[Congressional Record Volume 141, Number 39 (Thursday, March 2, 1995)]
[Senate]
[Pages S3325-S3366]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                     THE BALANCED BUDGET AMENDMENT


       protection from big spenders? the people lost by one vote

  Mr. HELMS. Mr. President, there are two disappointing things to 
mention today. The first is my regular daily report on the latest 
available disclosure of the total Federal debt, this time as of the 
close of business yesterday, Wednesday, March 1, stood at 
$4,848,389,816.26.
  If this debt were to be paid off today, with every man, woman, and 
child in the country paying his or her proportionate share, each of us 
would have to fork over $18,404.57. Of course, since millions of 
Americans pay no taxes at all, the average share of the Federal debt 
would be far greater than the per capita amount referred to above.
  The other sad thing? It is, of course, the Senate's failure today to 
approve a constitutional amendment requiring Congress to balance the 
Federal budget. If just one more Senator had voted today in favor of 
the amendment, it would have been approved by 67 Senators, exactly 
enough to pass the amendment and send it to the 50 States for 
ratification.
  Don't look for a balanced Federal budget anytime soon. But one day it 
will come. The American people will demand it.
          REDUCE THE DEFICIT WITHOUT AMENDING THE CONSTITUTION

  Mr. WELLSTONE. Mr. President, over the course of the last 3 weeks, we 
have heard many arguments for and against the proposed balanced budget 
amendment to the Constitution. Those arguments were made in good faith, 
and I know they reflect a broad commitment by those on both sides of 
this question to bringing the deficit down to reasonable levels. But 
the balanced budget amendment is an empty promise, not a policy. It has 
little immediate political cost and very high poll ratings--hence its 
popularity. But enacting it would be a serious mistake. We should 
reject it in favor of a real, long-term deficit reduction program.
  Since 1936, when Minnesota's own Harold Knutson revived the idea of a 
balanced budget constitutional amendment that has been originally 
rejected by the Constitution's Framers, Congress has debated various 
versions. The real question before us today, as it was 50 years ago, is 
whether we should weld onto the Founding document of our democracy, the 
U.S. Constitution, a budget gimmick that would do more harm than good 
to the economic well-being of our Nation, and our citizens.
  As I have consistently argued, in my judgment we do not need to amend 
the U.S. Constitution to balance the Federal budget. Instead, we must 
continue to make tough choices on actual legislative proposals, as I 
have done, to cut wasteful and unnecessary post-cold-war defense 
spending, to continue to reduce low priority domestic spending, to 
completely restructure the way we finance and deliver health care in 
this country--in both the public and private sector--and to scale back 
special tax breaks for very wealthy interests in our society who have 
for a long time not been required to pay their fair share. That 
approach is the only responsible, fair way to bring our annual Federal 
deficits, and the much larger Federal debt, under control.
  For the last 15 years or so, that is what the Congress has been 
unwilling to do, and that is the source of a lot of frustration in the 
country. Congress has been unable to muster and sustain a majority to 
make difficult budget choices. We have seen illustrated here in the 
Senate over and over again a central problem: The political gap between 
the promise to cut spending, and actual followthrough on that promise. 
I make this point because I want to underscore that many of those who 
have been beating their chests the hardest about a balanced budget 
amendment have often been among those who have consistently voted 
against these actual deficit reduction proposals. We cannot give over 
our budget-balancing responsibilities to a machine, a mechanism. That 
responsibility is ours.
  Of course, I support balancing the Federal budget in a responsible, 
fair way. Despite all of the rhetoric today, we all at least agree on 
that basic goal. That's why some of us have voted consistently to
 reduce actual Federal spending when we've had the chance over the last 
few years on this floor. Not gimmicks, not smoke and mirrors, not 
deficit reduction formulas that never identify precise cuts, but actual 
reductions in Federal spending contained in actual amendments to 
appropriations bills. Votes on those proposed cuts have been important 
indicators of our willingness to make tough choices. This is where the 
budget rubber has met the road.

  The President's $500 billion deficit reduction package in the 103d 
Congress, which I supported and which was approved without a single 
Republican vote, was a major downpayment toward balancing the budget. 
But Democrats had to do it alone. When we cut, the Republicans ran. 
While we acted, they talked. Still, much more must be done.
  But now, instead of real budget choices we are presented with a 
gimmick that I do not believe will work to balance the budget, and that 
if it does work as it's designed, could do serious harm to the U.S. 
economy. It will also serve to reduce pressure in the next few years to 
actually reduce the deficit further, allowing Members of Congress to 
declare a temporary victory without cutting significantly from the 
Federal deficit. And then the reckoning will come, when we are up 
against the wall at the end of this century and have to balance the 
budget in just a few short years with massive spending cuts in all 
Federal spending, including Social Security and Medicare.
  [[Page S3326]] If that's true, then why is the amendment so popular, 
at least in the abstract? In recent years, the borrow-and-spend 
policies of the 1980's and early 1990's have come home to roost, 
rekindling public support for drastic measures. But just so that we 
don't lose our historical perspective in this debate, I think it's 
important to recognize that the problem of huge Federal budget deficits 
is a relatively recent one, going back only to the early 1980's. It's 
just not true, as some amendment proponents imply, that the Federal 
Government has been spending way beyond its means for decades.
  The Reagan and Bush administrations gave America by far its 10 
largest budget deficits in our history. The huge tax cuts and large 
defense increases of that era are still costing us. Whatever your party 
affiliation or perspective on enacting this amendment, that is 
indisputable. If it were not for the interest costs on the debt 
accumulated during the 1981-92 period, the Federal budget would be in 
balance in 1996 and headed toward surplus thereafter.
  I am not trying to explain away large deficits over the last decade 
or so, but simply to point out that they are, more than anything else, 
a direct result of the misguided and now thoroughly discredited fiscal 
policy called supply side economics. Despite the urgings of some of our 
colleagues in the new House leadership, and some of the provisions of 
the Republican Contract for America, we must not turn down that supply-
side road again.
  Opposing the amendment has not been easy, or politically popular. But 
since I have spoken several times on various amendments that have been 
proposed over the course of the last few weeks, let me try to
 summarize one last time my major reasons for voting against this 
amendment.


   americans have a right to know how the amendment will affect them

  Throughout this debate, I've argued that the people of Minnesota--and 
all Americans--have an enormous stake in the outcome of this debate, 
and that they have a right to know how the spending cuts required by 
the amendment could affect them and their families. I offered an 
amendment to one of the first bills before the Senate this year urging 
proponents of the constitutional amendment to detail the over a 
trillion dollars in cuts they would make to balance the budget by 2002, 
before it is sent to the States for ratification. This is simple 
``truth-in-budgeting;'' it's the least we could have expected from 
proponents.
  Indeed, the Minnesota State Legislature and Governor Carlson agree. 
And they sent a Minnesota mandate to Washington to prove the point. The 
legislature recently passed overwhelmingly a resolution, signed by the 
Governor, urging those of us here in Congress to continue our efforts 
to reduce the Federal budget deficit, and requesting financial 
information on the impact the balanced budget amendment would have on 
our State. By rejecting the amendment, which I introduced to provide 
the information to all the States that the Minnesota Legislature was 
seeking, the Senate sent States a chilling message.
  Another major right-to-know amendment, offered by Senator Daschle, 
was also defeated. Despite the straightforward logic of this approach, 
these amendments were rejected on virtual party-line votes.
  And so if we pass this constitutional amendment today, we would be 
sending it to the State legislatures for ratification without giving 
them, or the millions of American families whom they represent in each 
State, any idea of how we intend to cut over a trillion dollars from 
the Federal budget between now and the year 2002, or how it will affect 
their lives and the lives of their children and grandchildren. Families 
will not be told how deep the Medicare, Medicaid, school lunch, higher 
education, or Social Security cuts will be; at least not before we vote 
on the amendment.
  That is, I think, a gross abdication of our sworn responsibility to 
serve those we represent, and a slap in the face to those who count on 
us for truth-in-budgeting. Recent polls show that over 80 percent of 
Americans believe we should be straight with them about how we intend 
to balance the budget under this amendment before we act on it. Even 
so, balanced budget proponents have rejected the right-to-know and 
instead offered Americans a ruse, an exercise in budget deception. In 
so doing, they have seriously breached the standard of public 
accountability that Americans should be able to expect from their 
leaders. In addition, there are a number of sound fiscal policy 
arguments against the amendment; I will raise just two examples.
    amendment would deepen economic recessions and worsen disasters
  Consider the potential risk that the spending cuts required by the 
amendment could push soft economy into a recession, or in a worse case, 
deepen an existing recession and push us into a depression. Now when 
the economy slips into recession, Federal spending helps to cushion the 
fall by increasing unemployment insurance and other assistance programs 
for low- and moderate-income people. At the same time, income tax 
collections drop because people and businesses are making less money in 
a recession.
  But under the amendment, Congress would be forced, perversely, to do 
the opposite: raise taxes, cut spending, and push the economy into an 
economic freefall. The so-called automatic economic stabilizers like 
unemployment insurance that have proven so useful in recent decades 
would be gone, and we would instead effectively enshrine in the 
constitution the economic policies of Herbert Hoover. With fiscal 
policy enjoined by the amendment, sole responsibility for stabilizing 
the economy would rest with the Federal Reserve. And with their almost 
exclusive focus on fighting inflation these days, more often than not 
they end up protecting Wall Street investors--not average working 
families.
  As I have suggested, the amendment is an attempt to enshrine an 
economic dogma which would cripple our ability to offer pragmatic 
responses to changing economic conditions. Because our efforts to 
change the balanced budget amendment to take this problem into account 
also failed, this serious flaw remains.
  Coupled with the absence of any exception for emergency disaster 
spending, that was included in a proposed amendment defeated last week, 
the lack of economic foresight this reflects is almost breathtaking to 
me. In just a few days, we will consider an emergency spending bill to 
help pay the Federal share of the California earthquake last year. The 
cost of this disaster is now up to $15 billion.
  In the last two decades, the Federal Government has spent $134 
billion in Federal disaster relief, including $33 billion in the last 5 
years alone. Under a balanced budget requirement, what would we do in 
the face of a huge flood, earthquake, or other disaster that cost 
scores of billions of dollars in relief aid? How long would it take to 
garner the three-fifths votes necessary in both Houses to pay for it? 
And what special legislative prizes would opponents require for their 
votes? Those are all open to questions.


         amendment could put federal deposit insurance at risk

  Another open question is the impact of the amendment on bank 
deposits. I am sure balanced budget amendment supporters don't intend 
to put the life savings of American families at risk, or to threaten 
the stability of the banking system. And yet that is precisely what 
this amendment would do. Since the Depression, the FDIC has insured 
depositors against bank failures. That limit is now up to $100,000 per 
account. And right now those guarantees cover private savings of about 
$2.7 trillion--that's a whole lot of money that's guaranteed by
 the U.S. Government. Some have observed that the balanced budget 
amendment could put the full faith and credit of the United States 
embodied in such guarantees at risk.


    amendment does not separate day-to-day expenses from investments

  Most Americans believe that a balanced budget, like a balanced 
checkbook, is a good idea. They argue that America, like a family, 
should always balance its budget. But this overlooks a key fact: The 
household budgets of most middle class Americans have substantial debt, 
either for a car, a home, or a college education for their kids.
  This reflects a central problem with the amendment. It ignores the 
difference between two different types of spending: investments for the 
future, 
[[Page S3327]] and ``operating,'' or day-to-day, spending. Taking out a 
mortgage on a home is investing in your family's future; taking one out 
to pay for next year's vacation is not. This is acknowledged by most 
State governments, many of whom are required to balance their operating 
budgets--but not their investment budgets.
  American business agrees; incurring debt to invest and expand a 
business has long been a hallmark of business strategies for sustained 
growth. With governments, as with families or businesses, borrowing 
isn't inherently bad; it depends what you're borrowing for. With 
families, businesses or State governments, the central question is: 
Will the debt we incur improve our long-term economic prospects? If 
this principle applies to household or business budgets, why shouldn't 
it apply to the Federal budget? Nonetheless, an amendment to address 
this problem was rejected.


           No protections for the social security trust funds

  This balanced budget amendment fails to protect the Social Security 
trust funds from being raided to balance the Federal budget. We tried 
to make sure that for the purpose of calculating the deficit under the 
balanced budget amendment, the huge surpluses in the Social Security 
trust fund would not be counted. In that effort, too, we failed; our 
proposed Social Security amendment was defeated. Make no mistake what 
this means: Despite the promises of the proponents that they will not 
balance the budget on the backs of Social Security recipients, they 
have refused to explicitly protect this program in the language of the 
constitutional amendment itself. In fact, they fought hard to defeat 
our Social Security amendment. That is as good an indication of their 
future intentions regarding Social Security as anything we have seen.


          A shell game that will require states to raise taxes

  There is another problem with this constitutional amendment. For many 
in Minnesota, it will likely mean an increase in personal income, 
sales, and property taxes needed to offset the loss in Federal aid from 
crime control to higher education, roads and bridges to farm programs, 
rural economic development to Medicare. This shell game, in
 which costs are simply shifted from the Federal Government onto the 
States, would force Minnesota to fund these efforts on its own. A 
recent Treasury Department study concluded that an increase of between 
9 and 13 percent in Minnesota taxes would be required to make up the 
difference. In reality, a vote for the balanced budget amendment is 
really a vote for a trickle-down tax increase.


                         a standard of fairness
  I think it's a simple question of fairness. If this constitutional 
amendment passes, in the next 7 years we are going to have to make 
$1.48 trillion in spending cuts and other policy changes--assuming that 
we enact Republican-proposed tax cuts for the wealthy and defense 
increases. If we don't, we'll still have to make about $1.2 trillion in 
cuts. If we make these cuts to meet the balanced budget amendment 
requirement and timetable, then we should make sure that wealthy 
interests in our society, those who have political clout, those who 
hire lobbyists to make their case every day here in Washington, will be 
asked to pay their fair share. At least they should bear as much of the 
burden as regular middle class folks that we represent, who receive 
Social Security or Medicare or Veterans benefits, or who receive 
student loans to send their kids to college and offer them a better 
future.
  That's just common sense, and I had hoped that during this debate we 
would signal that we would apply such a standard of fairness. For 
example, too often in discussions about low-priority Federal spending 
which ought to be cut, one set of expenditures has been notoriously 
absent. That is tax breaks for wealthy and well-positioned special 
interests. But that, too, was rejected by the constitutional 
amendment's proponents when I offered an amendment urging simply that 
we make sure such special tax breaks are on the table as we move 
forward in our deficit reduction efforts. Tax subsidies are heavily 
skewed to corporations and the relatively few people with very high 
incomes, while Government benefits and services go in far larger 
proportions to the middle class and the poor.
  In the last few weeks, this issue of fairness has emerged more and 
more clearly to me, more by its absence than by its presence. It looks 
to me as though the current standard, at least as it has been applied 
so far in the published plans of balanced budget proponents, will not 
require much, if any, sacrifice from special interests in our society 
who have enjoyed certain tax breaks, benefits, preferences, deductions 
and credits that most regular middle-class taxpayers don't enjoy.


          efforts to scrutinize tax breaks for wealthy blocked

  But while the constitutional amendment's proponents don't seem to 
mind that it could require States to raise State taxes by large 
margins, they are adamantly opposed to making sure that wealthy 
corporations and others pay their fair share of the deficit reduction 
burden.
  It is a fact, often overlooked, that we can spend money just as 
easily through the Tax Code, through what are called ``tax 
expenditures,'' as we can through the normal appropriations process. 
Spending is spending, whether it comes in the form of a government 
check or in the form of a tax break for some special purpose, like a 
subsidy, a credit, a deduction, or accelerated depreciation for this 
type of investment or that. These tax expenditures--in some cases they 
are tax loopholes--allow some taxpayers to escape paying their fair 
share, and thus make everyone else pay at higher rates. These arcane 
tax breaks are simply special exceptions to the normal rules, rules 
that oblige all of us to share the burdens of citizenship by paying our 
taxes.
  The General Accounting Office issued a report last year titled, ``Tax 
Policy: Tax Expenditures Deserve More Scrutiny.'' It makes a compelling 
case for subjecting these tax expenditures to greater congressional and 
administration scrutiny, just as direct spending is scrutinized. The 
GAO noted that most of these tax expenditures currently in the Tax Code 
are not subject to any annual reauthorization or other kind of 
systematic periodic review. They observed that many of these special 
tax breaks were enacted in response to economic conditions that no 
longer exist. In fact, they found that of the 124 tax expenditures 
identified by the committee in 1993, about half were enacted before 
1950. Now that does not automatically call them into question. It just 
illustrates the problem of their not being very carefully looked at in 
any systematic way over very long periods of time. Many of these 
industry-specific breaks get embedded in the Tax Code, and are not 
looked at again for years. And yet we refused by roll call vote to even 
commit to consider them as we move forward in our efforts to balance 
the Federal books.
  When we begin to weigh, for example, scaling back the special 
treatment for percentage depletion allowances for the oil and gas 
industry against cutting food and nutrition programs for hungry 
children, we may come out with quite different answers than we have in 
the past about whether we can still afford to subsidize this industry. 
The nonpartisan Congressional Budget Office estimates that eliminating 
this particular tax break would save $4.9 billion in Federal revenues 
over 5 years.
  And this is not an isolated example. The Congressional Joint Tax 
Committee has estimated that tax expenditures cost the U.S. Treasury 
over $420 billion every single year. And they estimate that if we don't 
hold them in check, that amount will grow by $60 billion to over $485 
billion by 1999. Now some tax expenditures serve important public 
purposes, like supporting charitable organizations, and should be 
retained. But many of these must be on the table along with other 
spending as we look for places to cut the deficit.
  I could not find any hint of interest in cutting corporate tax breaks 
in the Republican contract, I think because many of the benefits of 
these tax breaks go to very high-income people with wealth and power 
and clout in our society, and to corporations with high-powered
 lobbyists. They're the ones for whom the contract provides an 
estimated $169 billion windfall that would resurrect the tax-shelter 
industry and effectively slash corporate rates.

  At a time when we are talking about potentially huge spending cuts in 
meat inspections designed to insure against 
[[Page S3328]] outbreaks of disease; or in higher education aid for 
middle class families; or in protection for our air, our lakes, and our 
land; or in highways; or in community development programs for States 
and localities; or in sewer and water projects for our big cities; or 
in safety net programs for vulnerable children, we should be willing to 
weigh these cuts against special tax loopholes on which we spend 
billions each year. And yet we could not even agree to put these on the 
table along with everything else as we move forward in our efforts to 
reduce the deficit.


                        ENSHRINES MINORITY RULE

  Constitutional and congressional scholars have observed that the 
balanced budget amendment gives a veto power to a small minority of 
either the House or the Senate in key budget decisions, a profoundly 
antidemocratic shift away from our proud, 200-year-old tradition of 
majority rule. The need to win approval from three-fifths of both 
Houses to waive the balanced budget requirement in a recession would 
give added power to members whose votes might be needed to avoid 
plunging the country into a deeper downturn.
  Thus, the price of an agreement to let the Government run even a 
modest deficit during a recession, and to provide recession-related 
unemployment benefits, might be a capital gains cut or other tax break 
touted by its backers as a ``growth incentive.'' As we saw in the 
1980's, these tax breaks usually prove to lose revenues and increase 
the deficit over the long term, which in turn could lead to additional 
program cuts in subsequent years to bring the budget back into balance.


                     WEAKENS OUR ABILITY TO INVEST

  As I have observed, the balanced budget amendment would largely deny 
to the Federal government a basic practice that most businesses, 
families, and States and local governments use--borrowing to finance 
investments with a long-term payoff. Borrowing to finance new 
investments is standard business practice. A business that failed to 
modernize because it could not borrow would soon be left behind.
  We must continue to invest in our people. Our economy is creating new 
jobs at a near-record pace--over 5 million in the last 2 years alone--
yet it doesn't give much help to those ordinary working families who 
are at the bottom, or in the struggling middle class. As one Iron 
Ranger in Minnesota recently told me, ``All these jobs being created 
doesn't do me much good if I have to hold three of them to keep my 
family together.'' His comment reflects the anger and economic 
insecurity many Americans feel because their personal economic 
experience doesn't jibe with what Government statistics tell them--that 
unemployment is down, inflation is in check, and economic growth
 and productivity are booming. Despite these statistics, standards of 
living and real wages of workers remain flat, or in slight decline; 
many are just one downsizing away from layoff, and feel less secure. We 
must invest in the skills and futures of our people if we are going to 
turn this situation around.

  The amendment would force a scaling back of Government investment in 
areas where economists stress more investment is needed: 
infrastructure, education and training, early intervention programs for 
children, research and development. There is growing evidence we invest 
too little in these areas and that such under-investment has 
contributed to our Nation's weak economic performance in recent years.
  It is true that for too long the Federal Government has been 
undisciplined in its borrowing, and that is what threatens our fiscal 
future. We have a responsibility to future generations to get our 
fiscal house in order, and to do it the Federal Government has to 
reprioritize spending in relation to this central question of 
investment, by re-examining programs across the board and eliminating 
or scaling back those that are wasteful and unnecessary. We must 
redesign cumbersome Federal structures to meet the challenges of the 
information age, of rapidly changing demographics, of our decaying 
inner cities. We should do this in a way that's fair, open and 
accountable, without the budget smoke and mirrors that have too often 
fogged the real choices facing voters.
  Let me say a word about the impact that systematic disinvestment 
would have on working families, children and the elderly in my State, 
because ultimately that is what this whole debate is about.


           the impact of the amendment on minnesota families

  Throughout this debate, I have tried to ask myself basic questions 
about the impact of this balanced budget amendment on the families in 
Minnesota whom I represent. I think it would inflict on Minnesotans 
serious harm, and that is why I cannot in good conscience support it. 
That is ultimately the deciding factor for me.
  I've already talked about the shell game that this amendment would 
require by shifting the costs of government from the Federal to the 
State level, and forcing States to raise income, property and sales 
taxes--in Minnesota's case by about 13 percent, according to the 
Treasury Department. But what about the actual spending cuts? How would 
they be distributed? Who would have to sacrifice, and who would 
benefit?
  Over 7 years, under the balanced budget amendment and accompanying 
Republican proposals, Minnesota would lose nearly $5.9 billion in 
Federal Medicare funds, Medicaid cuts would total nearly $3.7 billion, 
elementary and secondary education would lose $1.5 billion, and Federal 
law enforcement would lose $143.7 million. Minnesota farmers also would 
likely lose billions in farm payments, causing a serious decrease in 
family farm income. And it's not just rural areas
 that would be hit. The two largest urban counties in my State, 
Hennepin and Ramsey Counties, would alone lose about $10.3 billion in 
total Federal aid over 7 years.

  In addition, despite Republican promises to temporarily protect this 
program, large cuts in Social Security benefits to Minnesotans--an 
estimated $2,000 annually per beneficiary--should also be expected if 
this program is slated for across-the-board cuts.
  These are very large cuts, and they will have a major impact on the 
people of my State. I have heard from elderly couples in Minnesota on 
fixed incomes, terrified about the impact of the amendment on their 
Medicare funding. And they have reason to be fearful. I have sat with 
homeless men and women, Medicaid recipients, who are threatened with 
going without even the most basic health care under the amendment. 
Instead of this approach, we owe it to these people to do real 
comprehensive health care reform.
  Despite the claims of some that opponents of the amendment are 
exaggerating the threat posed by these huge spending cuts, this is for 
real. I am not making this up. In fact, just the other day, Finance 
Committee Chairman Packwood said that he thought we would have to make 
up to $550 billion in cuts in Medicare alone to meet its requirements--
not to mention the huge cuts in Medicaid he acknowledged would be 
necessary. And it could go much higher than that, depending on budget 
decisions made in other areas.
  Finally, let me say a word about the process by which this amendment 
has been considered. In recent weeks, balanced budget amendment 
proponents have rejected virtually every single good faith effort to 
improve the constitutional amendment. Amendments to prevent a raid of 
the Social Security trust funds, to exempt earned veteran's benefits, 
to strike the majority requirements, to prevent harm to hungry and 
homeless children, to separate investment from day-to-day operating 
budgets, to provide for exceptions for major disasters and economic 
recessions--and many others--were defeated.
  I believe that if the Senate passes this amendment today, as we look 
back on this debate from the midst of a serious recession, major 
disaster, or even undeclared national security emergency, this 
unwillingness by proponents to accept even modest, reasonable changes 
in the amendment will prove seriously misguided.
  While at first look this amendment appears to make sense and is 
widely popular, amending our Constitution in this way would be a 
mistake with potentially serious fiscal, economic, and social 
consequences and would seriously alter our democratic process. We can 
and should balance the budget without gimmicks and without changing the 
Constitution. I intend to continue to vote to do that. I urge my 
colleagues to join me in that effort, and to 
[[Page S3329]] vote no on the balanced budget amendment. I yield the 
floor.
  Mr. LEVIN. Mr. President, I want deficit reduction and I am willing 
to work for it. That is why I supported the President's deficit 
reduction package in the last Congress. But while I have stood up for 
real deficit reduction, what I am not prepared to do is to write into 
the Constitution language that is more likely to lead to 
disillusionment and constitutional crisis than to a balanced budget.
  I see five flaws in the proposed amendment. First, the proposed 
amendment would not balance the budget, it would just say that a future 
Congress has to pass a law to enforce a balanced budget. Why wait? 
Unless and until we make the tough choices needed to cut spending or 
raise revenues, we will not have a balanced budget, whether or not we 
pass the proposed constitutional amendment and whether or not the 
States ratify it. We will instead have passed what could turn out to be 
a cynicism-deepening illusion.
  The proposed constitutional amendment says that starting no earlier 
than 2002, Congress has to have a law enacted which enforces a balanced 
budget. Why wait? Why wait to do the hard work of passing implementing 
laws and doing the actual budgeting? That's a dodge which allows some 
to say we are cured before we have taken the medicine. It puts a giant 
loophole in the Constitution to cover over congressional weakness.
  In May 1992, Robert Reischauer, the Director of the nonpartisan 
Congressional Budget Office, testified before the House Budget 
Committee that a balanced budget amendment is not a solution; 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.'' Dr. Reischauer stated:

       It would be a cruel hoax to suggest to the American public 
     that one more procedural promise in the form of a 
     constitutional amendment is going to get the job done. The 
     deficit cannot be brought down without making painful 
     decisions to cut specific programs and raise particular 
     taxes. A balanced budget amendment in and of itself will 
     neither produce a plan nor allocate responsibility for 
     producing one.

Dr. Reischauer further stated:

       Without credible legislation for the transition that 
     embodies an effective mechanism for enforcement, government 
     borrowing is not going to be cut. But the transitional 
     legislation and the enforcement mechanism are 95 percent of 
     the battle. If we could get agreement on those, we would not 
     need a constitutional amendment.

  The public understands this. They know the difference between 
promises and action. Let me tell you what some of the commentators are 
saying about the balanced budget amendment back in my home State. Here 
is what the Detroit Free Press said on January 15:

       You wouldn't take seriously any politician who promised to 
     be faithful to his spouse, beginning in 2002, so why do so 
     many people take seriously the proposed balanced-budget 
     amendment?
       It's the same kind of empty promise to be good--not now, 
     but later. Putting it in the Constitution isn't likely to 
     confer on Congress the spine or the wisdom to fulfill it.
       * * * [T]he way to cut the budget is to cut the budget, not 
     to promise to do it sometime in the future. * * * Gluing a 
     balanced budget amendment onto the Constitution only 
     postpones the moment of truth.

And here is what the Battle Creek Enquirer said on January 29:

       If a balanced budget is such a good idea, we say to 
     Congress: ``Just do it!'' After all, waiting until a 
     constitutional amendment mandates it will just delay a 
     balanced budget--perhaps by years.
       This Congress isn't likely to give the nation a balanced 
     budget, that's for certain. But, by touting the need for this 
     amendment, it sure can talk like a Congress that already has 
     * * *  [I]t's all an illusion.

  ``Just do it!'' That's what the American people want, Mr. President. 
They know the difference between promises and action, and they want the 
latter. A constitutional amendment can promise a balanced budget, but 
it cannot deliver a balanced budget. Only concrete action by the 
Congress can do that.
  Put another way, Mr. President, the proposed constitutional amendment 
has no effective enforcement mechanism. The amendment relies on a 
future Congress to act to implement and enforce it. That is the bottom 
line. This is the same reed that proved so weak in the 1980's when the 
President and the Congress quadrupled the national debt from $1 
trillion to $4 trillion.
  The argument has been made that we have tried everything else, why 
not a constitutional amendment. We can't depend on legislation, the 
argument goes, so let's try a constitutional amendment.
  So what does this amendment do? It depends on the same kind of 
legislation to be enacted which its sponsors say has not previously 
been effective.
  When we were debating this amendment in 1986, Senator Hatch 
acknowledged the following:

       [T]here is no question that Congress would have to pass 
     implementing legislation to make it effective. * * * It would 
     be the obligation of Congress, after the amendment is passed 
     by both Houses and ratified by three-quarters of the states 
     to * * * enact legislation that would cause this to come 
     about.

  And again, CBO Director Reischauer pointed out that:

       Without credible legislation for the transition that 
     embodies an effective mechanism for enforcement, government 
     borrowing is not going to be cut. But the transitional 
     legislation and the enforcement mechanism are 95 percent of 
     the battle. If we could get agreement on those, we would not 
     need a constitutional amendment.

  Just a few weeks ago, on January 30, Senator Hatch stated:

       ``* * * [U]nder 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.

  In fact, the committee report accompanying this constitutional 
amendment itself states that it ``* * * must be supplemented with 
implementing legislation''.
  Mr. President, I have offered an amendment to the constitutional 
amendment to require this Congress to address this issue by adopting 
legislation to implement and enforce a balanced budget requirement now. 
Without my amendment, there are no real teeth in the promise of a 
balanced budget contained in the proposed amendment.
  Alexander Hamilton states in Federalist Paper No. 15, ``If there be 
no penalty annexed to disobedience, the resolutions or commands which 
pretend to be laws will, in fact, amount to nothing more than advice or 
recommendation.''
  If congressional weakness is the reason for this amendment--and it 
is--then Congress will use the loopholes in this amendment to evade the 
responsibility which it sets forth. My fear is that this amendment will 
give us an excuse to duck the hard choices, as Congress has often 
chosen to do, until it would become effective in 2002--at the earliest. 
I am afraid that upcoming Congresses will say ``the balanced budget 
amendment will take care of our problems, so we don't need to address 
them now.''
  Dr. Reischauer, in his 1992 testimony, listed a number of loopholes 
that Congress could use to get around an apparently rigid balanced 
budget rule:
  Using timing mechanisms and other budget gimmicks to achieve short-
run budget targets, including such actions as shifting pay dates 
between fiscal years, accelerating or delaying tax collections, 
delaying needed spending until future fiscal years, and selling 
government assets;
  Basing the budget on overly optimistic economic and technical 
assumptions; and
  Creating off-budget agencies that would have authority to borrow and 
spend but whose transactions would not be directly recorded in the 
budget.
  That is what we did in the 1980's. We used optimistic estimates or 
``rosy scenarios''. Here are some of those estimates. In 1981, our 
estimates were off by $58 billion. In 1982, our estimates were off by 
$73 billion. In 1983, our estimates were off by $91 billion, and on and 
on. In 1991, they were off by $119 billion--$119 billion in 1 year. You 
talk about a loophole. This one is big enough to drive a $119 billion 
deficit through. That is how big this loophole is.
  The sponsors of the amendment say that the real enforcement mechanism 
is in section 2. That section provides that it will take 60 percent of 
the votes, a supermajority, to increase the debt ceiling. So if our 
estimates are too rosy--if, for instance, we follow the 1980's model of 
estimates in order to evade the constitutional requirement, then, we 
are told, we can fall back on 
[[Page S3330]] the requirement that the debt limit can only be 
increased by a 60 percent vote in each House.
  As Senator Graham of Florida has pointed out, however, the so-called 
debt limitation provision in the proposed amendment would allow us to 
run deficits in the first decade and a half of the next century of as 
much as $120 billion a year, masked by taking that money from the 
Social Security trust fund, without that counting toward the deficit. 
The proposed amendment applies the 60-vote requirement to ``the limit 
on the debt of the United States held by the public''. So the debt held 
by the Social Security Administration isn't covered and the usual 
majority rule would apply to raising that debt limit.
  In any case, history has proven the debt limit is a weak reed to rely 
on, because when you vote on whether or not to increase the debt limit, 
you are voting whether or not to bring down the Government of the 
United States. We have to pay our legitimate debts, however many votes 
it may take. If we don't do that, we are finished economically. To make 
that point, let me quote from a July 8, 1987 letter from Secretary of 
the Treasury James A. Baker III to the Chairman of the Senate Finance 
Committee:

       I cannot overemphasize the damage that would be done to the 
     United States' credit standing in the world if the Government 
     were to default on its obligations, nor the unprecedented and 
     catastrophic repercussions that would ensue. Market chaos, 
     financial institution failures, higher interest rates, flight 
     from the dollar and loss of confidence in the certainty of 
     all United States Government obligations would produce a 
     global economic and financial calamity. Future generations of 
     Americans would have to pay dearly for this grave breach of a 
     200-year-old trust.

  Mr. President, we are not going to achieve a balanced budget by 
threatening not to raise the debt ceiling, because that is a nuclear 
weapon aimed at the economy of this country. You don't balance the 
budget by threatening suicide, and that is what a failure to pay our 
debts would be. If we do not pay our debts, this country's economy is 
finished. So whether it takes the usual majority or 61 votes, it 
doesn't matter. We will have to increase the debt ceiling, because 
after the debts have been incurred, we won't have any choice.
  Mr. President, my second problem with the amendment is that if a 
later Congress does adopt effective enforcement legislation, it would 
be putting in the hands of a minority of Senators, representing as 
little as 15 percent of the population, critical decision-making power 
over the economy of this Nation. Under the proposed amendment, it is 
intended that outlays not exceed receipts, and the debt limit not be 
increased, unless three-fifths of both Houses of the Congress agreed. 
The economic future of our country should not be put in the hands of a 
minority by a constitutional amendment which would be so difficult to 
change if it went awry.
  My third problem with the amendment is that it would put the Social 
Security trust fund at risk. By my count, during this debate the Senate 
has rejected at least three amendments to protect the Social Security 
trust fund. As the senior Senator from Florida explained, Mr. 
President, that means that we will continue running deficits of at 
least $120 billion a year for more than a decade after this amendment 
would go into effect, and will conceal these deficits by taking the 
money from the Social Security trust fund. The money in that trust fund 
is exactly that--money that we have collected in trust. I cannot vote 
for a constitutional amendment which allows the use of that money to 
cover up huge deficit spending. That's simply wrong.
  My fourth problem with the amendment is that, if effectively 
implemented, it would preclude the use of deficit spending to cushion 
the impact of a recession. A balanced budget amendment would force the 
Federal Government to raise taxes and cut spending in recessions, to 
offset the loss of revenue caused by declining income. These policies 
would deepen the impact of a recession and could even turn a mild 
recession into a depression.
  Indeed, the Treasury Department has done a study showing that, were 
it not for countercyclical deficit spending, roughly one and a half 
million more people would have been unemployed in the 1991-92 
recession. Mr. President, we should not ignore the real world hardships 
caused by recessions and we should not act in a way which could cause 
millions of Americans to lose their jobs.
  Finally, Mr. President, I am troubled by the fact that the proposed 
amendment is intentionally ambiguous on the role of the President in 
carrying out the amendment. The resolution of this crucial issue will 
determine how the amendment will affect the checks and balances placed 
in the Constitution by our Founding Fathers.
  With regard to Presidential impoundment, the Senator from Utah, 
Senator Hatch, says the President would have no power to impound funds 
unless expressly granted by Congress, but the sponsors refuse to make 
this explicit in the amendment itself.
  There are some, including Members of this Senate, who already believe 
that the President has inherent impoundment powers under article II of 
the Constitution. Would not that argument be reinforced by a 
constitutional amendment prohibiting outlays from exceeding receipts, 
in view of the President's duty to preserve, protect, and defend the 
Constitution?
  Former Reagan administration Solicitor General Charles Fried has 
testified that such a power would exist. He stated:

       Now, the command of section 1 is very unqualified. Total 
     outlays shall not exceed total receipts unless you have the 
     three-fifths vote. It seems to me that command
      would give the President--any President--a far better claim 
     to impound funds than that which was asserted some years 
     ago by President Nixon, because the President's warrant 
     would not be drawn from, as President Nixon said it was, 
     inherent powers of the Presidency. He could point to the 
     Constitution itself. He would say that they shall not 
     exceed, and he swears an oath to see that the laws are 
     faithfully executed, and I would think his claim to 
     impound would be very strong. Not only his claim, but he 
     would argue with considerable plausibility his duty to do 
     so.

  So again, the record is, at best, unclear.
  The question whether the President could enforce the amendment by 
impoundment would not be an insurmountable problem, had the majority 
not chosen to make it so. For instance, when we approved a balanced 
budget amendment in the Senate in 1982, we included language proposed 
by the Senator from New Mexico, Mr. Domenici, to ensure that the 
amendment could not be construed to grant the President impoundment 
powers.
  This year, however, the sponsors of the amendment decided to remain 
silent on this issue. That is not the way we should address the 
question of amending the Constitution. This is the Constitution we are 
talking about, and we need to know what the amendment we are 
considering means in this critical area.
  In conclusion, Mr. President, the proposed amendment provides too 
easy an excuse for Congress not to act now to reduce the deficit and it 
doesn't force congressional action later either.
  It lets us off the hook now, and there is no hook later.
  It's based on the argument that a constitutional amendment is needed 
because previous laws calling for a balanced budget didn't work. But 
its success, by its own terms in section 6, is dependent upon a future 
Congress enacting a similar law.
  The amendment before us, in other words, is unlikely to reduce the 
deficit, but is likely to increase public cynicism about the willpower 
of Congress to act.
  We can and we should adopt enforcement legislation to achieve a 
balanced budget now, with or without a constitutional amendment.
  There is only one way to balance the budget now, or in 2002--and that 
is with the willpower to make the tough choices. I hope we will defeat 
this constitutional amendment and instead show the will power to make 
the tough choices and enact enforcement legislation actually needed to 
balance the budget.
  Mrs. MURRAY. Mr. President, I voted against House Joint Resolution 1, 
the so-called balanced budget amendment.
  I voted no because this amendment is a 10-second political sound bite 
with decades of economic implications. It will handcuff future 
generations to an 
[[Page S3331]] economic blueprint this Congress dictates in 1995. And, 
worst of all, it makes a mockery of the most important document this 
country has ever produced.
  I am a member of the Budget Committee. When I came to the Congress 2 
years ago, I faced the largest debt ever amassed by any country in the 
history of civilization. More debt was created during the 12 years of 
Republican administrations in the 1980's and early 1990's than in the 
entire 200 years preceding them.
  I strongly support putting this country's economic house in order. 
Mr. President, I support a balanced Federal budget. The people of this 
Nation deserve nothing less. But this amendment does not get us there. 
Words on a piece of paper cannot balance the budget, only legislators 
like you and I can.
  We have to make tough choices as we correct the fiscal mismanagement 
of the 1980's. We have to balance the budget with surgical cuts; with a 
scalpel, not a meat cleaver.
  Mr. President, we have made some very tough decisions. I was one 
Member of this body who voted for a plan--a plan with specific cuts and 
common sense--which reduces the deficit by $505 billion over 5 years. 
Program-by-program, cut-by-cut. Most of the Members of the Senate who 
voted against the deficit reduction plan now support this 
constitutional amendment.
  Mr. President, where are the specifics? What will they cut? Which 
taxes will they raise? Who will be hurt? The American people have a 
right to know. Under this amendment, we have no idea.
  For example, will they cut out funding for the Federal Government's 
obligation to clean-up the Hanford Nuclear Reservation in my home State 
of Washington? Will they eliminate the home mortgage deduction? Will 
they cut Head Start, or WIC, or Ryan White? Will they stop guaranteeing 
student loans? Will they block further assistance to our depressed 
timber communities, or job training for laid-off aerospace workers?
  Mr. President, just this week, we have seen some examples of how 
careless cuts can be when they are made with a meat cleaver. The 
rescissions package coming before the Senate soon is a mean-spirited 
and irrational piece of legislation. As nasty as those cuts are, they 
still do not get us to a balanced budget. Instead, they damage those we 
can least afford to harm: our children.
  If this body is serious about deficit reduction, we should resume the 
debate on health care reform. Even cutting every discretionary program 
will not get us to a balanced budget. We must control the growth of 
health care costs. I find it ironic that many of the same Senators who 
opposed the health care reform bill last year now support this 
constitutional amendment.
  This so-called balanced budget amendment is dangerous. It will remove 
all our flexibility in dealing with emergencies--economic troubles like 
recessions, or even natural disasters like volcanic eruptions, 
earthquakes, flooding, hurricanes, and massive fires. My home State has 
experienced many such disasters recently. If this amendment had been 
part of the Constitution, how would my friends and neighbors have 
coped?
  Mr. President, I believe many of our colleagues would want to help in 
these emergency situations. That is why the Congress is the proper 
venue for deciding these issues--our Founding Fathers thought so, too.
  This constitutional amendment throws our responsibility to the 
courts. The courts will decide if funding is appropriate. Supreme Court 
justices are not responsible to the people of my home State; they are 
not elected by anyone. They are not sent to the Nation's capital to 
tend to the needs of my constituents.
  Mr. President, we have amended the Constitution only 17 times since 
we adopted the Bill of Rights. We have never changed the Constitution 
lightly. With each previous amendment, the American people voted to 
expand rights and outline responsibilities--we have never inserted an 
economic plan into the Constitution. This amendment sets a terrible 
precedent.
  I voted in favor of several amendments to the House Joint Resolution 
1. I could see that the resolution had considerable support, and I 
wanted to make sure that if it did indeed pass, we protected our most 
vulnerable populations; that we maintained the integrity of the Social 
Security trust fund; that we continued our fight against violent crime; 
that we respected our veterans; and that we exempt natural disasters 
from cuts.
  I also believe that we should display common sense and work to reduce 
the massive deficit before we enacted sweeping, across-the-board tax 
cuts.
  These safeguards all failed--every one of them. All attempts at 
tempering the resolution, or placing some sensible priorities into the 
legislation, were killed.
  Mr. President, this is bad policy, and I cannot support any measure 
that will handcuff our country's economic policy. When I stand in this 
Chamber, I remember that I am not only a U.S. Senator but also a 
mother.
  It might be popular to vote yes, but I won't worry about my own 
personal popularity until I know my children's economic future is safe. 
I do not believe we should trivialize our Constitution in order to give 
politicians a reason to make the kind of choices they should be making 
anyway.
  This resolution will hurt our country and handcuff future 
generations. Amending the U.S. Constitution is not worth the gamble. 
For these reasons, Mr. President, I did not support House Joint 
Resolution 1.
  Mr. PRESSLER. Mr. President, since 1981, there have been eight 
balanced budget amendment measures that have been approved by the 
Senate Judiciary Committee and reported to the Senate. Three of these 
measures have received floor consideration.
  In 1982, the Senate passed Senate Joint Resolution 58 by a 69-to-31 
vote. This marked the first time either House of Congress had approved 
such a measure. Although a substantial majority of the House of 
Representatives voted in favor of a counterpart of Senate Joint 
Resolution 58, the 236-to-187 margin fell short of the necessary two-
thirds vote.
  In 1986, the Senate rejected a balanced budget amendment (S.J. Res. 
225) by a vote of 66-to-34, thus failing to achieve the necessary two-
thirds majority by a single vote.
  Then during 1994, the Senate defeated Senate Joint Resolution 41 by a 
vote of 63-to-37, 4 votes short of the two-thirds necessary for 
adoption.
  Since coming to the Senate in 1979, I consistently have cosponsored 
and supported balanced budget amendment measures, and have voted for 
adoption of these measures at each and every opportunity. I strongly 
support the proposed amendment before us which was approved by the 
House of Representatives. With our vote today, the Senate will choose 
between a failed status quo or a new road toward true fiscal 
accountability.
  Mr. President, there is compelling need for a balanced budget 
amendment to the Constitution. The Federal Government has run deficits 
for 23 years in a row and for 54 of the last 62 years. As a result, our 
national debt has spiraled to more than $4.8 trillion. The gross annual 
interest on the debt exceeds $300 billion.
  Moreover, if we maintain the status quo--as reflected in the 
President's budget request for fiscal year 1996--the national debt 
would increase to more than $6.7 trillion in 2000. Mr. President, is 
this the kind of legacy we want to impose upon our children and 
grandchildren?
  The harsh fact is that up until now we have tried every legislative 
means possible to lower deficit spending and achieve tax revenues in 
excess of outlays. In the past 10 years, we have seen Gramm-Rudman, 
Gramm-Rudman II, the 1990 budget amendment, and the failed 1993 budget 
plan. These well-intended measures have failed to move us closer to a 
balanced budget. Even if it were to succeed for one budgetary cycle, 
what assurances are there for continued balanced budgets and surpluses 
sufficient to eliminate our national debt?
  There must be a measure beyond Federal statute and outside the 
present legislative process that would require continued balanced 
Federal budgets. That is why a constitutional measure is necessary.
  The constitutional amendment before the Senate today would prohibit 
deficit spending except during any fiscal year in which a declaration 
of war 
[[Page S3332]] is in effect or when the country is engaged in an urgent 
national security crisis. Also, the limit on deficit spending and the 
limit on the national debt may be waived by a recorded vote of three-
fifths of the whole number of each House.
  It seems that if the limits on deficit spending and the national debt 
could be waived by a simple majority vote of the House and the Senate, 
the purpose of the constitutional amendment would be nullified. It is 
clear more than a majority should be required to waive the amendment. 
Year after year huge deficits have been incurred by simple majority 
votes.
  Requiring a supermajority vote is not unique. The Constitution 
currently has nine supermajority requirements on specific actions or 
measures. These supermajorities include: ratification of treaties; veto 
overrides; expulsion of a Member of the Senate or the House; 
impeachment of the President, Vice President, and other Federal civil 
officers and judges; waiver of disability of certain persons who 
engaged in rebellion against the United States; election of a Vice 
President by the Senate; and amendment of the Constitution. Also, 
supermajorities are provided for in each House under its constitutional 
right to determine the rules of its proceedings.
  Measures such as a declaration of war or an amendment to the 
Constitution were rightly considered by the framers to be the most 
serious of policy commitments. They believed a broader consensus was 
needed for these beyond a simple majority. The framers also imposed 
supermajority requirements to ensure that the fundamental rights of 
individuals were not overrun by the tyranny of a majority. Mr. 
President, we have reached a point in our history that any serious 
thought of further mortgaging the future of our children and 
grandchildren should require a broader consensus than a simple 
majority. It is for them that we must get our fiscal house in order. It 
is for them that we must pass this balanced budget amendment.
  The proposed amendment would take effect within 2 years after 
ratification by three-fourths of the States, or by 2002, whichever 
comes later. It is significant that 48 States, including my home State 
of South Dakota, have constitutional provisions limiting their ability 
to incur budget deficits. Such constraints have proven workable in the 
States.
  It is not surprising that a large majority of persons throughout the 
country who have been polled on this issue support a balanced budget 
amendment. Certainly, a large majority of South Dakotans from whom I 
have heard and with whom I have met urge that this resolution be 
adopted. They know it is the only way to achieve balanced Federal 
budgets and reduction of the national debt. I hope, Mr. President, our 
colleagues will bring that about.
  Mr. LEAHY. Mr. President, during the past few days, I have been 
dismayed at the attempts of the proponents of this constitutional 
amendment to find a fix to pick up a vote or two in order to obtain 
passage. It may make for high drama, but it also makes for bad law. 
This is the United States Constitution that they are seeking to amend 
and its provisions should be carefully crafted, studied and considered. 
Back rooms and political dealmaking have no place in amending the 
Constitution.
  At the center of these desperate negotiations has apparently been a 
belated effort to jerryrig some type of budget resolution or 
implementing legislation to protect the Social Security trust fund from 
being used to balance the budget under this so-called balanced budget 
amendment. This is absurd.
  The language of House Joint Resolution 1 is very clear. Section 1 
states: ``Total outlays for any fiscal year shall not exceed total 
receipts for that fiscal year.* * *'' And section 7 states: ``Total 
receipts shall include all receipts of the U.S. Government except those 
derived from borrowing. Total outlays shall include all outlays of the 
U.S. Government except for those for repayment of debt principal.'' The 
undisputed reading of this language is that the Social Security trust 
fund will be covered by this constitutional amendment.
  In addition to the unambiguous language of the constitutional 
amendment itself, the legislative history of House Joint Resolution 1 
makes it clear that the Social Security trust fund is not protected. In 
fact, the proponents have fought back all efforts in the Senate 
Judiciary Committee to amend the same language in Senate Joint 
Resolution 1 and all amendments offered here on the Senate floor over 
the past month.
  During Senate Judiciary Committee consideration of this 
constitutional amendment, Senator Feinstein offered an amendment to 
exclude funds going in and out of the Social Security trust fund from 
the definition of total receipts and total outlays. Unfortunately, a 
majority of members of the Senate Judiciary Committee tabled Senator 
Feinstein's amendment by a vote of 10 to 8 on January 18, 1995.
  During the Senate debate on House Joint Resolution 1, Democrats 
offered two separate amendments to take Social Security off the table. 
Senator Reid offered an amendment to this constitutional amendment that 
would have legally protected the
 Social Security trust fund by excluding it from the definitions of 
total outlays and total receipts in section 7 of House Joint Resolution 
1. But that amendment was tabled by a vote of 57 to 41 on February 14, 
1995.

  Just a few days ago, Senator Feinstein offered a substitute balanced 
budget amendment that again would have legally protected the Social 
Security trust fund by excluding it from the definitions of total 
outlays and total receipts in the substitute amendment. Again, the 
proponents of this constitutional amendment tabled the Feinstein 
substitute amendment by a vote of 60 to 39. Whether the Tennessee 
Valley Authority is exempted and placed ``off budget'' may be in doubt, 
but there is no doubt that the Social Security trust fund is included 
by the proponents of this constitutional amendment.
  Trying to craft some type of subsequent, legislative fix is folly. No 
court in the country would enforce a statute that tries to overrule the 
clear language of a constitutional amendment and the clear legislative 
history supporting that language. The only way to protect the Social 
Security trust fund from this so-called balanced budget amendment is to 
write that protection into the text of House Joint Resolution 1 itself. 
There is no other legally sound or enforceable way.
  Moreover, any follow-up legislative effort to protect Social Security 
could be changed at any time by subsequent legislation and would offer 
no permanent protection. Unlike an amendment to the Constitution of the 
United States, a simple majority of Senators, or in the case of 
legislation changing the Budget Act 61 Senators, could change 
legislation trying to take Social Security off the tale. The 
legislation would fall far short of the protection of having something 
enshrined in the Constitution, which the Founding Fathers purposely 
made difficult to amend.
  If proponents are finally willing to offer real protection for Social 
Security, why do it with only a budget resolution or statute? And if 
that is good enough for Social Security, why not cut the deficit 
through the same mechanism?
  Let us be honest with the American people. The real reason the 
proponents of this so-called balanced budget amendment refuse to 
protect Social Security in the constitutional amendment itself is that 
they have no intention of protecting Social Security. Proponents of 
this constitutional amendment plan to use the annual surpluses in the 
Social Security trust fund to mask the true deficit. To make it easier 
to thump their chests that the budget is balanced, the supporters of 
this constitutional amendment hope to raid the $705 billion in annual 
surpluses in the Social Security trust fund that will accumulate 
between now and 2002.
  It was most revealing that their recent offer to compromise with 
Senators Conrad and Dorgan on this point was to stop counting the 
surpluses in the Social Security trust fund in 2012, or about the time 
that those surpluses are projected to dry up.
  Let us put an end to this foolishness. Either protect Social Security 
in the language of House Joint Resolution 1 or not, but quit playing 
games with the Constitution of the United States. I have argued since 
this measure began 
[[Page S3333]] being considered that we needed to tackle the important 
questions of implementing legislation first. But the proponents of this 
measure have refused. They remain prepared to leave every concern and 
serious problem for later.
  But their mantra, that fundamental flaws in the constitutional 
amendment itself can be fixed in implementing legislation, rings 
hollow. Even if we believed their sudden change of heart on these 
mattes signalled a real change in philosophy, some problems created by 
the amendment cannot be corrected in mere implementing legislation. The 
Constitution defines the ground rules, and the Constitution overrules 
any contradictory implementing legislation.
  Let us bring this sorry spectacle to an end. Let us vote to defeat 
the so-called balanced budget amendment. Maybe then the Senate could 
get past this slogan of an amendment and let us get on with real 
business, making the tough choices needed to take real action to reduce 
the deficit.
  Mr. BIDEN. Mr. President, last week I announced my decision to 
support the balanced budget amendment.
  I rise today to explain my choice.
  Considering amendments to our Constitution is one of the Senate's 
most profound responsibilities. Our Nation has made only 17 such 
changes since the Bill of Rights was ratified over 200 years ago.
  But in recent decades a structural imbalance has occurred in the way 
the Federal Government finances its operations. Each year, we find 
ourselves deeper and deeper in debt, with no reasonable prospect for 
constraining either the deficit or the debt.
  We cannot balance our budget. Or, more precisely, we will not.
  As I considered the balanced budget amendment as a possible solution 
to this problem, I had to first answer an important question--Is this 
an issue worthy of constitutional consideration?
  From the point over 10 years ago when I offered my own constitutional 
amendment to balance the Federal budget, up to my vote for Senator 
Reid's balanced budget amendment last year, I have held that this is an 
issue worthy of constitutional consideration.
  The decision to encumber future generations with financial 
obligations is one that can rightly be considered among the fundamental 
choices addressed in the Constitution.
  If this issue meets the test of constitutional significance, Mr. 
President, then is House Joint Resolution 1 the way to address it?
  Mr. President, many of my colleagues, whose very valid concerns I 
have shared, have honored this Chamber with an eloquent presentation of 
the problems this particular amendment could cause.
  I will respond to some of those arguments later.
  But none of their arguments has overcome my concern for the future of 
our Nation's economy--for the country we will pass on to our children.
  After so many years of seeking alternative solutions, I can see no 
other reasonable prospect for sharply curtailing the debt than the 
adoption of this amendment into our Constitution.
  Mr. President, it is one thing to have deficits of $20 to $40 billion 
per year, which we could live with for the foreseeable future. But it 
is quite another thing to have deficits of $200 to $400 billion. And 
just 6 years from now, Mr. President, $400 billion is just what our 
deficit will be, not counting the surplus in the Social Security trust 
fund.
  Under these extraordinary circumstances, it seems reasonable to me to 
require an extraordinary majority of Congress to continue deficit 
spending.
  Even if this amendment passes and is ratified by the States, I know 
that we will continue to have some deficits. It is the potential size 
of deficits that bothers me; there is nothing sacred about a balanced 
budget.
  But if we do decide to add to our national debt, it should be for 
important reasons, such as managing recessions or natural disasters--or 
securing the future well-being of our children--for reasons that can 
command the support of three-fifths of both Houses.
  Over a decade ago, Mr. President, we strayed from the course that 
had, since the end of World War II, shrunk the national debt as a share 
of our economy. Since the early 1980's, we have foolishly, and 
significantly, increased our national debt year after year.
  In 1980, Federal debt held by the public totalled $710 billion, and 
the interest we paid on the debt was $52 billion. This year, that debt 
has reached $3.6 trillion, and our interest payments will be $234 
billion.
  Recognizing the folly of this course, in 1984 I proposed a freeze on 
every program of the Federal Government--across the board. Although I 
wrote the plan with two Republican Senators, we received little support 
for the proposal, from either side of the aisle.
  By the way, I am convinced, Mr. President, that had we acted then, 
the harm to many of the programs that I hold dear, responsibilities 
that moved me to enter public life, would have been softened.
  As it is, without the freeze--that we were warned would harm so-
called liberal programs--I have had to watch as those programs have 
gone through the wringer.
  In 1981, when we lost control of the deficit, human services programs 
were 8.6 percent of Federal outlays. A decade later, they were 6.9 
percent, a 20-percent reduction in their share of spending.
  In 1981, education, training, employment and social services were 3.7 
percent of Federal outlays. Over the next decade, as deficits and 
interest payments grew, they shrank to 2.3 percent, a 40-percent cut in 
their share of Federal spending.
  After failing to pass the freeze, in the hope of restoring some 
discipline to our finances and reducing the deficit, I supported the 
Gramm-Rudman process, that put caps on the amount of deficit allowed, 
and required a balanced budget.
  But the requirements changed every year; the only constant in the 
process was the annual increase in the national debt, and the guarantee 
of annual deficits.
  And in 1993, we passed an historic budget agreement at the beginning 
of the Clinton administration, that will cut $500 billion from our 
deficits over 5 years. The healthy economy that followed passage of 
that plan has meant even more deficit savings.
  If I thought that we could sustain this trend, Mr. President, I would 
withhold my support for this amendment.
  But, what was the political response to that serious deficit 
reduction plan? It was denounced by those who now claim they want to 
attack the deficit.
  That plan was passed by a single vote in both Houses, without one 
Republican vote. Moreover, that plan has been used by so-called deficit 
hawks to defeat the very Members of Congress who had the courage to 
vote for it.
  And now we see again a plan by the new majority for tax cuts, defense 
increases--including star wars--and, of course, the promise of a 
balanced budget.
  Mr. President, I've read this story before. We are all living out the 
consequences of the first time we tried that program.
  It is clear now that there are no options left before us to turn the 
short-term success of the 1993 budget plan into a longer-term program 
to bring down future deficits.
  And there are no other options to force those who voted against 
deficit reduction back then to face the consequences--requiring them to 
look at everything including revenues rather than continue the charade 
that the only thing we need to do to balance the budget is to cut 
foreign aid and AFDC.
  Because they--and we--have been so successful in misleading the 
American people about the problem, those aspects of the Government's 
responsibilities that I entered public life to support have already 
been badly harmed as a consequence of these gigantic deficits: 
children, education, fighting crime and drugs, supporting organizations 
that promote international stability.
  And those areas of the budget that need help the least--tax loopholes 
for the privileged, exotic weapons systems, people who aren't middle 
class or poor but who make money off of their programs--those have done 
the best.
  I offer as evidence the recent votes in the House. Now, without the 
balanced budget amendment, our fiscal disarray is the pretext for cuts 
in school 
[[Page S3334]] lunches, infant nutrition, the successful and effective 
Head Start Program, and educational programs that our future depends 
on. Do my friends who share my values--who share my indignation at this 
disregard for those least able to help themselves, this short-sighted 
slighting of the future--do they really believe that if we were to vote 
down the balanced budget amendment that those legislative priorities 
would change?
  I am convinced--reluctantly--that unless we use this opportunity to 
try to restore control over our finances, we will not be able to re-
establish our priorities.
  Our fight is not--or should not be--against making deficit spending a 
more difficult choice.
  Our fight, with or without a balanced budget amendment, is against 
those who would walk away from Government's responsibilities and who 
will sacrifice the future for short-term political advantage.
  Despite the shrinkage in those programs in recent years, we still 
face a future of increasing national debt, and rising annual deficits, 
and those programs and responsibilities I feel most strongly about will 
continue to take the hits.
  This year alone, we will pay $234 billion in interest on the debt. By 
1997, interest will be $270 billion--more than either our defense or 
domestic spending.
  If this trend is unsustainable--and it is--and if the hard choices we 
make are turned against us--and they are--What, then can we do?
  I have concluded, Mr. President, that there is nothing left to try 
except the balanced budget amendment, forcing everything onto the 
table, and requiring us to justify why some areas have escaped the 
budget ax so far.
  But what of the many arguments against this amendment--concerns that 
I have shared in the past. Let me explain my thoughts on some of those 
concerns today.
  Mr. President, one of the strongest practical arguments raised 
against the balanced budget amendment is that it will cost us our 
ability to respond to recessions.
  There are two points that I want to make in regard to that serious 
charge. First, the sad fact is that we have already lost that 
flexibility--by making deficits the norm in good times and in 
recessions. Until we regain control of our finances, deficits will 
remain an unintended consequence of our budget process, not a selective 
policy choice.
  Second, Mr. President, even under the constraints of this amendment, 
it is possible to provide that flexibility. In Delaware, we have built 
a two percent surplus into each year's budget, to assure that we can 
cover unforeseen events that could raise spending or reduce revenues.
  We could do that with the Federal budget, and restore its important 
stabilizing role, a role that is now lost in the annual red ink. This 
is not something that appears to be a realistic option in the near 
term, but if that is the only way to restore the effect of automatic 
stabilizers in the Federal budget, we will be able to choose that 
option.
  This amendment will make automatic stabilization more difficult, but 
it will remain our choice to restore that function of the Federal 
budget to its former effectiveness.
  There are other concerns that I share with my colleagues who oppose 
this amendment.
  Together, we tried to make this a better proposal. I believe that 
this amendment could be improved by changes I have supported here on 
the floor and in the Judiciary Committee.
  We tried to keep the Social Security trust fund off budget, where it 
is now, and where it should stay. We failed to pass that amendment, and 
this will allow us to continue to mask the current deficit with funds 
that are needed to meet future obligations.
  I believe that this failure takes us further from the truth about our 
real deficit problems, and further from the truth about the very real 
problems in the Social Security system itself.
  But let me stress for those who are concerned about the effect of 
this amendment on the Social Security system--this change in our 
Constitution does not, by itself, cut a dime from current benefits.
  Under current rules, Social Security is now off budget, but by law 
its surpluses still go to purchase the accumulating pile Treasury bonds 
that we will have to pay off in the future.
  Taking Social Security out of the balanced budget amendment would not 
change that aspect of the system, or prevent tampering with the 
commitments we have made in the past.
  My concern, in addition to the ways in which that accumulating 
surplus will distort our definition of the budget, is that this 
amendment will increase the temptation to use the Social Security 
system to make the rest of the budget appear more balanced.
  This is a valid reason to try to insulate Social Security from that 
temptation--but not reason to renounce what I have concluded is our 
last chance to restore control over our country's financial future.
  We also tried, Mr. President, to assure that the real costs of a 
balanced budget amendment, and not just its surface allure, are 
apparent to the citizens who will be asked to ratify it in the coming 
months.
  And we tried to provide a capital budget--to treat public investments 
the way families, businesses, and States treat their investments. And 
we failed.
  But I want the record to show that we are not prohibited by this 
amendment from devising a capital budget. I predict that events and 
experience will show us that a capital budget is essential to setting 
priorities, and that we will find a way to fit such a process into our 
budget system.
  We tried to avoid a potential shift in the constitutional balance of 
powers by ensuring that only the Congress would enforce a balanced 
budget, Mr. President, and we tried to avoid tying up the courts with 
constitutional questions about the President's role in enforcing a 
balanced budget.
  Mr. President, I believe that these constitutional issues remain the 
greatest risk we will take when we add this amendment to our 
Constitution.
  Now, with the acceptance of Senator Nunn's amendment, Mr. President, 
some of my concern on that issue has been relieved.
  So where do we stand?
  We can vote for this less than perfect amendment, that requires 60 
percent majorities to permit deficits--and I predict that we will 
choose to permit those deficits, but smaller deficits, and less 
frequently, than before.
  Or, Mr. President, we can continue to add every year to the debt 
burden of future generations.
  We will steal today from the next generation, squeezing out the 
savings and investment that could increase future wealth.
  We will continue to tie our own hands, to restrict our own ability--
indeed, our responsibility--to set priorities in our annual budget 
process.
  This year, interest on the national debt will cost the United States 
$234 billion; the entire domestic discretionary budget will be $253 
billion.
  By the time this amendment is intended to become law, in the year 
2002, interest on the debt will be $344 billion, larger than every 
other category in the budget except for Social Security.
  Given that prospect, Mr. President, I choose to take a chance on the 
balanced budget amendment.
  I hope that reverence for the Constitution and the procedural 
roadblocks in the amendment will establish an ethic of budget balance 
and a new, responsible, tradition will grow from the action we take 
here today.
  But only history will tell.
  But I have sufficient confidence in our citizens and in our political 
institutions that we will learn from any flaws that remain in this 
amendment, and will make the best of its virtues.
  Two hundred years of American history tells me it is right to have 
that confidence.
  But at the end of the day, Mr. President, I am willing to take the 
first step today down this new path. I will vote for the balanced 
budget amendment, but I will do so with my eyes open.
  It is not the panacea some of its proponents have advertised, but 
neither is it the plague its opponents have portrayed.
  For me, it as a reluctantly chosen opportunity to regain responsible 
control over our affairs.
  And I hope that the record of my words and actions on this amendment 
will help my fellow citizens, both in my 
[[Page S3335]] State of Delaware and in the other States, as they 
consider its ratification.
  I hope that they consider fully the record of debate we have worked 
to establish here in the Congress. That record should make us all, on 
both sides of this profound issue, proud.
  Mr. NUNN. Mr. President, on Wednesday, March 1, a story in the 
Washington Post discussing my judicial review amendment to the balanced 
budget amendment referred to the views of Prof. Kathleen Sullivan of 
the Stanford Law School. The views of Professor Sullivan, as reported 
in the Post, could be viewed as critical of my amendment limiting 
judicial review. That would not be an accurate reflection of Professor 
Sullivan's views.
  I received a letter from Professor Sullivan yesterday in which she 
notes:

       I have had the opportunity to read your remarks in the 
     floor proceedings yesterday, and agree with you completely 
     that it would be imprudent to pass the [Balanced Budget] 
     Amendment in the mere unfounded hope that courts would not 
     entertain lawsuits arising under it. Addressing the judicial 
     review issue squarely, as you did, is plainly a step in the 
     right direction.

  I ask unanimous consent that the text of the letter from Professor 
Sullivan and the article in the Post be printed in the Record.
  Mr. President, I am pleased that the Senate overwhelmingly adopted 
the amendment to limit judicial review under the balanced budget 
amendment. My amendment will ensure that no court interjects itself 
into the balanced budget process except as specifically authorized by 
Congress.
  I look forward to working with the chairman of the Judiciary 
Committee, Senator Hatch, in drafting implementing legislation, 
including implementing legislation on the subject of judicial review. 
To the extent that Congress exercises the authority in the amendment to 
regulate the judicial role, there are ample precedents for statutory 
provisions to ensure that judicial review does not interfere with the 
taxing and spending powers of Congress. These could include, for 
example, providing exclusive jurisdiction in the Federal courts or in a 
designated Federal court; removal to Federal court of any case filed in 
a State court; and restriction of the remedies, if any, that a court 
could grant.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                          Stanford Law School,

                                                    March 1, 1995.
     Senator Sam Nunn,
     U.S. Senate,
     Washington, DC.
       Dear Senator Nunn: Congratulations on your success 
     yesterday in persuading your colleagues of the danger that 
     the Balanced Budget Amendment, in its unamended form, would 
     unwisely transfer constitutional authority from the Congress 
     to the courts. I have had the opportunity to read your 
     remarks in the floor proceedings yesterday, and agree with 
     you completely that it would be imprudent to pass the 
     Amendment in the mere unfounded hope that courts would not 
     entertain lawsuits arising under it. Addressing the judicial 
     review issue squarely, as you did, is plainly a step in the 
     right direction. I am glad that you found my letter useful in 
     addressing this issue.
       You may have read me quoted in the Washington Post this 
     morning as saying that your amendment renders the Balanced 
     Budget Amendment more an ``exhoration'' than an ``enforceable 
     requirement'' along the lines of many other constitutional 
     provisions. While this quote is accurate, it leaves out my 
     further comment to the reporter that the Balanced Budget 
     Amendment is, for that very reason, better with the Nunn 
     Amendment than without it. While I continue to believe that 
     there are strong reasons not to tamper with the existing 
     constitutional machinery in this area at all, I believe that 
     any measure that reduces the net transfer of power from the 
     legislative to the judicial and executive branches is 
     desirable.
           Very truly yours,
     Kathleen M. Sullivan.
                                                                    ____

                [From the Washington Post, Mar. 1, 1995]

                   Dole Delays Budget Amendment Vote


     one supporter short of passage, gop pressed holdout democrats

                    (By Eric Pianin and Helen Dewar)

       Senate Majority Leader Robert J. Dole (R-Kan.) last night 
     abruptly put off a final vote on the proposed balanced budget 
     amendment after GOP leaders failed in a desperate daylong bid 
     to pluck the critical 67th vote from among wavering 
     Democrats.
       Faced with almost certain defeat, Dole delayed the vote--
     until today or perhaps later in the week--to buy time while 
     Republicans stepped up efforts to win over one of a handful 
     of Democrats, particularly North Dakota Sens. Kent Conrad and 
     Byron L. Dorgan, who have demanded changes in the measure to 
     protect Social Security as well as other safeguards.
       Sen. Robert C. Byrd (D-W.Va.), a leading opponent of the 
     measure and a senior figure in the Senate, lashed out at Dole 
     for postponing the vote, charging that Republicans appeared 
     to be engaging in ``a sleazy, tawdry effort to win a victory 
     at the cost of amending the Constitution of the United 
     States.'' Byrd charged that Dole's action flouted a unanimous 
     agreement to hold the critical vote yesterday, following more 
     than a month of intense debate.
       ``This is a sad spectacle,'' Byrd said.
       ``I think the sad spectacle is that we may lose this 
     vote,'' Dole retorted.
       Dole refused to back down, saying there was still a chance 
     Republicans could recruit at least one more senator to help 
     pass the amendment by the two-thirds majority required. He 
     said that in the wake of last fall's elections, when 
     Republicans swept to control of Congress pledging to balance 
     the budget and make dramatic changes in the face of 
     government, the Senate owed it to the American people to make 
     one more try.
       ``We still think there's some chance of getting this 
     resolved by tomorrow and getting 67 votes,'' Dole said. ``If 
     we fail, we fail.''
       Dole's decision came after an extraordinary day of back-
     room dealing in which Dole, Senate Judiciary Committee 
     Chairman Orrin G. Hatch (R-Utah) and other leaders pleaded 
     with and cajoled every Democrat they could collar.
       Republican leaders had assumed until early yesterday that 
     the key to winning passage of the amendment was appeasing 
     Sen. Sam Nunn (Ga.), a highly influential Democrat who had 
     threatened to oppose the measure unless it was changed to 
     prohibit the courts from intervening in future congressional 
     tax and budget matters.
       But even after Dole and other GOP leaders relented and the 
     amendment was revised to satisfy Nunn and one other waffling 
     Democrat, Sen. John Breaux (La.), Republican vote counters 
     still came up one vote shy of the two-thirds majority.
       In the end, it came down to whether Republicans could win 
     the support of one or both of the Democrats from North 
     Dakota. While the packed Senate chamber buzzed with 
     anticipation during a half hour quorum call last evening, 
     Conrad moved back and forth between the Republican and 
     Democratic cloakrooms, conferring with each side.
       Conrad had vowed to oppose the constitutional amendment 
     unless it were rewritten to guarantee that the budget would 
     not be balanced by using the Social Security trust fund. He 
     also has advocated other changes, including language to 
     ensure that Congress has some flexibility in responding to 
     economic crises.
       At one point, Conrad, Dorgan, Sen. Wendell H. Ford (Ky.) 
     and other Democratic holdouts rejected a pledge from Dole and 
     House Speaker Newt Gingrich (R-Ga.) that Congress would pass 
     the Social Security guarantee in later legislation. But 
     Republicans said they were still discussing ways of trying to 
     guarantee passage of the bill protecting Social Security.
       Hatch said last night that for a while it appeared 
     Republicans could reach agreement with Conrad on the Social 
     Security issue, but talks broke down when Conrad said he also 
     wanted an exclusion for economic emergencies. Republicans 
     said they hoped to pick up Dorgan's support if Conrad agreed 
     to back the amendment.
       Last night's dramatic developments capped five weeks of 
     heated debate and political maneuvering over the amendment, 
     which requires a three-fifths majority of both houses before 
     Congress could spend in excess of projected revenue, except 
     in times of war.
       The House approved the amendment in late January, 300 to 
     132. While the overwhelming support in the House reflected 
     the broad popular appeal of the measure in the abstract, 
     Senate Democrats, who hold the balance of power in passing or 
     defeating it, have played on voter concerns that Social 
     Security, Medicare and other politically sensitive programs 
     would become vulnerable if the amendment were adopted.
       Others warned that it would dangerously alter the balance 
     of power in Washington, hamstringing Congress in times of 
     economic crisis and giving the president the upper hand in 
     controlling spending.
       ``The amendment is so full of flaws, so reflective of 
     flabby thinking, so arrogant in its disregard for the 
     traditional checks and balances and separation of powers that 
     its consequences could be nothing short of calamity,'' Byrd 
     said. Senate Minority Leader Thomas A. Daschle (D-S.D.) 
     described it as a ``shoot-now, ask-later approach'' that 
     Congress will regret.
       Nunn's provision was the only change that Democrats 
     succeeded in making in the amendment; Republicans said they 
     agreed to it after getting assurances that the House will 
     accept it.
       The provision would be unique in the Constitution. By 
     removing the balanced budget requirement from the 
     jurisdiction of federal courts, it would enable only Congress 
     to enforce the amendment's provisions.
       ``This is like tying yourself to the mast but ensuring that 
     you can untie yourself any time,'' said Stanford University 
     law professor Kathleen M. Sullivan. Laws ``only work when 
     there is pressure. [The Nunn amendment] renders the balanced 
     budget amendment an exhortation to the Congress to be 
     [[Page S3336]] good, rather than an enforceable 
     requirement.''
       The tension-filled day began with an early morning meeting 
     in which Hatch and Sen. Paul Simon (D-Ill.), a major 
     proponent of the measure, told Nunn they would accept his 
     proposal, reflecting a decision reached by Dole the night 
     before that this was the only way to win passage of the 
     amendment.
       On the floor, Breaux, another of the Democrats who had been 
     uncommitted, announced he would vote for the constitutional 
     amendment as long as it was changed to include Nunn's 
     proposal. In a soft voice, Hatch then said he would be 
     willing to accept Nunn's proposal. The night before, Hatch 
     had fervently vowed to oppose any change in the amendment's 
     language, even if that meant its defeat. Nunn thanked Hatch 
     and said he would now vote for the amendment.
       But Nunn had hardly sat down before Dorgan was on the 
     floor, saying he could not vote for the amendment unless 
     Congress made clear in advance that it was not going to tap 
     the Social Security trust fund for revenue to balance the 
     budget.
       While Democrats were resisting Republican entreaties, 
     Senate GOP freshmen trooped into the chamber, sitting in a 
     group in the back two rows, a visible reminder of the 
     political earthquake that brought them to Congress and the 
     balanced budget amendment to the forefront of the agenda of 
     the new GOP majority.
       Sen. Rick Santorium (R-Pa.) got right to the heart of their 
     political message: ``The people who will stand in the way of 
     this balanced budget amendment today will not be around long 
     to stand in the way next time. It will pass. It is just a 
     matter of when.''

  Mr. CRAIG. Mr. President, I rise in support of House Joint Resolution 
1, the bipartisan, bicameral, consensus balanced budget amendment to 
the Constitution.
  There are many individuals who deserve special recognition for their 
efforts on behalf of this amendment--more than it is possible to 
include here at one time.
  I want to begin by commending the former chairman of the Judiciary 
Subcommittee on the Constitution, the senior Senator from Illinois [Mr. 
Simon]. He has toiled for many years in this vineyard. In this area, 
and in many others, Congress will miss his courage and leadership--and 
we all will miss his warmth--when he retires at the end of the 104th 
Congress. His staff, particularly Aaron Rappaport on the Judiciary 
Committee, have always been professional, hardworking, and invaluable 
to this effort.
  It would not have been a debate on the balanced budget amendment 
without the able leadership of the President pro tempore of the Senate, 
Senator Thurmond of South Carolina. He has always been ahead of his 
time, as he was some 40 years ago when he first arrived in this body 
and became a principal sponsor of the balanced budget amendment.
  I also want to recognized the chairman of the Judiciary Committee, 
Senator Hatch of Utah, and his skilled and helpful staff. Senator Hatch 
is an estimable constitutional lawyer, a skilled floor manager, and a 
long-time leader in this effort.
  On the committee, on the floor, and at every step, the Senators from 
Alabama [Mr. Heflin] and Illinois [Mrs. Moseley-Braun] have poured much 
time and dedication into this effort for years.
  Many more Senators deserve recognition. I think almost every one who 
votes ``aye'' today on final passage has done a lot of additional work 
on behalf of this amendment. I don't know when I've seen so many give 
so much for so worthy a cause.
  Finally, I must recognize our distinguished majority leader, Senator 
Dole of Kansas, the principal sponsor of Senate Joint Resolution 1, 
this measure as introduced and reported in this body. Without his 
guidance and leadership, the movement to pass this amendment would have 
faded long ago. I also appreciate the long hours and capable work put 
in by this staff over these recent, arduous weeks.
  This extraordinary accomplishment, a bicameral, bipartisan, consensus 
version of the most important legislation, never could have come this 
far without the leadership and courage of my former colleagues in the 
other body, Representatives Charlie Stenholm of Texas and Dan Schaefer 
of Colorado. When the House made history last month by passing this 
amendment for the first time in its history, it could not have happened 
without the blood, sweat, and dedication of these two statesmen.
  Representative Stenholm was my cofounder, 11 years ago, of CLUBB--
Congressional Leaders United for a Balanced Budget, an informal 
bicameral group formed to keep this amendment alive after a decisive 
House defeat in 1982. Pete Wilson of California was our first Senate 
cochair. Former House CLUBB cochair Jim Inhofe of Oklahoma is now a 
Member of this body, as are other veteran House leaders, including 
Senators Snowe of Maine and Kyl of Arizona.
  In language as well as congressional support, the language before us 
today has a long and distinguished pedigree.
  Outside Congress, this amendment is supported by a great groundswell 
of public support and grass roots activism.
  Otherwise the balanced budget amendment would not have come back 
after losing in the House in 1982 and the Senate in 1986. Otherwise it 
would not have come to the floor of one Chamber or the other a combined 
total of seven times in the last 5 years--in 1990 in the House, in 1992 
in both bodies, in 1994 in both bodies, and this year in both.
  While a great many citizens, taxpayer groups, public interest 
organizations, and trade associations have supported this movement over 
the years, particular emphasis should be given to the work of the 
National Taxpayers Union and, particularly, within that organization, 
to Mr. Al Cors, the chairman of the nationwide Balanced Budget 
Amendment Coalition.
  I ask unanimous consent that, Mr. President, that at the end of my 
statement I may include correspondence from that Coalition supporting 
House Joint Resolution 1, as well as from other organizations.
         this is the vote that counts; do we trust the people?

  Mr. President, when the 55 delegates to the Philadelphia Convention 
of 1787 convened at Independence Hall, they came with 55 perfect 
Constitutions for the young republic. They emerged with one version 
that, from any one of their points of view, was less than perfect.
  But more than 200 years of history have shown that imperfect version, 
full of compromise and an occasional complication, has been eminently 
workable, has endured, and has remained a model for the world.
  No matter how any of my colleagues may have voted on any amendment 
earlier, you now have a chance to pass an amendment that unites the 
underlying principle of virtually all versions of the balanced budget 
amendment.
  No matter what any one of my colleagues would have wanted in your 
perfect version of such an amendment, we now have just one balanced 
budget amendment remaining before us.
  The only effective balanced budget amendment is the one that passes.
  Your constituents will understand, and I know you understand: Vote 
no, and you kill the only chance for an amendment, here and now.
  Vote yes, and you will carry forward one of the great debates of our 
age. This amendment will go back to the House of Representatives, and 
from there to every State capital.
  That's what this vote is really about--engaging the American people 
in the most sweeping public debate about the appropriate size, scope, 
and role of the Federal Government since the original Bill of Rights 
was sent to the States by the First Congress.
  The question is clear: Do we trust the people with that debate? Do we 
trust the 80 percent of the people who demand this amendment? Do we 
trust the voters who demanded last November that the Federal Government 
change its ways?
  This Senator does trust the American People.
  That's why we have this process of amending the Constitution--because 
the Constitution is the people's law, not the government's law, and 
because the people have a right to take part in such a momentous 
debate.


                fundamental rights, limits on government

  Before I start responding to points made in debate over the last few 
days, I want to refocus us on why we are here considering this 
amendment, in the first place.
  A constitution is a document that enumerates and limits the powers of 
the government to protect the basic 
[[Page S3337]] rights of the people. Within that framework, it sets 
forth just enough procedures to safeguard its essential operations. It 
deals with the most fundamental responsibilities of the government and 
the broadest principles of governance.
  Our balanced budget amendment, House Joint Resolution 1, fits 
squarely within that constitutional tradition.
  The case for the balanced budget amendment can be summed up best as 
follows:
  The ability of the Federal Government to borrow money from future 
generations involves decisions of such magnitude that they should not 
be left to the judgements of transient majorities.
  The right at stake is the right of the people--today and in future 
generations--to be protected from the burdens and harms created when a 
profligate government amasses an intolerable debt.
  The Framers of the Constitution recognized that fundamental right. I 
return once more to the words of Thomas Jefferson, who explicitly 
elevated balanced budgets to this level of morality and fundamental 
rights when he 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.

  Woodrow Wilson said, ``Money being spent without new taxation . . . 
is as bad as taxation without representation.''
  Mr. President, deficit spending is taxation without representation. 
Americans are told that deficit are Uncle Sam's way of giving them a 
free lunch, providing $1.18 worth of government for just $1.00 in 
taxes. In reality, taking gross interest into account, the government 
has to spend $1.19 for every $1.00 of benefits, goods, services, and 
overhead in the budget.
                         THE DEBT IS THE THREAT

  Even as we speak, we are adding to the Federal debt: $829,440,000 a 
day, 34,560,000 an hour, 576,000 a minute, and 9,600 a second.
  In its January baseline, the Congressional Budget Office projects 
that annual Federal deficits will grow from $176 billion this year to 
more than double that amount, $351 billion, in fiscal year 2003, and to 
$421 billion by fiscal year 2005.
  Deficits are really the cruellest tax of all, since they never stop 
taking the taxpayers' money. Americans are paying now, with a sluggish 
economy, for the Government's past addiction to debt. According to the 
Federal Reserve Bank of New York, the deficits of the 1980's already 
have depressed our standard of living by 5 percent. Unless things 
change, the next generation will pay even more dearly.
  According to the National Taxpayers Union, for each year with a $200 
billion deficit, a child born today will pay $5,000 in additional taxes 
over his or her lifetime.
  The President's own fiscal year 1995 Budget, in its ``Analytical 
Perspectives'' volume, projects that future generations will pay as 
much as 82 percent of their lifetime incomes in taxes, under the 
current policies of borrow-and-spend.
  In 1992, the nonpartisan General Accounting Office issued its report, 
``Budget Policy: Prompt Action Necessary to Avert Long-Term Damage to 
the Economy.'' At that time, GAO projected that failure to take action 
on the deficit and the growing debt would produce a stagnant--even 
slightly declining--standard of living for Americans in the year 2020. 
In contrast, GAO said that simply balancing the Federal budget by 2001, 
and keeping it balanced, would raise our children's standard of living 
by 36 percent.
  GAO and the Congressional Budget Office now project lower deficits, 
as a result of their scoring of last year's budget plan. However, the 
intermediate- and long-term deficit outlook has done no better than 
decline form cataclysmic to intolerable.
  The current CBO baseline looks a great deal like--indeed, a little 
worse than--GAO's muddling through scenario report, in which the 
deficit is held at 3 percent of gross domestic product.
  Under this muddling through scenario, our children's standard of 
living in 2020 would be 7 percent lower and the Federal debt would be 3 
times larger than if the budget is balanced by 2001.
  Our national economic policy should not be one of muddling through.
  Even that scenario is based on somewhat optimistic assumptions. 
Interest rates are now near a 30-year low. If they bounce back upward 
some, the cost of interest payments on the debt will explode. Senator 
Murkowski had a chart out here on the floor during this debate that 
displayed that graphically.
  So, we must keep in mind that small changes for the worse in our 
economic picture over the next few years will make the deficit picture 
far worse.
  Today, Federal budget deficits are the single biggest threat to our 
economic security. The Federal debt now totals $4.8 trillion, or about 
$18,500 for every man, woman, and child in America, and is growing.
  As deficits grow, as the national debt mounts, so do the interest 
payments made to service that debt. Besides crowding out other fiscal 
priorities, these amount to a highly regressive transfer of wealth. 
About 20 percent of these payments go overseas.
  Interest on the Federal debt is largely a transfer from middle-income 
taxpayers to large institutions, banks, corporations, wealthy 
individuals and foreign investors.
  In fact, interest payments to wealthy foreigners make up the largest 
foreign aid program in history. According to the President's budget, in 
fiscal year 1994, the U.S. Government sent $44.5 billion overseas in 
interest payments. That's more than twice as much as all spending on 
actual international programs, including foreign aid and operating our 
embassies abroad, which totalled about $21 billion. Also in fiscal year 
1994, 33.9 percent--$62.6 billion--of the dollars borrowed from the 
public came from overseas.
  Annual gross interest on the debt now runs about $300 billion, making 
it now the second largest item of Federal spending, and equal to about 
half of all personal income taxes.
                        the framers' assumptions

  The Framers thought that the limited size and enumerated powers of 
Government, the limits on the money supply created by a gold standard, 
the moral imperative of the unwritten constitution, and the House's 
exclusive power to originate bills raising revenue all would protect 
this right. Jefferson would have preferred to put this protection in 
the Constitution. But others at the time viewed the idea that a 
restraint on indebtedness would be needed as being beyond belief.
  Times have changed, as have the nature of government, monetary 
policy, and politics. The original constraints that protected the 
people from a profligate government, all of which had constitutional 
status, have all but dissolved. It's now about 60 years past time to 
replace them.


                             political will

  Critics of the balanced budget amendment argue that all we need is 
the political will, the leadership to balance the budget. That argument 
ignores the reality that the way the Federal Government makes its 
economic and political decisions has changed fundamentally over the 
last two generations.
  The system is broken. The Government has spent more than it has taken 
in for 57 of the last 65 years. The budget was last balanced in 1969, 
and in 1960 before that. We are not talking here about some short-term 
failure of will that was cured with the last election or will be cured 
with the next one.
  The impetus to borrow and spend has become a structural one in our 
system of government. It is a constitution-class crisis that demands a 
constitution-class solution.


              not narrow policy, but perfecting democracy

  The balanced budget is not narrow economic or fiscal policy. It is 
structural, systemic change that would help perfect representative 
democracy.
  Over the last two generations, the political and budget processes 
have evolved in such a way that virtually all of the political rewards 
are for spending more and borrowing more. Narrow, highly organized, 
interest groups mobilize to reward spending increases for specific 
constituencies. The more general, public interest in restraining the 
size and fiscal appetite of government 
[[Page S3338]] has been put at a systematic disadvantage.
  The only way to put the general public interest back on a level 
playing field with the special interests is to make it harder to borrow 
and spend.
  That's what our amendment does. For the first time, it creates 
accountability by requiring that deficits occur only when Members of 
Congress cast an identifiable vote to run a deficit.
  By providing for accountability and by restoring the general public 
interest to a stronger representative voice, our amendment actually 
perfects our democratic process.
  The essence of this reform is that we finally restore the principle 
that the government should grow no larger than the people are willing 
to pay for and we should pay for all the government we demand.
  It's often said that Congress underestimates the wisdom of the 
people. Well, the people have spoken once again, and it's time for 
Senators to realize that, today, as is usually the case, good policy is 
good politics. The American people understand the balanced budget 
amendment, they want Congress to pass it, and they are right.
                             majority rule

  One of the curious objections raised against the balanced budget 
amendment is that it would threaten majority rule.
  Those that dwell on the difficulty of getting three-fifths majorities 
to unbalance the budget or raise the debt limit are missing the point: 
They are still thinking, ``What do we need to do in order to keep 
deficit spending?''
  That's why we put supermajorities in the amendment--not just to make 
it harder to deficit spend and increase the debt, but to deter Congress 
from deficit spending in all but legitimate and extraordinary 
circumstances. Under our amendment, when you balance the budget, you 
don't have to worry about mustering a supermajority.
  Such a requirement is consistent with other provisions in the 
Constitution. Freedom of speech is protected by a supermajority 
requirement. So is freedom of religion. So is the right to keep and 
bear arms and every other right in the Constitution.
  Because it takes supermajorities to amend the Constitution, every 
right protected in the Constitution by limiting the power of government 
is protected by supermajorities.
  In addition, as has been noted by both sides in this debate, specific 
supermajorities are written into several procedures in the 
Constitution, including treaty ratification and overriding vetoes.
  In our amendment, we create procedural restraints on the Federal 
Government to protect the right of the people to be free from excessive 
government debt. We use 60 percent supermajorities instead of two-
thirds or absolute prohibitions because we foresee that the process 
will need to be flexible on occasion.
  The Framers wanted to protect majority rule for the transaction of 
most of the Government's business. But sometimes, to protect 
fundamental rights or the integrity of specific process, they employed 
supermajority requirements to protect against, in the words of the 
Federalist Papers, a tyranny of the majority.
  Let's look at the will of the majority from one more angle.
  Two-thirds to four-fifths of the American people want the balanced 
budget amendment. Clear majorities of Congress want it. If it doesn't 
pass today, if it doesn't go the American people for a full public 
debate, it will be because a minority has blocked it here.


                          disaster assistance

  Some are concerned about whether requiring a three-fifths vote to 
deficit spend would thwart efforts to deal with natural disasters. From 
1978-94, supplemental disaster appropriations topped $7 billion in only 
1 year, 1992. We generally are talking about a very small portion of 
the Federal budget.
  As Senator Simon and others have suggested, creating a small disaster 
revolving fund, or for that matter, just planning to run small 
surpluses, would be sufficient to meet such needs.
  On the other hand, Congress also has a history of dealing promptly 
and compassionately in such situations. Only one time over the last 15 
years did a disaster bill fail to clear either body with less than a 60 
percent majority. That was in 1992, in the House, amid much contention 
over the Budget Enforcement Act firewalls, the balanced budget 
amendment and other issues. And that bill fell only one vote short of 
60 percent.
  Congress is not going to turn its back on natural disaster victims 
under this amendment. To suggest it will is to ignore reality and 
history.


                          separation of powers

  Perhaps the most curious concern I have heard raised about the Simon-
Hatch-Craig amendment is that it would transfer powers from the 
legislative branch to the Executive or the courts.
  Let's look at the amendment. That doesn't occur in section 6, which 
begins with the words, ``The Congress shall enforce and implement this 
article * * *.''
  This transfer doesn't appear later in section 6, which recognizes the 
need of Congress to use estimates in implementing legislation, 
obviously foreclosing some of the more inventive scenarios that might 
tempt Executive or court action.
  It certainly doesn't appear in the clarifying language that the 
amendment's authors have added to section 6 to make sure that no one 
thinks the courts can raise taxes or construct equitable remedies.
  There's no lint-item veto in here. There's no delegation of Congress' 
legislative power, implied or explicit, to anyone else.
  In the same way that the first amendment begins with the words, 
``Congress shall make no law * * *,'' this amendment restricts the 
power of the entire Government by making it harder to enact something 
into law.
  The balanced budget amendment does not change in any way the balance 
of power among the branches of government. It is absolutely consistent 
with the spirit, the style, and the operations of the rest of the 
Constitution.


             slash-and-burn scenarios for priority programs

  During the course of this debate, as seems to happen every time a 
balanced budget amendment comes to the floor, the Treasury Department 
and various special interest groups did a disservice to serious public 
debate by releasing so-called studies that they tried to make look 
legitimate by attaching tables of numbers.
  In reality, they were scare tactics, using dubious assumptions, and 
filled with manufactured numbers.
  Such studies rely on sometimes questionable economic assumptions. But 
in every case, they did not look to the long-range benefits of balanced 
budgets. And in every case, they assumed a mindless, across-the-board, 
meat-ax approach to budget changes.
  One of the chief benefits of the balanced budget amendment is that it 
will make Congress and the President set priorities. You don't have to 
set priorities when you don't have a credit limit. In an effort to 
scare as many people as possible, and attract as much attention as 
possible, these studies, including one issued by the Treasury 
Department, imply that the President and Congress have no priorities 
and would not select or change priorities under the amendment.
  To this Senator, what their arguments really say is, these opponents 
are afraid that the amendment will work and that, when the Government 
must set priorities, the American people may not agree with their 
priorities.
  Balanced budgets will produce a stronger economy, better able to 
sustain its defense capabilities while meeting its other needs. And I 
am confident that the people will demand, and willing to risk that 
Congress will deliver, an adequate defense budget.
  DRI/McGraw-Hill, which is one of the world's leading nonpartisan 
economic analysis and forecasting firm has called on Congress to 
approve the balanced budget amendment.
  DRI believes BBA is the path to the benefits of a balanced Federal 
budget. Their report, released just a few weeks ago, said, in part:

       A major argument for the Constitutional amendment is the 
     credibility it may lend to the process. This credibility may 
     permit a sharper drop in bond yields and thus an earlier 
     boost in the economy.

  The firm strongly endorsed the balanced budget amendment during a 
recent news conference on Capitol Hill.
  They predicted that 2.5 million new jobs could be created by 2002 as 
more 
[[Page S3339]] resources are freed up for private investment, interest 
rates drop, and businesses can afford to expand, buying more equipment 
and training.
  The firm says the amendment should lower borrowing costs for 
businesses, encouraging private investment. Real nonresidential 
investment could grow by 4 to 5 percent by 2002, absent the $200 
billion in Federal deficits which currently soak up capital.
  The balanced budget amendment is the best friend of those who rely on 
essential Government programs, and of all other Americans. Interest 
payments on the Federal debt are already crowding out discretionary 
spending. As DRI said:

       The current generation does not need to sacrifice its 
     living standard to protect that of future generations from an
      unbearable federal debt. Budget balance demands neither 
     recessions nor the dismantling of the federal government.

  The amendment would relieve, rather then intensify, budget pressures 
in part through lower interest rates, according to DRI:

       A ``virtuous cycle'' of lower structural deficits, lower 
     federal debt, and lower interest rates can create half the 
     required long-term deficit reduction through lower federal 
     interest payments.
       The lower interest rates and reduced borrowing would cut 
     interest costs for the federal government; in fact, by 2002 
     half the savings in our budget simulations come from lower 
     interest costs.

  Lower interest rates mean the real glide path to a balanced budget 
will involve less short-term pain than some have warned. Even the 
Treasury Department, for example, in its study, which did not take into 
account the positive economic impact of balancing the budget, assumed 
interest cuts would provide less than a quarter of total savings in 
fiscal year 2002.
  DRI/McGraw-Hill predicts that in the course of creating 2.5 million 
new jobs following passage of the BBA, increased business activity will 
allow the Federal budget to be balanced 2 years ahead of schedule. This 
could also provide the opportunity for an even more gradual glide path 
to a balanced budget, moderating spending slow-downs.

       Cutting federal spending and balancing the budget will 
     greatly benefit the U.S. economy in the long run. Shifting 
     spending from personal and government consumption toward 
     private investment raises the national capital stock, our 
     proportionate domestic (rather than foreign) ownership of 
     wealth, and thus our standard of living. (Source: DRI/McGraw-
     Hill Special Report, February 1995).

  Finally, DRI/McGraw-Hill is convinced that balancing the Federal 
budget is in the best economic interest of the United States. They put 
it in concrete terms:

       Balancing the budget clearly helps the U.S. economy. By the 
     end of the 10 year forecast, real DGP is up $170 billion, or 
     2.5% from its baseline level. This is far from trivial and 
     translates to about $1000 per household at today's prices.


                      Thomas Jefferson--Revisited

  I turn one more time to the words and works of Thomas Jefferson.
  Jefferson balanced the budget in all 8 of his years in the White 
House. He reduced the national debt by half during his first term and 
set policies in motion that resulted in a national debt of a mere 
$38,000--that's 38 thousand--in 1834 and 1855.
  Jefferson's Louisiana Purchase has been tossed about as an example of 
how going into debt can be beneficial. But let's look at what we can 
learn from his experience.
  It's true that the Louisiana Purchase was twice the size of the 
Federal budget in 1803, as noted by the Senator from West Virginia [Mr. 
Byrd]. But the Federal budget was only 1.63 percent of gross national 
product at the time.
  Relative to the size of the gross domestic product, the Louisiana 
Purchase would translate into just under $225 billion in today's 
dollars probably because the Federal deficit last year was $203 
billion.
  Jefferson and his successors sold the land acquired from France and 
made a profit for the Federal Government.
  Every year the Federal Government is borrowing the equivalent of a 
Louisiana Purchase. And what are we getting for it? Nothing except a 
higher bill for interest costs and a legacy of crushing debt to leave 
behind for our children.
                        other issues, conclusion

  There are many other issues relating to this amendment, too numerous 
to discuss in the time allotted. To address those as a matter of 
legislative history, I ask unanimous consent to insert various other 
materials in the Record.
  As for those additional facets of the debate, I want to note that, 
with our approximately 4,000 pages of legislative history over the last 
15 years, every question has been answered, every objection has been 
dealt with.
  This amendment has a history, it has a pedigree. It is the 
bipartisan, bicameral, consensus that has been looked at by 
constitutional scholars, economists, public interest groups, and 
members of both bodies.
  This is our one chance to vote, up or down, to send a balanced budget 
amendment to the House and then to the people.
  I'll turn one last time to the words of Thomas Jefferson, when he 
wrote, in a 1798 letter to John Taylor:

       * * * constitution. I would be willing to depend on that 
     alone for the reduction of the administration of our 
     government to the genuine principles of its constitution; I 
     mean an additional article, taking from the federal 
     government the power of borrowing.

  And again, in 1798, he wrote:

       If there is one omission I fear in the document called the 
     Constitution, it is that we did not restrict the power of 
     government to borrow money.

  Just 3 years ago, 38 states ratified the 27th amendment, concerning 
variations in congressional pay, as proposed by James Madison 200 years 
ago.
  It just goes to prove that occasionally it's time to turn to a new 
idea, and sometimes the answer is to turn to a classic.
  Today, Mr. President, my colleagues, it's time to add Mr. Jefferson's 
amendment to the Constitution, right behind that of his friend, Mr. 
Madison. We could hardly be in better company, we could hardly seek 
wiser guidance, in contemplating this addition to our Constitution.
  Thomas Jefferson also said:

       I am not an advocate for frequent changes in laws and 
     constitutions. But laws and institutions must go hand in hand 
     with the progress of the human mind. As that becomes more 
     developed, more enlightened, as new discoveries are made, new 
     truths discovered and manners and opinions change, with the 
     change of circumstances, institutions must advance also to 
     keep pace with the times. We might as well require a man to 
     wear still the coat which fitted him when a boy as civilized 
     society to remain ever under the regimen of the their 
     barbarous ancestors.

  If you want to ignore the lessons of the last 35 years of excessive 
debt, vote no on this amendment.
  If you are willing to leave our children a stagnant or declining 
standard of living, vote no on this amendment.
  If you want to continue the failed status quo, vote no on this 
amendment.
  If you agree with Jefferson that, ``as new discoveries are then vote 
yes on the balanced budget amendment.
  If you trust the American People, and understand their demand that 
government change its ways, then vote yes on the balanced budget 
amendment.
  If you want today to be the first day of new hope and opportunity for 
our Nation, our economy, and our children, then vote yes on the 
balanced budget amendment.
  I ask unanimous consent that I may have printed in the Record 
numerous supporting materials, including letters and statements of 
endorsement from citizens' groups, information on public support of the 
balanced budget amendment, substantive analyses prepared by outside 
groups, and supporters here within Congress, fact sheets, and newspaper 
articles.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                     The Balanced Budget Amendment


                                                    Coalition,

                                 Washington, DC, February 6, 1995.
       Dear Senator: The undersigned organizations strongly urge 
     you to vote for and support the Balanced Budget Amendment, 
     S.J. Res. 1, introduced by Senators Dole, Hatch, Simon, 
     Thurmond, Heflin, Craig, Moseley-Braun and others. This 
     bipartisan proposal (over 40 total Senate cosponsors) has 
     already passed the Senate Judiciary Committee on a 15 to 3 
     vote and is now being considered on the Senate floor.
       The framers of the U.S. Constitution assumed each 
     generation of Americans would pay its own bills--and that the 
     federal budget would, over time, remain roughly in balance. 
     According to Thomas Jefferson, ``we should consider ourselves 
     unauthorized to saddle posterity with our debts, and morally 
     bound to pay them ourselves.''
       In today's era of mass media, special interest politics, 
     and expensive and sophisticated election campaigns, the 
     checks and balances established 200 years ago are not up to 
     the job of controlling the federal deficit. Recent 
     [[Page S3340]] Congresses and presidents have proven 
     themselves incapable of acting in the broader national 
     interest on fiscal matters. Whenever Congress considers 
     spending cuts that could help balance the budget, only a few 
     Americans are aware of it, and fewer still express their 
     views about it. By contrast, those who stand to lose from 
     budget restraint--typically the beneficiaries and 
     administrators of spending programs--are well aware of what 
     they stand to lose. They mount intensive lobbying campaigns 
     to stop fiscal restraint.
       This pro-spending and pro-debt bias has led to 25 straight 
     unbalanced budgets. It took our nation 205 years--from 1776 
     to 1981--to reach a $1 trillion debt. Now, just 14 years 
     later, the debt is $4.8 trillion. Each year, interest 
     payments rise as the overall debt grows. These payments have 
     been one of the fastest-rising items in the federal budget--
     they now account for the entire deficit, all by themselves. A 
     succession of statutory remedies has failed to stem this 
     historic and highly dangerous turn of events.
       S.J. Res. 1 is a sound amendment that has evolved through 
     years of work by the principal sponsors. It provides the 
     constitutional discipline needed to make balanced federal 
     budgets the norm, rather than the rare exception (once in the 
     past 34 years), and it offers the proper flexibility to deal 
     with national emergencies.
       In addition to requiring a three-fifths majority vote to 
     deficit spend or increase the federal debt limit, S.J. Res. 1 
     is designed to make raising federal taxes more difficult. It 
     would require the approval of a majority of the whole number 
     of both the House and Senate--by roll call votes--in order to 
     pass any tax increase. This adds much-needed accountability.
       Unless action is taken now, higher federal spending and 
     debt will continue to cripple our economy and mortgage our 
     children's future. We urge you to support S.J. Res. 1, the 
     Balanced Budget Amendment.
           Sincerely,
         National Taxpayers Union; International Food Service 
           Distributors Association; National Association of 
           Wholesale-Distributors; American Legislative Exchange 
           Council; National Association of Manufacturers; 
           National Association of Home Builders; The Seniors 
           Coalition; Financial Executives Institute; Concerned 
           Women for America; The Business Roundtable; American 
           Farm Bureau Federation; American Furniture 
           Manufacturers Association; United We Stand America; 
           United Seniors Association, Inc.; Howard Jarvis 
           Taxpayers Association; Independent Bakers Association; 
           Citizens for a Sound Economy; Council for Citizens 
           Against Government Waste; Traditional Values Coalition; 
           Automotive Service Association; National Retail 
           Federation; National Truck Equipment Association; Truck 
           Renting and Leasing Association.
         National-American Wholesale Grocer's Association; U.S. 
           Chamber of Commerce; National Cattlemen's Association; 
           Associated Builders and Contractors, Inc.; National 
           Ready Mixed Concrete Association; U.S. Business and 
           Industrial Council; National Federation of Independent 
           Business; National Association of Realtors; Small 
           Business Survival Committee; Christian Coalition; The 
           Concord Coalition; Printing Industries of America; 
           International Council of Shopping Centers; Motorcycle 
           Industry Council, Inc.; American Tax Reduction 
           Movement; International Mass Retail Association; 
           Texaco, Inc.; U.S. Federation of Small Business; 
           American Machine Tool Distributors Assn.; Union 
           Pacific; Common Sense for America; Americans for Tax 
           Reform; American Bakers Association.
                                                                    ____

             [IRET--Congressional Advisory, Feb. 27, 1995]

              Keynes is Alive, But not Well, in Washington

                     (By Norman B. Ture, President)

       Opponents of a Balanced Budget Amendment assert that 
     recessions will be deeper and more prolonged if the amendment 
     prohibits the federal government from running budget 
     deficits. According to this Keynesian article of faith, 
     increases in federal spending relative to federal tax 
     revenues expand total--government, household, and business--
     spending and thereby produce increases in total production, 
     employment, and income.
       Much of this increase in government spending and decrease 
     in government tax revenues occurs automatically as the 
     economy moves into recession. With falling output, 
     employment, and income, payroll and income taxes decrease, 
     while government outlays for such things as unemployment 
     compensation and food stamps go up. These so-called 
     ``automatic stabilizers'' allegedly cushion the decline in 
     households' and businesses' disposable incomes, allowing them 
     to maintain higher spending levels than they otherwise would 
     be able to undertake. Moreover, according to this argument, 
     the federal government should take action to increase other 
     spending and/or to reduce taxes to fortify the automatic 
     bolstering of disposable income.
       The argument is wrong analytically. It is also rejected by 
     history. It should be rejected by the Senate as the basis for 
     deciding the fate of the Balanced Budget Amendment.
       It is certainly true that the government's revenues 
     automatically decline and certain of its outlays 
     automatically increase during a recession. These automatic 
     fiscal changes, however, don't--can't--increase total real 
     spending. The resulting gap between government spending and 
     government revenues has to be financed, either by the 
     government's borrowing the difference or by resorting to the 
     monetary printing press. If the government borrows the money 
     to finance the deficit, the lenders' disposable incomes--the 
     amount of their current after-tax incomes available to 
     purchase consumption products or business assets--is reduced 
     by the amount they lend the government--the same amount as 
     the increase in the disposable incomes of other people. No 
     net increase in income available for spending occurs.
       The same thing is true if the government takes 
     discretionary actions to increase its spending and/or to cut 
     taxes. The government's borrowing to make up the difference 
     between its additional outlays and reduced revenues cancels 
     any increase in disposable income that allegedly would be 
     produced by running a deficit.
       Of course, the government might resort to the money 
     printing press to finance the deficit. This might lead to an 
     increase in nominal aggregate demand but only at the cost of 
     pushing up the price level. Real disposable income and 
     spending would increase only if people were fooled and failed 
     to spot the inflationary erosion of their actual incomes and 
     purchasing power.
       Public policy makers should not disregard Abe Lincoln's 
     famous homily in making their policy decisions. They should, 
     instead, rely on some homely, basic truths. Increases in the 
     nation's income can't be produced by fiscal sleight of hand. 
     Increases in real income depend on increases in real output. 
     Increases in real output depend on increases in production 
     inputs and/or in the efficiency of their use. Increases in 
     production inputs depend on increases in the real rewards for 
     supplying them.
       Budget deficits will not maintain, let alone increase, real 
     disposable income unless they result from fiscal actions that 
     increase incentives for people to work, save, invest, 
     innovate, start new businesses or expand existing 
     enterprises.
       History is no kinder to the Keynesian fiscalism than 
     analysis. The record of the economy's aggregate performance 
     reveals no evidence that budget deficits, per se, allay or 
     moderate recessionary developments, or, indeed, that they 
     exert any expansionary influence. Even the least demanding 
     statistical tests of a relationship between federal budget 
     outcomes and gross domestic product reject the notion that 
     budget deficits are significant in moderating recessionary 
     forces.
       In this era of heightened concern about the federal 
     government's preempting too much of the nation's production 
     capability and misdirecting its use, opposition to curbing 
     the growth in government spending and federal deficits by 
     imposing a budget-balancing constitutional requirement is 
     truly bizarre. Basing that opposition on the Keynesian fiscal 
     mythology is even weirder. It is to be hoped that the U.S. 
     Senate will base its decision about a Balanced Budget 
     Amendment on consideration of the really relevant concern 
     about how most effectively to discipline fiscal and budget 
     policy decision making.
                                                                    ____

         [American Legislative Exchange Council, Feb. 24, 1995]

  More Than 200 Economists Publicly Support Balanced Budget Amendment

                   (By Kerry Jackson and Ian Calkins)

       Washington, DC., February 24, 1995--By endorsing a letter 
     outlining their support for the Balanced Budget Amendment 
     (BBA), 219 economists from across the country have publicly 
     recognized the threat federal deficit spending poses to 
     America's future.
       Included in the list are such prominent economists as Dr. 
     Richard Vedder of Ohio University, Dr. William Niskanen of 
     the CATO Institute, and Dr. Gordon Tullock of the University 
     of Arizona. The list was solicited by the American 
     Legislative Exchange Council (ALEC) in response to news 
     reports that many economists are opposed to the BBA. ALEC, 
     the nation's largest bipartisan membership organization of 
     state legislators, instead believes economists recognize the 
     harm in an annual spending deficit that has hit $200 billion 
     and is growing. With support from roughly 3,000 member state 
     legislators, ALEC has been at the forefront of the Balanced 
     Budget Amendment issue for 20 years.
       ``This list represents the most respected and brilliant 
     minds in the field of economics'' said ALEC Executive 
     Director Samuel A. Brunelli. ``What that tells us is simply 
     this: the Balanced Budget Amendment is sound economic 
     policy.''
       Brunelli presented the letter and list Monday morning to 
     Senator Paul Coverdell (R-Ga.) during a BBA Coalition 
     meeting, where he reported the list was still growing as he 
     left his office.
       ``There is a strong intellectual foundation in support of 
     the Balanced Budget Amendment,'' Brunelli told Coverdell. 
     ``This is just a representative group of scholars who realize 
     the danger reckless deficit spending has on our present and 
     future economy.''
       By endorsing the letter, the economists are saying ``there 
     is no rational argument against the Balanced Budget 
     Amendment. Simple observation of the fiscal record of recent 
     years tell us that the procedures through which fiscal 
     choices are made are 
     [[Page S3341]] not working.'' And they understand the 
     ``immorality of the intergenerational transfer that deficit 
     financing represents cries out for correction.''
       They also acknowledge the BBA would produce an ``increase 
     in investor and business confidence, both domestic and 
     foreign.''
       One of the primary arguments against the BBA is the 
     prospect that states will be forced to bear an inequitable 
     financial burden if costs are shifted in balancing the 
     budget, making them unwilling to ratify the measure. ALEC, 
     however, has addressed that problem in its recently published 
     Issue Analysis: Up to the Challenge: Why State and Local 
     Governments Can Flourish Under the Balanced Budget Amendment. 
     The paper exposes the cost-shifting argument as groundless 
     and goes on to outline a number of ways states can actually 
     save money if the BBA were enacted. As a membership 
     organization that is closely associated with state lawmakers, 
     ALEC believes there is enough support among the states to 
     ratify the BBA.
       ``Already 29 states have passed a resolution calling for a 
     limited Constitutional Convention to write a BBA,'' Brunelli 
     said. ``That's more politically difficult legislation to pass 
     than ratification, and it's only nine states shy of the 
     number of states required to amend the Constitution.''
  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 policitians 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 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 Berthound, National Taxpayers Union.
       Dr. Michael Block, University of Ariziona.
       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 Institue.
       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.
       [[Page S3342]] 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 of 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 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 Petersen, 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 Tedas--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.
                                                                    ____

               [National Taxpayers Union, Dec. 29, 1994]

                     Facts About The National Debt

       In FY 1995, interest payments on the National Debt are 
     expected to be $310.0 billion. This is: the second largest 
     item in the budget. (20% of all Federal spending); more than 
     the total revenues of the Federal government in 1976; 92% of 
     Social Security payments; $4,628 per family of three; $5,979 
     million per week, $854 million per day, $593,151 per minute, 
     or $9,886 per second; 23% of all Federal revenues; and 52% of 
     all individual income tax revenues.
       The National Debt has now topped $4.75 trillion.
       The Federal government has run deficits 56 out of the last 
     64 years and 33 out of the last 34 years.
       The national debt has increased 1536% since 1960, 777% 
     since 1975, 423% since 1980, 162% since 1985 and 49% since 
     1990.
       During the 1960's deficits averaged $6 billion per year.
       During the 1970's deficits averaged $35 billion per year.
       During the 1980's deficits averaged $156 billion per year.
       During the 1990's deficits averaged $248 billion per year.
       It took over 200 years to accumulate our first trillion 
     dollars in national debt. In the next four years, we will 
     accumulate well over $1 trillion in additional debt.
                                                                    ____

  [Congressional Leaders United for a Balanced Budget, Jan. 30, 1995]

      The Regressive Effect of Deficit Spending--Interest Payments

       While we hoard the crumbs, the whole loaf is being taken 
     away from us.--Joe Kennedy, in testimony before the House 
     Budget Committee.
       Until we control our deficit problem, interest payments 
     will continue to devour increasingly larger portions of the 
     budget. Interest payments have increased from 6% of the 
     budget in 1960 to more than 14% of the 
     [[Page S3343]] budget today. After adjusting for inflation, 
     gross interest payments have increased by 97% since 1980. 
     This explosion in debt payments has forced a corresponding 
     reduction in the goods and services the government can 
     provide. Until we bring the budget under control, interest 
     payments will continue to devour a increasingly larger 
     portion of the budget.
       Interest payments will cripple the ability of future 
     generations to make necessary investments in health care, 
     education, and other programs. Interest payments will 
     continue to crowd out funding for discretionary programs. GAO 
     has estimated that interest payments will reach $400 billion 
     dollars by the year 2020 if we fail to bring the deficit 
     under control. The growth of interest payments and 
     entitlement spending will force a half a trillion dollars of 
     deficit reduction each year just to maintain a deficit path 
     of three percent of GDP by the year 2020. All government 
     programs would be subject to severe cuts every year under 
     this scenario.
       Interest payments already are crowding out worthy programs. 
     Net interest will be over $235 billion this year. This money 
     will not be available for federal investment, social programs 
     or defense. Interest payments are: 8 times higher than 
     expenditures on education; 50 times higher than expenditures 
     on job training; 55 times higher than expenditures on Head 
     Start; 140 times higher than expenditures on childhood 
     immunizations.
       Interest payments represent a transfer of wealth from 
     middle-class taxpayers to upper-income individuals and 
     foreign investors. Interest is paid to individuals who own 
     Treasury Bills--primary the wealthiest 10% of citizens and 
     institutional investors. Nearly 20% of interest payments are 
     sent overseas to foreign investors. In 1993, the Treasury 
     sent $41 billion overseas in interest payments.
    
                                                                    ____


  [Congressional Leaders United for a Balanced Budget, Jan. 30, 1995]

          Facts About Our National Debt and Interest Payments

       Our national debt currently exceeds $4.7 trillion--about 
     $18,500 for every man, woman and child in the United States. 
     (Source: Department of Treasury, Monthly Treasury Statement.)
       The national debt has increased by $3.6 trillion since the 
     Senate last passed (but the House defeated) the Balanced 
     Budget Amendment in 1982. The debt has also increased by more 
     than $160 billion since the House voted on the BBA in March 
     1994. (Sources: Department of Treasury, Monthly Treasury 
     Statement; FT '95 Budget of the United States, Historical 
     Tables.)
       Under current policies, future generations are projected to 
     face a lifetime net tax rate of 82% in order to pay the bills 
     that we are leaving them. (Source: FY '95 Budget of the 
     United States, Analytical Perspectives.)
       If we continue current policies into the next century, we 
     may be forced to enact half-a-trillion dollars in deficit 
     reduction each year just to restrain the deficit to three 
     percent of GDP. (Source: General Accounting Office, Budget 
     Policy: Prompt Action Necessary to Avert Long-Term Damage to 
     the Economy)
       In 1994, gross interest payments exceeded $296 billion. 
     This is greater than the total outlays of the federal 
     government in 1974. (Source: FY '95 Budget of the United 
     States, Historical Tables.)
       In 1994, gross interest payments consumed about half of all 
     personal income taxes. (Source: National Taxpayers Union)
       In FY '94 we spent an average of $811.7 million a day on 
     gross interest payments. That's $33.8 million an hour, and 
     $564,000 per minute. (Source: Congressional Budget Office, 
     The Economic and Budget Outlook: Fiscal Years 1995-1999.
       In 1993, the U.S. government sent $41 billion overseas in 
     interest payments on Treasury bills held by foreign 
     investors. This represents more than twice the amount of 
     spending on all international programs. (Source: FY `95 
     Budget of the United States, Analytical Perspectives.)
       Net interest payments in 1994 were five and a half times as 
     much as outlays for all education, job training and 
     employment programs combined. (Source: FY `95 Budget of the 
     United States, Historical Tables.)
       The drain on national savings caused by the deficit during 
     the 1980's resulted in a loss of 5% growth in our national 
     income. This translates into roughly three and a quarter 
     million jobs lost. (Source: The New York Federal Resource 
     Board, CBO)
                                                                    ____

  [Congressional Leaders United for a Balanced Budget, Jan. 30, 1995]

        The Economic Consequences of Maintaining the Status Quo

       According to the Congressional Budget Office, under current 
     policies the deficit will bottom out at $176 billion in FY 
     1995 before increasing again, reaching $284 billion in 2000 
     and $421 billion in 2004. In 1995, the year in which the 
     deficit is the lowest, the deficit will equal 2.5 percent of 
     Gross Domestic Product. The deficit will rise as a percentage 
     of GDP, reaching 3.1 percent of GDP in 2000 and continuing to 
     increase to 3.6 percent of GDP by 2005.
       In June of 1992, the General Accounting Office released a 
     study entitled Prompt Action Necessary to Avert Long-Term 
     Damage to the Economy, which set out several scenarios for 
     budget policy, including one that is remarkably similar to 
     current budget projections--reducing the deficit enough to 
     hold annual deficits to approximately 3 percent of GDP. The 
     GAO found that this scenario, which it called the ``muddling 
     through option'' would not be sufficient to avoid the severe 
     economic consequences of deficit spending. Among the 
     conclusions that GAO reached:
       A failure to reverse current trends in fiscal policy ``will 
     doom future generations to a stagnating standard of living, 
     damage U.S. competitiveness and influence in the world, and 
     hamper our ability to address pressing national needs.''
       Simply maintaining a deficit at three percent of GDP 
     ``offers no escape either from progressively harder decisions 
     or from an unacceptable economic future. It only postpones 
     the date of a full confrontation with the underlying 
     problem.''
       If we continue on the current ``muddling through'' path, by 
     2005 ``the amount of deficit reduction that will be required 
     to limit the deficit to three percent of GDP will increase 
     exponentially. By the year 2020, it will require a half a 
     trillion dollars of additional deficit reduction each year 
     just to maintain a deficit path of three percent of GDP.''
       ``The muddling through path requires one to make harder and 
     harder decisions just to stay in place, partly just to offset 
     the growing interest costs that compound with the deficit. . 
     . . To select this path is to fend off the disaster of 
     inaction, but it would lock the nation into many years of 
     unpleasant and relatively unproductive deficit debates rather 
     than debates about what government ought to do and should be 
     done. It is death by a thousand cuts.''
                                                                    ____

               [From Government Waste Watch, Winter 1994]

  The Balanced Budget Amendment:--Our Economic Security in the Balance

                    (By Larry Craig and Paul Simon)

       ``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, morally bound to pay them 
     ourselves.''
       That statement, as relevant as today's headlines, was made 
     almost 200 years ago by Thomas Jefferson. This perspective, 
     once at the very foundation of our political system, urgently 
     needs to be reasserted.
       It should be, as early as February, when Congress takes up 
     our Balanced Budget Amendment to the Constitution, S.J. Res. 
     41.
       Our nation's founders saw a balanced budget and prompt 
     repayment of debt not merely as issues of fiscal policy, but 
     as a moral imperative. Failure to meet these goals was 
     considered not simply economic folly, but a violation of the 
     basic right of the people to be free from a profligate 
     government.
       Yet today, federal budget deficits are the single biggest 
     threat to our economic security. The government has spent 
     more than it has taken in for 55 of the last 63 years. The 
     budget was last balanced in 1969. The result is a federal 
     debt totaling $4.4 trillion, or more than $17,000 for every 
     man, woman, and child in America, and growing.


                 What are the Harms of Budget Deficits?

       Like every family and business, when the government 
     borrows, it must make interest payments. Annual gross 
     interest on the debt now runs about $300 billion, making it 
     the second largest item of federal spending next to Social 
     Security. This equals an incredible 57 percent of all 
     personal income taxes.
       Now in a sluggish economy, Americans are paying for the 
     government's past addiction to debt. Unless things change, 
     the next generation will pay even more dearly.
       Last year, Congress's nonpartisan General Accounting Office 
     (GAO) said that, under current trends, our children's 
     standard of living in the year 2020 would stagnate at today's 
     levels--extinguishing the prospect that each generation of 
     Americans would be able to leave the next a legacy of greater 
     opportunity. In contrast, GAO found that balancing the budget 
     by 2001 would produce a 36 percent improvement in the 
     nation's standard of living by 2020.
       An added danger exists because the national government has 
     a power that families and business don't: It can put the 
     Treasury's printing presses in high gear, devalue the 
     currency, and monetize the debt. Of course, the resulting 
     inflation would depress the worth of people's incomes and 
     assets and produce the same outcome: a lower standard of 
     living.


             why has it been so hard to balance the budget?

       Our system of government has changed fundamentally: While 
     almost all Americans want a balanced budget, there's no way 
     to put this general public interest on a level playing field 
     with the specific demands of mobilized, organized interest 
     groups.
       The unlimited ability to borrow naturally leads to 
     unlimited demands to spend beyond our means. Every American 
     belongs to at least one group that benefits from federal 
     spending. And everyone would like to see his or her taxes 
     held down. If they don't have to say ``no,'' many elected 
     officials see political peril in doing so.
       That is, there's no way to make it a fair fight until we 
     put a rule in place that the government can't break or amend 
     with impunity, that guarantees we get no more government than 
     we are willing to pay for, and calls on us to pay for all the 
     government we demand.

[[Page S3344]]

                HOW THE BALANCED BUDGET AMENDMENT WORKS

       The amendment would prohibit federal outlays from exceeding 
     receipts unless three-fifths of both houses of Congress 
     specifically vote to run a deficit. Similarly, the limit on 
     the national debt could be increased only with a 60-percent 
     super majority vote. A ``constitutional,'' or absolute 
     majority on a roll call vote would be required to raise 
     taxes, contrasted with the current requirement for only a 
     simple majority of those present and voting--or even just a 
     voice vote. The president would be required to balance the 
     budget he or she submits to Congress.
       By making it more difficult to continue deficit spending 
     and by requiring specific recorded votes, the amendment would 
     make Congress more accountable to the public. The difficulty 
     in obtaining ``super majorities'' to increase borrowing or 
     raise taxes would force the president and congressional 
     leaders to find ways to live within the confines of the 
     amendment.


             WHAT DO THE AMENDMENT'S OPPONENTS HAVE TO SAY?

       We have spent years working with colleagues, legal 
     scholars, economists, and public policy groups like the 
     Council for Citizens Against Government Waste to refine our 
     amendment and find out how it would work. We have become more 
     committed to passing the amendment, more certain of the need 
     for it, and more confident of its appropriateness to become 
     part of the Constitution, as we have seen every question 
     answered and every criticism solidly rebutted. For example:


                            IT'S NOT NEEDED

       Opponents argue that ``political will'' and budget process 
     reforms should be sufficient to balance the budget. Perhaps 
     they should be; in reality, they haven't been.
       In 1978, 1979, 1982, 1985, 1987, and 1990, Congress enacted 
     and presidents signed laws requiring balanced budgets. Every 
     one was amended or ignored when push came to shove. After 
     all, it is as easy to amend a law or waive a rule as it is to 
     pass it. Amending the Constitution requires two-thirds 
     majorities in Congress and ratification by three-fourths (38) 
     of the states, formidable hurdles that have allowed the 
     enactment of only 17 amendments since the original Bill of 
     Rights in 1789.
                             it won't work

       Skeptics contend that presidents and congresses would evade 
     the amendment by using accounting gimmicks, such as putting 
     items off-budget. Our amendment is carefully drafted to avoid 
     this kind of danger. For example, precise definitions ensure 
     that no category of outlays or receipts can be placed outside 
     the scope of the amendment.


                         it would work too well

       Forgetting that they also said the amendment wouldn't work 
     at all, opponents argue that it would put a ``straitjacket'' 
     on the economy by preventing Congress from using fiscal 
     policy to counteract economic downturns.
       Our amendment anticipates the need for flexibility that 
     could arise in the long term. During a true emergency, 
     Congress should be able to muster the three-fifths vote 
     needed to stimulate the economy through temporary deficit 
     spending. Our amendment would ensure that such spending is 
     the exception rather than the rule.
       Years of unbalanced budgets, in good times and bad, have 
     made deficits the greatest danger to our economic well-being. 
     Keep in mind that most of the deficit spending this year went 
     simply to pay interest on the debt. To the extent that 
     deficits can stimulate the economy, today there's almost 
     nothing left over to do so after making interest payments.


                it would thwart the will of the majority

       The Constitution's framers wrote that one of the purposes 
     of a constitution is to protect certain rights deserved by 
     all Americans by placing these rights beyond the reach of a 
     ``tyranny of the majority.''
       The rights enshrined in the Constitution, such as freedom 
     of speech and religion, represent absolute prohibitions on 
     government action. Jefferson favored an absolute prohibition 
     on government borrowing. Our amendment does not go that far. 
     But it does recognize that to protect our children from a 
     tyranny of debt, deficit spending should require more than a 
     simply majority vote.
       Moreover, our amendment requires a 60-percent majority in 
     exactly one circumstance: when spending in the budget would 
     exceed revenues. The amendment in no way affects the 
     majority's ability to set budget priorities within a balanced 
     budget. Therefore, the amendment would restore our system to 
     working the way the framers of the Constitution intended.


                      good programs might get cut

       Every dollar borrowed incurs interest costs which already 
     result in significantly fewer dollars for high-priority 
     programs and in higher taxes. In fact, if no federal debt 
     ever had been accumulated in the first place, the government 
     would run a $200 billion surplus over the 1995-1999 period.
       Some worry, if the budget must be balanced, it will be done 
     fairly. However, the government's escalating interest 
     payments--with gross interest totaling $294 billion in 1993--
     are blatantly regressive. These represent a transfer of funds 
     from the working middle class--who pay the bulk of federal 
     taxes--to the large banks, corporations, and wealthy 
     individuals who hold Treasury securities. About 15 percent of 
     these payments go to rich investors of governments overseas.
       The greatest unfairness is for the government to live off a 
     giant credit card today and send the bill to the next 
     generation amounting to a massive taxation without 
     representation.


                               conclusion

       The best way to ensure the continued soundness of essential 
     programs, stabilize the economy and pass on a legacy of 
     economic opportunity to our children is to reverse the growth 
     in the federal debt. Without a balanced budget amendment to 
     the Constitution, it is unlikely we will ever find the 
     discipline to restore this rationality to our budget 
     decisions.
                                                                    ____

               [From the Washington Times, October 1993]

                    Economic Security in the Balance

                    (By Larry Craig and Paul Simon)

       ``Once the budget is balanced and the debts paid off, our 
     population will be relieved from a considerable portion of 
     its present burdens and will find out new motives to 
     patriotic affection, (and) additional means for the display 
     of individual enterprise.''
       That statement, as relevant as today's news, was made more 
     than 150 years ago by President Andrew Jackson. This 
     perspective on the federal government and the economic well-
     being of the people, once at the very foundation of our 
     political system, urgently needs to be reasserted.
       It should be, early in November when Congress takes up our 
     Balanced Budget Amendment to the Constitution, S.J. Res. 41.
       Federal budget deficits are not an abstract problem; they 
     are now the single biggest threat to our nation's economic 
     security. When the economy is unstable, seniors on fixed 
     incomes suffer the most.
       The government has spend more than it has taken in for 55 
     of the last 63 years; the budget was last balanced in 1969. 
     The result is a federal debt totaling $4.3 trillion, or about 
     $17,000 for every man, woman and child in America, and 
     growing.
       Like every family and business, when the government 
     borrows, it must make interest payments. Annual gross 
     interest on the debt now runs about $300 billion, making it 
     the second-largest item of federal spending, next to Social 
     Security. This amount equals an incredible 57 percent of all 
     personal income taxes.
       Every dollar borrowed incurs interest costs that result in 
     significantly fewer dollars for high-priority programs and in 
     higher taxes. With a growing population depending on Social 
     Security, the best way to ensure its continued soundness is 
     to stabilize the economy and reverse the growth in interest 
     costs--which compete with Social Security for dollars--by 
     balancing the budget.
       The fiscal costs and economic drag of the federal debt 
     imperil both seniors today and their children. Last year, 
     Congress' nonpartisan General Accounting Office said that, if 
     nothing changes, our children's standard of living in the 
     year 2020 will stagnate at today's levels--putting an end to 
     the American dream of each generation leaving the next a 
     legacy of opportunity. In contrast, balancing the budget by 
     2001 would produce a 36 percent improvement in the nation's 
     standard of living by 2020.
       Who collects interest payments on the federal debt? About 
     15 percent goes overseas. Almost all of the rest goes to 
     large banks, corporations, state and local governments, and 
     wealthy investors. Thomas Jefferson objected to any federal 
     indebtedness, fearing that taxes on farmers, laborers, 
     merchants and their families would escalate forever to pay 
     the interest on a growing debt.
       Why has it been so hard to balance the budget? The 
     unlimited ability to borrow leads naturally to unlimited 
     demands to spend. Every American belongs to at least one 
     group that benefits from federal spending. And everyone would 
     like to see his or her taxes held down. If you don't have to 
     say ``no,'' then many elected officials see only political 
     peril in doing so.
       Our system of government has changed fundamentally: While 
     almost all Americans want a balanced budget, there's no way 
     to put this general, public interest on a level playing field 
     with the specific demands of mobilized, organized interest 
     groups.
       That is, there's no way to make it a fair fight until we 
     add to the Constitution a rule the government can't break, 
     that guarantees we get no more government than we are willing 
     to pay for and calls on us to pay for all the government we 
     demand.
       Fifty years before Jackson, Jefferson said, ``We should 
     consider ourselves unauthorized to saddle posterity with our 
     debts, and morally bound to pay them ourselves.... I wish it 
     were possible to obtain a single amendment to our 
     Constitution...an additional article, taking from the 
     government the power of borrowing.''
       It's time to live up to Mr. Jefferson's vision.
                                                                    ____

   [From CLUBB--Congressional Leaders United for a Balanced Budget, 
                       Revised January 30, 1995]

      Factsheet: Alarmist Attacks on the Balanced Budget Amendment

       Yesterday, the Treasury Department released a study 
     projecting several ``horror story'' scenarios of the kinds of 
     policy decisions the Administration foresees might be 
     [[Page S3345]] necessary if the Balanced Budget Amendment, is 
     added to the Constitution. The ``results'' of these studies 
     were broken down by state. Other studies have been released 
     by other organizations purporting to demonstrate the impact 
     that a balanced budget amendment will have.
       These studies actually send four messages: (1) Opponents 
     fear the amendment will work; (2) The case against the 
     amendment is so weak that opponents must resort to scare 
     tactics; (3) The methodology used assumes arbitrary, across-
     the-board approaches; and (4) The study represents a failure 
     to face up to long-term responsibilities and consequences.
       (1) Opponents fear the amendment will work: Critics raise 
     the specter of what budget policy options might be considered 
     if Congress and the President must comply with a Balanced 
     Budget Amendment. However, their arguments are directed 
     against the deficit reduction that will be required to 
     balance the budget.
       The study ignores the impact on government services, 
     program beneficiaries, and taxpayers from remaining on a 
     course that will result in the federal debt increasing 90% 
     over the next ten years, and annual spending on interest 
     payments increasing by two-thirds. As Senator Paul Simon has 
     pointed out, every dollar spent on interest payments is a 
     dollar that can not go to valued programs.
       Forcing the government to live within its means will 
     require setting priorities and making some difficult 
     decisions. This will not happen without the Amendment and it 
     must happen to safeguard our future economic security.
       (2) Scare tactics: As Rep. Olympia Snowe said in a 1994 
     Budget Committee hearing, people start pounding the table 
     when they're losing the argument. Arguments like those in the 
     Treasury and Wharton studies rely on alarming individuals and 
     groups about how severely they might be impacted. However, 
     even if federal spending continued to increase 3.1% a year, 
     it would fall into balance with revenues (as projected in 
     CBO's January baseline) by the year 2002. Currently, spending 
     is projected to grow an average of 5% a year through 2001.
       If we act promptly, reasonable restraint, not massive 
     spending cuts or tax increases, will take us to a balanced 
     budget. However, CBO projects deficits again increasing 
     rapidly after 1996. The longer we wait, the greater the pain 
     of deficit reduction will become.
       (3) Arbitrary, unrealistic methodology: The study assumes 
     that Congress will abdicate its responsibility to set 
     priorities and that the deficit reduction will occur in an 
     across-the-board manner. This approach, which is common in 
     such ``horror story'' reports regarding a BBA, implies that 
     the President and Congress have no priorities and assumes 
     they would not set priorities within a balanced budget 
     framework. The Treasury Department study manufactures per-
     program and per-state numbers that likely bear no resemblance 
     to the decisions Congress and the President eventually will 
     make.
       This very lack of priority-setting is at the root of the 
     $4.7 trillion national debt; today, marginal programs are 
     funded because they never have to compete with essential 
     programs. Under the amendment, Congress and the President 
     would be faced with a fiscal and political imperative to set 
     priorities. Government could promise no more than the people 
     were willing to pay for and we would pay for all the 
     government we demand.
       Treasury acknowledges that its ``estimates are static in 
     nature and reflect no macroeconomic feedback.'' Thus, the 
     study does not discuss the long-term economic security, 
     growth, and higher living standards that will result from 
     balanced budgets and are at the core of the case for the 
     amendment. In 1992, the non-partisan General Accounting 
     Office compared the economic effects of balancing the budget 
     by the year 2002 with a ``muddling through'' scenario that 
     assumed policies to maintain deficits of 3% of GDP. GAO found 
     that balancing the budget by the year 2000 would promote 
     significantly greater economic growth than the muddling 
     through option.
       (4) Failure to take responsibility for the long term: CBO's 
     preliminary budget projections found that the deficit will 
     leap back upward to $421 billion by FY 2005. The deficit as a 
     share of gross domestic product (GDP) would pass the 3% mark 
     before the next century.
       The preliminary CBO baseline resembles the ``Muddling 
     Through'' scenario set out in GAO's 1992 report, Budget 
     Policy: Prompt Action Necessary to Avert Long-Term Damage to 
     the Economy. Under that scenario, by 2020, per capita GDP 
     would be 7% lower and the federal debt three times larger 
     than if the budget were balanced from the year 2001 on. 
     Moreover, the annual deficit reduction required to maintain 
     the deficit at 3% of GDP (``muddling through'') would give 
     rise to more than $500 billion a year by FY 2020.
       Approaches like those taken by Treasury imply that 
     Americans will find each and every federal program so 
     indispensable, so sacred, that protecting every single 
     program, every interest today, outweighs our children's 
     standard of living and the government's ability to continue 
     providing priority services and benefits in the coming years.
       (Prepared by the Offices of Senator Larry Craig (202) 224-
     2752 Congressman Nathan Deal (202) 225-5211.)
                                                                    ____

      [CLUBB--Congressional Leaders United for a Balanced Budget]

         Factsheet: Balanced Budget Requirements in the States

       Debate on a proposed Balanced Budget Amendment to the U.S. 
     Constitution highlights the status of the states as 
     ``laboratories of democracy.'' While the supporters of H.J. 
     Res. 1 do not argue that the federal Constitution should have 
     a balanced budget requirement because the states have such 
     restraints, the experiences of the states are instructive.
       While they vary widely in form, 49 of the 50 states have 
     significant balanced budget requirements.
       It is also true that, while, standing alone, many of the 
     state provisions appear to be less restrictive than H.J. 1 
     for the federal government, there are important institutional 
     differences which dictate the terms of the federal proposal.
       In 35 of the states, balanced budget requirements are 
     written into constitutions. In 13 others they are statutory. 
     Nine of those have constitutional debt limits that are 
     usually interpreted as constitutional balanced budget 
     requirements. In one (Wyoming), the unwritten imperative is 
     strong enough that it is regarded as having ``constitutional 
     status.''
       But that's only a glimpse into the rich diversity through 
     which states control indebtedness.
       In 43 or more states, balanced budget requirements are 
     supplemented by special executive branch budget powers. 
     Twenty-one states have spending limits, 7 have revenue 
     limits, and 3 have both. Fifteen require more than a simple 
     majority to pass any budget.
       Noteworthy differences include whether capital, trust fund, 
     or other budgets are included under state balanced budget 
     requirements.
       There's a lot we can learn from specific state balanced 
     budget initiatives and apply to the federal proposal.
       The states can afford to exempt portions of their budgets 
     because state bond ratings--generally applying to capital 
     investments--serve as the ultimate disciplinarian. There are 
     no bond rating services for the federal government in part 
     because foreigners and others line up to bank on the full 
     faith and credit of the U.S. government. In addition, some 
     bond issues are subject to public referenda.
       States sometimes mislead when defining a ``deficit.'' That 
     led to the language before Congress now, ``Total outlays for 
     any fiscal year shall not exceed total receipts for that 
     fiscal year . . .''
       The processes of defining and amortizing ``capital 
     investments'' can be abused. For example, New York City, 
     prior to its financial crisis in the s, wrote off spending 
     for school textbooks by declaring their ``useful life'' to be 
     30 years.
       Some states can use revenue and borrowing to meet balanced 
     budget requirements. Under H.J. Res. 1, raising the debt 
     limit requires a \3/5\ majority to counter this state-proven 
     tendency.
       The imposition of budget discipline on states whether from 
     balanced budget requirements or bond ratings has led to 
     establishment of ``rainy day'' funds. Many states now set 
     aside excess revenues in good times requiring less 
     indebtedness during recessions.
       Despite such diversity, the experience of the states shows 
     that balanced budget requirements have had a salutary effect.
       From 1980 to 1992, the states' outstanding long-term debt 
     rose from $120 billion to $369 billion, a 208 percent 
     increase; total state spending growth was about 4 percent 
     greater than revenue growth. During the same period, federal 
     debt grew from $905 billion to $4.002 trillion, a 340 percent 
     increase; federal spending growth was about 38 percent 
     greater than revenue growth.
       The similarities between state and federal budget 
     experiences support adoption of a federal balanced budget 
     amendment; the differences demonstrate why H.J. Res. 1 is the 
     approach best suited to the federal level.
       That variance and relative complexity of state provisions 
     contributed to the development of the one-page simplicity of 
     the Stenholm/Smith federal amendment. An amendment to the 
     U.S. Constitution should state a broad, fundamental principle 
     and provide the bare bones of process necessary to enforce 
     that principle.
       The states' experiences demonstrate that exempting any 
     portion of federal spending from a balanced budget amendment 
     would create potential loopholes. The ``higher authorities'' 
     that generally check abuses at the state level do not exist 
     at the federal level. ``Pet programs'' could easily be pushed 
     into whatever funding category was not covered by a BBA. Debt 
     would continue to soar, and the Constitution would be 
     affronted.
       The federal government has no line item veto and a 
     relatively weak rescission process. The lack of such 
     supplementary means for imposing discipline is among the 
     reasons why the federal BBA needs to be more restrictive than 
     state counterparts. At the same time, a BBA is the single 
     most important mechanism, and the most constitutionally 
     elegant, for enforcing the fundamental principle that the 
     people should be protected from the abuses of profiligate 
     government borrowing.

[[Page S3346]]

                             Silver Spring, MD, February 15, 1994.
     Hon. Paul Simon,
     U.S. Senate,
     Washington, DC.
       Dear Senator Simon: I am pleased to have this opportunity 
     to express my support for the Balanced Budget Amendment.
       For 37 years I worked for the Social Security 
     Administration, serving as Chief Actuary in 1947-70, and as 
     Deputy Commissioner in 1981-82. In 1982-83, I served as 
     Executive Director of the National Commission on Social 
     Security Reform. And I continue to do all that I can to 
     assure that Social Security continues to fulfill its 
     promises.
       The Social Security trust funds are one of the great social 
     successes of this century. The program is fully self-
     sustaining, and is currently running significant excesses of 
     income over outgo. The trust funds will continue to help the 
     elderly for generations to come--so long as the rest of the 
     federal government acts with fiscal prudence. Unfortunately, 
     that is a big ``if.''
       In my opinion, the most serious threat to Social Security 
     is the federal government's fiscal irresponsibility. If we 
     continue to run federal deficits year after year, and if 
     interest payments continue to rise at an alarming rate, we 
     will face two dangerous possibilities. Either we will raid 
     the trust funds to pay for our current profligacy, or we will 
     print money, dishonestly inflating our way out of 
     indebtedness. Both cases would devastate the real value of 
     the Social Security trust funds.
       Regaining control of our fiscal affairs is the most 
     important step that we can take to protect the soundness of 
     the Social Security trust funds. I urge the Congress to make 
     that goal a reality--and to pass the Balanced Budget 
     Amendment without delay.
           Sincerely,
                                                  Robert J. Myers.
       CLUBB--Congressional Leaders United for a Balanced Budget

       The following quotes are from a News Conference held by 
     Senators Craig, Simon and Robb joined by former Senator 
     Tsongas, and Robert Myers on February 7, 1995.
       Concord Coalition co-chair and former Democratic Senator 
     Paul Tsongas responded to President Clinton's budget proposal 
     released Monday, which, as reported in the media, breaks 
     Clinton's campaign ledge to cut deficits in half during his 
     first term.
       ``The budget which came from the President yesterday said, 
     I've given up; that as long as I am President of the United 
     States there will never be a balanced budget. That is an 
     astonishing statement.''
       Paul Tsongas, talking about Social Security and the BBA:
       ``It is embarrassing to be a Democrat and watch a 
     Democratic President raise the scare tactics of Social 
     Security.''
       ``It pains me that the Democratic party should be the party 
     that turns its back on the young.''
       Paul Tsongas talked about those who've supported BBA in the 
     past, but who now say they will vote against a BBA without a 
     Social Security exemption.
       ``It's flushing out those who never meant it, those whose 
     cynicism I think is now going to be on display.''
       ``The calculation is quite explicit, how do I somehow kill 
     the Balanced Budget Amendment without having my fingerprints 
     on the deed. And the use of Social Security is the chosen 
     weapon.''
       ``The question is, where is the cover? And the cover is the 
     Social Security subterfuge.''
       ``Those who vote to exclude Social Security are voting to 
     kill the Balanced Budget Amendment. It is that simple, it is 
     that clean and should be stated.''
       Senator Paul Simon (D-IL):
       ``Every time we have a deficit, we're borrowing from your 
     six year-old. And what we're saying is let's stop borrowing 
     from six year-olds.''
       Tsongas, responding to Simon:
       ``Eventually the six year-old will rebel, having been given 
     massive debt by you and I.''
       Paul Tsongas' general comments on BBA and balancing the 
     budget:
       ``Without the Balanced Budget Amendment the budget will 
     never be balanced--that's a given. There is simply not the 
     discipline and self will in this place to do it.''
       ``This is not rocket science. It's not what is in your head 
     or in your heart. It's what is in the lower part of your 
     regions that is in question.''
       Tsongas responded to a question about how much budget cuts 
     to balance the budget would hurt people across the country.
       ``If you don't do it now; if you let those numbers run 
     themselves out for ten years, then you are looking at far 
     more draconian measures.''
                                                                    ____



                                        The Seniors Coalition,

                                       Fairfax, VA, March 1, 1995.
     Hon. Larry Craig,
     U.S. Senate,
     Washington, DC.
       Dear Senator Craig: I wanted to take just a moment to thank 
     you for your dedication and extraordinary effort to get a 
     Balanced Budget Amendment passed. We believe very strongly 
     that a bankrupted country cannot care for its elderly, its 
     young or its poor, and that a Balanced Budget Amendment is 
     desperately needed at this time.
       The Seniors Coalition commissioned The Luntz Research 
     Companies to conduct a poll late last week to determine if 
     public support for the Balanced Budget Amendment was still as 
     strong as it had been at the end of January. I would like to 
     share some of the results with you.
       As far as we have been able to determine, this nationwide 
     poll contains the most recent data available on the public's 
     opinion of the Balanced Budget Amendment. The questions were 
     asked as part of an omnibus national survey conducted of 
     1,000 registered voters from February 22nd to 23rd. The 
     survey has a margin of error of 3.1% at the 95% 
     confidence level.
       When people were asked if they supported the Senate passing 
     the same Balanced Budget Amendment passed by the House of 
     Representatives, an overwhelming 79% of respondents supported 
     Senate passage of this measure. This figure is identical to 
     the results of a Wirthlin poll conducted January 25th to 
     28th. Public support for the Balanced Budget Amendment has 
     not fallen over this past month.
       Of those supporting the Balanced Budget Amendment, 61% were 
     strongly supporting the BBA and 18% were somewhat supportive 
     of the BBA. Compared to the Wirthlin poll: 52% strongly 
     favored and 27% somewhat favored a BBA at the end
      of January. This suggests that not only do people still 
     support a BBA, but they do so with a stronger conviction.
       When senior citizens were asked how they felt about the 
     Balanced Budget Amendment, 80% of those age 55-64 and a 
     strong 71% of those age 65+ supported the BBA. By geographic 
     region, people in the Northeast support the BBA at 80%, those 
     in the South by 79%, those in the Midwest by 76%, in the West 
     by 78% and along the Pacific by 81%.
       We were also curious to know how people would feel about 
     their Senator if the Balanced Budget Amendment failed. 
     Respondents were asked if they would vote for or against 
     their Senator in the next election if he or she were the one 
     to cause the BBA to fail by one vote. Nearly half, 46%, said 
     they would vote against their Senator if this were the case. 
     These were evenly split, 23% each, along the lines of 
     definitely against or probably against. Comparatively, of the 
     34% who answered they would vote for their Senator, only 11% 
     were firm in their conviction.
       Senior citizens were consistent with this trend and 45% of 
     those age 55-64 and 41% of those age 65+ indicated they would 
     vote against their Senator if they blocked passage of the 
     Balanced Budget Amendment. Of interest in these numbers is 
     that seniors were lower than the general average of 34% in 
     stating they would vote for their Senator under this 
     scenario. Of those age 55-64, only 30% would vote in the 
     affirmative and 31% of those age 65+ would vote to re-elect 
     their Senator.
       By geographic region, those that would vote against their 
     Senator if they were responsible for the failure of the 
     Balanced Budget Amendment was as follows: Northeast--43%; 
     South--50%; Midwest--46%; West--45%; and Pacific--48%.
       The respondents were also asked if they felt that those 
     Senators who have claimed they want to learn more about the 
     Balanced Budget Amendment were correct in opposing the BBA, 
     or were they putting politics ahead of the national interest. 
     An astounding 60% of the voters surveyed thought that 
     politics was being put ahead of the national interest. This 
     number held strong among seniors of all ages at 59% in both 
     the 55-64 and 65+ categories.
       In geographic regions, 58% of those in the Northeast, 65% 
     of those in the South, 56% of those in the Midwest, 60% of 
     the West and 58% of the Pacific thought that politics were 
     taking precedence over the national interest.
       The results of this poll clearly show that despite all the 
     rhetoric and debate over the past month on what a Balanced 
     Budget Amendment would mean for America, seniors--and voters 
     in general--are still strongly committed to forcing Congress 
     to balance its budget, and they want their Senators to do the 
     right thing.
           Sincerely,
                                                      Jake Hansen,
     Vice President for Government Affairs.
                                                                    ____

                                        The Seniors Coalition,

                                       Fairfax, VA, March 2, 1995.


                               memorandum

     Re The American Association of Retired Persons and the 
       Balanced Budget Amendment.
     To: All Interested Parties.
     From: Kimberly Schuld, Legislative Analyst.
       The AARP commissioned The Wirthlin Group to conduct a 
     survey for them January 25-28, 1995 on a variety of questions 
     pertaining to the BBA. Since then, the AARP and the National 
     Council of Senior Citizens have been twisting the poll's 
     results and methodology to claim that public support for a 
     BBA is low--once Americans are told what the BBA will mean to 
     them.
       The key word here is TOLD. The poll utilizes a series of 
     questions designed to lead people to a mis-informed and 
     generally incorrect impression of what the BBA will do. 
     Namely, the line of questioning implies that Social Security 
     and Medicare will face drastic cuts, and state and local 
     taxes will skyrocket as the federal faucet is turned off.
       An AARP Press Release announcing the poll results states, 
     ``. . . most Americans do not understand the potential impact 
     of the Balanced Budget Amendment and are adamantly opposed to 
     using Social Security and Medicare to reduce the federal 
     deficit.''
       Quite bluntly, the AARP has effectively provided a 
     political scare campaign for those members of Congress 
     wishing to avoid facing 
     [[Page S3347]] their constituents with the news that they 
     want to vote against the BBA. We all know the arguments 
     against excluding Social Security from the constitutional 
     amendment, but the AARP has electrified the ``third rail'' to 
     the political benefit (is it really?) of the White House.


                   analysis of the aarp/wirthlin poll

       The poll consisted of sixteen questions to 1,000 adults, 
     with a 200 oversample to adults 50 and older. The margin of 
     error is 2.8% at a 95% confidence level. A copy 
     of the questions is attached.
       The poll starts off with a question about the direction of 
     the country and then asks: ``Do you favor or oppose a 
     balanced budget amendment to the U.S. Constitution that would 
     require the federal government to balance its budget by the 
     year 2002?'' Favor: 79%. Oppose: 16%.
       The next question tests how people perceive the budget can 
     be balanced: spending cuts, taxes or both. This is followed 
     by a question on equal percentage across-the-board cuts in 
     every federal program.
       The next two questions ask specifically if Social Security 
     and Medicare should be included in across-the-board cuts. As 
     could be expected, the respondents would favor exemptions for 
     both programs. A key element to these two questions (#5 and 
     #6) is the use of the word ``exempt''. The word ``exempt'' is 
     not used anywhere in the poll except in relation to Social 
     Security and/or Medicare. This sets up a connection in 
     people's minds that these programs may be in graver danger 
     than other government programs.
       Question #7 sets up the respondent for the ``truth in 
     budgeting'' excuse the Administration has been spinning. When 
     offering people the choice between passing the BBA first, or 
     identifying cuts first, the poll throws in ``consequences'' 
     associated with cuts. The connotation is that there are going 
     to be dire ``consequences'' to balancing the budget. This 
     sets up the respondent to answer question #15 (open-ended) 
     with a negative response on how they think the BBA will 
     affect them personally.
       Questions #8, #9 and #10 ask about whether respondents 
     think it is necessary to cut Defense. Social Security and 
     Medicare to balance the budget, or whether the budget could 
     be balanced without these programs. As could be expected, the 
     response for cutting Defense is overwhelming compared to SS 
     and Medicare. The group of questions sets up a ``good cop/bad 
     cop'' scenario in the mind of the respondent whereby they 
     identify Defense as the ``bad guy'' as well as being reminded 
     which party tends to support Defense. It is also important to 
     remember that at the time this poll was taken the newspapers 
     and network news broadcasts were full of stories about the 
     Republicans wanting to increase Defense spending in the 
     Contract With America.
       Questions #11 and #12 address taxes; their role in the 
     budget balancing process and reform ideas. This also serves 
     to set up negative responses to question #15. In #11, 48% of 
     the people believe there will have to be tax increases to 
     balance the budget. Then the next question, they are asked to 
     declare a preference for one of a variety of tax cuts. This 
     conflict sets up a negative impression that tax cuts are good 
     and the BBA is bad because there must be tax increases to 
     accomplish its goal.
       Question #13 throws together ``programs for the poor, 
     foreign aid, and congressional salaries and pensions''. 
     Respondents are asked how far these programs COMBINED would 
     go toward balancing the budget if they were cut. By throwing 
     these widely divergent programs together, the pollsters are 
     setting up the respondent to believe that balancing the 
     budget will mean higher taxes and cuts in taxpayer-financed 
     programs.
       Question #14 is the keeper. Respondents are asked if they 
     still support a BBA with the following choices: Social 
     Security should be kept separate from the rest of the budget 
     and exempted from a BBA because it is a self-financed by a 
     payroll tax or Social Security is part of the overall 
     government spending and taxing scenario, thus should be 
     subject to cuts along with the rest of the budget.
       The results of this questions dramatically flip the BBA 
     support from question #2: BBA with SS Exempt: 85%. BBA that 
     cuts SS: 13%.
       Question #16 now asks: ``Do you favor or oppose the 
     balanced budget amendment, even if it means that your state 
     income taxes and local property taxes would have to be raised 
     to make up for monies the federal government no longer 
     transfers to your state?'' Favor: 38%. Oppose: 60%.
       This question ends the phone call on a gross mis-
     interpretation that dire consequences of doom and gloom are 
     on the horizon, all at the voter's expense. This is exactly 
     the type of question that re-reinforces the ``angry voter'' 
     complex of the middle class family.
       These anti-BBA results are achieved by planting the seed of 
     doubt slowly but surely that:
       1. It is the intention of BBA supporters to cut Social 
     Security and Medicare.
       2. It is the intention of BBA supporters to beef up Defense 
     spending at the expense of everything else.
       3. Taxes will inevitably go up with a BBA.
       4. A BBA will have a negative direct impact on families 
     ``beyond the beltway.''
       Any time a Senator, Congressman, reporter or lobbyist 
     starts to talk about poll results showing 85% of Americans 
     oppose a BBA unless it exempts Social Security, bear in mind 
     that the spin-meisters achieved this number by forcing the 
     assumption that draconian Social Security cuts are a foregone 
     conclusion.
       Leaders from the Republican party, the Democratic party, 
     the Administration and the President himself have all gone to 
     great lengths to state that social security benefits are off 
     the table.
       Any member of congress who contends NOW that the new 
     Republican leadership cannot be trusted to keep their hands 
     off Social Security is also implicating their own party 
     leaders and the President of the same un-trustworthiness.
                                                                    ____

 Testimony of Jake Hansen, Director of Government Affairs, the Seniors 
      Coalition for the Joint Economic Committee, January 23, 1995


        Balanced Budget Amendment: Imperative to Social Security

       Mr. Chairman, this is not a new issue to The Seniors 
     Coalition. Since our inception we have fought for a Balanced 
     Budget Amendment. We have had experts on Social Security and 
     an expert economist look at the issue, as well as hearing 
     from thousands of our members. Their conclusion: give us a 
     Balanced Budget Amendment.
       During the elections and in recent debate, we have heard 
     from many politicians that a Balanced Budget Amendment will 
     destroy Social Security. However, the question is not ``Will 
     a Balanced Budget Amendment destroy Social Security'', but 
     rather ``Can Social Security survive without a Balanced 
     Budget Amendment?''
       As you know, up until 1983, the Social Security system ran 
     on a pay-as-you-go basis. That is, the amount of money going 
     into the Trust Funds from payroll deductions was basically 
     equal to the amount of money being paid to beneficiaries of 
     the day.
       In the late seventies, the economy was a disaster. 
     Inflation was up, leading to higher cost of living payments 
     than had been anticipated. Unemployment was up, meaning that 
     less money was being paid into the system than had been 
     anticipated. The result: Social Security was headed for 
     bankruptcy at break-neck speed.
       In 1983, a bi-partisan effort saved Social Security by 
     changing the benefit structure and raising Social Security 
     payroll taxes. This effort created a new--and potentially 
     worse--problem: a rising fund balance in the Social Security 
     Trust Funds. For the past ten years, more money has been 
     pouring into the Trust Funds than is needed to meet today's 
     obligations.
       This balance has been ``borrowed'' by the federal 
     government. Today, the federal government owes the Trust 
     Funds about $430 billion. By the year 2018, according to the 
     Social Security Board of Trustees, that figure will be a 
     shade over three trillion dollars. At that time, the entire 
     federal debt will be--who knows, eight, ten, twelve trillion 
     dollars?
       The point is, how will the government ever pay back the 
     Trust Funds? They could: turn on the printing presses and 
     monetize the debt, so that a Social Security check would buy 
     a loaf of bread; borrow the money--hurting both the economy 
     and the Federal Budget; make massive cuts in benefits; raise 
     taxes, and thus, destroy the economy for everyone; or simply 
     renege on the debt.
       Mr. Chairman, The Seniors Coalition doesn't find any of 
     these alternatives acceptable.
       The Chairman of our advisory board, Robert J. Myers (often 
     referred to as the father of Social Security) wrote of his 
     support of a Balanced Budget Amendment last year and said: 
     ``In my opinion, the most serious threat to Social Security 
     is the federal government's fiscal irresponsibility. If we 
     continue to run federal defects year after year, and if 
     interest payments continue to rise at an alarming rate, we 
     will face two dangerous possibilities. Either we will raid 
     the trust funds to pay for our current prolificacy, or we 
     will print money, dishonestly inflating our way out of 
     indebtedness. Both cases would devastate the real value of 
     the Social Security Trust Funds.''
       The bottom line, is that if we want to protect the 
     integrity of Social Security the only way is through a 
     Balanced Budget Amendment.
       With that said, the question becomes will just any old 
     Balanced Budget Amendment do? The answer is, some are better 
     than others, and some are absolutely not acceptable.
       First, some people are suggesting that Social Security 
     should be exempted. That should be something that an 
     organization like ours would leap at. The fact is, we are 
     concerned that such an Amendment would end up destroying 
     Social Security as more and more government programs would be 
     moved to Social Security to circumvent the Balanced Budget 
     Amendment. We believe this would destroy Social Security, and 
     will not support such an Amendment.
       Our first choice would be a Balanced Budget Amendment that 
     controls taxes as well as spending--such as the Amendment 
     that has been presented by Congressman Barton. We support tax 
     limitation and would like to see this Amendment voted on. We 
     would urge every Member of Congress to vote for this 
     Amendment.
       If, this Amendment does not pass, then we willingly support 
     a Balanced Budget Amendment such as the one offered by 
     Senators Hatch and Craig. While I am concerned about taxes, I 
     believe that last year's elections 
     [[Page S3348]] showed us that we, the people, do have the 
     ultimate power. And, I believe that had we been forced to pay 
     for all the government we were being given, we would have 
     made massive changes much sooner.
       Mr. Chairman, we believe that what is most important is 
     that America be given a serious Balanced Budget Amendment as 
     soon as possible. We will work with you and your colleagues 
     in every way possible to make that happen. Thank you.
                                                                    ____

                                        The Seniors Coalition,

                                    Fairfax, VA, January 24, 1995.


                               memorandum

     Re Balanced Budget Amendment.
     To: Senator Craig.
     From: Jake Hansen, Vice President for Government Relations.
       The Seniors Coalition has supported a balanced budget 
     amendment for several years. On behalf of our one million 
     members nationwide. I am requesting your support of S.J. Res. 
     1 in the next few weeks.
       It is vital that Congress pass a measure that would require 
     the federal budget to be balanced. Our members feel that if 
     the government were forced to evaluate its spending the way 
     every family in America evaluates their own, this country 
     would not be ``heading down the wrong path.'' While there are 
     a great many factors that contribute to this public 
     perception, the bottom line for many Americans is that the 
     government takes too much from them and spends too much on 
     programs that do not work. The time to end the cycle of 
     taxing and spending has come.
       I also want to touch briefly on the role of Social Security 
     in the balanced budget amendment. We feel that there is no 
     reason to exempt Social Security from a balanced budget. In 
     fact, such an exemption would create a serious policy and 
     political crisis for Congress, and would lead to the 
     destruction of the Social Security system.
       If Social Security is exempted, the total force of 
     balancing the budget will find its way to Social Security. 
     There will be an overwhelming temptation to either redefine 
     government programs as Social Security programs, or pull 
     money out of the Trust Fund to balance the budget by cutting 
     Social Security taxes to offset tax increases elsewhere. In 
     fact, there would be nothing to stop Congress from 
     ``borrowing'' as much money as it wanted from the Trust Funds 
     to finance any other government program.
       We feel confident that the political climate surrounding 
     Social Security is enough to protect it, thus engaging in 
     destructive policy in the name of protection will only lead 
     us down the path of truly committing damage to the Social 
     Security system.
       What is most important is that America be given a serious 
     balanced budget amendment as soon as possible.
                                                                    ____


Balanced Budget Amendment Alert From the Seniors Coalition, January 26, 
                                 1995.

       This morning the opponent of a BBA launched a full scale 
     attack on the Balanced Budget Amendment with Social Security 
     bombs. Seniors across the country are watching C-SPAN with 
     renewed and unjustified fear. It is vital that their scare 
     campaign be stopped.
       Exempting Social Security from the Balanced Budget 
     Amendment will destroy the Social Security system--NOT 
     protect it.
       Balancing the budget will create tremendous pressure and 
     that pressure will blow through any available escape hatch. 
     Whatever is exempted from the balanced budget requirement 
     becomes that escape hatch!
       As the total force of balancing the budget falls on Social 
     Security, there will be overwhelming pressure to redefine 
     many government programs as Social Security programs. This 
     endangers its original purpose. There would be nothing to 
     stop Congress from ``borrowing'' as much money as it wanted 
     from the trust fund to finance any government program if 
     Social Security is exempted from the Balanced Budget 
     Amendment.
       Exempting Social Security from the Balanced Budget 
     Amendment would open a loophole in the requirement that would 
     completely gut its effectiveness by allowing all social 
     welfare and other programs (such as Medicare and Medicaid) to 
     be financed off-budget, in deficit, as the ``New Covenant 
     Social Security.''
       Failure to pass a Balanced Budget Amendment will destroy 
     Social Security.
       Eventually, $400 billion plus will have to be returned to 
     the Social Security trust fund to pay benefits to retired 
     baby-boomers. Without starting a balanced budget process now, 
     the battle over Social Security will be like nothing Congress 
     has ever seen thirty years from now.
       Without balancing the budget, Social Security benefits will 
     always be subject to cuts, new taxes and means-testing. This 
     permanently erodes any confidence in discussions of systemic 
     reforms for future generations.
                                                                    ____

                                                      60 Plus,

                                  Arlington, VA, February 9, 1995.
     Hon. Larry E. Craig,
     U.S. Senate,
     Washington, DC.
       Dear Senator Craig: I am writing to you to express the 
     strong support of the 60/Plus Association for the Balanced 
     Budget Amendment to the Constitution, which is now being 
     considered by the U.S. Senate.
       The 60/Plus Association is a two-year-old, nonpartisan, 
     seniors advocacy group with more than 225,000 members. For 
     the 103rd Congress, we presented the Guardian of Seniors' 
     Rights award to 226 House and Senate Members.
       The Balanced Budget Amendment is the best friend the Social 
     Security system and our nation's seniors could have. The 
     Senate should pass H.J. Res. 1, as passed by the House of 
     Representatives in a strong bipartisan vote, and submit it 
     immediately to the States for ratification.
       Continuted, growing deficit spending is the greatest threat 
     to the integrity of the Social Security system and to the 
     present and future benefits paid from Social Security trust 
     funds. Past deficits have created a national debt of $4.8 
     trillion--an alarming 70 percent of our Gross Domestic 
     Product. Gross interest payments now consume nearly one-fifth 
     of total federal spending and will surpass Social Security as 
     the largest item of spending by the end of the decade.
       This national debt already has depressed the economy and 
     lowered seniors' standard of living. As the costs of 
     servicing that debt continue to climb and to squeeze all 
     other budget priorities, they threaten the very existence of 
     Social Security. Today's Social Security surpluses represent 
     a commitment to seniors tomorrow. But a debtor bankrupted by 
     an excessive debt load is not able to meet any of its 
     commitments. Bitter experience has shown that only the 
     Balanced Budget Amendment can save our nation from that fate.
       While well-intentioned, these attempts to exempt Social 
     Security from the discipline of the Balanced Budget Amendment 
     are completely misguided. Instead of protecting seniors, 
     exemptions like that in the Reid Amendment would allow the 
     Social Security trust funds to run unlimited deficits. This 
     would create an irresistible temptation to pay for all sorts 
     of unrelated programs out of the trust funds, completely 
     destroying the unique purpose for which they were created and 
     rendering them insolvent.
       The debt is the threat to Social Security and America's 
     seniors. A ``clean'' balanced budget amendment, such as H.J. 
     Res. 1. is their best protector. The 60/Plus Association 
     urges you and your colleagues to pass their urgently needed 
     legislation and resist the scare tactics of those who create 
     any loopholes that would compromise either balancing the 
     budget or protecting Social Security.
       Former Senator Paul Tsongas summed it up best when he said 
     he was ``embarrassed as a Democrat to watch a Democratic 
     President raise the scare tactics of Social Security.''
       In other words, it's `scare us old folks time again' as 
     opponents drag a 30-year-old red herring across the trail.
       Many seniors--including this one--vividly remember the 
     scare tactics then--the LBJ TV ad--a giant pair of scissors 
     cutting through a Social Security card--with the clear 
     implication that a vote for Barry Goldwater and Republicans 
     would mean the end of Social Security.
       Seniors didn't buy that canard then, nor do they now, 30 
     years later, judging by the response we get from a vast 
     majority of seniors.
           Sincerely.
                                                  James L. Martin,
     Chairman, 60+.
                                                                    ____

                                     National Taxpayers Union,

                                                 February 6, 1995.

                           [Legislative memo]

     Re Balanced Budget Amendment--Critique of Amendment To Exempt 
         Social Security and Scoring in NTU Annual Rating of 
         Congress.
     To: U.S. Senators.
     From: David Keating, Executive Vice President.
       An amendment to SJR 1 by Senators Reid, Feinstein, and 
     others will propose to exempt Social Security trust funds 
     (OASDI) from a balanced budget rule. A vote against this 
     proposal will be heavily counted as a pro-taxpayer vote in 
     our annual Rating of Congress.
       NTU strongly supports prompt passage, early this year, of 
     the best Balanced Budget Amendment (BBA) that can get the 
     needed two-thirds vote. This means a genuine, effective BBA, 
     not the dishonest ``cover'' substitutes offered by BBA 
     opponents.


  key reasons why congress should not exempt social security from the 
                       balanced budget amendment

       Exempting Social Security would render a Balanced Budget 
     Amendment meaningless and endanger Social Security. It would 
     give Congress an excuse to delay action on huge Social 
     Security deficits that will occur as today's younger workers 
     retire. Although the Social Security system currently 
     collects more in taxes than it spends on benefits, this will 
     change early in the next century and eliminate the 
     effectiveness of the balanced-budget rule. At that time, 
     other federal funds should be in a surplus position to 
     prevent large government budget deficits that would harm the 
     economy. But the Reid Amendment would only require a 
     balancing of non-Social Security receipts and outlays, 
     resulting in huge legal federal budget deficits at that time.
       1. It would create a huge loophole in the Amendment and 
     encourage Congress to raid trust fund revenues.--A future 
     Congress that wished to circumvent the Amendment could, by a 
     simply majority vote, authorize deficits by reducing trust 
     fund taxes and revenues and increasing ``operating'' fund 
     taxes and revenues by an equal amount. Trust funds could pay 
     for Social Security benefits by 
     [[Page S3349]] running a deficit. This has the potential to 
     be more than a $300 billion loophole.
       2. Congress could also create deficits by channeling other 
     programs aimed at aiding the elderly through the trust 
     funds.--Candidates include veterans' benefits and pensions, 
     which total over $20 billion a year. Supplemental Security 
     Income at over $25 billion a year is another likely 
     candidate, as is Medicare (over $110 billion) and the 
     approximately three-fourths of Medicaid spending (or over $65 
     billion) that benefits the aged. A portion of funds spent on 
     the retired poor by the Food Stamp, low-income home energy 
     assistance, housing subsidy, and other social service 
     programs might be transferred to newly exempt trust funds. 
     Some or all of federal employee or military retirement 
     programs may also become part of Social Security.
       3. It would legalize an ANNUAL total budget deficit of over 
     $2,000,000,000,000 ($2 trillion) in the year 2050!--Even if 
     the Social Security exemption was faithfully observed, it 
     would allow huge deficits in the Social Security trust funds 
     in the next century that will occur under current policies as 
     today's children retire.
       4. Such loopholes could result in spending money from trust 
     funds for other programs.--A future Congress and president 
     that wished to circumvent the balanced-budget rule could do 
     so simply by funding non-Social Security programs from trust 
     fund accounts. There is nothing in the proposed exemption 
     that would prohibit spending money from trust funds for non-
     retirement or non-disability programs. A simple majority of 
     Congress could thus effectively circumvent any debt limit.
       5. It would endanger Social Security.--Net interest on the 
     national debt has grown from a mere 7.7 percent of federal 
     spending in 1978 to 14 percent in 1995. Not only will 
     interest begin to crowd out Social Security, but the 
     continued buildup of debt will impair the ability of future 
     taxpayers to refund moneys borrowed from the trust fund. Only 
     an all-inclusive Balanced Budget Amendment will force 
     Congress to balance the budget and create a sound environment 
     for the future of Social Security.
                                                                    ____

                                  IRET Congressional Advisory,

                                                 February 8, 1995.

      A Balanced Budget Amendment Must Not Exclude Social Security

       A few Senators who voted for a balanced budget amendment 
     last year are saying they may oppose the amendment this year 
     unless a special exemption for Social Security is attached to 
     it. This may be a gambit to kill the amendment. Granting 
     Social Security special constitutional status is not morally 
     or economically justified, would greatly weaken the 
     amendment, and ironically would add new burdens to the Social 
     Security System in the long run.
       The purpose of a balanced budget constitutional amendment 
     is to compel Congress and the President to balance the 
     federal budget. That means holding overall government 
     expenditures at or below total government revenues. It does 
     not mean holding some spending to no more than some 
     revenues--with exemptions for national defense or the highway 
     trust fund or medicaid or Social Security or any other 
     program that might have a legitimate national purpose or 
     powerful constituency.
       Carving out Social Security benefits and taxes from the 
     budget calculations would leave an especially large hole 
     because Social Security benefits are the federal government's 
     largest expenditure and second largest tax. Social Security 
     benefits already exceed total national defense spending, 
     formerly the largest expenditure category, and are growing 
     much more rapidly; by the end of the decade federal payments 
     of Social Security benefits will be about 60 percent greater 
     than what the nation spends on national defense. On the tax 
     side, the Social Security payroll tax is exceeded in size 
     only by the individual income tax. Millions of individuals 
     owe more in Social Security taxes than they do in income 
     taxes. The employer share of the Social Security tax is, by 
     itself, a bigger revenue source than the corporate income 
     tax. A balanced budget amendment that leaves out Social 
     Security would be seriously incomplete on both the 
     expenditure and tax sides.
       A Social Security exclusion would jeopardize passage of a 
     balanced budget amendment in two ways. First, the exclusion 
     would complicate the task of balancing the (redefined) budget 
     in the near term. The Social Security trust fund is running a 
     surplus for the time being. If Social Security were 
     artificially removed from budget calculations, the deficit 
     would suddenly appear bigger and reducing it to zero over the 
     next several years would require extra large spending cuts or 
     tax increases. That would make a balanced budget amendment 
     appear more painful, which could scare away some potential 
     supporters. Second, the version of the amendment with the 
     exclusion gives political cover to opponents of a balanced 
     budget amendment. Because a balanced budget amendment has 
     strong public support, resisting it openly is politically 
     risky. By putting forward the flawed version, which has no 
     chance of passing Congress, opponents can to claim to voters 
     that they back a balanced budget amendment even as they fight 
     versions that would be more acceptable and effective. That is 
     known as having your cake and eating it too.
       In addition, as Senator Dole and others have cautioned, a 
     Social Security exemption would create a giant loophole in 
     the amendment. The contents of Social Security are defined by 
     statute and can be modified by statute. If Social Security 
     were excluded from the amendment while other spending were 
     not, Congress could shield other programs from tough budget 
     choices by passing statutes to shift them into Social 
     Security. Under the pressure of dodging a constitutional 
     amendment, some of the government programs that might be 
     reclassified as part of Social Security are unemployment 
     compensation, worker retraining, and spending on the earned 
     income tax credit. And because Congress is inventive, this is 
     just for starters.
       At present, the Social Security trust fund is running a 
     surplus. That would allow many other programs to be shifted 
     into Social Security without busting its trust fund in the 
     short run. When the baby boom generation starts retiring, 
     however, Social Security will experience unsustainably large 
     deficits under present benefit formulas. That looming crisis 
     has nothing to do with a balanced budget amendment. It will 
     be caused by the expanding number of retirees and other 
     taxpayers. If the Social Security System has become a 
     repository for myriad government programs when the 
     demographic crunch arrives, the squeeze on the core program, 
     benefits for the elderly, will come sooner and be harsher 
     because of the extraneous spending that has become embedded 
     in the Social Security System and is also making demands on 
     its revenues.
       Social Security projections under current budget formulas 
     point to an enormously adverse impact on the availability of 
     saving for private sector uses. Federal ``entitlements'', of 
     which Social Security is the largest, already preempt much 
     private saving, and, if nothing is done, entitlement spending 
     will before very long consume all private saving. The core 
     economic objective of a balanced budget amendment is to 
     prevent federal budget developments from commandeering 
     private saving. The Social Security System is projected to go 
     into deficit early in the next century and thereafter fall 
     deeper and deeper into debt, becoming the biggest federal 
     government consumer of private saving. It makes no sense to 
     enact a balanced budget amendment but allow Social Security 
     to escape balanced budget discipline. To protect private 
     saving from the inroads of federal deficits, a balanced 
     budget amendment must apply to all government programs, 
     including Social Security and other ``entitlements''.
       A balanced budget amendment would force hard choices to be 
     made regarding federal spending programs. Some defenders of a 
     special exemption for Social Security assert that Social 
     Security deserves privileged treatment. Although Social 
     Security is politically popular (which in itself affords much 
     protection), it is not clear on economic or moral grounds why 
     Social Security should receive higher priority than other 
     federal spending. For instance, is paying Social Security 
     benefits a more noble or urgent federal government function 
     than providing for the national defense, enforcing federal 
     laws, or undertaking basic scientific research?
       Treating Social Security benefits and taxes differently 
     from all other government outflows and inflows would have 
     some economic justification if Social Security were analogous 
     to private saving, but it is not. Unlike private saving, 
     Social Security payments are not voluntary choices reflecting 
     individuals' preferences. As with other taxes, people can 
     face fines and prison if they refuse to pay Social Security 
     taxes.
       With private saving, the funds are invested productively 
     and the eventual payouts to savers come from the returns on 
     those investments. Whereas many advocates of the Social 
     Security program describe it as an efficient government-run 
     saving program, it is, in reality, the largest Ponzi scheme 
     in the history of the world. Social Security payroll taxes go 
     to the U.S. Treasury, and the Treasury, after issuing IOUs to 
     the Social Security trust fund, uses the taxes to help pay 
     the government's current bills. That is not real saving. It 
     is akin to a person earning income, writing himself a bunch 
     of IOUs, putting those IOUs in a piggy bank, and then 
     spending all the money. No matter how full of IOUs the piggy 
     bank becomes, it will not hold even a dime of saving. In 
     other words, the government no more directs Social Security 
     revenues into productive investments than it does other tax 
     revenues.
       If a balanced budget amendment to the constitution is to be 
     meaningful in subjecting federal budget policy to financial 
     discipline, it must apply to all federal spending and 
     revenues. It should not exempt the largest spending item and 
     the second largest tax. The national issues the amendment 
     addresses are too important to fall victim to a parliamentary 
     ploy.
                                              Michael S. Schuyler,
     Senior Economist.
                                                                    ____

                                      Congressional Leaders United


                                        for a Balanced Budget,

                                                 January 24, 1995.

 Fact Sheet--How the Balanced Budget Amendment Protects Social Security


The BBA would put an end to the rapid growth in interest payments that 
             threaten to crowd out Social Security spending

       Interest payments on the federal debt have nearly 
     quadrupled since 1980. Net interest payments in 1993 were 
     $200 billion and are expected to exceed $300 billion annually 
     by the 
     [[Page S3350]] end of the decade. Until we balance the 
     budget, spiralling interest payments will continue to crowd 
     out other spending, including Social Security.


    balancing the budget would avert the threat of runaway inflation

       No industrialized nation has reached the level of debt we 
     will face next century without monetizing the debt by 
     printing more dollars. Monetizing the debt would lead to 
     explosive inflation. Huge debt burdens contributed to ruinous 
     inflation in Germany in the 1920's and several Third World 
     nations in the 1980's. Runaway inflation would have a 
     particularly severe impact on senior citizens living on a 
     fixed income. It would not do any good to get a $1,000 
     retirement check if bread costs $100 a loaf.


the bba would force congress to deal with deficits in time to prevent a 
    budget crisis forcing draconian cuts each year just to ``muddle 
                               through''

       The General Accounting Office has warned that if the amount 
     of deficit reduction required just to limit the deficit to 
     three percent of GDP would increase exponentially by the year 
     2005. By the year 2020, Congress would be required to enact a 
     half a trillion dollars of additional deficit reduction each 
     year just to retrain the deficit to three percent of GDP. No 
     program--including Social Security--would be able to escape 
     deep spending cuts under this scenario.


  balancing the budget would promote the economic growth necessary to 
                sustain the social security trust funds

       GAO, CBO and most economists warn that continued growth in 
     deficit spending would
      result in lower productivity and deteriorating living 
     standards. As real wages for taxpaying workers decline, 
     there will be increasing resistance to the taxes necessary 
     to meet the growing commitments of the Social Security 
     program. GAO found that balancing the budget by the year 
     2001 would lead to the higher productivity and growth in 
     real wages that would be necessary to support our 
     commitments to the growing elderly population.


 the amendment would help ensure that Congress takes action before the 
       Social Security trust funds begin running yearly deficits

       Although the Social Security trust funds currently run a 
     surplus, within a generation, they will face cash shortfalls. 
     A balanced budget amendment would provide Congress and the 
     President with the necessary incentive to take corrective 
     action to deal with this threat and provide for the long-term 
     solvency of the trust funds.


the amendment preserves statutory provisions protecting Social Security
       The current statutory protections for Social Security would 
     not be eliminated by the BBA. For example, under current law, 
     any legislation that would change the actuarial balance of 
     the social security trust funds are subject to a point of 
     order which requires a 3/5 vote to waive in the Senate. Under 
     the 1985 Gramm-Rudman-Hollings Act and the 1990 Budget 
     Enforcement Act, Social Security was completely protected 
     from all sequesters. Social Security is not subject to the 
     spending caps in the 1990 budget agreement. Given political 
     realities, Congress would be likely set budget priorities in 
     such a way that protections for Social Security are 
     maintained or even enhanced.


Exempting Social Security would open up a loophole in the BBA and tempt 
Congress to defund the trust funds, threatening retirement benefits and 
                       the trust fund surplusses

       Exempting the Social Security trust funds from the 
     amendment would create a perverse incentive for Congress to 
     use them as a source to fund new or totally unrelated 
     programs, threatening the ability of the trust funds to 
     fulfill their current obligations to retirees. For example, 
     Congress could pay for current and new non-Social Security 
     spending by simply depositing FICA taxes into general 
     Treasury revenues, instead of into the trust funds. Congress 
     also could pass legislation to shift spending for Medicare, 
     other retirement programs, or any number of programs to the 
     Social Security trust funds to avoid a 3/5 vote to unbalance 
     the budget. Thus, non-Social Security outlays and receipts 
     could be ``balanced'' simply changing program definitions and 
     draining the Social Security trust funds.


       The Constitution is not the place to set budget priorities

       A constitutional amendment should be timeless and reflect a 
     broad consensus, not make narrow policy decisions. As noted 
     above, the financial status of Social Security will change 
     drastically, and perhaps quite unpredictably, in the next 
     century. We should not place technical language or overly 
     complicated mechanisms in the Constitution and undercut the 
     simplicity and universality of the amendment.
                                                                    ____

                                      Congressional Leaders United


                                        for a Balanced Budget,

                                                 January 18, 1995.

Fact Sheet--A Balanced Budget Amendment Exemption Would Imperil Social 
                                Security


 A BBA exemption would threaten the reve- nues for the Social Security 
                               Trust Fund

       Placing the OASDI/Social Security trust funds outside the 
     Amendment's deficit restrictions would provide a perverse 
     incentive for a future Congress to shift FICA (and related 
     income) taxes out of the trust funds. Portions of those taxes 
     could be transferred to general Treasury accounts to balance 
     the ``operating'' budget covered by the BBA, but at the cost 
     of gutting the OASDI trust funds. The current stable revenue 
     stream for Social Security could be critically diverted in 
     small steps which would add up to disaster for the system. A 
     precedent for this already exists: The income taxes on Social 
     Security benefits in the 1983 ``bailout'' go directly into 
     the trust funds, but higher income taxes imposed on Social 
     Security retirees in 1993 are diverted to general Treasury 
     revenues.


  social security could easily be overwhelmed by non-social security 
 programs moved to social security's ledger in an attempt to hide them 
                 behind the cloak of its exempt status

       It's easy to predict well-meaning efforts to protect a 
     whole range of social programs by arguing they fall under the 
     general intent of Social Security to provide a safety net. 
     Contrary to the claims of those who want an exemption, 
     funding for current Social Security would not be set aside 
     for protection, but would be pilfered by reclassifying more 
     and more programs as Social Security. This is an even greater 
     threat than simply providing a loophole for deficit spending. 
     As other programs intrude on Social Security, its stability 
     will steadily erode.


a social security exemption defeats the intent of the BBA by providing 
                the greatest deficit loophole in history

       As if the direct threat to Social Security isn't enough, 
     exempting it would create an enclave for additional federal 
     debt while at the same time, government could proudly 
     proclaim a ``balanced budget.'' Projects which risk being 
     assigned a low priority under the BBA could avoid facing 
     scrutiny and be paid for by draining the Trust Funds. The 
     Social Security deficit tomorrow could be bigger than the 
     total deficit today.


                         the debt is the threat

       The greatest threat to Social Security is the federal debt 
     itself. Gross interest payments on the debt already are 
     nipping at the heels of Social Security as the second largest 
     single item in the federal budget. Social Security is in no 
     way immune to the increasing pressure interest payments place 
     on every single federal spending item as the growing debt 
     forces ever larger debt service costs.


  every current statutory protection for social security can continue 
                               under bba

       Social Security is the best statutorily protected program 
     in the federal budget. Those laws are perfectly compatible 
     with a BBA and can remain in force, continuing to protect the 
     system. The BBA takes away the major threats to Social 
     Security so existing statutes can do their jobs. But if the 
     federal budget does not have the spending restraint imposed 
     on it by a Constitutional Amendment, we cannot guarantee that 
     the statutes which protect Social Security now can be 
     maintained.
                                                                    ____

                                      Congressional Leaders United


                                        for a Balanced Budget,

                                                 January 30, 1995.

The Balanced Budget Amendment--A Necessary and Appropriate Addition to 
                            the Constitution


  the amendment corrects an institutional bias toward deficit spending

       Representatives may know that chronic deficits threaten the 
     nation's long-term prosperity, but they also know that their 
     short-term interest lies in spending more on the demands of 
     various special interests. When faced from all sides with 
     demands for more spending and less taxes, Congresses and 
     Presidents have taken the easy way out by borrowing more 
     money. A Balanced Budget Amendment corrects this bias by 
     creating immediate political and economic consequences for 
     running a deficit.


   the amendment protects rights deserving constitutional protection

       The ability to borrow money from future generations is a 
     power of such magnitude that should not be left to the 
     judgments transient majorities. Thomas Jefferson favored a 
     Constitutional prohibition of federal indebtedness, fearing 
     that taxes on farmers, laborers, merchants and their families 
     would escalate forever to pay the interest on a growing debt. 
     The threat of economic and political harm from deficit 
     spending is the type of governmental abuse appropriately 
     proscribed by the Constitution.
       Even Professor Laurence Tribe of Harvard, a leading 
     opponent of the amendment, told the Senate Budget Committee 
     in 1992 that ``The Jeffersonian notion that today's populace 
     should not be able to burden future generations with 
     excessive debt, does seem to be the kind of fundamental value 
     that is worthy of enshrinement in the Constitution. In a 
     sense, it represents a structure protection for the rights of 
     our children and grandchildren.''


 the amendment is consistent with the American principle of protecting 
  the interests of politically under-represented groups from majority 
                                 abuse

       The Constitution has always served to protect unrepresented 
     minorities from the abuses of government. The framers of the 
     Constitution were extremely concerned that the rights of the 
     public would be trampled by the tyranny of the majority and 
     crafted a Constitution that balanced the protection of 
     minority rights against the principal of majority rule. 
     Senator Byrd made an eloquent 
     [[Page S3351]] statement on behalf of this principal during a 
     debate regarding the Senate filibuster, stating that ``There 
     have come times when the protection of minority is highly 
     beneficial to a nation. Many of the great causes in the 
     history of the world were at first only supported by a 
     minority. and it has been shown time and time again that the 
     minority can be right. So this is one of the things that's so 
     important to the liberties of the people.''
       Living off a giant credit card and sending the bill to the 
     next generation is a form of taxation without representation 
     in a very real sense. Requiring a higher threshold of support 
     for deficit spending will protect the rights of future 
     generations who are not represented in our political system 
     but will bear the burden of our decisions today.
       Requiring a higher threshold of support for deficit 
     spending will protect the rights of future generations who 
     are not represented in our political system but will bear the 
     burden of our decisions today. The ability to borrow money 
     from future generations is a power of such magnitude that it 
     should not be left to the judgments of transient majorities.
       Thomas Jefferson agreed with BBA proponents 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.'' With what does a constitution deal, if not with 
     ``the fundamental principles of government?''
       The BBA is based on exactly the same principles as the rest 
     of the constitution.--It would protect the fundamental rights 
     of the people by restraining the federal government from 
     abusing its powers. Morally dubious things should be 
     difficult to do. That's the underlying principle for 
     requiring 3/5 votes in both Houses to approve deficit 
     spending.
       Conclusion.--Thousands of pages and hundreds of hours of 
     committee testimony, floor debate, and committee reports have 
     answered every question and concern about the BBA. The only 
     reason left for voting against the BBA is if you believe that 
     it's all right to leave our children a legacy of excessive--
     and growing--debt. The determination of BBA opponents shows 
     that they fear what BBA supporters have promised all along: 
     the amendment will work.
                                                                    ____

                                      Congressional Leaders United


                                        for a Balanced Budget,

                                                 January 30, 1995.

 Would the BBA ``End Majority Rule?'' No. It Would Protect Fundamental 
                                Rights.

       A common criticism of the balanced budget amendment is that 
     it would ``end majority rule.'' Those who focus on the 
     difficulty of achieving a 3/5 majority to approve deficit 
     spending are missing the point about this amendment. They are 
     stuck in the status quo, revealing their reverence to an 
     outdated pattern of thought; that deficits are the norm. Or, 
     alternately they betray preferences FOR deficit spending. The 
     mind-set exposed is, what would we need to do under the BBA 
     to continue deficit spending?
       Opponents of requiring super majorities to approve deficit 
     spending ignore one point, intentionally or otherwise: Under 
     a balanced budget amendment simple majorities will continue 
     to rule. The amendment does not affect the ability of a 
     majority to spend on programs it deems important and to set 
     budget priorities as it sees fit. Super majorities would come 
     into play only when deficit spending looms because the 
     majority abdicates its responsibility to produce a balanced 
     budget. They would serve as a deterrent to irresponsible 
     fiscal policy, while allowing necessary flexibility when a 
     consensus emerges to deal with a national emergency.
       Some opponents of the amendment write as though super 
     majorities were a foreign concept to the framers of the 
     constitution. One of their explicit purposes outlined in the 
     Federalist Papers, was to put certain rights and powers 
     beyond the reach of the ``tyranny of the majority,'' and 
     protect current minorities and future majorities from abuse 
     by transient, coalescing ``factions.'' The BBA is very much 
     within that spirit.
       Every right protected in the constitution is protected with 
     super majority requirements. That's what is necessary to 
     amend the explicit rights stated in the document.
       Senator Byrd of West Virginia, a leading opponent of this 
     measure, might himself have made our point best when he said, 
     ``There have come times when the protection of a minority is 
     highly beneficial to a nation. Many of the great causes in 
     the history of the world were at first only supported by a 
     minority. And it has been shown time and time again that the 
     minority can be right. So this is one of the things that's so 
     important to the liberties of the people.''
       The unfettered power to deficit spend carries with it the 
     temptation to exercise that power to the point of abuse. 
     Incurring huge debts on behalf of our children really is a 
     form of taxation without representation. Our children are a 
     minority whose economic interests demand to be represented 
     through the super majorities provided for in the balanced 
     budget amendment.
                                                                    ____

               [U.S. Chamber of Commerce, Washington, DC]

            Balanced Budget Amendment: Constitutional Issues

       The U.S. Chamber of Commerce, the nation's largest business 
     federation, has endorsed S.J. Res. 1, the Balanced Budget 
     Amendment to the U.S. Constitution. The Chamber believes that 
     this measure will help move the federal government toward 
     fiscal responsibility. This paper discusses the most 
     significant constitutional and legal questions raised by this 
     landmark legislation, along with some of the conclusions 
     reached by the U.S. Chamber.


  Is a Balanced Budget requirement appropriate subject matter for the 
                             Constitution?

       Some commentators have argued that a balanced budget 
     requirement is a mere rule of accounting, incompatible with 
     the broad principles embodied in the Constitution. It is 
     worth noting that the Constitution already contains several 
     narrowly-focused economic and fiscal provisions, including 
     the requirement of ``a regular statement and account of the 
     receipts and expenditures of all public money'' (Article I. 
     Section 9) and the requirement that ``duties, imposts and 
     excises . . . [be] uniform throughout the United States'' 
     (Article I, Section 8).
       Moreover, the Balanced Budget Amendment embodies two 
     principle themes of the Constitution: limitation on federal 
     power, and protection of politically under-represented groups 
     against majoritarian abuse. Thomas Jefferson, who perceived 
     the inherent tendency of central government to expand, 
     supported a constitutional prohibition of federal borrowing 
     as a means of protecting individual liberty. For most of the 
     nation's history the growth of the federal government was 
     held in check by an implicit policy against deficits, except 
     during war or recession. In recent times, the erosion of this 
     principle has created persistent structural deficits, removed 
     the need to limit and prioritize programs, and led to an 
     excessively large federal sector. The BBA requirement that 
     federal operations be funded from current revenues restores 
     an important principle of fiscal responsibility and limited 
     government.
       Likewise, the protection of groups with limited access to 
     the political process has emerged as a major theme of 
     Constitutional law.\1\ Limitations have been placed on 
     governmental actions which unfairly impact racial minorities, 
     aliens and other ``discreet and insular'' groups.\2\ Because 
     future generations who will bear much of the burden of 
     current policy lack input in to the electoral process, it may 
     be that their interests are undervalued in federal budget 
     decisions. The Balanced Budget Amendment seeks to ensure that 
     the vital interest of young and future Americans are 
     reflected in the decisions of Congress, embodying a principle 
     of fairness and political inclusion consistent with the best 
     provisions of the Constitution.
 can the deficit problem be solved short of amending the constitution?

       Statutory attempts to impose fiscal discipline upon the 
     federal government have failed, largely because Congress was 
     able to change the rules in mid-game. The ambitious deficit 
     reduction targets of the 1985 Gramm-Rudman-Hollings law were 
     repeatedly modified when they conflicted with Congress' 
     spending ambitious. Likewise, big-ticket items such as 
     unemployment compensation payments and disaster relief are 
     customarily designated as ``emergency'' spending, which 
     exempts them from spending caps. Between 1980 and 1990, each 
     year's actual spending exceeded the targets of that year's 
     budget resolution by an average of $30 billion (the excess 
     was $85 billion in 1990).\3\
       Each statutory response to the deficit has shown the same 
     vulnerability: hard-won budget rules can be waived or 
     modified by a simple majority vote. Not surprisingly, a 
     majority can usually be assembled to support more spending. 
     The key advantage of a Constitutional amendment is that tough 
     budgetary rules can be placed beyond the reach of simple 
     Congressional majorities S.J. Res. 1 requires yearly 
     enactment of a balanced budget, unless Congress approves a 
     specific deficit for that fiscal year by a three-fifths vote 
     of each house. (A simple majority of each house can waive the 
     balanced budget requirement during a time of war.) The 
     supermajority requirement reflects the view that incurring a 
     deficit should be an exceptional event that requires clear 
     consensus. This legislation commits future Congresses to 
     avoid structural deficits, while providing them the 
     flexibility to respond to true emergencies.


              is there any place for statutory solutions?

       While the Balanced Budget Amendment mandates a zero deficit 
     by FY 2002 (or the second fiscal year after enactment), it 
     does not specify how to get there. The Chamber believes that 
     enactment of a BBA will force Congress to take a close look 
     at statutory mechanisms designed to reach that goal, and this 
     will probably begin well in advance of final ratification by 
     the states. In approving S.J. Res. 41, the Senate Judiciary 
     Committee contemplated enactment of ``legislation that will 
     better enable the Congress and the President to comply with 
     the language and intent of the amendment.''\4\ Additional 
     budget process reforms may include tax and spending 
     limitations, line-item veto authority, and the creation of an 
     independent commission to recommend spending cuts. The BBA 
     will thus lay the groundwork for further budget process 
     reforms at the statutory level.
     Footnote at end of article.
     [[Page S3352]] will congress and the president still have the 
            flexibility to respond to national emergencies?

       S.J. Res. 1 does not prohibit Congress from running a 
     deficit in a given year; it merely requires that this 
     decision be approved by three fifths of each house. This 
     degree or consensus is required for many important decisions, 
     including the approval of a treaty, and override of a 
     Presidential veto. In the BBA, the three-fifths requirement 
     reflects the view that incurring a deficit should be an 
     exceptional event that is carefully scrutinized. At the same 
     time, this provision allows Congress and the President the 
     flexibility to respond to genuine emergencies. Should large-
     scale domestic problems such as recessions or natural 
     disasters alter budget needs, it will be possible to assemble 
     a three-fifths consensus that recognizes this. In the case of 
     foreign
      aggression, the balanced budget requirement can be suspended 
     by a simple majority vote of each house.


  Will the amendment thrust the courts into an inappropriate role of 
                  cutting programs and raising taxes?

       Some commentators have raised questions about the 
     enforcement of a Balanced Budget Amendment. A primary concern 
     is that Congressional efforts to meet the balanced budget 
     requirement would be challenged in the courts, and the 
     judiciary would be thrust into the role of weighing policy 
     demands, slashing programs and increasing taxes. On the other 
     hand, there is a legitimate and necessary role for the courts 
     in ensuring technical compliance with the amendment. The 
     Chamber believes that these concerns can be reconciled in 
     implementing legislation, which draws upon existing legal 
     principles.
       In general, the courts have shown an unwillingness to 
     interject themselves into the fray of budgetary politics. The 
     New Jersey Supreme Court observed that ``it is a rare case . 
     . . in which the judiciary has any proper constitutional role 
     in making budget allocation decisions.''\5\ The judiciary has 
     remained clear of most budget controversies through doctrines 
     of ``nonjudiciability,'' including ``mootness,'' 
     ``standing,'' and the ``political question'' doctrine.
       A case is considered moot and can be rejected by the court, 
     if the matter in controversy is no longer current (this will 
     be a factor in many budgetary controversies, such as those 
     based on unplanned expenditures or flawed revenue estimates 
     which become apparent near the end of the fiscal year). The 
     doctrine of standing limits judicial access to parties who 
     can show a direct injury over and above that incurred by the 
     general public. The logic is that the grievances of the 
     public (or substantial segments thereof) are the proper 
     domain of the legislature.\6\ The U.S. Supreme Court has held 
     that status as a taxpayer does not automatically confer 
     standing to challenge federal actions,\7\ and has barred 
     taxpayer challenges of budget and revenue policies in the 
     absence of special injuries to the plaintiffs.\8\ The 
     political question doctrine is a elated principle that the 
     courts should remain out of matters which the Constitution 
     has committed to another branch of government. The Supreme 
     Court has held that a ``political question'' exists when a 
     case would require ``nonjudicial discretion.''\9\ This would 
     be the case with many budgetary controversies, such as the 
     choice to cut particular programs, which by their nature 
     require ideological choices and the balancing of competing 
     needs.
       In contrast, courts have asserted jurisdiction over 
     politically tinged controversies where they find 
     ``discoverable and manageable standards'' for resolving them. 
     In Baker v. Carr,\10\ the U.S. Supreme Court reasoned that 
     objective criteria guide judicial decisionmaking and limit 
     the opportunity for overreaching. In the balanced budget 
     context, the ``discoverable and manageable standards'' 
     principle can help demarcate lines between impermissible 
     judicial policymaking, and the needed enforcement of 
     accounting rules and budget procedures.
       In all likelihood, a strong framework of accounting 
     guidelines will emerge from implementing legislation. The 
     Senate Judiciary Committee has interpreted Section 6 of the 
     bill to impose ``a positive obligation on the part of 
     Congress to enact appropriate legislation''
      regarding this complex issue.\11\ Judiciary Committee staff 
     on both the House and Senate side have indicated their 
     intention that implementing legislation embrace stringent 
     accounting standards that will minimize the potential for 
     litigation. Should legitimate questions arise concerning 
     the methods by which Congress balances the budget, these 
     standards will also provide objective criteria which meet 
     constitutional standards for judicial intervention.
       The implementing package is also likely to establish 
     guidelines for judicial involvement, defining what issues are 
     judiciable and which parties have standing to challenge 
     Congressional decisions. State budget officers, for example, 
     could be given standing to contest unfunded federal mandates. 
     The enforcement procedures, coupled with budget process and 
     accounting guidelines, will operate against a backdrop of 
     traditional legal principles to rationally limit judicial 
     action. The effect should be to prevent judicial overreaching 
     into legislative functions, while providing a check on 
     Congressional attempts to evade the requirements of the BBA 
     through procedural and numerical gimmickry.


                               footnotes

     \1\See John Hart Ely, ``Toward A Representation-Reinforcing 
     Mode of Judicial Review,'' 37 Md. Law Review 451 (1978).
     \2\United States v. Carolene Products Co., 304 U.S. 144 
     (1938), footnote 4.
     \3\Source: ``The Economic and Budget Outlook,'' Congressional 
     Budget Office (January 1993), p. 108.
     \4\S. Rpt. 103-163, 103rd Congress, 1st Session (1993), p. 6.
     \5\Board of Education v. Kean, 457 A.2d 59 (1982).
     \6\Flast v. Cohen, 392 U.S. 83 (1968) (Harlan, J., 
     dissenting).
     \7\Massachusetts v. Mellon, 262 U.S. 447 (1923).
     \8\United States v. Richardson, 418 U.S. (1974) (plaintiffs 
     challenged a statute allowing the CIA to avoid public 
     reporting of its budget); Simon v. Eastern Kentucky Welfare 
     Rights Organization, 426 U.S. 26 (1976) (plaintiffs 
     challenged a Revenue Ruling granting favorable tax treatment 
     to certain hospitals as inconsistent with the Internal 
     Revenue Code).
     \9\Id.
     \10\Baker v. Carr, 369 U.S. 186 (1962).
     \11\S. Rpt. 103-163, 103rd Congress, 1st Session (1993).
                                     U.S. Chamber of Commerce,

                                       Washington, DC, 20062-2000.

         The Economic Effects of the Balanced Budget Amendment

       The U.S. Chamber of Commerce, the nation's largest business 
     federation, endorses S.J. Res. 1, the Balanced Budget 
     Amendment of the U.S. Constitution. The Chamber believes that 
     this measure will help move the federal government toward 
     fiscal responsibility. This paper discusses the most 
     significant economic questions raised by this landmark 
     legislation along with some of the conclusions reached by the 
     U.S. Chamber.
       Q. Why should we balance the federal budget?
       A. There are several reasons why the federal budget should 
     be balanced. Most fundamentally, the Balanced Budget 
     Amendment would improve accountability in federal spending 
     decisions. Government officials are generally inclined to 
     increase government spending to improve services to their 
     constituents. This, of course, is countered by their 
     reluctance to raise taxes. But since borrowing can substitute 
     for raising taxes, legislators find they can offer high level 
     of services without the pain of raising the current level of 
     taxes. Consequently, when it's time to make tough spending 
     decisions, Congress finds it can dodge the question by just 
     borrowing the difference. The proper counterweight to higher 
     government spending--raising taxes--is circumvented by the 
     seemingly painless act of federal borrowing. This leaves us 
     with more government than taxpayers are willing to pay for. 
     Over time, such borrowing leaves us with a bloated government 
     sector and the problem of paying off the debt.
       The Balanced Budget Amendment restores the proper balance 
     between spending and taxes, and forces government officials 
     to prioritize difficult spending choices. It improves the 
     process whereby such decisions are made, forcing Congress to 
     use much greater discipline.
       Also, no matter whether the government finances its 
     spending through taxes or borrowing, its still spending and 
     therefore commanding economic resources. To those who believe 
     in limited government and market systems, the level of 
     federal spending is as much of a concern as how the amount is 
     financed. Limiting government borrowing blocks the path of 
     least resistance to government expansion, and so we expect 
     that a Balanced Budget Amendment would act to limit the reach 
     of government into the economy.
       Q. Wouldn't Congress just raise taxes to close the deficit?
       A. In a way. Congress already has. After all, the 
     difference between Government borrowing and raising taxes is 
     just a question of taxes today or taxes tomorrow. The 
     important point is that, no matter how it's financed, the 
     government is spending economic resources, and the amount of 
     spending will surely be greater when government is allowed to 
     use deficit spending.
       And tax increases to close the deficit gap are being used 
     now anyway--witness the tax increases in 1982, 1983, 1984, 
     1985, 1988, 1989, 1990 and 1993. In other words, we're 
     already getting the tax increases. By requiring a balanced 
     budget, we expect to place additional pressure on Congress to 
     tackle the spending cuts that should be made.
       To answer the question more directly. Congress can't just 
     raise taxes, leave spending intact, and walk away--if it 
     could, it would have done so a decade ago and spared us this 
     long debate on deficit spending. So while it may raise some 
     taxes to close the deficit, Congress will have to confront 
     its voracious spending habit. The end result will be a lower 
     level of government spending, and less government involvement 
     in the economy.
       In addition, a couple of provisions in the BBA make it more 
     difficult to raise taxes. Under the amendment, tax increases 
     require both a roll call vote (instead of anonymous voice 
     votes) and a constitutional majority (which means 51 votes 
     would be required in the Senate and 218 votes in the House to 
     raise taxes, instead of a majority of those voting). This may 
     not sound like much of a hurdle, but note that President 
     Clinton's 1993 tax increase would have needed an additional 
     two Senate votes under such a requirement. Instead, it passed 
     after Vice President Gore's vote broke a 49-49 deadlock.
       Finally, of course, congressmen and women would have to 
     face the political consequences of raising taxes at the 
     voting booth. Because a roll call vote would identify those 
     who voted to raise taxes, legislators would be held to a 
     higher level of accountability.
       Q. What is the primary economic impact of running 
     government deficits?
       A. The worst thing about government deficit spending is 
     that it distorts the economy's 
     [[Page S3353]] balance between saving and investment, 
     producing adverse long-term productivity growth. The funds 
     the government is borrowing have to come from somewhere, and 
     generally they come from private saving and private 
     investment. Throughout the 1980's and early 1990's, we've 
     seen the saving rate fall from about 8% to consistently below 
     4%--too low to fuel the kind of investment we need to keep up 
     our high productivity. Since long-term productivity growth is 
     the key to rising standards of living, it's dangerous to be 
     skimping on investment.
       Federal borrowing is not inherently wrong or bad for the 
     economy; it depends on how the funds are used. If the funds 
     were being used exclusively to create stronger schools, 
     better highways, safer bridges, and so forth, we would be 
     increasing the productive capacity of the economy. This
      means that we would be creating the means by which future 
     generations can create the wealth to pay back the borrowed 
     funds. But if we're using those funds to provide ourselves 
     with consumption-oriented short-term benefits that don't 
     improve our long-term productive capacity, then we're 
     raising our standard of living by lowering that of future 
     generations. To quote NationsBank economist Mickey Levy: 
     ``Deficits matter most because they distort the way 
     current national resources are allocated, generally 
     favoring current consumption at the expense of private 
     investment.''\1\
     \1\Footnotes at end of article.
---------------------------------------------------------------------------
       Q. Are there other effects of deficit spending that harm 
     the economy?
       A. In a complex, interlocking, international economy, you 
     can expect sustained deficit spending to cause other 
     distortions as well. First, chronic government borrowing 
     tends to put upward pressure on interest rates. Businesses 
     seeking to raise capital and households applying for 
     mortgages have to compete with the federal government in 
     securing loanable funds. This increase in demand pushes 
     interest rates up. Consequently, fewer loans are made to the 
     private sector, and those that are made carry a higher 
     interest rate. This is known as ``crowding out,'' since 
     government borrowing displaces some private borrowing.
       Second, because our economy is increasingly linked to the 
     global market, there are important international impacts 
     related to the budget deficit.\2\ Higher interest rates tend 
     to raise the foreign exchange value of the dollar, meaning 
     that our trading partners face price increases on the goods 
     and services they buy from the U.S. This lowers our exports, 
     pushing up our trade deficit. Many contend that one of the 
     major forces behind the huge trade deficits of the 1980s was 
     the federal budget deficit.
       Third, the amount we're paying to service our national debt 
     has grown almost fivefold since 1979--from $43 billion to 
     $203 billion in 1994. As a share of total government outlays, 
     interest payments on the debt have about doubled from 7.4% 
     during the 1970s to over 14% currently. That means that for 
     the same amount of revenue, there's less money for other 
     government programs, whether it's for national defense, our 
     court system, Head Start, or environmental clean-up. No 
     matter what the budget priorities are, fewer funds are 
     available.
       To sum up, there are serious economic side-effects of 
     deficit spending that Washington tends to ignore. In addition 
     to restoring discipline to the spending decisions of 
     Congress, the Balanced Budget Amendment seeks to remove the 
     economic distortion caused by chronic deficit spending.
       Q. Back to that notion of ``crowding out'' for a moment. If 
     increased government borrowing leads to higher interest 
     rates, as you claim, then why did interest rates fall during 
     the 1980s just as the budget deficit was expanding?
       A. The key to this apparent paradox is the behavior of 
     inflation during the 1980s. After starting out the decade in 
     the double-digits, the inflation rate fell sharply due to 
     tighter monetary policy and, in mid-decade, the collapse of 
     oil prices. Since expectations of future inflation are 
     embedded in
      market interest rates this decline in inflation pushed 
     interest rates down. This more than offset the impact of 
     increasing federal deficits which were working at the same 
     time to push interest rates up.
       So while it's true that market interest rates fell 
     significantly during the 1980's it's correct to say that they 
     would have fallen even further had the federal budget been 
     brought into balance. In fact later in this document we'll 
     present results from an econometric study that show 
     significally lower interest rates as a result of moving to a 
     balanced budget.
       Q. Doesn't government spending represent an investment in 
     the economy, with highway and transportation construction, 
     funds going to education, etc?
       A. Some government spending can be regarded as ``investment 
     spending,'' meaning that funds spend now will generate 
     stronger economic growth later. Spending on infrastrucutre--
     highways, bridges, dams, and mass transit, for example--and 
     other programs such as education are often thought of that 
     way, since they provide benefits over a long period of time. 
     But the bulk of government spending goes to projects and 
     programs that don't provide much of a return over time, but 
     instead represent ``current spending.'' Such programs include 
     Social Security, Medicare, federal retirement programs, 
     unemployment insurance, agricultural extension offices, and 
     so forth. While many of these programs are desirable, we need 
     to recognize that we're borrowing vast sums to pay for 
     benefits that are only short-lived. If this generation 
     believes that the current level of spending on entitlements 
     such as Social Security is appropriate, that's fine, but the 
     funding should therefore come from the current generation, 
     not the next.
       Because an extra dollar of private investment is generally 
     more efficient that an extra dollar of government investment, 
     our productive capacity generally grows less when funds are 
     diverted away from the private sector. This means that 
     productivity and wage growth will be held back, lowering our 
     standard of living.
       Q. Why a Balanced Budget Amendment now? After all, we've 
     gotten along without it for 200 years.
       A. Until about 1960 or so, running a balanced over time was 
     almost an unwritten Constitutional amendment. The U.S. 
     government ran deficits during the War of 1812, the severe 
     recession of 1837-43, the Civil War, and the Spanish American 
     War, to name a few episodes. But in other periods, the 
     federal government ran surpluses to reduce its outstanding 
     debt. On the whole, only emergencies justified running a 
     deficit.
       But since 1960, this informal rule apparently has gone by 
     the wayside. In the past 34 years, the U.S. has avoided a 
     deficit only once, when in 1969 there was a surplus of $3 
     billion. Given the chronic deficits we've come to expect, its 
     time to make explicit through a Constitutional amendment the 
     old implicit principle of government living within its means.
       Q. Will passing a Balanced Budget Amendment really add 
     discipline to the federal government?
       A. Lawmakers have tried statutory measure to rein in 
     government deficit spending, but they just haven't worked. 
     For example, in 1985 Congress passed the Gramm-Rudman-
     Hollings deficit reduction bill, which was supposed to reduce 
     the deficit to zero by fiscal year 1991 from the $293 billion 
     deficit projected at the time for fiscal year 1991.\3\ As it 
     turned out, even with passage of GRH, we ended up with a $196 
     billion deficit in 1991 and a $289 billion deficit in 1992. 
     That's because hard-won budget rules can be waived or 
     modified by a simple majority vote. The Balanced Budget 
     Amendment, on the other hand, requires a three-fifths vote of 
     each house to enact a budget with a deficit (in times of war, 
     only a simply majority is required).
       It's clear that these statutory measures haven't worked, 
     and so it's time to turn to the stronger medicine of a 
     balanced budget amendment.
       Q. Didn't we move to balancing the budget with the passage 
     in August 1993 of President Clinton's budget package, the 
     Omnibus Budget Reconciliation (OBRA)?
       A. Washington made some progress in trimming the deficit in 
     1993 when it passed OBRA. The nonpartisan Congressional 
     Budget Office estimated in September 1993 that OBRA will cut 
     $433 billion of debt over the next five years from the 
     projected baseline (i.e., pre-OBRA) level of debt.\4\ But not 
     only is the post-OBRA deficit still at $222 billion in FY 
     1998 (CBO January 1995 estimate), but it's also on the rise. 
     By 2005, according to CBO, the deficit is projected to hit 
     $421 billion. As a percentage of total output, that means the 
     deficit rises from 2.7% of GDP in FY 1998 to 3.6% in FY 
     2004.\5\
       Like the budget deals in the previous decade before it, 
     OBRA clearly does not solve the deficit problem. That's why 
     it's imperative to turn to a constitutional, rather than a 
     statutory, remedy for our chronic deficit problem.
       Q. What's the relationship between the federal deficit and 
     federal debt?
       A. The federal deficit is the difference between the 
     government's outlays and receipts in any one year, while 
     federal debt is the total amount of government debt 
     outstanding. The debt, in other words, is the total 
     accumulation of deficits over the years. In 1994, the federal 
     deficit was $203 billion, and the total federal debt by year-
     end was $4.64 trillion.\6\
       Q. A federal debt of $4.6 trillion sounds like a lot, but 
     is it historically high?
       A. In absolute terms, it's the highest it's ever been. But 
     because of inflation and the growth of our economy, it's best 
     to answer this question by measuring the federal debt 
     relative to the size of the economy; that is, to look at the 
     ratio of debt to GDP. Today, the total debt held by the 
     public is 52% of current GDP.\7\ While that's less than half 
     of 1946's 114% of GDP, we don't have as much to show for it. 
     The debt then paid for victory in World War II, while the 
     current debt is simply
      funding higher levels of consumption.
       Moreover, this ratio is currently moving in the wrong 
     direction. It's grown from below 30% during the 1970s to just 
     over 40% during the mid-1980s, and now to over 50%. In 
     contrast, the federal debt ratio in the postwar period was 
     pruned from 114% to 68% by 1951, and generally kept falling 
     until the early 1970s.
       Q. So the federal debt's higher, and it's been growing for 
     twenty years. But while some continue to feel economic 
     discomfort from structural changes unrelated to the higher 
     federal debt (such as the defense build-down and the 
     commercial real estate overhang), the U.S. seems to be doing 
     fine. What's the crisis?
       A. The growing federal debt is not a problem that can be 
     characterized as ``a wolf at the door,'' which requires 
     immediate attention. Instead, to use the analogy introduced 
     by President Carter's top economist, Charles 
     [[Page S3354]] Schultze, it's a ``colony of termites in the 
     wall.''\8\ In other words, it's a serious long-term problem 
     that can be ignored in the short-term. The damage--lower 
     investment, lower productivity, slower wage growth, etc.--may 
     be hard to perceive or even hidden by other economic forces, 
     but that doesn't mean it's not occurring. The termites are 
     still chomping away and must still be dealt with, because the 
     destruction can be massive.
       Q. Won't the Balanced Budget Amendment hamper government 
     activity in times of a national emergency, such as a war?
       A. The Amendment will not compromise America's ability to 
     respond to national emergencies. In general, the Amendment 
     can be suspended for a specific fiscal year whenever three-
     fifths of both Houses of Congress vote to do so. In wartime, 
     this requirement is lowered to a simple majority.
       Q. Won't balancing the budget cause a serious disruption of 
     economic growth?
       A. If the deficit were reduced all at once--from FY 1995's 
     projected $162 billion to zero next year, for example--there 
     indeed would be a severe disruption. Because the removal of 
     so much fiscal stimulus in one year is not advisable, the 
     Balanced Budget Amendment calls for the provision to become 
     law in FY 1999 or two years after the ratification by three-
     quarters of the states, whichever is later. The Amendment 
     does not provide a specific path for deficit reduction in the 
     meantime, but Congress would have five years to implement the 
     needed changes.
       While we should expect some disruption--balancing the 
     budget is not, in the short-term, an economic growth policy--
     we will see several long-term benefits after the budget is 
     balanced. And the short-term distress can be mitigated, 
     according to economic simulations performed in a 1992 study 
     conducted by Laurence H. Meyer & Associates, a nonpartisan 
     and highly regarded macroeconomic consulting firm based in 
     St. Louis, Missouri. If we had started in 1993 and balanced 
     the budget by 1998, using Federal Reserve policy to cushion 
     the economy, the LHM&A model shows that total output would be 
     between 1% to 1.6% higher in 2003.\9\ Even
      1% additional output means an economy that's $80 billion 
     larger (measured in today's dollars).
       Q. Does it make any difference whether Congress balances 
     the budget using tax increases or spending cuts?
       A. It makes a big difference. In the study cited above, 
     LHM&A found that the highest gains from deficit reduction 
     come from expenditure cuts. That is because increases in 
     taxes create disincentives for labor and investment, 
     mitigating some of the beneficial effects of deficit 
     reduction on interest rates.
       In the following table we report the results of two policy 
     simulations conducted by LHM&A in which the budget is 
     balanced, and compare it to the baseline case where policy is 
     left as is.
       The first column shows where the economy would be if no 
     action were taken.
       The second column shows where the economy would be if 
     expenditures were cut by the entire amount necessary to 
     balance the budget (``All Spending'').
       The final column shows the results of balancing the budget 
     by raising spending and cutting expenditures by exactly the 
     same amount (``Mix'').
       The two balanced budget scenarios assume that the Federal 
     Reserve eases monetary policy enough to maintain the 
     unemployment rate at the baseline level of 5.2%. The 
     following table compares how the economy would look with and 
     without deficit reduction by showing some of the results for 
     the first five years.

                                   THE ECONOMIC IMPACT OF BALANCING THE BUDGET                                  
                                    [The First 5 Years of Deficit Reduction]                                    
----------------------------------------------------------------------------------------------------------------
                                                                    No deficit      Deficit reduction scenarios 
                                                                     reduction   -------------------------------
                                                                 ----------------                               
                                                                     Baseline      All spending         Mix     
----------------------------------------------------------------------------------------------------------------
Levels in the fifth year:                                                                                       
    Federal deficit ($ bill)....................................      -251               0              -1      
    3-month T-bill rate (percent)...............................         5.5             4.7             4.6    
    30-year Government bond yield (percent).....................         6.9             5.7             5.8    
    AAA corporate bond yield (percent)..........................         7.1             5.8             5.9    
Average annual growth, first 5 years (percent):                                                                 
    Real GDP....................................................         2.6             2.8             2.7    
    Inflation...................................................         3.3             3.5             3.4    
    Real personal disposable income.............................         2.3             1.7             1.5    
----------------------------------------------------------------------------------------------------------------

       Notice how interest rates are significantly lower in the 
     scenarios where the deficit has been reduced. This is the 
     fuel for the higher level of business investment. In fact, 
     the inflation-adjusted value of the nation's plant and 
     equipment (what economists call the real capital stock) is 2% 
     higher after the first five years of deficit reduction, and 
     6% higher after ten years, when comparing the result of the 
     ``All Spending'' scenario to the baseline. While those 
     figures may sound small, they mean $120 billion worth of 
     additional computers and manufacturing plants within five 
     years, and $390 billion more in ten years. And it should be 
     noted that the capital stock is almost 2% higher when the 
     budget is balanced entirely through spending cuts rather than 
     an equal mix of spending cuts and tax increases.
       While inflation is a bit higher in the deficit-reduction 
     scenarios (due to the Federal Reserve's cushioning), growth 
     in real GDP (inflation-adjusted output) is stronger, on 
     average, in the five-year period, as the deficit is reduced. 
     Real personal disposable income grows at a slower rate (1.7% 
     and 1.5% versus 2.3%) in the cases where the deficit is 
     lowered. But note that it's stronger in the case where all of 
     the deficit reduction comes from reductions in government 
     spending. This shows that moving to a balanced budget will 
     inflict some economic pain. The short-term pain is 
     unavoidable, but it helps set the stage for stronger growth 
     in the years after the deficit has been balanced.
       Of course, the active participation of Federal Reserve is 
     an important component of LHM&A's simulations, and it comes 
     with the price tag of slightly higher inflation. But the 
     important point is that the model suggests a path that the 
     economy can follow to get to a balanced budget without severe 
     economic hardship.
       Another factor that would help the transition that's hard 
     to model is the boost to consumer and business confidence we 
     would expect to find once a credible balanced-budget plan 
     were enacted. Business investment should be higher, and the 
     return of resources from the public to the private sector as 
     government spending cuts are carried out should improve 
     overall productivity in the economy.
       Q. Most of the states have some sort of balanced budget 
     requirement. What has been their experience?
       A. According to the National Association of State Budget 
     Officers, the application of the state experience to the 
     Federal experience is not clear-cut. The state balanced 
     budget requirements are diverse and written so generally that 
     they're subject to varying interpretations. According to 
     their 1992 statement, the tradition of balanced budgets, 
     rather than the enforcement provisions or the threat of lower 
     bond ratings, plays the most important role in developing 
     balanced budgets.\10\
                               Footnotes

     \1\Mickey D. Levy, Deficitphobia: Right for the Wrong 
     Reasons, in ``Economic and Financial Perspectives,'' CRT 
     Government Securities Ltd., New York, December 1993, pg. 1.
     \2\Benjamin M. Friedman, U.S. Fiscal Policy in the 1980s: 
     Consequences of Large Budget Deficits at Full Employment, in 
     ``Debt and the Twin Deficits Debate,'' James M. Rock, ed. 
     Mayfield Publishing Company, 1991.
     \3\Laurence H. Meyer & Associates, Balancing the Budget by 
     1991: The Gramm-Rudman-Hollings Proposal, November 1985, pg. 
     5.
     \4\Congressional Budget Office, The Economic and Budget 
     Outlook: An Update, September 1993, pgs. 26-29.
     \5\Congressional Budget Office, The Economic and Budget 
     Outlook: FY 1996-2000, January 1995, pg. 58.
     \6\Ibid, pg. 51.
     \7\Congressional Budget Office, Federal Debt and Interest 
     Costs, May 1993, pg. 92.
     \8\Charles L. Schultze, Of Wolves, Termites and Pussycats, 
     ``The Brookings Review,'' Summer 1989, pgs. 26-33.
     \9\Laurence H. Meyer & Associates, Balancing the Budget: An 
     Analysis of the Economic Effects of Deficit Reduction, 
     prepared for the Chase Manhattan Bank, December 1992, pg. 1.
     \10\National Association of State Budget Officers, State 
     Balanced Budget Requirements: Provisions and Practices, June 
     1992, pg. 3.
                                                                    ____

                                     U.S. Chamber of Commerce,

                                                   Washington, DC.

           Balanced Budget Amendment: The Role of the Courts

       Some lawmakers and commentators have raised questions about 
     the enforcement of a Balanced Budget Amendment to the U.S. 
     Constitution. A primary concern is that Congressional efforts 
     to meet the balanced budget requirement would be challenged 
     in the courts, and the judiciary would be thrust into a non-
     judicial role of weighing policy demands, slashing programs 
     and increasing taxes.
       On the other hand, there is a legitimate and necessary role 
     for the courts in ensuring compliance with the amendment. 
     Congress could potentially circumvent balanced budget 
     requirements through unrealistic revenue estimates, emergency 
     designations, off-budget accounts, unfunded mandates, and 
     other gimmickry. Certainly, the track record of the 
     institution under the spending targets of Gramm-Rudman-
     Hollings and other statutory provisions is no cause for 
     optimism.
       It is our view that the need to proscribe judicial 
     policymaking can be reconciled with a 
     [[Page S3355]] constructive role for the courts in 
     maintaining the integrity of the balanced budget requirement. 
     Congress is expected to address technical issues such as 
     accounting standards, budget procedures and judicial 
     enforcement in followup implementing legislation. By drawing 
     on the existing legal principles of ``mootness,'' 
     ``standing'' and ``nonjudiciability,'' implementing 
     legislation can define an appropriate role for the courts in 
     making the amendment work. The net effect can be to prevent 
     judicial assumption of legislative functions such as 
     selecting program cuts, while allowing the courts to police a 
     framework of accounting standards and budget procedures.


              traditional limits on judicial intervention

       In general, the courts have shown an unwillingness to 
     interject themselves into the fray of budgetary politics. The 
     New Jersey Superior Court observed that ``it is a rare case * 
     * * in which the judiciary has any proper constitutional role 
     in making budget allocation decisions.''\1\ The judiciary has 
     remained clear of most budget controversies through the 
     principles of ``mootness'' and ``standing,'' as well as the 
     ``political question'' doctrine.
     Footnotes at end of article.
---------------------------------------------------------------------------
       A case is considered moot, and can be rejected by the 
     court, if the matter in controversy is no longer current. In 
     Bishop v. Governor, 281 Md. 521 (1977), taxpayers and 
     Maryland legislators claimed that the governor's proposed 
     budget violated the state's balanced budget law, because $95 
     million was contingent upon enactment of separate federal and 
     state legislation. The Maryland Court of Appeals dismissed 
     the case as moot because by that time the separate 
     legislation had been
      approved, and the relevant fiscal year had elapsed. Mootness 
     will be a factor in many potential challenges to 
     Congressional action under a federal Balanced Budget 
     Amendment, particularly those based on unplanned 
     expenditures or flawed revenue estimates which become 
     apparent near the end of the fiscal year.
       The doctrine of standing limits judicial access to parties 
     who can shoe a direct injury over and above that incurred by 
     the general public. The logic is that the grievances of the 
     public (or substantial segments thereof) are the proper 
     domain of the legislature.\2\ The U.S. Supreme Court has 
     generally held that status as a taxpayer does not confer 
     standing to a challenge federal actions\3\, and has barred 
     taxpayer challenges of budget and revenue policies in the 
     absence of special injuries to the plaintiffs.\4\ A state 
     cannot sue the federal government on behalf of its 
     citizens,\5\ and it is doubtful that Members of Congress have 
     standing to challenge federal actions in court.\6\
       The political question doctrine is a related principle that 
     the courts should remain out of such matters which the 
     Constitution has committed to another branch of government. 
     The U.S. Supreme Court has held that a ``political question'' 
     exists when a case would require ``nonjudicial 
     discretion.''\7\ This would be the case with many budgetary 
     controversies, such as the choice to cur particular programs, 
     which by their nature require ideological choices and the 
     balancing of competing needs. In theory, at least, Congress 
     brings to this task a ``full knowledge of political, social 
     and economic conditions. * * *,'' as well as the legitimacy 
     of elected representation.\8\ The New Jersey Supreme Court 
     recognized this in a case where local governments challenged 
     funding decisions made by the governor and legislature, 
     holding that the allocation of state funds among competing 
     constituent groups was a political question, to be decided by 
     the legislature and not the judiciary.\9\ The Michigan 
     Supreme Court has likewise held that program cutting 
     decisions are a non-judicial function.\10\


                         a role for the courts

       The courts have asserted jurisdiction over politically 
     tinged controversies where they find ``discoverable and 
     manageable standards'' for resolving them. In Baker v. Carr, 
     the U.S. Supreme Court reasoned that objective criteria guide 
     judicial decisionmaking and limit the opportunity for 
     overreaching. In the balanced budget context, the 
     ``discoverable and manageable standards'' principle can help 
     demarcate lines between impermissible judicial policymaking, 
     and the needed enforcement of accounting rules and budget 
     procedures.
       In all likelihood, a strong framework of accounting 
     guidelines will emerge from implementing legislation. The 
     Senate Judiciary Committee has interpreted Section 6 of the 
     bill to impose ``a positive obligation on the part of 
     Congress to enact appropriate legislation'' regarding this 
     complex issue.\11\ Judiciary Committee staff on both the 
     House and Senate side have indicated their intention that 
     implementing legislation embrace stringent accounting 
     standards that will minimize the potential for litigation. 
     Should legitimate questions arise concerning the methods by 
     which Congress ``balances'' the budget, these standards will 
     also provide objective criteria which meet constitutional 
     standards for judicial intervention.
       The implementing package is also likely to establish 
     guidelines for judicial involvement, defining what issues are 
     judiciable and which parties have standing to challenge 
     Congressional decisions. Where Congress has defined standing 
     within the relevant statute, the courts have generally 
     deferred to this request for judicial input, and entertained 
     suitable cases.\12\ This approach has the advantage of 
     defining appropriate controversies and plaintiffs more 
     precisely. In the Balanced Budget context, the right to raise 
     particular arguments could be delegated to specific public 
     officials. State budget officers, for example, could be given 
     standing to contest unfunded federal mandates.
       We are satisfied that such enforcement procedures, coupled 
     with budget process and accounting guidelines, will operate 
     against a backdrop of traditional legal principles to 
     rationally limit judicial action. The effect should be to 
     prevent overreaching into legislative functions, while 
     providing a check on Congressional attempts to evade the 
     requirements of the BBA through procedural and numerical 
     gimmickry.


                               footnotes

     \1\Board of Education f. Kean, 457 A.2d 59 (N.J. 1982).
     \2\Flast v. Cohen, 392 U.S. 83 (1968), (Harlan, J., 
     dissenting).
     \3\Massachusetts v. Mellon, 262 U.S. 447 (1923). The courts 
     have allowed taxpayer claims that public funds were used to 
     support an unconstitutional purpose. The two important 
     decisions in this area are both establishment of religion 
     cases. Flast v. Cohen, 392 U.S. 83 (1968); Valley Forge 
     Christian College v. Americans United for Separation of 
     Church and State, 454 U.S. 464 (1982).
     \4\United States v. Richardson, 418 U.S. 166 (1974) 
     (plaintiffs challenged a statute allowing the CIA to avoid 
     public reporting of its budget); Simon v. Eastern Kentucky 
     Welfare Rights Organization, 426 U.S. 26 (1976) (plaintiffs 
     challenged a Revenue Ruling granting favorable tax treatment 
     to certain hospitals as inconsistent with the Internal 
     Revenue Code).
     \5\South Carolina v. Katzenbach, 383 U.S. 301 (1966).
     \6\Goldwater v. Carter, 444 U.S. 996 (1979).
     \7\Baker v. Carr, 369 U.S. 186 (1962).
     \8\Id.
     \9\Camden v. Byrne, 82 N.J. 133 (1980).
     \10\Michigan Assn. of Countries v. Dept. of Management and 
     Budget, 418 Mich. 667 (1984).
     \11\S. Rpt. 103-163, 103rd Congress, 1st Session (1993).
     \12\Nowak, John E. et al. Constitutional Law, West Publishing 
     Co. (1983), p. 87. In Lujan v. Defenders of Wildlife, 112 
     Sup. Ct. 2130 (1992), the Court voided a citizen suit under 
     the Endangered Species Act, holding that Congress' power to 
     define standing by statute is limited by Article III of the 
     Constitution. The decision that citizen suit provisions must 
     be carefully articulated and supported by clear legislative 
     goals.
                                                                    ____

                                     U.S. Chamber of Commerce,

                       Washington, DC, Thursday, February 9, 1995.

      U.S. Chamber Throws Support Behind Balanced Budget Amendment

       Washington.--The U.S. Chamber of Commerce today pledged to 
     ``pull out all the stops'' to ensure passage of the balanced 
     budget amendment.
       In a press conference rallying support for the upcoming 
     Senate vote, Chamber Senior Vice President Bruce Josten said, 
     ``We believe that passage of the balanced budget amendment is 
     imperative if we are to restore the critical principle of 
     fiscal responsibility and limited government. It is the lynch 
     pin in our approach to taming government spending and 
     shrinking government waste.
       ``Large and growing federal deficits reduce savings and 
     investment, stymie income and job growth and lower 
     productivity growth and our standard of living,'' Josten 
     said. ``Deficits result in the accumulation of government 
     debt and ultimately lead to higher taxer.
       ``Together with the line-item veto and the prohibition on 
     unfunded mandates, passage of this balanced budget amendment 
     will place renewed emphasis on fiscal discipline, force 
     Congress to cut spending and constrain its ability to raise 
     taxes.''
       Josten promised the full extent of the Chamber's 
     capabilities to ``pull out all the stops and pledge to use 
     every aspect of our broad grassroots organization to ensure 
     the passage of a balanced budget amendment.
       ``We urge all the senators to vote for its passage and we 
     will count it as a key vote in our chamber rating system,'' 
     he said.
                                                                    ____

                                                             NFIB,


                                          Small Business News,

                                                   Washington, DC.

       Balanced-Budget Amendment Crucial to Small-Business Growth

       Washington, February 9.--Jack Faris, president of the 
     National Federation of Independent Business, the nation's 
     largest advocacy group for small business, urged small-
     business owners to write and call Congress to support the 
     idea of adding a balanced-budget amendment to the 
     Constitution.
       Faris said Congress must heed broad-based public support 
     for a balanced-budget amendment, especially that coming from 
     the small-business sector.
       ``Small-business owners have voted overwhelmingly for a 
     balanced budget and deficit reduction in several NFIB 
     surveys,'' Faris said. ``They understand that high deficits 
     rob small businesses of available capital and mean less money 
     for private investment. When small firms can't afford to 
     expand and buy equipment, fewer jobs are created and less 
     revenue is sent to the Treasury.''
       The 1994 deficit hit $223 billion, Faris said, pointing out 
     that the public debt, the accumulation of each year's 
     deficit, reached $4.7 trillion.
       ``It's inconceivable that a business could spend or borrow 
     as irresponsibly as the federal government has,'' Faris said. 
     ``A small firm has to live within a budget. If owners spent 
     and borrowed money like the federal government, they'd be out 
     of business in a heartbeat.''
       The NFIB Education Foundation, the organization's research 
     arm, found that federal taxes and frequent tax law changes 
     rank among the top problems of entrepreneurs.
       [[Page S3356]] ``Small-business owners voted in November in 
     greater numbers than ever before to elect lawmakers who 
     wouldn't conduct `business as usual,' Faris said. ``and a 
     balanced-budget amendment would be a major step toward 
     controlling the size of the federal government.''
       NFIB represents more than 600,000 small and independent 
     firms. Small business makes up 99 percent of the private 
     sector, hires approximately half of the country's workforce, 
     and creates some two-thirds of all new jobs, according to 
     NFIB.
                                                                    ____

           [News release from Financial Executives Institute]

   Financial Executives Institute Announces Top 10 Legislative Agenda

       Morristown, NJ, January 16, 1995.--Financial Executives 
     Institute, a professional association of corporate financial 
     executives, is prepared to work with the Congressional 
     leadership to enact the initiatives contained in the 
     ``Contract with America.'' In a letter that outlines its 
     legislative agenda for 1995, FEI urged its 14,000 members to 
     support such ``Contract'' initiatives as deficit reduction, 
     product-liability reform, regulatory reform, and capital-
     gains reform.
       ``For years we've been urging Congress to put a lid on 
     spending and manage the taxpayers' money more wisely,'' says 
     P. Norman Roy, president of FEI. ``Now, we seem to have 
     people in Congress who are determined to give the taxpayers 
     good value for their tax dollars. It's a good start.''
       Heading FEI's agenda of ten key issues is passage of the 
     Balanced Budget Amendment, which would prohibit federal 
     outlays from exceeding total receipts. If the amendment 
     passes, it will require a three-fifths majority in both 
     houses of Congress for the federal government to incur a 
     deficit. Despite strong Republican support, passage of the 
     Amendment is not certain; passage will require a two-thirds 
     majority in each house.
       Other FEI ``top ten'' initiatives include:
       Line-Item Veto--give the president the authority to strike 
     any appropriation or specific tax provision from proposed 
     legislation;
       Product-Liability Reform--create uniform product-liability 
     laws, covering state and federal actions;
       Securities-Litigation Reform--limit the growth of lawsuits 
     filed by class-action attorneys on behalf of shareholders 
     whose stock prices have shown unusual market performance and 
     make losing litigants responsible for winners' costs;
       Tax Reform--allow individuals to exclude 50 percent of 
     capital-gains income from taxes and reduce the corporate 
     capital-gains tax to 17.5 percent. Also, explore alternatives 
     to the current tax system, such as a flat rate with higher 
     exemptions or replacing both corporate and individual taxes 
     with value-added and/or personal-consumption taxes;
       Regulatory Reform--eliminate regulations that stifle 
     business initiative and competitiveness; also reduce 
     paperwork and require federal agencies to calculate the costs 
     and benefits of compliance;
       Federal Financial Management Reform--strengthen the Chief 
     Financial Officers Act, the goal of which is to get the 
     government's fiscal house in order;
       Entitlement Reform--resolve the long-term imbalance between 
     the government's entitlement promises and its ability to pay 
     for them and ensure the long-term solvency of Social Security 
     and Medicare;
       Health-care Reform--develop broad national agreement on a 
     specific health-care reform initiative rather than leave the 
     solution to the individual states, which could lead to 
     multiple state rules and an onerous administrative burden for 
     companies with multi-state operations;
       Procurement Reform--Pass and implement the Federal 
     Acquisition Streamlining Act of 1994, which is expected to 
     save taxpayers $12.3 billion over the next 5 years by 
     reducing cumbersome regulatory burdens and needless 
     bureaucracy in the government's acquisition of products and 
     services from the private sector.
       Financial Executives Institute, the leading advocate for 
     the views of corporate financial management, is a 
     professional association of 14,000 senior financial 
     executives from nearly 8,000 major corporations throughout 
     the United States and Canada.
                                                                    ____

[News release from Associated Builders and Contractors, Inc., Rosslyn, 
                         VA, February 9, 1995]

                 ABC Supports Balanced Budget Amendment

       Passage of the Balanced Budget Amendment (S.J. Res. 1) 
     would promote much needed restraint in government taxation 
     and spending, according to Charlie Hawkins, senior vice 
     president of Associated Builders and Contractors.
       ``We can no longer tolerate the practice of freely granting 
     exceptions to budget rules in order to accommodate funding 
     demands. Congress must respond to the call to cease runaway 
     spending and begin the kind of reform that the Balanced 
     Budget Amendment dictates,'' Hawkins said.
       Hawkins said the amendment would force the president and 
     Congress to set priorities rather than to continually 
     postpone making difficult choices. The prospect of having to 
     move toward balanced budgets in the near future would have an 
     immediate positive impact on the budget process and would 
     provide a Constitutional gurantee that we will adhere to a 
     deficit reduction plan, he said.
       ``Deficit spending should no longer be a way of life for 
     the federal government. Every American family must live 
     within its means and balance its budget. Forty-nine of the 50 
     states operate under some form of a balanced budget 
     requirement--it makes sense that the federal government would 
     compel itself to work with similar self-control,'' he said.
       Hawkins added that the amendment should not include an 
     exemption for Social Security. Such an exemption would put 
     Social Security at risk by creating an incentive to link 
     other programs to the entitlement program to exempt them from 
     deficit calculations. ``The best protection for Social 
     Security is a balanced budget,'' he said.
       Associated Builders and Contractors is a national 
     association representing more than 17,000 construction and 
     construction-related companies located in 80 chapters 
     throughout the country.
                                                                    ____

     NAW Calls on the Senate to Pass the Balanced Budget Amendment

       Washington, DC February 9, 1995.--The National Association 
     of Wholesaler-Distributors (NAW) today called on the United 
     States Senate to pass S.J. Res. 1, the Balanced Budget 
     Amendment to the Constitution.
       ``On behalf of the 45,000 companies represented by NAW, we 
     strongly urge every Member of the Senate to support S.J. Res. 
     1. An historic opportunity for national fiscal discipline has 
     finally arrived, and we must seize it,'' said Dirk Van 
     Dongen, NAW President.
       ``NAW and its member companies have actively supported a 
     Constitutional Amendment for a balanced Federal budget for 
     many years. After decades of uncontrolled Federal spending, 
     our members again state the obvious: government budget 
     discipline is essential. No longer should Federal outlays 
     exceed receipts. Furthermore, we strongly believe that 
     Congress should rely on spending restraints--not tax 
     increases--to balance the budget, rather than further 
     burdening hard-working American taxpayers.''
       ``There is little doubt that for too long American 
     companies have felt the effects of the Federal deficit; a 
     deficit that is projected to begin growing again soon. Now is 
     our best chance to show real leadership--to permanently rein 
     in government spending. If we are unsuccessful, Federal debt 
     and deficits--and politics--will continue to cripple our 
     economy and mortgage our future. The Balanced Budget 
     Amendment moves our country in the right direction and it 
     unburdens our employers and employees along the way. The 
     Senate should pass it and send it to the states without 
     hesitation,'' concluded Van Dongen.
       (NAW represents 45,000 companies through a federation of 
     wholesale distribution firms and national, state and local 
     associations.)
                                                                    ____

     Citizens Group Urges Senate To Pass Balanced Budget Amendment


    statement of paul beckner, president citizens for sound economy

       Washington, DC.--On behalf of Citizens for a Sound Economy 
     (CSE), I offer my strong support of the proposed balanced 
     budget amendment to the Constitution. Our 250,000 members are 
     among the 80% of Americans who believe it is time for the 
     federal government to put its fiscal house in order by doing 
     what every American family must do--balance its budget.
       The federal government continues to be plagued by wasteful 
     deficit spending; Congress appropriates money it does not 
     have and should not spend. The American people are fed up 
     with the status quo that has given them $200 billion 
     deficits, a $4.8 trillion national debt, bigger government, 
     higher taxes, and a reduced standard of living. The House of 
     Representatives has acted. Now it is time for the Senate to 
     do its part.
       The balanced budget amendment is about so much more than 
     November's elections or the ``Contract with America.'' It is 
     about Democrats and Republicans joining together to rise 
     above partisan interests to act in the national interest. It 
     is about the people's representatives finally standing up and 
     saying, ``Passing The Buck Stops Here.''
       I urge the Senate to do the right thing--for America and 
     its future generations that we are so shamelessly willing to 
     burden with our debt. Pass the balanced budget amendment. 
     Pass it now.
       CSE is a 250,000 member grassroots advocacy organization 
     founded in 1984 to defend and promote America's free 
     enterprise system.
                                                                    ____

  Coalition Urges Passage of Balanced Budget Amendment in the Senate 
          ``Get With the Program,'' Says Small Business Group

       Washington, DC.--The Small Business Survival Committee 
     [SBSC] urged members of the United States Senate to swiftly 
     pass the Balanced Budget Amendment to begin restoring fiscal 
     sanity, as well as America's faith, in the federal 
     government.
       ``It is no surprise that those Senators lined up against 
     the Balanced Budget Amendment [BBA] are those who continue to 
     support big government, and continue to view government as 
     the solution--not the problem. President Clinton, Senator 
     Robert Byrd and the ``right to know'' crowd are fighting a 
     losing battle and should get with the fiscal accountability 
     program,'' said SBSC President Karen Kerrigan.
       SBSC and a coalition of organizations supporting passage of 
     the Balanced Budget Amendment held a press conference today 
     to 
     [[Page S3357]] collectively voice support for swift action in 
     the United States Senate.
       ``I find it particularly insincere that Senators called for 
     a ``right to know'' amendment, are the same Members who 
     secretly stuff appropriation bills with pork and special 
     interest programs, and continue to push funding for programs 
     which have proven to be an abysmal failure. It seems to me 
     that these practices are now in ``the know,'' after years of 
     hiding such fiscal abuse, and taxpayers want this to end,'' 
     added Kerrigan.
       The Small Business Survival Committee is a 40,000-member 
     nonpartisan, nonprofit advocacy organization.
               Statement on the Balanced Budget Amendment

                        (By Grover G. Norquist)

       Americans for Tax Reform, the national clearinghouse for 
     the grassroots taxpayers movement, strongly supports the 
     Balanced Budget Amendment to the United States Constitution.
       In addition, as the organization which opposes all tax 
     increases as a matter of principle, we are delighted to 
     support the Constitutional amendment requiring a 60% 
     supermajority to raise taxes, to be voted in the House of 
     Representatives on April 15, 1996. We are grateful for the 
     leadership of freshman Representatives John Shadegg (R-AZ) 
     and Linda Smith (R-WA) on this issue. In addition, we are 
     pleased to see the supermajority as a likely initiative issue 
     in several new states next year. Voters will choose the next 
     President of the United States in November, 1996 as they vote 
     on these initiatives.
       Tax increases are not the solution to reducing the budget 
     deficit: they merely feed politicians' appetite for increased 
     federal spending. However, politicians use the federal 
     deficit as a bogus rallying cry for the supposed need to 
     raise taxes. That is why a balanced budget requirement and a 
     supermajority requirement are necessary to keep taxes down 
     and control federal spending. The Balanced Budget Amendment 
     shuts off one spigot feeding federal spending by prohibiting 
     deficit spending. The supermajority amendment shuts off the 
     other spigot by making tax increases difficult. Together, 
     they shut the valve which finally chokes off runaway federal 
     spending. In the nine states which currently have a 
     supermajority requirement, spending growth has slowed 
     dramatically.
       Taxpaying Americans have been robbed of their prosperity in 
     the last half-century by the explosion of federal spending, 
     fueled by deficit spending and dramatic increases in taxes. 
     As Congressman Joe Barton has pointed out, federal taxes went 
     from 5% of a family's income in 1934 to almost 19% in 1994. 
     It is time that we reign in the beast. It is time that 
     taxpaying Americans finally have leverage over spending 
     interests. That is why we are strongly in support of the 
     Balanced Budget Amendment and the supermajority amendment.
            Farm Bureau Calls for Balanced Budget Amendment

       Washington, Jan. 5, 1995.--Passage of a balanced budget 
     amendment should be the first step in a series of needed 
     changes in the federal government's policies on taxation, 
     spending and regulations, Farm Bureau told the Senate 
     Judiciary Committee today.
       ``Farm Bureau has supported a balanced budget amendment to 
     the U.S. Constitution for 15 years,'' said Utah Farm Bureau 
     President Ken Ashby. ``Farmers and ranchers believe a 
     balanced budget amendment can help provide much needed budget 
     discipline that, unfortunately, seems impossible to achieve 
     in government today.''
       Ashby, who grows alfalfa, hay and grain, said a more hands-
     off approach of federal regulations on private economic 
     activity and on state and local governments, in combination 
     with a reduction in deficit spending, would benefit all 
     Americans. He said if a balanced budget amendment is passed, 
     Congress must not slow down on spending reform.
       ``These changes in public policies will take months of 
     serious consideration and debate by the Congress,'' Ashby 
     said. ``You cannot do everything at once, and we do not 
     expect you to. But we also do not want you to simply pass a 
     balanced budget amendment and then go back to business as 
     usual.''
       As part of the Farm Bureau proposal, Ashby called on the 
     senators to push for a balanced budget amendment that would 
     require a three-fifths ``super majority'' vote of both houses 
     of Congress to ignore the balanced budget requirement. He 
     said ``this provision will elevate the scrutiny of proposed 
     new spending and force Congress to go on record when it 
     decides to increase spending.''
       He told the Judiciary panel that as a result of the 1990 
     farm bill and the 1990 Omnibus Budget Reconciliation Act, 
     government payments to farmers have been reduced by 
     approximately one-third. He recognized some cuts as necessary 
     to reduce the Federal debt, but said farmers are not the only 
     segment of the population that needs to pitch in.
       ``Farmers have not been entirely happy with these 
     reductions but understand that cuts are necessary if a 
     balanced budget is to be achieved,'' Ashby said. ``Now it is 
     time for all government programs, including social security 
     and defense, to follow agriculture's example and contribute 
     to spending control.''
       Farm Bureau, he said, also believes any amendment proposal 
     should require the president to submit a balanced budget to 
     Congress. Ashby said this provision would help spread the 
     responsibility for balancing revenue and spending among the 
     legislative as well as the executive branch.
       Ashby told the panel that the current practice of allowing 
     passage of tax increases by a majority of the members present 
     on the floor of either house must change. He told the 
     committee that a majority of the total membership of each 
     house, recorded by a roll call vote, should be required for 
     future tax increases, making them more difficult to achieve.
                                              Christian Coalition,


                                          Capitol Hill Office,

                                Washington, DC, February 24, 1995.
       Dear Senator: On behalf of the 1.5 million members and 
     supporters of the Christian Coalition, we urge you to support 
     the balanced budget amendment [BBA] to the Constitution.
       The mounting national debt threatens our nation's economic 
     future. Unless we act today to restore fiscal sanity, more 
     private savings will be drawn away from investments necessary 
     for lasting economic growth. Without a BBA, the nation will 
     grow deeper in debt to foreign creditors, and the interest 
     payments on the soaring debt will preclude other budget 
     priorities. This is indeed a bleak legacy to leave our 
     children and grandchildren.
       Moreover, we do not believe that the American people are 
     taxed too little. Rather we believe that the federal 
     government spends too much. According to the Tax Foundation, 
     federal, state and local taxes claimed 39.5 percent of the 
     income earned by a median two-earner family in 1994. Every 
     additional four year delay without a balanced budget could 
     result in another trillion dollars of debt, and another $55 
     billion in annual interest costs. According to the National 
     Taxpayers Union, these interest payments alone will cost 
     today's child over $130,000 in extra taxes, on average, over 
     his or her lifetime.
       A balanced budget amendment is long overdue. We urge you to 
     pass it now to secure a sound fiscal future for America's 
     families.
           Sincerely,
     Marshall Wittmann,
       Director, Legislative Affairs.
     Heidi Scanlon,
       Director, Governmental Affairs.
                                Congress of the United States,

                                   Washington, DC, March 15, 1994.
       Dear Colleague: What did Thomas Jefferson get for $225 
     billion? The Louisiana Purchase, which became all or part of 
     15 States.
       What are we getting for $223 billion? Absolutely nothing, 
     except another year older and deeper in debt.

              Thomas Jefferson and the Louisiana Purchase


                        overview--february 1994

       When Balanced Budget Amendment (BBA) supporters have quoted 
     Thomas Jefferson's sentiments against government debt, Sen. 
     Byrd cited the Louisiana Purchase, arguing:
       The purchase amount, $15 million, all borrowed, was almost 
     twice the size of the total annual federal budget in 1804. 
     The comparable figure would be translated into $2.8 trillion 
     today--a ``whopper'' of a transaction.
       Jefferson talked tough against going into debt before he 
     was President, but obviously saw how the need for borrowing 
     could arise once he became President.
       Jefferson had virtually no association with writing the 
     Constitution; Madison, who did, said that the wise incurring 
     of debt could benefit posterity.


                               responses

       To buy the Louisiana Territory, Jefferson did borrow an 
     amount equal to twice the amount the federal government was 
     spending annually at the time. However, total federal outlays 
     amounted to only about 1.6% of gross domestic product in 1804 
     (compared to 22% in 1994). Jefferson's purchase was equal to 
     a less than 3.5% of GDP, the equivalent of about $224.5 
     BILLION in 1993 dollars.
       In other words, in GDP-adjusted terms, the Louisiana 
     purchase cost Jefferson about the same amount the government 
     now deficit-spends every year, and about the same amount the 
     government spends on net interest payments just to service 
     the debt every year.
       The BBA follows both Jefferson's philosophy and his 
     example. Obviously, his ultimate position was that debt was 
     acceptable (1) for extraordinary needs and (2) if it was 
     repaid.
       S.J. Res. 41, requiring a \3/5\ vote to deficit spend or 
     raise the debt limit, provides both a norm of balanced 
     budgets and the flexibility to meet extraordinary needs.
       Jefferson reduced the federal debt by half during his first 
     term.
       Unlike today's general indebtedness, Jefferson paid for the 
     Louisiana Purchase with a specific, dedicated note. The debt 
     so incurred was paid off fully within 20 years, by 1823.
       When Jefferson submitted the treaty and related legislation 
     to Congress in 1803, he stated his expectations that: (1) The 
     remaining national debt would be paid off before the 
     Louisiana note came due; and (2) the then-current growth in 
     revenues would enable retirement of the Louisiana debt in a 
     relatively short time.
       The Louisiana Purchase was a once-in-a-lifetime 
     opportunity. Certainly you would expect to obtain a \3/5\ 
     vote for such an extraordinary and beneficial investment. And 
     in fact, all of the relevant Congressional 
     [[Page S3358]] votes related to the Louisiana Purchase far 
     exceeded the \3/5\ margin required to borrow under S.J. Res. 
     41.
       Madison, too, dedicated his Presidency to balanced budgets, 
     promising ``to liberate the public resources by an honorable 
     discharge of public debt.'' In fact, he retained Jefferson's 
     Treasury Secretary to continue Jefferson's responsible fiscal 
     policies.
       This year the federal budget deficit will be, adjusted for 
     size of GNP, about equal to the amount that President 
     Jefferson borrowed for the Louisiana Purchase.
       But the government is not ``investing'' this $223 billion. 
     Unlike that of 1804, 1994's borrowing is not buying us 
     306,573,740 acres of fertile prairies, navigable waterways, 
     and abundant natural resources, to resell at a profit and 
     with which to enrich the lives and well-being of our 
     children. Today's borrowing is for current consumption, 
     simply allowing government programs to spend beyond their 
     income.
       Every year, this generation's government is incurring 
     additional debt of a magnitude that Jefferson and his 
     generation felt was appropriate only for a once-in-a-lifetime 
     endeavor.
       The $15 million (in 1804 dollars) worth of bonds issued to 
     finance the Louisiana Purchase was paid off completely within 
     20 years. In GNP-adjusted 1993 dollars, this purchase turned 
     a $74 billion profit in land sales alone by 1823, and another 
     $132 billion profit in land sales by 1834. These proceeds 
     helped reduce the federal debt to $38,000--that's $38 
     thousand--in 1834 and `35, its lowest level before or since.
       In contrast, over this past 20 years, the gross federal 
     debt will have increased by 869 percent--from $484 billion in 
     fiscal year 1974 to $4.69 trillion at the end of FY 1994, as 
     projected by CBO. In fact, the red ink has flowed in 56 of 
     the last 64 years.
       The federal government has been accumulating debt so fast 
     and in such massive amounts that American taxpayers are now 
     servicing that debt with interest payments about equal--
     again, adjusted for size of GNP--to what Jefferson and the 
     8th Congress borrowed to double the size of the nation. (CBO-
     projected gross interest in FY 1994: $298 billion; Net 
     interest: $201 billion.)
       Jefferson's government invested. Ours has been eating the 
     seed corn in increasing quantities for decades.
       The above information on Jefferson's Louisiana Purchase has 
     been drawn from two papers prepared at our request: 
     Jefferson's Constitutional Dilemma with the Louisiana 
     Purchase, by James M. Hamilton (Stenholm staff), and An 
     Economic Analysis of the Jefferson Administration and the 
     Louisiana Purchase, by William A. Duncan, PhD (National 
     Taxpayers Union Foundation). Rather than send you a 22-page 
     Dear Colleague, we invite you to contact any of us or Ed 
     Lorenzen (5-6605), Andy Moore (5-6730), Donna Tobias (4-
     2752), or Aaron Rappaport (4-5573) for copies of these 
     papers.
           Sincerely,
     Charles W. Stenholm.
     Robert F. Smith.
     Larry E. Craig.
     Paul Simon.
     
                                                                    ____
                           a Balanced Budget.

                  H.J. Res. 1, The Jefferson Amendment

       For over 140 years in this nation, balanced federal budgets 
     were part of the unwritten constitution just like the two 
     party system and the workings of the electoral college. 
     Modern necessity dictates change through a balanced budget 
     amendment to the constitution. Jefferson foresaw this some 
     200 years ago:
       ``I am not an advocate for frequent changes in laws and 
     constitutions. But laws and institutions must go hand in hand 
     with the progress of the human mind. As that becomes more 
     developed, more enlightened, as new discoveries are made, new 
     truths discovered and manners and opinions change, with the 
     change of circumstances, institutions must advance also to 
     keep pace with the times. We might as well require a man to 
     wear still the coat which fitted him when a boy as civilized 
     society to remain ever under the regimen of their barbarous 
     ancestors.'' (The Jefferson Memorial, Washington, D.C.)
       Quotes from the Framers and others on the evils of public 
     debt:
       ``It is a miserable arithmetic which makes any single 
     privation whatever so painful as a total privation of 
     everything which must necessarily follow the living so far 
     beyond our income. What is to extricate us I know not, 
     whether law, or loss of credit. If the sources of the former 
     are corrupted, so as to prevent justice the latter must 
     supply its place, leave us possessed of our infamous gains, 
     but prevent all future ones of the same character.'' 
     (Jefferson, 1787)
       ``I place economy among the first and most important of 
     republican virtues, and public debt as the greatest of the 
     dangers to be feared.'' (Jefferson, 1816)
       ``If we run into such debts, as that we must be taxed in 
     our meat and in our drink, in our necessaries and our 
     comforts, in our labors and our amusements, for our callings 
     and our creeds, as the people of England are, our people like 
     them, must come to labor sixteen hours in the twenty-four, 
     give the earnings of fifteen of these to the government for 
     their debts and daily expenses . . .'' (Jefferson, 1816)
       I believe it may be regarded as a position warranted by the 
     history of mankind that, in the usual progress of things, the 
     necessities of a nation, in every stage of its existence, 
     will be found at least equal to its resources. (Alexander 
     Hamilton in the Federalist #30)
       To liberate the public resources by an honorable discharge 
     of public debts. (President James Madison, Stating one of the 
     primary goals of his Administration)
       Interest is now paid to capitalists out of the profits of 
     labor; not only will this labor be released from the burden, 
     but the capital, thus thrown out of an unproductive use, will 
     seek a productive employment; giving thereby a new impetus to 
     enterprise in agriculture, the arts, commerce, and 
     navigation. (Samuel Inghams, Secretary of the Treasury under 
     Andrew Jackson)
       President Andrew Jackson, in proposing to effect 
     substantial reductions in the war debt, observed:
       We should look at the national debt, as just as it is, not 
     as a national blessing but as a heavy burden on the industry 
     of the country to be discharged without unnecessary delay.
       President Benjamin Harrison described unnecessary public 
     debt as ``criminal.''
       [Even during unsatisfactory economic conditions,] * * * 
     ``the government should not be permitted to run behind its 
     debt.'' (President William McKinley)
       The nation must make financial sacrifices accompanied by a 
     stern self denial in public expenditures until we have 
     conquered the disabilities of our public finance * * * we 
     must keep our budget balanced for each year. (President 
     Calvin Coolidge)
       ``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.'' 
     (Jefferson, 1816)
       ``There does not exist an engine so corruptive of the 
     government and so demoralizing of the nation as a public 
     debt. It will bring on us more ruin at home than all the 
     enemies from abroad against whom this army and navy are to 
     protect us.'' (Jefferson, 1821)
       ``The payments made in discharge of the principal and 
     interest of the national debt, will show that the public 
     faith has been exactly maintained.'' (Jefferson, 1801)
       ``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.'' (Jefferson)
       ``I wish it were possible to obtain a single amendment to 
     our constitution. I would be willing to depend on that alone 
     for the reduction of the administration of our government to 
     the genuine principles of its constitution; I mean an 
     additional article, taking from the federal government the 
     power of borrowing.'' (Jefferson, 1798)
       ``The consequences arising from the continual accumulation 
     of public debts in other countries ought to admonish us to be 
     careful to prevent their growth in our own.'' (President John 
     Adams in his Inaugural Address)
       ``Stewards of the public money should never suffer without 
     urgent necessity to be transcended the maxim of keeping the 
     expenditures of the year within the limits of its receipts. 
     (President John Quincy Adams)
       ``As the vicissitudes of nations begat a perpetual tendency 
     to the accumulation of debt, there ought to be a perpetual, 
     anxious, and unceasing effort to reduce that which at any 
     time exists, as fast as shall be practicable, consistent with 
     integrity and good faith.'' (Alexander Hamilton)
       ``Once the budget is balanced and the debts paid off, our 
     population will be relieved from a considerable portion of 
     its present burdens and will find not only new motives to 
     patriotic affection, but additional means for the display of 
     individual enterprise.'' (President Andrew Jackson)
       ``After the elimination of the public debt, the Government 
     would be left at liberty * * * to apply such portions of the 
     revenue as may not be necessary for current expenses to such 
     other objects as may be most conducive to the public security 
     and welfare.'' (President James Monroe)
       ``Money being spent without new taxation and appropriation 
     without accompanying taxation is as bad as taxation without 
     representation.'' (President Woodrow Wilson)
       If there is one omission I fear in the document called the 
     Constitution, it is that we did not restrict the power of 
     government to borrow money. (Thomas Jefferson, 1798)
       A wise and frugal government, which shall restrain men from 
     injuring one another, shall leave them otherwise free to 
     regulate their own pursuits of industry and improvement, and 
     shall not take from the mouth of labor the bread it has 
     earned. This is the sum of good government, and this is 
     necessary to close the circle of our felicities. (Thomas 
     Jefferson, First Inaugural Address, March 4, 1801)
       The public debt is the greatest of dangers to be feared by 
     a republican government. (Thomas Jefferson)
       The question whether one generation has the right to bind 
     another by the deficit it imposes is a question of such 
     consequences 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, Quoted by George Will in 
     ``It Ought To Be A Crime,'' Washington Post, April 30, 1992)

[[Page S3359]]

  [Factsheet from Congressional Leaders United for a Balanced Budget]

       Capital Budgeting--Not a Capital Idea for the Constitution

       A Constitutional Amendment should reflect broad principles 
     and should not contain narrow policy decisions such as 
     defining a capital budget. There is wide disagreement among 
     policymakers about what should be included in a federal 
     capital budget. We should not place a concept such as capital 
     budgeting in the Constitution when there is no consensus on 
     what constitutes a capital budget.
       State and local governments have a check on their use of 
     capital budgets through bond ratings. If a state government 
     were to abuse its capital budget, the states bond rating 
     would drop and the state would be unable to continue to 
     finance new capital expenditures for borrowing. In addition, 
     many states require that bond issues be approved by the 
     voters. These checks on the abuse of capital budgets would 
     not exist under a federal capital budget, making it far more 
     likely that a federal capital budget would be abused.
       The justification that most businesses and state and local 
     governments have for capital budgeting is that they 
     occasionally need to make one-time, extraordinary 
     expenditures that are amortized over a long period of time. 
     The federal budget is so huge--$1.5 trillion in 1994--that 
     almost no conceivable, one-shot project would make even a 
     small dent in it.
       Even the Federal Interstate Highway System, which has been 
     called the largest peacetime undertaking in all of human 
     history, was financed on a pay-as-you-go basis. President 
     Eisenhower initially proposed that the Interstate System be 
     financed through borrowing. However, Congress kept it on-
     budget and financed it through a gas tax at the suggestion of 
     Senator Albert Gore, Sr. We are unlikely to have another 
     capital expenditure of this magnitude in the foreseeable 
     future.
       While state capital spending is often placed off-budget, so 
     are trust fund surpluses. According to a Price-Waterhouse 
     study, state budgets would be roughly in balance if both 
     capital expenditures and trust funds were included on budget.
       Exempting a capital budget from budget restraints ensures 
     that spending on capital investments--financed entirely by 
     debt--will increase. The debt incurred as a result of these 
     expenditures will crowd out spending on items other than 
     physical capital.
       Less than four percent of federal outlays are for non-
     defense physical investment. Given the relatively small and 
     constant share that capital expenditure have in the federal 
     budget, there is no need to remove capital expenditures from 
     the general budget.
       S.J. Res. 1/H.J. Res. 28 does not prevent the creation of a 
     separate operating and capital accounts, but the total budget 
     must remain in balance. This is consistent with the 
     recommendations of GAO, which stated,
       ``. . . the creation of explicit categories for government 
     capital and investment expenditures should not be viewed as a 
     license to run deficits to finance those categories . . . . 
     The choice between spending for investment and spending for 
     consumption should be seen as setting of priorities within an 
     overall fiscal constraint, not as a reason for relaxing that 
     constraint and permitting a larger deficit.''
 [Congressional Leaders United for a Balanced Budget--Revised January 
                               30, 1995]

       Balanced Budget Amendment--Promoting Honesty in Budgeting

       H.J. Res. 1/S.J. Res. 1, the bi-partisan consensus Balanced 
     Budget Amendment to the Constitution, is written to foreclose 
     loopholes or evasions in its implementation and enforcement, 
     while allowing for necessary and beneficial flexibility. It 
     also will have the salutary effect of providing incentives 
     for more honest and accurate budgeting than now or in the 
     past.
       The general self-enforcing mechanism in the BBA: The 3/5 
     vote on the debt limit:
       No matter what accounting techniques are used to depict a 
     balanced budget, and regardless of any ``rosy scenario'' 
     economic assumptions, smoke and mirrors, or honest estimating 
     mistakes, if actual outlays exceed actual receipts, the 
     Treasury ultimately would need to borrow in order to meet the 
     government's obligations. This would require 3/5 votes in 
     both the Senate and House to raise the debt limit.
       The threat of a ``train wreck'' on the debt limit provides 
     a powerful incentive for truth-in-budgeting, because Congress 
     and the President could not escape the consequences of 
     policies that increased the debt. Opponents who focus on the 
     difficulty of achieving a 3/5 majority miss the point. They 
     are still focused on what's necessary to run a deficit. The 
     possibility of a 3/5 debt vote is a deterrent. Facing it is 
     so undesirable that Congress and the President generally 
     would do anything to avoid it--even balance the budget!
       H.J. Res. 1/S.J. Res. 1 rules out loopholes and 
     ``gimmicks;'' for example:
       The amendment could not be evaded by moving items off-
     budget. H.J. Res. 1 does not require that a single document, 
     a ``budget,'' be written in balance. It deals with how total 
     outlays conform to total receipts. Taking an item ``off-
     budget'' in statute still could be used to give that item 
     priority over others or give it certain protections in the 
     budget process (as has been done with Social Security), but 
     would not affect the operation of the BBA. The amendment 
     would remove the current incentive to move items off-budget 
     for the purpose of masking a deficit. The possibility of a 3/
     5 debt limit vote would deter moving deficit spending ``off-
     budget.''
       Definitions of terms could not be manipulated to evade the 
     BBA. Terms such as ``receipts,'' ``debt,'' ``revenue,'' 
     ``whole number,'' and ``war'' already appear in the 
     Constitution and have long-established meanings. Others, such 
     as ``outlays,'' ``debt held by the public,'' ``budget,'' and 
     ``declaratory judgment'' are universally and solidly 
     understood, having been long-defined and used in OMB, CBO, 
     Congressional, legal, and other documents. Committee reports 
     and floor debates since 1981 have gone to great lengths to 
     establish a legislative history for, and preventing 
     misinterpretation of, these and other terms.
       H.J. Res. 28/S.J.Res. 1 would promote honesty and accuracy 
     in budget estimates:
       Congress and the President can not plan for a coming fiscal 
     year without making estimates. Section 1, requiring that 
     actual outlays and receipts be in balance, and Section 6, 
     allowing for the use of estimates, operate together as 
     follows:
       Section 6 says estimates may be used in preparing a budget 
     plan;
       Section 1 requires that such planned budgets be in balance;
       Following such a budget plan, so long it is reasonable to 
     do so, complies with Section 1. This means Congress and the 
     President need not re-open the budget throughout the fiscal 
     year, simply because of month-to-month fluctuations in 
     receipts or outlays. (E.g., A wave of last-minute tax 
     payments could cause actual receipts to fall short of 
     estimates in one month's and exceed them in the next.) 
     Indeed, some previous versions have been criticized as 
     inflexible because they lacked estimates language.
       The threat of a 3/5 debt limit vote will enforce the 
     accuracy of budget estimates.
       The experience of our compliance with the caps on 
     discretionary outlays enacted as part of the 1990 Budget 
     Enforcement Act illustrates how budgetary restraints provide 
     an incentive for sound estimates. Although Congress 
     appropriates budget authority and must rely on estimates of 
     outlays, it has complied with the outlay caps by taking care 
     to ensure that the appropriations bills enacted did not pose 
     a risk of breaching the outlay caps. A balanced budget 
     amendment would provide a similar, but far stronger, 
     incentive for improving all budget estimates.
       To be safe, Congress should, and probably would, plan small 
     surpluses in most years.
       The BBA would be promoting honesty and accuracy in dealing 
     with contingent liabilities:
       Currently, there is no incentive for Congress and the 
     President to tackle the politically difficult issues 
     associated with contingent liabilities such as government 
     pensions and savings and loan insurance. For example, 
     Congress repeatedly postponed action on the S & L cleanup, 
     even though that ultimately resulted in increased costs to 
     the federal government. By restraining the government's 
     ability to borrow, H.J.Res. 28/S.J.Res. 1 will provide a 
     powerful incentive to deal with contingent liabilities 
     promptly--before they result in unnecessary costs--and 
     honestly.
                                                                    ____

   Emergency Appropriations Should Not be Exempted from the Balanced 
                            Budget Amendment

       An amendment to override the balanced budget in case of 
     disaster or national emergency is unnecessary.
       According to the Congressional Budget Office, since 1978 
     there have been only seven years in which supplemental 
     appropriations for natural disasters have exceeded $100 
     million. The incidence of natural disasters requiring large 
     supplemental appropriations is historically unusual.
       The text of the balanced budget amendment provides for the 
     constitutional requirement for a balanced budget to be waived 
     with a three-fifths vote of both Houses.
       In the past five supplemental bills put before Congress, 
     both Houses have voted with at least a three-fifths majority 
     to approve the supplemental funding.
       Congress has consistently voted to appropriate funds by at 
     least three-fifths majority, in the case of national 
     disaster, economic emergency and war.
       In 1991 the Senate passed a bill to offset the costs of 
     Desert Storm to various governmental agencies, as well as 
     additional appropriations for food stamps, State unemployment 
     compensation operations, veterans compensations and pensions, 
     92 to 8. It passed the House 365 to 43.
       Later that year the Senate passed another supplemental bill 
     providing disaster assistance funds to FEMA and to meet costs 
     of Desert Storm, 75 to 17. The House passed the same bill 303 
     to 114.
       In 1992 the Senate passed a bill appropriating emergency 
     funds for hurricane Andrew and hurricane Iniki, 84 to 10. The 
     House had already passed this bill 297 to 124.
       In 1993, the Senate passed a bill for emergency relief for 
     the major widespread flooding in the Midwest, by voice vote, 
     the House passed it 400 to 27.
       In the most recent emergency supplemental bill that went in 
     large part to fund victims of the most recent Los Angeles 
     earthquake, the Senate approved the measure 85 to 10, the 
     House approved it 337 to 74.
       [[Page S3360]] emergency supplemental votes february 1994

       This is a summary of emergency supplemental appropriations 
     from FY '78 through FY '94. The statistics are based on a 
     review of funds appropriated to FEMA. There are a wide 
     variety of disaster bailout funds, but this is the best 
     measure because no broader study of federal disaster funding 
     is available.
       The measures cited here include two non-FEMA supplemental 
     appropriations for the Small Business Administration and 
     which appear on the dollar amount list in this section.
                                                                    ____

         History of Disaster Supplementals as of February 1994

       The table below from the Congressional Budget Office shows 
     that in the sixteen years since 1978 there have been only 
     seven years in which Supplemental Appropriations for Natural 
     Disasters have exceeded $100 million. The incidence of 
     natural disasters requiring large supplemental appropriations 
     is historically unusual and the use of these funds has 
     clearly not been a ``budget buster.''

      CERTAIN SUPPLEMENTAL APPROPRIATIONS FOR NATURAL DISASTERS\1\      
                [By fiscal year, in millions of dollars]                
------------------------------------------------------------------------
                   1978    1980    1989    1990    1992    1993    1994 
------------------------------------------------------------------------
P.L. 95-255:                                                            
  Disaster                                                              
   relief                                                               
   (floods).....     300  ......  ......  ......  ......  ......  ......
P.L. 95-284:                                                            
  SBA disaster                                                          
   loans                                                                
   (floods).....     758       0       0       0       0       0       0
P.L. 96-304:                                                            
  FEMA (Love                                                            
   Canal, NY)...       0     870       0       0       0       0       0
  SBA disaster                                                          
   loans (Mt.                                                           
   St. Helens)..       0   1,177       0       0       0       0       0
P.L. 101-100:                                                           
  FEMA disaster                                                         
   relief (HUGO)       0       0   1,108       0       0       0       0
P.L. 101-130:                                                           
    Loma Prieta:                                                        
      Stafford                                                          
       disaster                                                         
       relief...       0       0       0   1,100       0       0       0
      Federal-                                                          
       aid to                                                           
       highways.       0       0       0   1,000       0       0       0
      SBA                                                               
       disaster                                                         
       loans....       0       0       0     500       0       0       0
      Unanticipa                                                        
       ted needs       0       0       0     250       0       0       0
P.L. 102-229:                                                           
  FEMA disaster                                                         
   relief.......       0       0       0       0     943       0       0
  Commodity                                                             
   Credit                                                               
   Corporation..       0       0       0       0   1,750       0       0
P.L. 102-302:                                                           
  FEMA disaster                                                         
   relief.......       0       0       0       0     300       0       0
  SBA disaster                                                          
   loans........       0       0       0       0     195       0       0
  Employment &                                                          
   training.....       0       0       0       0     500       0       0
P.L. 102-368:                                                           
  Commodity                                                             
   Credit                                                               
   Corporation..       0       0       0       0     430     100       0
  SBA disaster                                                          
   loans........       0       0       0       0     357       0       0
  FEMA disaster                                                         
   relief.......       0       0       0       0   2,517       0     143
  Assisted                                                              
   housing......       0       0       0       0     183     100       0
P.L. 103-76:                                                            
  Commodity                                                             
   Credit                                                               
   Corporation..       0       0       0       0       0   1,050       0
      Prior                                                             
       contingen                                                        
       cy;                                                              
       released                                                         
       8/12/93..       0       0       0       0       0     300       0
      Borrowing                                                         
       authority       0       0       0       0       0       0     900
  Economic                                                              
   development                                                          
   assistance...       0       0       0       0       0     100       0
  Corps of                                                              
   Engineers....       0       0       0       0  ......  ......  ......
      Flood                                                             
       control,                                                         
       Mississip                                                        
       pi River.       0       0       0       0       0     120      60
  Federal-aid to                                                        
   highways.....       0       0       0       0       0     100       0
  Community                                                             
   development                                                          
   grants.......       0       0       0       0       0     200       0
  FEMA disaster                                                         
   loans........       0       0       0       0       0   1,735     265
P.L. 103-121:                                                           
  SBA disaster                                                          
   loans (LA                                                            
   earthquake)..       0       0       0       0       0       0     140
                 -------------------------------------------------------
        Total...   1,058   2,047   1,108   2,850   7,175   3,805   1,508
------------------------------------------------------------------------
\1\The estimates on this table are for major disasters where the        
  appropriations exceeded $100 million.                                 


   TABLE 1.--HOUSE AND SENATE VOTES ON SELECTED APPROPRIATION MEASURES  
                 INCLUDING DISASTER FUNDS, FY1978-FY1994                
                          [as of February 1994]                         
------------------------------------------------------------------------
Fiscal Year/bill number/                 Final passage\1\               
    name (Public law    ------------------------------------------------
        number)                   House                   Senate        
------------------------------------------------------------------------
FY1978:                                                                 
    H.J.Res. 873,        Voice\2\...............  ......................
     Supplemental (P.L.                                                 
     95-284).                                                           
    H.J.Res. 796,        393-4\3\...............  Voice\3\              
     Supplemental (P.L.                                                 
     95-255).                                                           
FY1979:                                                                 
    H.R. 4289,           284-132................  Voice                 
     Supplemental (P.L.                                                 
     96-38).                                                            
FY1980:                                                                 
    H.R. 7542,           291-117................  37-19                 
     Supplemental (P.L.                                                 
     96-304).                                                           
FY1981:                                                                 
    None                   .....................                        
FY1982:                                                                 
    None                   .....................                        
FY1983:                                                                 
    None                   .....................                        
FY1984:                                                                 
    None                   .....................                        
FY1985:                                                                 
    None                   .....................                        
FY1986:                                                                 
    H.R. 4515,           355-52.................  Voice                 
     Supplemental (P.L.                                                 
     99-349)                                                            
FY1987:                                                                 
    None                   .....................                        
FY1988:                                                                 
    None                   .....................                        
FY1989:                                                                 
    H.J.Res. 407,        Voice\2\...............                        
     Continuing                                                         
     Resolution, (P.L.                                                  
     101-100)\4\.                                                       
FY1990:                                                                 
    H.J.Res. 423,        303-107\2\.............                        
     Supplemental (P.L.                                                 
     101-130).                                                          
    H.R. 4404,           308-108................  Voice                 
     Supplemental (P.L.                                                 
     101-302).                                                          
FY 1991:                                                                
    None                   .....................                        
FY 1992:                                                                
    H.R. 5620,           Voice\5\...............  Voice\5\              
     Supplemental (P.L.                                                 
     102-368).                                                          
    H.R. 5132,           249-168................  Voice                 
     Supplemental (P.L.                                                 
     102-302).                                                          
    H.J. Res. 157,       303-114................  Voice                 
     Supplemental (P.L.                                                 
     102-229).                                                          
FY 1993:                                                                
    H.R. 2667,           Voice\5\...............  Voice\5\              
     Supplemental (P.L.                                                 
     103-75).                                                           
FY 1994:                                                                
    H.R. 2519,           303-100................  90-10                 
     Commerce, Justice,                                                 
     State (P.L. 103-                                                   
     121).                                                              
    H.R. 3759,           245-65.................  Voice                 
     Supplemental (P.L.                                                 
     103-211).                                                          
------------------------------------------------------------------------
Sources: Library of Congress. Bill digest files in Scorpio (C103, C102, 
  C101, CG99, CG96); Daily Digest. Congressional Record, v. 124, March  
  22, 1978, p. D 230, March 23, 1978 p. D 234, & May 12, 1978, p. D 403;
  Daily Digetst. Congressional Record, v. 132, June 24, 1986. p. D 433. 
  U.S. Library of Congress. Congressional Research Service. Federal     
  Funding for Disasters. Memorandum by Keith Bea, dated November 3,     
  1993.                                                                 
                                                                        
\1\Votes on final passage are votes on conference reports, unless       
  otherwise noted.                                                      
\2\No conference report, House agreed to Senate amendments.             
\3\On initial passage, the House and Senate passed the same bill.       
\4\This was a continuing resolution, which included supplemental        
  appropriations.                                                       
\5\No conference report, both Houses considered amendments between the  
  two Houses. All votes were voice votes.                               

  
                                                                    ____
                                      CRS Report for Congress,

                                                   April 30, 1992.

                   (By Robert Keith and Edward Davis)

         A Balanced Federal Budget: Major Statutory Provisions


                                summary

       During the remainder of the 102nd Congress, the House and 
     Senate are expected to consider whether the Constitution 
     should be amended to require a balanced Federal budget. Both 
     chambers have addressed this issue in past years, but 
     Congress has never enacted such an amendment for ratification 
     by the States. Although the Constitution does not prescribe a 
     balanced Federal budget, provisions have been enacted into 
     law on several occasions stating this as a goal or policy of 
     the Federal Government.
       This report identifies and briefly discusses the major 
     statutory provisions that pertain to the goal or policy of a 
     balanced Federal budget. These provisions range in scope from 
     a simple, one-line statement to a lengthy set of provisions 
     involving complicated implementing procedures. Most of them 
     state that a balanced Federal budget is a national goal, or 
     require that the President include proposals or information 
     applicable to such a goal in his annual budget submission and 
     economic report to Congress, but do not establish procedures 
     to enforce compliance. While most of the provisions remain in 
     effect, some were applicable to fiscal-year periods that have 
     expired and have been repealed.
       The most well-known statute in this category is the 
     Balanced Budget and Emergency Deficit Control Act of 1985, 
     commonly referred to as the Gramm-Rudman-Hollings (GRH) Act. 
     The 1985 GRH Act set forth annual deficit targets leading to 
     a balanced Federal budget by fiscal year 1991 and established 
     an automatic process for across-the-board spending cuts 
     (known as ``sequestration'') aimed at keeping the deficit 
     within the statutory targets. The detailed enforcement 
     mechanism distinguishes the GRH Act from other balanced-
     budget statues.
       [[Page S3361]] The GRH Act was amended extensively in 1987 
     and 1990. The 1987 amendments postponed the balanced-budget 
     goal until fiscal year 1993; the most recent amendments 
     extend the sequestration process through fiscal year 1995, 
     provide for adjustable deficit targets, and change the focus 
     of the GRH Act from achieving budgetary balance to 
     controlling the growth of discretionary spending and 
     maintaining deficit neutrality regarding legislative changes 
     in mandatory spending and revenues. During the period from 
     fiscal year 1986 through fiscal year 1991 (when fixed deficit 
     targets were in effect), the actual deficit exceeded the 
     deficit target in the GRH Act by between about $6 billion 
     (fiscal year 1987) and $205 billion (fiscal year 1991).
       Other major statutes pertaining to the goal of a balanced 
     Federal budget include: a law increasing the public debt 
     limit in 1979, the Byrd Amendment of 1978, the Humphrey-
     Hawkins Act of 1978, the Revenue Act of 1978, the Revenue Act 
     of 1964, and the Budget and Accounting Act of 1921.
                              introduction

       During the remainder of the 102nd Congress, the House and 
     Senate are expected to consider whether the Constitution 
     should be amended to require a balanced Federal budget. Both 
     chambers have addressed this issue in past years, but 
     Congress has never enacted such an amendment for ratification 
     by the States.\1\ Although the Constitution does not 
     prescribe a balanced Federal budget, provisions have been 
     enacted into law on several occasions stating this as a goal 
     or policy of the Federal Government.
     \1\For a discussion of House and Senate action on this issue, 
     see: (1) ``Congress and a Balanced Budget Amendment to the 
     U.S. Constitution,'' by James V. Saturno, CRS Report 89-4 
     GOV, January 3, 1989, 19 pages; and (2) ``Balanced-Budget 
     Amendment Fails in House; Act OK'd,'' by George Hager, 
     Congressional Quarterly Weekly Reports, vol. 48, no. 29, July 
     21, 1990: 2284-2285.
---------------------------------------------------------------------------
       This report identifies and briefly discusses the major 
     statutory provisions that pertain to the goal or policy of a 
     balanced Federal budget. These provisions range in scope from 
     a simple, one-line statement to a lengthy set of provisions 
     involving complicated implementing procedures. Most of them 
     state that a balanced Federal budget is a national goal, or 
     require that the President include proposals or information 
     applicable to such a goal in his annual budget submission and 
     economic report to Congress, but do not establish procedures 
     to enforce compliance. While most of the provisions remain in 
     effect, some were applicable to fiscal-year periods that have 
     expired and have been repealed.


                   gramm-rudman-hollings act of 1985

       The most well-known statute in this category is the 
     Balanced Budget and Emergency Deficit Control Act of 1985 
     (Title II of P.L. 99-177, Increase in the Public Debt Limit; 
     99 Stat. 1038-1101; December 12, 1985), commonly referred to 
     as the Gramm-Rudman-Hollings (GRH) Act. The 1985 GRH Act set 
     forth annual deficit targets leading to a balanced Federal 
     budget by fiscal year 1991 and established an automatic 
     process for across-the-board spending cuts (known as 
     ``sequestration'') aimed at keeping the deficit within the 
     statutory targets. The detailed enforcement mechanism 
     distinguishes the GRH Act from other balanced-budget 
     statutes.
       The Act was modified extensively in 1987 by the Balanced 
     Budget and Emergency Deficit Control Reaffirmation Act 1987 
     (Title I of P.L. 100-119, Increase in the Public Debt Limit; 
     101 Stat. 754-784; September 29, 1987), which extended the 
     goal of a balanced budget to fiscal year 1993.
       Most recently, the GRH Act was amended extensively by the 
     Budget Enforcement Act (BEA) of 1990 (Title XIII of P.L. 101-
     508, Omnibus Budget Reconciliation Act of 1990; 104 Stat. 
     1388-573 through 1388-630; November 5, 1990). The BEA revised 
     the deficit targets in the GRH Act, making the targets 
     adjustable rather than fixed, and extended the sequestration 
     process for two more years--through fiscal year 1995 
     (although the budget is not required, and is not expected, to 
     be in balance by that time). Additionally, two new procedures 
     enforceable by sequestration were established: (1) adjustable 
     limitations on different categories of discretionary spending 
     funded in the annual appropriations process and (2) a ``pay-
     as-you-go'' process to require that increases in direct 
     spending (i.e., spending controlled outside of the annual 
     appropriations process) or decreases in revenues due to 
     legislative action are offset so that there is no net 
     increase in the deficit.
       The 1990 amendments changed the focus of the GRH Act from 
     achieving budgetary balance to controlling the growth of 
     discretionary spending and maintaining deficit neutrality 
     regarding legislative changes in mandatory spending and 
     revenues. This change in focus is reflected in Table 1, which 
     shows the original and revised GRH deficit targets.

              TABLE 1. ORIGINAL AND REVISED DEFICIT TARGETS             
                        [In billions of dollars]                        
------------------------------------------------------------------------
                                                                Revision
                                 Original    1987      1990    in fiscal
          Fiscal year             target   revision  revision  year 1993
                                                                 budget 
------------------------------------------------------------------------
1986..........................      171.9  ........  ........  .........
1987..........................      144    ........  ........  .........
1988..........................      108         144  ........  .........
1989..........................       72         136  ........  .........
1990..........................       36         100  ........  .........
1991..........................        0          64       327  .........
1992..........................  .........        28       317  .........
1993..........................  .........         0       236      419.4
1994..........................  .........  ........       102      304.9
1995..........................  .........  ........        83      300.5
------------------------------------------------------------------------
Note: The targets set in 1990 and revised subsequently, unlike the      
  targets set in 1985 and revised in 1987, do not reflect the Social    
  Security trust fund surpluses or the Postal Service.                  

       The GRH Act is linked to the Congressional Budget Act of 
     1974 (P.L. 93-344, as amended), principally by the 
     requirement in Section 606 of the 1974 Budget Act that budget 
     resolutions not recommend deficits in excess of the GRH Act 
     targets. Additionally, the unadjusted deficit targets and 
     discretionary spending limits are set forth in Section 601(a) 
     of the 1974 Budget Act.
       During the period that the GRH Act has been in effect, 
     sequestration has been triggered five times--once each for 
     fiscal years 1986, 1988, and 1990, and twice for fiscal year 
     1991. The sequestration reductions made for fiscal year 1986 
     were voided by court action and later reaffirmed, the 
     reductions for fiscal year 1988 were later rescinded, the 
     reductions for fiscal year 1990 were modified substantially, 
     and the reductions for fiscal year 1991 were applied in one 
     instance to domestic discretionary programs and in another to 
     international discretionary programs (the latter reductions 
     were later rescinded). With regard to the other two fiscal 
     years, sequestration was forestalled for fiscal year 1987 by 
     the enactment of alternative deficit reduction measures and 
     was avoided for fiscal year 1989 because the estimated 
     deficit excess was less than the $10 billion margin-of-error 
     amount.
       During the period from fiscal year 1986 through fiscal year 
     1991 (when fixed deficit targets were in effect), the actual 
     deficit exceeded the deficit target in the GRH Act (see Table 
     2). The overage ranged from about $6 billion for fiscal year 
     1987 to nearly $205 billion for fiscal year 1991.

TABLE 2.--ACTUAL DEFICIT COMPARED TO MAXIMUM DEFICIT AMOUNT: FISCAL YEAR
                                1986-1991                               
                        [In billions of dollars]                        
------------------------------------------------------------------------
                                                                 Actual 
                                          Maximum     Actual    deficit 
              Fiscal year                 deficit    deficit      over  
                                           amount                target 
------------------------------------------------------------------------
1986...................................      171.9      221.2       49.3
1987...................................      144.0      149.8        5.8
1988...................................      144.0      155.2       11.2
1989...................................      136.0      153.5       17.5
1990...................................      100.0      220.5      120.5
1991...................................       64.0      268.7     204.7 
------------------------------------------------------------------------
Note: Deficit amounts are presented on a consolidated basis (including  
  the transactions of off-budget entities--the Social Security trust    
  funds and the Postal Service).                                        

       The major provisions of the Gramm-Rudman-Hollings Act and 
     the 1974 Budget Act are codified in Titles 2 and 31 of the 
     United States Code. The text of these laws is contained in 
     publications of the House and Senate Budget Committees: (1) 
     House Budget Committee, Congressional Budget and Impoundment 
     Control Act of 1974 and Part C (and Sections 274 and 275) of 
     the Balanced Budget and Emergency Deficit Control Act of 1985 
     and Subtitles C and
      E of Title XIII of the Budget Enforcement Act of 1990 as 
     Amended Through December 31, 1990, committee print, serial 
     no. CP-2, February 1991, and (2) Senate Budget Committee, 
     Budget Process Law Annotated, committee print, S. Prt. 
     102-22, April 1991.


           TEMPORARY INCREASE IN THE PUBLIC DEBT LIMIT (1979)

       In 1979, Congress added two sections to a measure providing 
     an increase in the debt limit (P.L. 96-5, Temporary Increase 
     in the Public Debt Limit; 93 Stat. 8; April 2 1979). The 
     provisions were intended to bring balanced budget proposals 
     for fiscal year 1981 and 1982 before Congress for 
     consideration by requiring both the Budget Committees and the 
     President to submit them. Both sections were repealed on 
     September 13, 1982, upon the enactment of P.L. 97-258, which 
     recodified Title 31 of the United States Code (``Money and 
     Finance'').
       Budget Committee Reports.--The first provision, Section 5, 
     required the House and Senate Budget Committees to report 
     balanced budgets by April 15 of 1979, 1980, and 1981. Section 
     5 stated:
       Congress shall balance the Federal budget. Pursuant to this 
     mandate, the Budget Committees shall report, by April 15, 
     1979, a fiscal year budget for 1981 that shall be in balance, 
     and also a fiscal year budget for 1982 that shall be in 
     balance, and by April 15, 1980, a fiscal year budget for 1981 
     that shall be in balance and by April 15, 1981, a fiscal year 
     budget for 1982 that shall be in balance; and the Budget 
     Committees shall show the consequences of each budget on each 
     budget function and on the economy, setting forth the effects 
     on revenues, spending, employment, inflation, and national 
     security.
       1979 Reports. In 1979, the House Budget Committee complied 
     with the requirement by issuing Toward a Balanced Budget: 
     Report Pursuant to Public Law 96-5 (House Report 96-96, April 
     13, 1979, 102 pages) and a companion committee print that 
     included majority and minority staff reports. The Committee 
     reported the budget resolution for fiscal year 1980 (H. Con. 
     Res. 107) the same day, but it did not include 
     recommendations for fiscal years 1981 or 1982 (House Report 
     96-95, April 13, 1979)
       The Senate Budget Committee reported two budget resolutions 
     for fiscal year 1980 (Senate Report 96-68, April 12, 1979); 
     both resolutions included recommendations for fiscal years 
     1981 and 1982. The principal budget resolution, S. Con. Res 
     22, proposed a surplus of $0.5 billion for fiscal year 1981 
     and $0.7 billion for fiscal year 1982. The second resolution, 
     S. 
     [[Page S3362]] Con. Res. 23, was referred to as the 
     ``alternative congressional budget.'' It recommended a 
     deficit of $18.2 billion for fiscal year 1981, but a surplus 
     of $12.3 billion for fiscal year 1982.
       The House and Senate agreed to a final version of H. Con. 
     Res. 107 (the House adopted the Senate amendment of May 24, 
     1979) that recommended surpluses of $5.0 billion and $4.1 
     billion for fiscal years 1981 and 1982, respectively.
       1980 Reports. In 1980, the House Budget Committee reported 
     a budget resolution for fiscal year 1981 (H. Con. Res. 307, 
     House Report 96-857, March 26, 1980) that recommended 
     surpluses of $2.0 billion and $11.7 billion for fiscal years 
     1981 and 1982, respectively. The Senate Budget Committee 
     reported a budget resolution (S. Con. Res. 86, Senate Report 
     96-654, April 9, 1980) that recommended a balanced budget for 
     fiscal year 1981 (a deficit of zero) and a surplus of $10.0 
     billion for fiscal year 1982.
       The final version of the budget resolution (H. Con. Res. 
     307) agreed to by the House and Senate (the Senate adopted 
     the House amendment of June 12, 1980 to its amendment) 
     recommended a surplus of $0.2 billion for fiscal year 1981. 
     With respect to fiscal year 1982, the House recommended a 
     surplus of $26.8 billion and the Senate recommended a surplus 
     of $5.8 billion.
       1981 Reports. In 1981, the House Budget Committee reported 
     a budget resolution for fiscal year 1982 (H. Con. Res. 115, 
     House Report 97-23, April 16, 1981) that recommended a 
     deficit of $25.6 billion for that fiscal year, but a surplus 
     of $25.8 billion by fiscal year 1984. The Senate Budget 
     Committee reported a budget resolution (S. Con. Res. 19, 
     Senate Report 97-49, May 1, 1981) that recommended a deficit 
     of $48.8 billion for fiscal year 1982, but a balanced budget 
     (a deficit of zero) for fiscal year 1984.
       The House and Senate finally agreed on a budget resolution 
     (H. Con. Res. 115, House Report 97-46, May 15, 1981) that 
     recommended a deficit of $37.65 billion for fiscal year 1982, 
     but a surplus of $1.05 billion for fiscal year 1984.
       Alternate Budget Proposals of the President.--The second 
     provision, Section 6, required the President to submit 
     alternate proposals for a balanced budget if his budget 
     submission for fiscal years 1981 or 1982 recommended a 
     deficit for either fiscal year. Section 6 stated:
       (a) If a budget which is transmitted by the President to 
     the Congress under section 201 of the Budget and Accounting 
     Act, 1921, would, if adopted, result in a deficit in fiscal 
     year 1981 or in fiscal year 1982, the President shall also 
     transmit alternate budget proposals which, if adopted, would 
     not result in a deficit.
       (b) Such alternate budget proposals shall be transmitted 
     with the budget and, except as provided in subsection (c), 
     shall be in such detail as the President determines necessary 
     to carry out the purposes of this section.
       (c) Alternate budget proposals for a fiscal year 
     transmitted under subsection (a) shall include a clear and 
     understandable explanation of specific differences between 
     the budget and alternate budget proposals.
       Fiscal Year 1981 Budget. President Carter submitted his 
     budget for fiscal year 1981 to Congress on January 28, 1980. 
     The President proposed a deficit for fiscal year 1981 of 
     $15.8 billion and a surplus for fiscal year 1982 of $4.8 
     billion. The alternate proposals required by P.L. 96-5 were 
     set forth on pages 319-326 of the budget and explored the 
     impact of both $20 billion in revenue increases and spending 
     reductions (including such options as a six-percent surtax on 
     individual and corporate income, increased payroll taxes, the 
     elimination of Federal pay raises, no real growth in defense, 
     and holding cost-of-living increases in indexed programs to 
     three-fourths of the increase in the Consumer Price Index).
       On March 31, 1980, President Carter sent a package of 
     budget revisions to Congress, calling for surpluses of $16.5 
     billion for fiscal year 1981 and $41.5 billion for fiscal 
     year 1982.
       Fiscal Year 1982 Budget. President Carter submitted his 
     budget for fiscal year 1982 to Congress on January 15, 1981, 
     shortly before leaving office. He proposed a deficit of $55.2 
     billion in fiscal year 1981 and $27.5 billion for fiscal year 
     1982. The alternate proposals required by P.L. 96-5 were 
     included on pages 312-320 of the budget.
       On March 10, 1981, President Reagan submitted to Congress 
     revisions to the Carter budget for fiscal year 1982. The 
     revised budget proposals recommended deficits for fiscal year 
     1981 and 1982 of $54.9 billion and $45.0 billion, 
     respectively.
       The actual deficits (on a consolidated basis) for fiscal 
     years 1981 and 1982 were $79.0 billion and $128.0 billion, 
     respectively.


                         byrd amendment of 1978

       The ``Byrd Amendment,'' named for former Harry F. Byrd, Jr. 
     of Virginia, was included in the Bretton Woods Agreements 
     Amendments Act of 1978 (Section 7 of P.L. 95-435; 92 Stat. 
     1053; October 10, 1978). In its original form, the Byrd 
     Amendment stated: ``Beginning with fiscal year 1981, the 
     total budget outlays of the Federal Government shall not 
     exceed its receipts.''
       Two years later, the Byrd Amendment was modified by the 
     Bretton Woods Agreements Amendment Act of 1980 (Section 3 of 
     P.L. 96-389; 94 Stat. 1553; October 7, 1980) to read as 
     follows: ``The Congress reaffirms its commitment that 
     beginning with fiscal year 1981, the total outlays of the 
     Federal Government shall not exceed its receipts.''
       In 1982, as part of the recodification of Title 31 of the 
     United States Code (P.L. 97-258; 96 Stat. 908; September 13, 
     1982), the Byrd Amendment was restated in its current form: 
     ``Congress reaffirms its commitment that budget outlays of 
     the United States Government for a fiscal year may not be 
     more than the receipts of the Government for that year'' (see 
     31 U.S.C. 1103 (Budget Ceiling)).
                      humphrey-hawkins act of 1978

       The Full Employment and Balanced Growth Act of 1978 (P.L. 
     95-523), commonly known as the Humphrey-Hawkins Act, included 
     two provisions (in the form of amendments to the Employment 
     Act of 1946) that pertain to the goal of a balanced Federal 
     budget. First, Section 103(a) of the Act (92 Stat. 1892-1893) 
     amended the required elements of the President's annual 
     economic Report to Congress to include numerical goals for 
     certain measurements of economic activity consistent with, 
     among other things, a balanced Federal budget. The amended 
     provision of the Employment Act of 1946 (15 U.S.C. 1022, 
     Economic Report of the President) states in part:
       The President shall transmit to the Congress during the 
     first twenty days of each regular session * * * an economic 
     report (hereinafter in this chapter referred to as the 
     ``Economic Report'') together with the annual report of the 
     Council of Economic Advisers, submitted in accord with 
     section 1023(c) of this title, setting forth--
       (2)(A) annual numerical goals for employment and 
     unemployment, production, real income, productivity, Federal 
     outlays as a proportion of gross national product, and prices 
     for the calendar year in which the Economic Report is 
     transmitted and for the following calendar year, designated 
     as short-term goals, which shall be consistent with achieving 
     as rapidly as feasible the goals of full employment and 
     production, increased real income, balanced growth, fiscal 
     policies that would establish the share of an expanding gross 
     national product accounted for by Federal outlays at the 
     lowest level consistent with national needs and priorities, a 
     balanced Federal budget, adequate productivity growth, price 
     stability, achievement of an improved trade balance, and 
     proper attention to national priorities * * * [Emphasis 
     added; other provisions relating to the Economic Report and 
     the goal of obtaining a balanced Federal budget are contained 
     in 15 U.S.C. 1022a and 1022b]
       Second, Section 106 of the Act (92 Stat. 1895-1896) added a 
     new section to the Employment Act of 1946 (15 U.S.C. 1022c, 
     inclusion of Priority Policies and Programs in President's 
     Budget), which states in part:
       To contribute to the achievement of the goals under the 
     Full Employment and Balanced Growth Act of 1978, the 
     President's Budget for each fiscal year beginning after 
     October 27, 1978, shall include priority policies and 
     programs, which shall include, to the extent deemed 
     appropriate by the President, consideration of the 
     following--
       (I) proper attention to balancing the Federal budget; * * *
                          revenue act of 1978

       The Revenue Act of 1978 (P.L. 95-600) called for a balanced 
     budget in fiscal years 1982 and 1983. Section 3 of the Act 
     (Policy With Respect to Additional Tax Reductions; 26 U.S.C. 
     1 note; 92 Stat. 2767), stated:
       As a matter of national policy the rate of growth in 
     Federal outlays, adjusted for inflation, should not exceed 1 
     percent per year between fiscal year 1979 and 1983; Federal 
     outlays as a percentage of gross national product should 
     decline to below 21 percent in fiscal year 1980, 20.5 percent 
     in fiscal year 1981, 20 percent in fiscal year 1982 and 19.5 
     percent in fiscal year 1983; and the Federal budget should be 
     balanced in fiscal years 1982 and 1983. If these conditions 
     are met, it is the intention that the tax-writing committees 
     of Congress will report legislation providing significant tax 
     reductions for individuals to the extent that these 
     reductions are justified in the light of prevailing and 
     expected economic conditions. [Emphasis added]


                          revenue act of 1964

       The Revenue Act of 1964 (P.L. 88-272) included a statement 
     that Congress' action on the measure was intended to bring 
     about a balanced budget, although no reference was made to a 
     specific fiscal year. Section 1 of the Act (Declaration by 
     Congress; 78 Stat. 19), stated:
       It is the sense of Congress that the tax reduction provided 
     by this Act through stimulation of the economy, will, after a 
     brief transitional period, raise (rather than lower) revenues 
     and that such revenue increases should first be used to 
     eliminate the deficits in the administrative budgets and then 
     to reduce the public debt. To further the objective of 
     obtaining balanced budgets in the near future, Congress by 
     this action, recognizes the importance of taking all 
     reasonable means to restrain Government spending and urges 
     the President to declare his accord with this objective.


                   budget and accounting act of 1921

       Section 202 of the Budget and Accounting Act of 1921 (P.L. 
     67-13; 42 Stat. 21; June 10, 1921) requires the President to 
     make appropriate recommendations to Congress in the budget 
     whenever the estimates of revenues and spending in the budget 
     show a deficit or a surplus. In its original form, the 
     section directed the President to recommend ``new taxes, 
     loans, or other appropriate action'' to meet a projected 
     deficit. When the section was restated in the 1982 
     recodification of 
     [[Page S3363]] Title 31 of the United States Code, the 
     specific reference to new taxes and loans was removed. In its 
     current form (31 U.S.C. 1105(c)), the section states:
       The President shall recommend in the budget appropriate 
     action to meet an estimated deficiency when the estimated 
     receipts for the fiscal year for which the budget is 
     submitted (under laws in effect when the budget is submitted) 
     and the estimated amounts in the Treasury at the end of the 
     current fiscal year available for expenditure in the fiscal 
     year for which the budget is submitted, are less than the 
     estimated expenditures for that year. The President shall 
     make recommendations required by the public interest when the 
     estimated receipts and estimated amounts in the Treasury are 
     more than the estimated expenditures.
                                                                    ____

  Mr. LEAHY. Mr. President, I am proud of the action taken by the 
Senate today. This vote was what serving in the Senate is really 
about--having the courage to do what is right, refusing to pass the 
buck to the States, standing up to special interest groups and voting 
our conscience. Once it become obvious that proponents of this 
constitutional amendment planned to use the annual surpluses in the 
Social Security trust fund to mask the true deficit, the so-called 
balanced budget amendment was doomed.
  If this vote had been a secret ballot, it would have been lucky to 
get 40 votes. This is a lesson in why you don't amend the Constitution 
by taking a poll.
  I have commended many of my colleagues for voting against the so-
called balanced budget amendment. In particular, I believe that the 
senior Senator from West Virginia [Mr. Byrd] and the senior Senator 
from Oregon [Mr. Hatfield] should be commended. They were true profiles 
in courage and the country is indebted for their courageous leadership.


   the proposed constitutional amendment requiring a balanced budget

  Mr. ROCKEFELLER. Mr. President, this has been a historic day in the 
U.S. Congress. This afternoon, each of us casted our vote on whether to 
attach an amendment to the U.S. Constitution that would require in the 
strictest possible terms a balanced Federal budget in the next 7 years. 
And I joined my fellow and senior Senator from West Virginia, Senator 
Byrd, who led a serious and important battle against the amendment, in 
voting against this idea. I voted to defend West Virginians from the 
flaws and dangers of this amendment, and to help ensure that our State 
is not forced once again to pay the costs of others' political agendas, 
past mistakes, and potential for reckless harm.
  Today's vote was another victory for the idea that promises like 
Social Security should be kept. That Congress should focus on making 
real choices and setting priorities in dealing with the Federal 
Government's budget, instead of using the Constitution to blindly do 
the job.
  I have no doubt this idea for a constitutional amendment will be 
pushed again. For that reason, I want to outline my concerns again.
  This proposed constitutional amendment will affect the lives of every 
single West Virginian, and every single American--children, parents, 
and grandparents; seniors, workers, and students; our large and small 
businesses, and all their workers; the poor and the disabled--everyone. 
So it is critical that we fully understand what it proposes to do and 
how it will work.
  I suggest that we all have to be able to answer a few key questions: 
First, can the constitutional balanced budget amendment accomplish its 
goal of bringing the deficit down to zero in 7 years? Second, how it 
will accomplish that goal? And third, what are the consequences of 
moving to a zero deficit over a short period of time? Who will 
sacrifice, what programs will be cut, what programs will be spared?
  In short, who wins and who loses? That's what West Virginians tell me 
they want to know about the balanced budget amendment. They're willing 
to participate in a national crusade to get the deficit down--they 
supported the significant downpayment we made on reducing the deficit 
in 1993. As always, West Virginians are willing to do their fair 
share--but they want to know what that share will be. They want to know 
up front. And so do I. Before I give you my
 best answers to those three key questions, I want to note why the 
answers to these questions are essential.

  West Virginia has been told to trust Washington's promises about 
balancing the budget and cutting taxes in the past, as recently as the 
early 1980's. We didn't have the say in the matter then, and we were 
devastated. we don't want to let that happen again. We remember very 
well what happens when the Federal Government claims it can reduce its 
own costs, and then ignores the costs it foists onto the States.
  I remember well because I was Governor of West Virginia, when all too 
similar promises were made. I watched Congress promise to balance the 
budget while cutting taxes. I saw what happened in living Color. West 
Virginia's plants shut down and threw working families into 
foreclosures and bankruptcies. Our kids were forced to drop out of 
college because tuition money had to go to their families' mortgage 
payments and medical expenses. Our senior citizens had to keep their 
thermostats at 58 degrees because they could not afford heating oil. 
When I say I want to see the hidden details of this balanced budget 
amendment, it is not a political ploy or out of intellectual curiosity.
  It is because I have a contract with West Virginia. This time around 
I am here in Congress, not working in the State House, and I insist 
that West Virginia be told how this is going to be done. I insist on 
behalf of the residents of West Virginia. West Virginians take their 
right to know so seriously that the West Virginia Legislature passed a 
bipartisan resolution on February 14, 1995, reaffirming the importance 
of their right to know the details of the balanced budget amendment.
  The West Virginia resolution urged Congress to submit:

       [A] Balanced Budget Constitutional Amendment to the States 
     for ratification only if Congress provides a detailed 
     projection of what reductions will be made in the Federal 
     budget and how these will affect the government and people of 
     West Virginia, including, but not limited to, the effect on 
     Social Security benefits, Medicare, Medicaid, education, 
     highway moneys, including completion of the Appalachian 
     corridor system, and other programs necessary to the health 
     and well-being of the people of our State.

  It's that simple. If you don't tell me how reaching a balanced budget 
is going to be achieved so I can share that information with West 
Virginia, you won't have my vote.
  Democrats proposed just such an amendment. This amendment, the 
citizens' right to know amendment, would have given the States and 
their residents the right to know how we intend to reach a zero deficit 
by 2002. This improvement was offered by Senator Daschle on behalf of 
our Democratic Senate colleagues. It was summarily rejected, mostly on 
party lines, early in the debate on the balanced budget amendment.
  I am both shocked and disappointed that a majority of Members serving 
in the U.S. Senate chose to deny the people whom they represent the 
right-to-know what it would take to reach a balanced budget. And I am 
forced to conclude what a number of Republican leaders have stated 
publicly is the case, they believe that if the people knew what it 
would take to balance the budget--they might not support the 
constitutional amendment.
  The Senate also considered a proposed revision to this constitutional 
amendment to protect Social Security's trust funds. I voted for that 
idea, and watched my colleagues in support of the amendment proceed to 
vote to not protect Social Security. How can West Virginians--working 
people and seniors--trust their elected officials when they pay into a 
trust fund that's supposed to be dedicated only to Social Security, and 
see this rejection of the idea of keeping that promise. The failure of 
this constitutional amendment to protect Social Security is a reason 
alone to reject it.
  In fact, surveys of public opinion show over and over again that 
support for this amendment plummets to 32 percent when they learn that 
Social Security could be cut. I want to be clear. The constitutional 
amendment before the Senate today could lead to cuts in Social 
Security, and if it had prevailed, I am sure it would result in cuts in 
Social Security.
  Having said that, let us turn to the key questions: Can the amendment 
do what its exponents claim and how, and what does that mean?
  [[Page S3364]] Question 1--Can the constitutional amendment achieve a 
balanced budget by 2002?
  A careful reading of the actual legislative language of the balanced 
budget amendment makes clear the amendment alone will do nothing to 
balance our budget. It will not make us any smarter or wiser, or fairer 
when it comes time to proceed with the actual budget bills required to 
make tangible progress toward deficit reduction.
  This Congress does not need a constitutional amendment to perform its 
job of deficit reduction and fiscal prudence. Nothing in this provides 
Congress with any new authority to reduce the deficit, make tough 
budget cuts, or increase revenues. What the amendment says is that the 
Constitution requires Congress to balance the budget--and little more. 
Provisions are included which permit waiving the balanced budget 
requirements, but they have extraordinary hurdles attached to them in 
the form of supermajority rollcall votes. Other unprecedented 
provisions in this amendment would
 rewrite our Constitution's system of checks and balances, in addition 
to the provisions which upset the fundamental principles of majority 
rule.

  The amendment does not lay out explicit definitions of what should or 
should not be counted in tallying up the deficit, or reducing it. It 
doesn't protect any program, not Social Security, not Medicare, not 
defense, not veterans, not children's programs, not disaster aid.
  Congress already has the power to reduce the deficit. It doesn't need 
the algebra of fiscal policy written into the Constitution to do its 
job. And some of us in Congress, myself and my fellow West Virginian, 
the great Senator Byrd included, have stepped up to the plate and 
helped reduce the deficit. Congress has proven it can reduce the 
deficit on its own. We proved that in 1993 during the budget 
reconciliation debate--and we should all learn from that lesson. That 
congressional budget resolution, not a constitutional dictate, reduced 
the deficit. And Congress can and should reduce the deficit again. We 
should make our choices about how to do it prudently. We should take 
into consideration the benefits provided by certain Government programs 
and services, from Medicare to veterans benefits to public health 
programs to environmental protection. But continue on the path of 
deficit reduction we can and must.
  In 1993, when the Vice President had to cast the final Senate vote 
for the President's budget to put us over the edge and ensure we made a 
sizeble downpayment on the deficit, Democrats voted to streamline and 
cut popular Federal programs, to ask individual Americans to contribute 
to our national effort to reduce the deficit, and to increase Federal 
revenues where appropriate.
  That vote was about real deficit reduction--not a popular gimmick, 
not a quick constitutional fix that pretends to reduce the deficit, but 
is nothing more than a soundbyte so we can say we've resolved to get 
our financial house in order.
  Should a balanced budget amendment pass this year, the national 
deficit for 1995 will be exactly the same tomorrow as it is today, even 
if this constitutional balanced budget amendment were to pass 
overwhelmingly. That fact seems to have been obscured by much of the 
talk surrounding this amendment.
  The truth is that those who believe we need to start making the tough 
choices about how to reduce the deficit won't find any tough choices in 
the actual amendment. Indeed, I would argue that this amendment is an 
easy way out--it allows Members to declare their support for a balanced 
budget amendment, and lets them avoid the question of how we're going 
to do it. That's a copout in my book. And it is a huge step backward 
from the progress we made under the administration's 1993 budget that 
put us on the path to a reduced deficit with explicit, program-by-
program cuts.
  A specific budget plan that details how we will achieve a balanced 
budget is the only real way to reduce the deficit and balance the 
budget--with or without this constitutional amendment. We have seen no 
such plan from the Republican majority during the debate of this 
amendment, although the new majority leader has shared his speculation 
about the level of some cuts which might be necessary with some news 
organizations.
  Just this week, the new chairman of the Finance Committee, Senator 
Packwood, has speculated what kind of cuts would be necessary out of 
the health care programs for the elderly and disabled, and for poor 
children and pregnant women--$250 billion out of Medicare and Medicaid 
over the next 5 years, and some $400 billion over the full 7-year 
timeframe to reach balance. That's late breaking news from some of the 
Republican leaders and it raises real questions about why we have been 
provided with so little in terms of hard numbers to date.
  I know West Virginia seniors, rural hospitals, the disabled, and 
doctors who care for Medicare and Medicaid patients will be 
significantly affected by the unprecedented cuts described by Senator 
Packwood. But even as the new congressional leadership begins to give 
us real numbers about what will be required of certain programs--I have 
heard very little about how they are going to make those cuts--which 
providers' rates will be cuts, how much more seniors will pay out-of-
pocket, if children can still count on receiving basic health care 
services, and so on. The lack of details has been astounding.
  Question 2--How will we achieve the goal of a balanced budget in 7 
years?
  My answer to question 1 was that the constitutional amendment would 
not, of and unto itself, balance the budget. It merely says we have to 
do it. The only answer I can offer to question 2 is those in control of 
the numbers haven't told us how they will achieve the goal. They just 
say they will. They say ``trust us.'' That is it. Thats all the detail 
you get from the amendment.
  True, by thinking about the basic components of the Federal budget, 
you can start figuring out what programs will take major hits under a 
balanced budget amendment--the health programs, Medicare and Medicaid, 
Social Security if Congress reneges on its ephemeral promise to protect 
it. Even the staff of the Republican chairman of the Budget Committee, 
Senator Domenici's staff, has concluded that over $664 billion
 in cuts will be required in non-Social Security, non-defense mandatory 
entitlement programs to reach a zero deficit by the year 2002. That's 
nearly $100 billion in cuts every year if you spread it out. But they 
will not tell you how.

  I want to take a moment to explain a couple of very important 
amendments to the balanced budget resolution, and my views of them. You 
will recall that the Democratic amendment to exempt the Social Security 
Program from the calculations of the constitutional balanced budget 
amendment was rejected by a majority of Members. I voted for that 
initial amendment to protect Social Security because I saw it as a way 
to protect Social Security--and other--people from unfair harm, from 
broken promises, and for the sound financial reason that Social 
Security has not contributed to our deficit problems. It is a trust 
fund.
  During the amendment process, I also voted for additional protections 
for other vital programs as well, but that approach to protecting 
certain populations from the ravages of the balanced budget amendment 
failed.
  Recognizing that a series of those protective amendments failed to 
win passage, I could not vote for the substitute balanced budget 
amendment offered by Senator Feinstein. The amendment has the laudable 
goal of, once again, attempting to protect Social Security 
beneficiaries as I voted to do earlier in this process, but it still 
would have required a balanced budget in a 7-year timeframe. This 
amendment would still put a straitjacket on the country's economic and 
budget policy, it could still cause the devastating effects that the 
main proposal before us poses for West Virginians and the rest of 
Americans. It still could turn a period of high unemployment into a 
recession. In protecting Social Security, but serving as the same 
speeding train, the Feinstein amendment might also mow down benefits 
for war-injured veterans, Medicare payments that rural hospitals depend 
on to survive, the programs that help create jobs in our communities, 
funds for our schools. Had the Feinstein amendment prevailed, it would 
have forced even more draconian cuts in services and benefits where 
[[Page S3365]] they shouldn't be made. You can be sure that I will 
fight as hard as anyone to protect Social Security, but slapping a 
balanced budget amendment onto the Constitution is not the way to do 
that.
  Many Members also claim they want to protect defense from cuts as a 
result of the balanced budget, but haven't made any hard promises that 
they will do it. Other programs like veterans compensation and health 
care were not protected during the amendment process either--despite my 
offering what I believe to be a very surgical way to protect a special 
category of particularly needy and deserving veterans. It failed. 
Veterans have no guarantees that they are safe from the balanced 
budget's requirements for cuts.
  And that leads us to question three.
  Question 3--What are the consequences for our families, for our 
businesses, and for our States, of balancing the budget in 7 years?
  Even if one accepts the lack of specific information regarding how we 
would actually reach a balanced budget, one of the things Congress is 
always responsible for doing is assessing the consequences of our 
actions. That's impossible to do without the detailed plan or road map 
of how we are going to get from here to there.
  The amendment itself has been the subject of serious debate over the 
last few weeks in the U.S. Senate. Much of that debate has been a 
direct result of the tremendous effort and careful analysis of the 
senior Senator from West Virginia, Robert C. Byrd--we all owe him a 
debt of gratitude for the numerous illuminations he has provided. And I 
thank each of my colleagues for their various contributions and 
commentary on a whole list of amendments which have been offered as 
modifications to the amendment. I would like to be able to point to a 
single strengthening amendment beyond the limitation of how the courts 
can intervene in setting our budgetary and tax policies, but cannot.
  But I do honestly believe that the Senate has come to understand what 
is decipherable from the text of the amendment, and the intent of its 
proponents, because of this debate--even though we have not been 
provided the critical road map which would show us how we would achieve 
the balance of the Federal budget. What we do know about how this 
amendment would work is troubling to me as well.
  It astounds me to see Senators voting for this amendment without 
knowing how this amendment affects their States and our citizens, how 
vulnerable populations like children and seniors would fare under this 
amendment. I believe the citizens of West Virginia deserve to know how 
this amendment will affect their daily lives, the safety of the water 
they drink, the quality of the air they breathe, the health care 
services they need, the student loans their children need to make 
college affordable, and the roads which they drive on to get to and 
from work every day.
  They deserve to know how this amendment will affect the basics of 
their daily lives--and because the majority voted down the right to 
know amendment offered by the minority leader they will not know. They 
cannot know because Congress does not know. All Congress knows is the 
amendment will constitutionally mandate us to find a way to make sure 
we do not spend any more than we take in every year--that's the only 
assurance in the entire amendment--every other provision is a maybe.
  The cost-shifting that the balanced budget would cause to families 
and businesses in my State of West Virginia and in every State is 
mammoth. Statistics compiled by the Treasury Department, by the 
respected Wharton School, and by the Center for Budget and Policy 
Priorities, among others, give us a picture of how the amendment will 
affect our citizens even in the absence of detailed numbers, and 
program by program explanations.
  The different analyses I have seen tell us that under the balanced 
budget amendment, in West Virginia, 22,000 jobs will be lost, personal 
income will drop, health care services will be limited, and State and 
local taxes will have to be increased by over 20 percent to compensate 
for lost Federal dollars.
  The studies show that the State of West Virginia would have to raise 
its State and local taxes 20.6 percent across the board to compensate 
for the funds it would lose under the balanced budget amendment; that 
22,000 jobs are projected to be lost in West Virginia as a result of 
the balanced budget amendment (in 2003); that personal income in West 
Virginia is projected to drop by 8 percent as a result of the balanced 
budget amendment (in 2003); that the balanced budget amendment and the 
House contract's fiscal agenda would result in a loss of $96 million in 
Federal grants in 1996--which is $53 per resident.
  West Virginia would lose $322 million in 1998, $175 per resident of 
West Virginia.
  West Virginia would lose $841 million in 2002, $457 per person in 
West Virginia.
  West Virginia Medicare benefits would be cut by $824 million per year 
(by the year 2002), and total over $3 billion cumulatively.
  West Virginia Medicaid funding would be cut by $488 million per year 
(by the year 2002).
  Those projections provide a pretty stark picture of the consequences 
of this amendment. They tell me I cannot support this balanced budget 
amendment. And they raise a whole lot of additional questions about how 
this amendment will affect our national economy. How will the amendment 
affect West Virginia's economic recovery, and the economic future of 
our States? How will our most vulnerable populations fare under the 
amendment? How will defense be treated in the process? What kind of 
cuts, reforms, or increased revenues are necessary to take us from 
today's deficit, (which has steadily
 been reduced over the last 3 years for the first time since Harry 
Truman was President due to Democratic budget initiatives), to a zero 
deficit and how will we maintain that during natural disasters, 
recessions, or national security threats? How will we get from here to 
there?

  These are more of the kind of questions that West Virginians have 
called my office asking me and my staff. These are the kind of 
questions I want hard answers to before I vote in favor of any balanced 
budget amendment. Because this is such a serious matter, amending the 
document which enshrines our Nation's guiding principles and which is 
our Nation's organic law, I would like to list a series of additional 
concerns about the amendment which the Senate debate of recent weeks 
has only served to highlight.
  In some cases, we have had assurances from the amendments' proponents 
that some of these concerns will be met in implementing legislation, or 
because there is strong support for certain programs. But West 
Virginians have no guarantee of anything under this amendment. I cannot 
cast my vote on a constitutional amendment based on personal assurances 
of Members, even those from Members for whom I have the utmost regard. 
I have to cast my vote based on the actual language of the 
constitutional amendment and it remains deeply troubling to me.
  First, I reiterate, nothing in the balanced budget amendment makes 
government more efficient, less wasteful, or stops unnecessary 
spending. Only specific legislation, like the President's own deficit 
reduction initiative, which passed without a solitary Republican vote, 
can do that. The debate makes it sound like this amendment is a magic 
bullet to our perplexing budget dilemmas.
  Second, this amendment would result in big increases in State and 
local taxes. One Governor concludes that without seeing the plan for 
how balancing the budget will be accomplished, this amendment should be 
considered a vote to raise State and local taxes. He dubbed the 
existing amendment a ``trickle down tax increase''.
  Third, the balanced budget amendment is bad economic policy. Basic 
economics tells us the size of the deficit is directly related to the 
health of the economy. The deficit rises when the economy weakens--but 
temporary increases in the deficit act as automatic economic 
stabilizers. When family and business incomes decline, their tax 
liabilities decline more than proportionately. The resulting deficit 
means the government is paying out more than it takes in, 
counterbalancing the fall in the economy. This is true on the spending 
side as well. For example, when workers lose their jobs, higher 
outlays 
[[Page S3366]] for unemployment, Medicaid, and other programs help fill 
the gap in family budgets, and in overall economic activity, until the 
economy or people's individual situations improve. If a balanced budget 
were required every year, that cushioning effect would not be there.
  A balanced budget amendment would force us to cut spending or raise 
taxes to eliminate increases in the deficit caused by a slowing 
economy. Our fiscal policies would make the natural swings in the 
economy more pronounced--recessions will be deeper and longer.
  The proposed super-majority vote that would permit a deficit to exist 
during times of economic weakness is ineffective. Congress would have 
to be more prescient than private sector forecasters in order to 
develop the needed consensus to waive the strict balanced budget 
requirement.
  Fourth, the amendment does not adequately address how it will be 
enforced--making it either unenforceable or turning over enforcement to 
the courts or the President. The amendment would fundamentally 
restructure the balance of power set forth in the Constitution and 
could still empower unelected judges to raise taxes or cut spending, 
despite a restriction placed on the courts in an amendment offered by 
Senator Nunn in the closing moments of this debate. If the amendment 
were deemed unenforceable, respect for the Constitution would be 
severely diminished and rule of law would be undermined.
  The question of who will enforce this amendment has not been 
adequately answered by its proponents. Will it be the courts or the 
President--or is it intended not to be enforceable? Placing an 
unenforceable amendment in our Nation's charter would result in 
countless constitutional violations and make all other constitutional 
rights, by extension, violable as well.
  Judicial involvement in the budgetary process would be unprecedented, 
even for declaratory judgments, and yet the balanced budget amendment 
significantly increases judicial authority. Under this amendment, 
judges may be the ones asked to make the hard choices about that the 
Congress is accountable for making today--and I strongly believe judges 
lack the institutional capacity to make those decisions. It's wholly 
inappropriate to shift that duty to them.
  The Constitution's decision to give the ``power of the purse'' to the 
legislature was not made lightly. This amendment could transfer some of 
that power to the courts.
  Fifth, rules for fiscal policy should not be written into the 
Constitution.
 The Constitution is a miraculous document precisely because it 
establishes transcendent national ideals and freedoms and the structure 
of our Government, without micromanaging its performance. It sets 
individual rights and creates a system of separation of powers, our 
checks and balances, which protect against any one branch of government 
becoming too powerful.

  Fiscal policies respond to current economic conditions and the 
structure of the economy--those conditions and structures are 
constantly changing and should not be restricted to today's needs. 
Fiscal policy should reflect a constantly changing economic 
environment, not written in stone in the Constitution.
  Sixth, the amendment violates the our traditionally democratic 
principle of majority rule. The amendment requires a three-fifths 
supermajority vote to pass a law that allows deficit spending or a debt 
increase. For more than two centuries, the Constitution has only 
required a supermajority vote for measures vetoed by the President. 
Giving a minority the power to absolutely block legislative action 
would be an unprecedented undermining of majority rule. The wholesale 
transfer of power from the majority to the minority in cases where 
there is a recession, need to respond to an international or natural 
crisis, or to extend the Treasury's ability to borrow to pay the 
government's bills should not be permitted.
  Seventh, the balanced budget amendment will create uncertainty about 
the reliability of government services and obligations. There is a real 
practical difficulty in insuring the government's budget is balanced 
every year. If estimates are inaccurate (as they can very well be) and 
mid-year revised projections show a deficit by year's end--where will 
the money to compensate for the deficit come from? Interest payments 
can't be defaulted on, cutting entitlement programs like Medicare with 
millions of beneficiaries count on would be extremely unpopular, 
especially in the circumstance that there is very little notice--which 
means discretionary programs would probably take the mid-year hit. 
Discretionary programs like student loans could be totally shut down.
  In sum, this constitutional amendment is the most expansive amendment 
to our Constitution brought to a vote in both Houses in the last 206 
years. The amendment is almost as long as the entire Bill of Rights, 
and it would embed fiscal policy in our Constitution. It's called the 
balanced budget amendment but does nothing more than say we should 
balance the budget--the amendment is misnamed, it should be called the 
``Let's Use the Constitution to Promise We Will Balance the Budget 
Amendment.''
  When the rhetoric of the virtues of financial responsibility or 
balance has to be translated into action which will cut the deficit, it 
will mean across the board cuts in programs which millions of Americans 
rely on for their health care and nutritional needs, to help send their 
children to college, to improve their highways and bridges, and to 
protect our environment. It dodges the toughest questions of how we can 
get our national health care costs, private and public, under control--
and that is both a fundamental flaw of this amendment and a disgrace. 
In my judgment it will hurt West Virginians and have the harshest 
effect on the most vulnerable people in my State and in our country. I 
cannot in good conscience vote for this amendment.
  But I can, and will, continue my efforts to reduce the deficit, and 
to make government programs more responsive to those they serve, and to 
eliminate duplication and waste as we strive to make government leaner 
and more efficient, and to manage the costs of priority government 
programs. A lion's share of that work will be in finally dealing with 
health care costs and access problems that we failed to address, in 
part, because the importance of comprehensive health care reform to 
getting our national deficit under control was not sufficiently 
understood.
  I will continue to be willing to stand up and cast the tough votes if 
they are necessary to improve our Nation's overall economic health. But 
I cannot vote for this amendment because my constituents have been 
denied the basic information about how this amendment would affect 
their daily lives. In the absence of real information of its 
consequences, I have had to piece together the effects based on common 
sense assumptions of what will happen. I am dismayed that there has 
been a almost uniform refusal to improve this amendment to address the 
real concerns which have been raised.
  It seems appropriate to reflect upon the words of our Founders. I 
close with the words of Thomas Jefferson who drafted the venerable 
Constitution which this amendment proposes to radically alter. Thomas 
Jefferson said:

       I know of no safe depository of the ultimate powers of 
     society but the people themselves; and if we think them not 
     enlightened enough to exercise their control with a wholesome 
     discretion, the remedy is not to take it from them, but to 
     inform their discretion.

  That is a perpetual responsibility of Congress and the business we 
should be getting about today.


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