[Congressional Record Volume 143, Number 25 (Monday, March 3, 1997)]
[Senate]
[Pages S1820-S1822]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               SAY ``NO'' TO A BALANCED BUDGET AMENDMENT

  Mr. LAUTENBERG. Mr. President, I would like to take some time to talk 
about the vote that is pending tomorrow and the subject of the balanced 
budget amendment. We are coming to the close of yet another marathon 
debate on this subject, and I hope that I can crystallize the 
perspective and detail some of the major concerns of those of us who 
oppose this amendment.
  Mr. President, it is tempting, as the debate goes on, to accept right 
being on our side; the other side claims right and the moral imperative 
that says we should pass this balanced budget amendment, put it into 
the Constitution, open it up, have the courage to step forward.
  The courage is to be in the minority and say, ``No,'' though the most 
popular view is to amend the Constitution because the folks we 
represent, each of us in our States, really have not been made aware of 
what the penalty is if we lock ourselves into an amendment to the 
Constitution.
  We will be saying to people that in the future, programs that you 
relied on to sustain your family, to take care of your health care, to 
take care of your child's education, to take care of your unemployment 
insurance, may not be available, and if this country starts to slide 
into a recession, we may go the whole route.
  So, as we listen to the debate, it is very hard not to get to feeling 
rather sanctimonious about the side that we are on. I simply point out, 
as we talk about bipartisanship, and note that the Democrats are all of 
the votes in opposition, the 34 contemplated votes in opposition to the 
balanced budget amendment. Not the majority. The majority says, ``We 
can't manage our own behavior; we have to be controlled by other 
strictures, we have to be told that we are not allowed to do these 
things,'' not that we were sent here, elected to this honorific body, 
one of 100 out of 260 million people, who say we have the guts to stand 
up and make the decisions or pay the consequences.
  We talk about courage. The courage is to say, ``No; we will accept 
the voters' decision in the future when we run for election if we 
insist on maintaining the posture as it is.'' Good news brought us to 
this point, to where the budget deficit has been reduced by over 60 
percent in the last 4 years, where job growth is up to 11 million new 
jobs, as major company after major company shrinks down, closes its 
doors, sends its jobs overseas. The good news is inflation is under 
control, that our percentage of deficit to GDP is the smallest among 
the advanced nations of the world and the envy of all the other 
countries.
  So, Mr. President, I would like to discuss four points that go to the 
heart of the debate and hope that we will stay the course as it is and 
say no to a balanced budget amendment and say yes to the American 
people, that we have the backbone to stand up to this debate and we are 
obliged to carry on your wishes.
  First, the evidence is mounting and the public tide is turning 
against this amendment. Economist after economist, newspaper after 
newspaper, academic after academic believes this amendment is bad for 
the Nation, and for good reasons.
  Two, we will balance the budget without a balanced budget amendment.
  Third, the balanced budget amendment could wreak havoc with the 
economy and the economic security of millions of Americans.
  And four, it would be almost impossible to undo the damage of a 
balanced budget amendment once the harm is done.
  On the first point, the mounting opposition to the balanced budget 
amendment is not confined to one group of Senators or Members of the 
House. It is also not limited, when we consider both bodies, to a 
particular party or segment of the political spectrum.
  Federal Reserve Chairman Alan Greenspan, former CBO Director Rudy 
Penner, former Solicitors General Robert Bork and Charles Freid, not to 
mention our former and esteemed colleague, Senator Mark Hatfield, have 
all weighed in against the balanced budget amendment. Even last year's 
Vice Presidential candidate, Jack Kemp, appearing on ``Meet the Press'' 
called the amendment ``a recipe for future disaster in this country.''
  In the November 25, 1996, edition of Newsweek, conservative columnist 
George Will wrote:

       The Constitution should not be amended, unless there is a 
     compelling reason to do so.

  He goes on to say:

       Current conditions do not constitute a compelling reason.

  In its November 15, 1996, lead editorial entitled ``An Amendment is 
Poor Substitute for Backbone,'' USA Today said:


[[Page S1821]]


       Drafting a balanced budget amendment is a waste of 
     parchment. The history of balanced-budget measures show that.

  The Wall Street Journal, not exactly a bastion of liberal thought, 
labeled the amendment a ``constitutional boondoggle,'' calling the 
amendment a ``flake-out.'' The Journal went on to say:

       The notion of amending the Constitution to outlaw budget 
     deficits is silly on any number of counts.

  The Washington Post, too, had a scathing review of the balanced 
budget amendment. In its January 30, 1997, editorial, ``No to a Bad 
Amendment,'' the Post concluded:

       This is a fake show of strength and abuse of the 
     Constitution whose effect would be to harm the system of 
     government it purports to help.

  The New York Times called it ``an idea that looked good in the 
abstract but is dangerous in the reality.''
  And one of my home State newspapers in New Jersey, the Bergen Record, 
tagged the balanced budget amendment as ``a misguided measure'' and a 
``bad idea.''
  On the economic policy front, Federal Reserve Chairman Dr. Alan 
Greenspan, who is known for choosing his words carefully, recently 
expressed his reservations about the balanced budget amendment. At a 
January 21 Budget Committee hearing, in response to a question that I 
asked on the balanced budget amendment, Dr. Greenspan said:

       I have not been sympathetic to the specific details of most 
     balanced budget amendments largely because I think they are 
     very difficult to enforce, and I am terribly much concerned 
     about the issue of employing detailed economic policy within 
     the Constitution itself.

  Mr. President, on January 30, along with some of my colleagues, I 
joined with a message from over 1,000--it was printed in the paper--
leading economists, including 11 Nobel Prize winners in economics, in 
speaking out against this amendment. At the press conference releasing 
this statement, one of the participants asked a very good question. He 
said: ``Where are all of the conservative economists in favor of the 
balanced budget amendment?''
  The answer is that most of them are keeping a safe distance from it, 
and with good reason. The balanced budget amendment is fatally flawed 
economic policy.
  Mr. President, my second point is that we do not need this amendment.
  During the 1980's and the early 1990's, those who supported the 
amendment could point to historic increases in our annual deficits and 
the persistent unbalanced budgets submitted by both Republican and 
Democratic Presidents. Their concerns were understandable. In 1979, the 
deficit was $41 billion. In 1979 --almost 20 years ago--it was $41 
billion or 1.7 percent of GDP. When President Clinton took office, the 
deficit was $292 billion and was expected to crest at $347 billion in 
1997. The deficit as a percentage of gross domestic product stood at a 
whopping 4.9 percent.
  This staggering rise in the deficit led many to conclude that only a 
constitutional amendment could force the Federal Government to be 
fiscally responsible. The proponents pointed to the tide of red ink 
flooding the Nation and argued for this stop-me-before-I-spend-any-more 
amendment.
  But that sense of hopelessness has been now proven wrong.
  Since President Clinton took office, the deficit has gone down 
consistently and dramatically. Last year, it fell to $107 billion and 
1.4 percent of GDP. It is now the lowest deficit, as a percentage of 
GDP, of any major industrialized country. President Clinton has a plan 
to make it balance in the year 2002, and it will be a real balanced 
budget, not this raincheck of an amendment that may be--and it is a big 
``may be''--redeemed at a later date.
  We have proven that the Congress and the President can be fiscally 
responsible. I want to state in the strongest possible terms that we do 
not need an outdated and dangerous constitutional gimmick to do the 
job. We can do the job on our own, and we will.
  Mr. President, my third point is that the balanced budget amendment 
is a catastrophe waiting to happen. Perhaps most importantly, it would 
substantially aggravate economic downturn and it could turn a slowdown 
into a recession and a recession into a great depression. For example, 
during the Bush recession, real GDP fell 2 percent. If the balanced 
budget amendment had been in place, real GDP might have declined by 4 
percent or more.
  Last year, the Treasury Department issued a very interesting report 
on how a balanced budget amendment would have worsened the Bush 
recession. I want to quote from it. They said:

       A balanced budget amendment would force the government to 
     raise taxes and cut spending in recessions--at just the 
     moment that raising taxes and cutting spending will do the 
     most harm to the economy and aggravate the recession.

  That is what the Treasury Department said.
  During a recession, we need every tool at our disposal to deal with 
the economic downturn. The Government must be nimble and responsive, 
but the balanced budget amendment autopilot could send the economy into 
a tailspin. One President tried to balance the budget during a 
recession. His name was Herbert Hoover, and the recession quickly 
became the Great Depression.
  I am also very concerned that the balanced budget amendment could 
eliminate many of the automatic stabilizers, like unemployment 
insurance that protects people during a downturn and cushions some of 
the pain. Under current law, if unemployment goes up, so do 
unemployment insurance payments. That not only helps the workers and 
their families, but it moderates the impact of a recession on industry.
  Secretary Rubin estimates that without our automatic fiscal 
stabilizers, unemployment in 1992 may have crested at 9 percent, 
instead of 7.7 percent, which would have meant more than a million 
additional jobs could have been lost.
  It is possible that eventually we could have found the three-fifths 
supermajority needed to waive the provisions to the amendment. But 
Congress moved slowly even without a supermajority requirement, and 
most likely by the time we had reacted to the unfolding slowdown, the 
damage would have been done.
  Another major problem with this balanced budget amendment is that it 
increases the likelihood that the Government will default on its debt. 
The amendment includes language that requires a three-fifths majority 
vote in both Houses in order to raise the debt limit. This little-known 
provision is extremely dangerous, as one can imagine, to have a small 
minority denying the ability to raise the debt limit when it could very 
well be essential.

  Mr. President, the Nation was taken to the brink of default in 1995. 
Fortunately, cooler heads prevailed in that feverish atmosphere, and we 
were able to raise the debt ceiling by a simple majority vote. But what 
would have happened in 1995 if the supermajority rule had been in 
place? A minority, as I said, in Congress could have caused a default 
on our financial obligations.
  A default would have disastrous consequences. The Treasury would be 
prevented, at least temporarily, from issuing checks for Social 
Security, Medicare, and veterans benefits. Our creditworthiness would 
be shot. The Nation would suffer a profound and long-lasting increase 
in interest rates, harming all those who borrow. Homeowners making 
payments on adjustable rate mortgages would be especially hard hit. And 
these higher interest rates would make it even harder to balance the 
budget thereafter as the Nation would have to devote an even larger 
share of the budget to interest on the national debt.
  Mr. President, my fourth and last point is that there is no fail-
safe, sunset or automatic review built into this amendment. Congress 
has passed far lesser measures that contain at the very least a sunset, 
a time when this automatically stops for review. A case in point is the 
line-item veto that was enacted into law last year and contains a 9-
year sunset.
  But this balanced budget amendment, that is by far one of the most 
sweeping and dangerous pieces of legislation ever to come before the 
Congress, has none. This is most troubling to this Senator, as it 
should be to all Americans.
  What would happen if the balanced budget amendment caused the type of 
problems that I just outlined? Remember, this is not a simple piece of 
legislation. This is a constitutional amendment. Imagine our Nation, 
wracked by recession or, even worse, depression. Millions are out of 
work. Factories are

[[Page S1822]]

shuttered. Bankruptcy and foreclosures are rampant. Because a 
constitutional amendment is in force, Congress could not take the quick 
and responsive action that may be necessary, as we did during the Bush 
recession. The only legal course of action left to us would be yet 
another constitutional amendment to repeal this bad one and undo the 
damage.
  But hang on a minute. The last time that happened was in 1933, over 
60 years ago, when the 21st amendment was ratified repealing the 18th 
amendment to the Constitution. The 18th amendment was prohibition. It, 
too, was supposed to save us from ourselves and legislate backbone. It 
took 14 years to repeal it.
  During a depression we could not wait that long. The American people, 
who depend on our sound judgment and rely on our fiscal stewardship, 
certainly cannot wait that long. And neither should we. We should vote 
against this amendment.
  Mr. President, let me again emphasize that I agree with the need to 
be fiscally responsible, and I am committed to working toward a 
balanced budget. The President of the United States proposed a budget 
that balances in the year 2002. We have a challenge. Let us examine it. 
As the ranking Democratic Member of the Budget Committee, I believe we 
can reach a balanced budget agreement this year. But we can do it 
without this flawed constitutional amendment.
  The former majority leader of the Senate, Mike Mansfield, said that 
he owed the people of his State more than an echo; he owed them his 
judgment. It is my best judgment, Mr. President, that this amendment is 
bad for the people of New Jersey, as it is bad for the people all 
across our Nation. I urge my colleagues to do the right thing and 
oppose this amendment.
  I yield the floor and see my colleague, who is the right stuff, from 
Ohio about to take the floor. We will listen with interest.
  Mr. GLENN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Ohio.

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