[Congressional Record Volume 141, Number 39 (Thursday, March 2, 1995)]
[House]
[Page H2568]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                              {time}  2145
                       CALL FOR A BALANCED BUDGET

  The SPEAKER pro tempore (Mr. McHUGH). Under a previous order of the 
House, the gentleman from Michigan, (Mr. SMITH) is recognized for 5 
minutes.
  Mr. SMITH of Michigan. Mr. Speaker, Thomas Jefferson, in a letter to 
Elbridge Gerry in 1799, wrote:

       I am for a government rigorously frugal and simple, 
     applying all the possible savings of the public revenue to 
     the discharge of the national debt; and not for a 
     multiplication of officer and salaries merely to make 
     partisans, and for increasing by every device, the public 
     debt, on the principle of its being a public blessing.

  I agree with Mr. Jefferson wholeheartedly, and I suspect that most 
other Americans do as well. Today, the Federal debt is in excess of 
$4.7 trillion and growing at a rate of $200 billion to $300 billion per 
year. As the CATO institute has pointed out, this is both an economic 
and a moral problem. The economic problem is that deficit financing is 
the ultimate form of hidden taxation. Federal borrowing injects a huge 
prospending bias into the budget process by allowing politicians to 
hand out a dollar of Government spending to voters, while only imposing 
80 cents of taxes. Nobel Laureate James Buchanan in a 1977 book with 
his colleague Richard Wagner, alerted us to this problem. In their book 
Democracy in Deficit, Buchanan and Wagner argued strongly for a 
balanced budget amendment in order to contain the spending bias of a 
Government able to increase its expansion into the economy without the 
political restraints of raising taxes.
  Unbridled Federal spending will eventually lead to what economists 
call monetizing of the debt, which in plain English means that the 
Government pays for its debt by increasing the money supply. That 
cheats the lenders and causes inflation. This hidden tax, which Adam 
Smith called the worst form of taxation, strikes most heavily on those 
who save. As every senior citizen knows, their security can be wiped 
out in short order by
 even moderate inflation. At 8 percent inflation, the Government can 
effectively take away half of the money one has saved over a lifetime 
of work in about 9 years.

  The moral argument for a balanced budget is that federal borrowing is 
taxation without representation. Recall the words of the Declaration of 
Independence which refers to the repeated injuries and usurpations of 
King George because he imposed taxes on us without our consent. Can't 
our children make this same claim against a Congress that saddles them 
with interest payments that are already at $339 billion annually? None 
of our children and grandchildren currently have a say in the political 
process that is now putting their future at risk.
  On January 26, the House of Representatives passed a balanced budget 
amendment. Today, it was narrowly defeated in the Senate. This 
amendment would have imposed much-needed fiscal discipline on Congress 
and it would have taken away our ability to spend recklessly while 
sending the bills to our children and grandchildren.
  Without this amendment, it will be much more difficult to balance the 
budget, but I for one am willing to make the hard choices. I call on my 
colleagues to stop deficit spending, and I call on all citizens to 
commit themselves to do their part, to sacrifice some of the many 
things they get from government, so we can balance the budget, look our 
kids in the eye, and tell them that we will no longer force them to pay 
future taxes to enhance our current standard of living. As a nation of 
people who look to the future, and care about our children as much as 
we care about ourselves, we can make the commitment to balance the 
budget, and keep that commitment.


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