously had experienced. These deep plunges 
represent economic disaster for the country. They represent 
unemployment, business bankruptcies, and farm foreclosures, the like of 
which we have not seen in the post-World War II period. We almost seem 
to take it for granted that these major declines will not occur.
  I am extremely apprehensive that the balanced budget amendment will 
take us back to these days. I wanted to come tonight to sound this 
warning as to the potential impact of this balanced budget amendment 
and how it might affect our economy, how it might impact on jobs, on 
incomes, on the long-term standards of living of the American people, 
how it could cause significant harm to the economy because it would not 
allow us to follow policies which would avoid bringing economic 
slowdown into recession and recession into depression.
  Mr. President, I yield the floor.
                               Exhibit 1

                [From the Washington Post, Feb. 7, 1995]

                    It's a Recipe for Economic Chaos

                       (By Laura D'Andrea Tyson)

       Continued progress on reducing the deficit is sound 
     economic policy, but a constitutional amendment requiring 
     annual balance of the federal budget is not. The fallacy in 
     the logic behind the balanced budget amendment begins with 
     the premise that the size of the federal deficit is the 
     result of conscious policy decisions. This is only partly the 
     case. The pace of economic activity also plays an important 
     role in determining the deficit. An economic slowdown 
     automatically depresses tax revenues and increases government 
     spending on such programs as unemployment compensation, food 
     stamps and welfare.
       Such temporary increases in the deficit act as ``automatic 
     stabilizers,'' offsetting some of the reduction in the 
     purchasing power of the private sector and cushioning the 
     economy's slide. Moreover, they do so quickly and 
     automatically, without the need for lengthy debates about the 
     state of the economy and the appropriate policy response.
       By the same token, when the economy strengthens again, the 
     automatic stabilizers work in the other direction: tax 
     revenues rise, spending for unemployment benefits and other 
     social safety net programs falls, and the deficit narrows.
       A balanced budget amendment would throw the automatic 
     stabilizers into reverse. Congress would be required to raise 
     tax rates or cut spending programs in the face of a recession 
     to counteract temporary increases in the deficit. Rather than 
     moderating the normal ups and downs of the business cycle, 
     fiscal policy would be required to aggravate them.
       A simple example from recent economic history should serve 
     as a cautionary tale. In fiscal year 1991, the economy's 
     unanticipated slowdown caused actual government spending for 
     unemployment insurance and related items to exceed the 
     budgeted amount by $6 billion, and actual revenues to fall 
     short of the budgeted amount by some $67 billion. In a 
     balanced-budget world, Congress would have been required to 
     offset the resulting shift of more than $70 billion in the 
     deficit by a combination of tax hikes and spending cuts that 
     by themselves would have sharply worsened the economic 
     downturn--resulting in an additional loss of 1\1/4\ percent 
     of GDP and 750,000 jobs.
       The version of the amendment passed by the House has no 
     special ``escape clause'' for recessions--only the general 
     provision that the budget could be in deficit if three-fifths 
     of both the House and Senate agree. This is a far cry from an 
     automatic stabilizer. It is easy to imagine a well-organized 
     minority in either House of Congress holding this provision 
     hostage to its particular political agenda.
       In a balanced-budget world--with fiscal policy enjoined to 
     destabilize rather than stabilize the economy--all 
     responsibility for counteracting the economic effects of the 
     business cycle would be placed at the doorstep of the Federal 
     Reserve. The Fed could attempt to meet this increased 
     responsibility by pushing interest rates down more 
     aggressively when the economy softens and raising them more 
     vigorously when it strengthens. But there are several reasons 
     why the Fed would not be able to moderate the ups and downs 
     of the business cycle on its own as well as it can with the 
     help of the automatic fiscal stabilizers.
       First, monetary policy affects the economy indirectly and 
     with notoriously long lags, making it difficult to time the 
     desired effects with precision. By contrast, the automatic 
     stabilizers of fiscal policy swing into action as soon as the 
     economy begins to slow, often well before the Federal Reserve 
     even recognizes the need for compensating action.
       Second, the Fed could become handcuffed in the event of a 
     major recession--its scope for action limited by the fact 
     that it an push short-term interest rates no lower than zero, 
     and probably not even that low. By historical standards, the 
     spread between today's short rates of 6 percent and zero 
     leaves uncomfortably little room for maneuver. Between the 
     middle of 1990 and the end of 1992, the Fed reduced the 
     short-term interest rate it controls by a cumulative total of 
     5\1/4\ percentage points. Even so, the economy sank into a 
     recession from which it has only recently fully recovered--a 
     recession whose severity was moderated by the very automatic 
     stabilizers of fiscal policy the balanced budget amendment 
     would destroy.
       Third, the more aggressive actions requires of the Fed to 
     limit the increase in the variability of output and 
     employment could actually increase the volatility of 
     financial markets--an ironic possibility, given that many of 
     the amendment's proponents may well believe they are 
     promoting financial stability.
       Finally, a balanced budget amendment would create an 
     automatic and undesirable link between interest rates and 
     fiscal policy. An unanticipated increase in interest rates 
     would boost federal interest expense and thus the deficit. 
     The balanced budget amendment under consideration would 
     require that such an unanticipated increase in the deficit be 
     offset within the fiscal year!
       In other words, independent monetary policy decisions by 
     the Federal Reserve would require immediate and painful 
     budgetary adjustments. Where would they come from? Not from 
     interest payments and not, with such short notice, from 
     entitlement programs. Rather they would have to come from 
     either a tax increase or from cuts or possible shutdowns in 
     discretionary programs whose 
     [[Page S3219]] funds had not yet been obligated. This is not 
     a sensible way to establish budgetary priorities or maintain 
     the healthy interaction and independence of monetary and 
     fiscal policy.
       One of the great discoveries of modern economics is the 
     role that fiscal policy can play in moderating the business 
     cycle. Few if any members of the Senate about to vote on a 
     balanced budget amendment experienced the tragic human costs 
     of the Great Depression, costs made more severe by President 
     Herbert Hoover's well-intentioned but misguided efforts to 
     balance the budget. Unfortunately, the huge deficits 
     inherited from the last decade of fiscal profligacy have 
     rendered discretionary changes in fiscal policy in response 
     to the business cycle all but impossible. Now many of those 
     responsible for the massive run-up in debt during the 1980s 
     are leading the charge to eliminate the automatic stabilizers 
     as well by voting for a balanced budget amendment.
       Instead of undermining the government's ability to moderate 
     the economy's cyclical fluctuations by passing such an 
     amendment, why not simply make the hard choices and cast the 
     courageous votes required to reduce the deficit--the kind of 
     hard choices and courageous votes delivered by members of the 
     103rd Congress when they passed the administration's $505 
     billion deficit reduction package?
                                                                    ____


                               Exhibit 2

                High Cost of a Balanced Budget Amendment

                           (By Richard Kogan)

       Advocates of the Balanced Budget Amendment to the 
     Constitution do not intend to jeopardize the life savings of 
     America's families or threaten the stability of the nation's 
     banks. As written, however, the amendment could do just that.
       Currently, America's savings are safe. The Federal Deposit 
     Insurance Corp. (FDIC) guarantees individual deposits in 
     banks and thrift institutions up to $100,000 per account. 
     Depositors rely on the U.S. government to keep its word, 
     quickly and automatically; if a bank goes broke, the 
     government makes good on deposits. Deposit insurance claims 
     are enforceable in court.
       Now look at the Balanced Budget Amendment. It begins, 
     ``Total outlays for any fiscal year shall not exceed total 
     receipts for that fiscal year, unless three-fifths of the 
     whole number of each House of Congress shall provide by law 
     for a specific excess of outlays over receipts by a roll-call 
     vote.'' This deceptively simple concept--that the federal 
     budget must be balanced each year--would inadvertently cast 
     doubt over the ``full faith and credit'' of the U.S. 
     government, putting all federal guarantees, including deposit 
     insurance, at risk.
       Here's why. During a severe economic downturn, the risk of 
     bank failure is greatest. An economic downturn also produces 
     (or exacerbates) federal budget deficits, as tax revenues 
     decline and spending for programs such as unemployment 
     compensation increases. At such a time, the government would 
     lack the extra revenues it could need to cover the large 
     costs of rescuing depositors and the banking system. Under 
     current law, deposit insurance claims are automatically paid 
     as needed, regardless of the deficit. Under the amendment, if 
     deposit insurance payments would cause a deficit, might not 
     those payments be prohibited? Don't forget that the measure 
     would amend the Constitution, while deposit insurance and 
     other such guarantees are only statutes.
       American banking was not always protected. The Great 
     Depression was so steep--the economy shrank almost 30 percent 
     from 1929 to 1933--in part because there was no deposit 
     insurance. Some lost all their savings. A rumor that a bank 
     was in trouble prompted panic, with depositors rushing to 
     withdraw their savings. Even false rumors caused banks to 
     collapse.
       One of President Roosevelt's first acts was to close the 
     banks while Congress enacted deposit insurance. The banks 
     reopened, citizens could redeposit their funds in safety and 
     the economic collapse ended. Deposit insurance became the 
     first and best economic stabilizer. It is one reason that no 
     post-war recession has shrunk the economy more than 3\1/2\ 
     percent.
       Doesn't the FDIC charge annual fees to banks, building up 
     large balances, which would automatically be available in a 
     banking crisis?
       Not after the amendment. It prohibits spending borrowed 
     funds, Incredibly, it also prohibits using accumulated 
     savings; it requires that all federal spending in any fiscal 
     year be covered by that year's revenues. This requirement is 
     like telling a family to finance a new house or a child's 
     college tuition out of that year's wages, no matter how much 
     money the family has in the bank. In this case, the amendment 
     precludes a sudden increase in deposit insurance payments if 
     that increase would cause federal spending to exceed federal 
     revenues in that year, no matter how much the FDIC has ``in 
     the bank.''
       There are two possible ways out. First, Congress could 
     raise taxes or cut other spending by enough to offset deposit 
     insurance costs. But the potential size of those payments 
     shows why they could not be easily offset. The recent 
     restructuring of the savings and loan industry required 
     deposit insurance payments of $156 billion over four years, 
     $66 billion in 1991 alone. And the government's deposit 
     insurance guarantee covers private savings of $2.7 trillion. 
     These amounts are too large to be offset by a single year's 
     tax increases or spending cuts.
       Second, there is the escape hatch. By a three-fifths vote, 
     Congress could choose to pay deposit insurance and allow 
     deficit spending. But it is hardly automatic that Congress 
     would respond in a timely manner (or at all), even in a 
     pending crisis. In August 1941 Congress barely mustered a 
     majority to extend the draft, even though Hitler had already 
     marched across half of Europe. In the current debate, neither 
     the Senate nor the House could find a majority to write into 
     the amendment an exception for recessions. Finding three-
     fifths majorities in each House of Congress is significantly 
     more difficult. By the time Congress fully understands the 
     scope of a developing banking crisis and gathers the three-
     fifths vote (if it can), the problem would have grown, 
     perhaps to a dangerous degree.
       Taking the amendment at face value, then, legal commitments 
     made by the U.S. government would no longer be binding. When 
     economic troubles arose and the banking system, depositors 
     and the economy as whole most needed it, those 
     ``commitments'' could prove ephemeral.
                               Exhibit 3

                          Unbalanced Amendment

       Tomorrow's vote in the Senate on the balanced-budget 
     amendment is crucial for the Republican agenda to chop 
     Government programs into bits. The outcome is also crucial to 
     the nation because the pernicious amendment would do enormous 
     fiscal damage. Proponents are alarmingly within three votes 
     of winning.
       The core of the amendment would require the Government to 
     balance its books unless three-fifths of the House and Senate 
     vote to run a deficit. To the wavering Democrats--John Breaux 
     of Louisiana, Sam Nunn of Georgia, Wendell Ford of Kentucky, 
     and Kent Conrad and Byron Dorgan of North Dakota--here are 
     five unassailable reasons to vote no.
       Unnecessary.--Federal deficits have indeed been too high. 
     That poses a threat that borrowing will siphon savings away 
     from productive private investments.
       But the fact that borrowing must be contained does not 
     imply it ought to be eliminated--any more than family 
     borrowing, to buy a house or pay college tuition, need be 
     eliminated. A prudent rule would keep Federal debt growing 
     less quickly than incomes. This rule would justify deficits 
     of about $200 billion a year, close to current levels.
       Misleading.--Proponents claim the amendment would protect 
     future generations against ruinous interest payments. True, 
     today's children will owe taxes when they grow up to pay 
     interest on Federal debt. But proponents ignore the fact that 
     the tax payments will flow right back to these children as 
     owners of Government bonds.
       Unenforceable.--Because key terms of the amendment--like 
     outlays and receipts--are undefined, Congress will be able to 
     manipulate and evade. Can Congress create independent 
     agencies or find other ways to spend and borrow off the 
     Government books? A Senate committee has already written into 
     the legislative record, used to guide future court decisions, 
     that the Tennessee Valley Authority would be exempt from the 
     amendment. It should take lawyers five minutes to stretch 
     whatever ``principle'' guides that exception to scores of 
     other Government programs.
       The amendment also fails to provide an enforcement 
     mechanism. It might simply become an empty gesture or, worse 
     yet, the courts might step in to tell Congress how much it 
     should tax and where it should spend.
       Irrational.--Federal bookkeeping lumps ordinary spending 
     with long-term public investments. Congress, forced by the 
     amendment to cut quickly, would go after hugely expensive, 
     though vitally important, investments, such as scientific 
     research, costly laboratories and equipment, job training or 
     other investments that would not produce benefits for years, 
     if not decades.
       Reckless.--When the economy slows, tax revenues fall off 
     and spending on unemployment insurance and food stamps rises. 
     This automatic rise in the deficit, by triggering spending, 
     serves to mitigate the slowdown. But under the proposed 
     amendment, Congress could easily turn a mild downturn into 
     something worse. Unless a three-fifths supermajority saves 
     the day, Congress would have to raise taxes and cut spending 
     in a slow economy--the opposite of responsible stewardship.
       Take another unintended consequence. When savings and loans 
     went bankrupt during the 1980's, the Federal Government 
     bailed out depositors with borrowed money, thereby preventing 
     a banking panic. But under the proposed amendment, the 
     Government could not react instantly unless a supermajority 
     in Congress approved.
       The balanced-budget amendment appeals to taxpayers who 
     demand that the Government spend their money wisely. But 
     Senators Nunn, Ford, Conrad, Dorgan and Breaux need to 
     recognize that this honorable sentiment cannot be wisely 
     embedded into the Constitution.

  Mr. HATCH. Mr. President, critics or outright opponents of the 
balanced budget amendment have made the point that one reason we should 
not have a balanced budget rule is because of how the business cycle 
and the so-called automatic stabilizers work. The 
[[Page S3220]] basic idea is that in recessions, revenues decrease and 
outlays--such as welfare payments--increase. Critics say that economic 
fluctuations are as inevitable as the tides and hence so is a cycle of 
deficits, therefore, commanding budget balance is like ordering the 
tides to retreat.
  The notion that ordering budget balance is like commanding the tides 
to retreat is absurd. It is like saying it is impossible to stop using 
your credit cards. The truth is that taxing and spending decisions are 
volitional, notwithstanding decades of bad habits.
  Economic fluctuations which result in changes in revenue or outlay 
projections are not an argument against balance, but could an argument 
for surplus contingency funds. It is decidedly not an argument for 
maintaining large structural deficits. A family saves for a rainy day, 
they do not keep their credit cards ``maxed out''--in good times and 
bad--and then tell the credit company that economic fluctuations are as 
inevitable as the tides so how about another few thousand on the credit 
limit.
  The balanced budget amendment in no way prevents us from running a 
small surplus, which could be used to offset the effects of an economic 
downturn. In fact, Fred Bergston, a noted economist and former Treasury 
Department official, suggests we create a habit of saving for rainy 
days, which will allow us to use fiscal policy within the balanced 
budget rule better than we can now without it.
  The argument made by the Senator from Maryland seems to be a 
distorted version of Keynsianism, and it is not clear that it would 
work to stimulate our current economy. In fact, our recent history 
seems to refute such an expectation. In the early 1990's, we had record 
deficits and zero or low growth for 3 years. The experience of the late 
Bush, early Clinton, years was the experience of the Carter years, 
namely high deficits and recession. This sort of stimulus mechanism 
obviously does not work very well. Additionally, Mr. President, 
President Clinton's response to the recession of the early 1990's was 
to send a budget with tax increases and spending cuts. This was 
supported by the Senator from Maryland. Why was this plan appropriate 
in 1993 but apparently no other time?
  Moreover, we have been running deficits for three decades. Have we 
been in recession for three decades? Have we avoided the business cycle 
for three decades? No. We have had numerous business cycles since 1969 
but have only balanced the budget once. If critics are right, we should 
have had a cycle of deficits and surpluses. Far from cycling, the debt 
is on a steady increase. The debt is growing at a fantastic rate: it is 
now over $4.8 billion and is projected to exceed $6 trillion in only 3 
years. The correlation between deficits and prosperity is far from 
clear, based on our history.
  I have other questions about this argument. At the level we are now 
spending, about $1.5 trillion each year, just how big of a deficit 
would we have to run to stimulate the economy? We already have our foot 
to the floor on the debt accelerator--we cannot seriously argue that 
pushing our debts further will be helpful. Talk about inflexible fiscal 
policy. Our debt and yearly deficits are so large there just is not any 
clear room to move further. We would have more flexible fiscal policy 
if we got our deficits under control.
  Mr. President, the principle of a rule of balanced budgets is 
unassailable, and should be violated only when absolutely necessary.

                          ____________________