[Senate Report 104-5]
[From the U.S. Government Publishing Office]



                                                        Calendar No. 16
104th Congress                                                   Report
                                 SENATE

 1st Session                                                      104-5
_______________________________________________________________________


 
                BALANCED-BUDGET CONSTITUTIONAL AMENDMENT

                                _______


 January 24 (legislative day, January 10), 1995.--Ordered to be printed

_______________________________________________________________________


Mr. Hatch, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                             together with

              ADDITIONAL, MINORITY, AND SUPPLEMENTAL VIEWS

                       [To accompany S.J. Res. 1]
    The Committee on the Judiciary, to which was referred the 
bill (S.J. Res. 1) to propose an amendment to the Constitution 
relating to a Federal balanced budget, having considered the 
same, reports favorably thereon, and recommends that the bill 
do pass.
                                CONTENTS

                                                                   Page

  I. Purpose..........................................................2
 II. Legislative history..............................................3
III. Discussion.......................................................6
 IV. Votes of the committee..........................................12
  V. Text of S.J. Res. 1.............................................14
 VI. Section-by-section analysis.....................................15
VII. Cost estimate...................................................20
VIII.
     Regulatory impact statement.....................................23
 IX. Additional views of Mr. Kyl.....................................24
  X. Additional views of Mr. Biden...................................26
 XI. Minority views of Messrs. Kennedy, Leahy, and Feingold..........31
XII. Supplemental minority views of Mr. Leahy........................60
XII. Additional views of Mr. Heflin..................................70
XIV. Minority views of Mr. Feingold..................................74
 XV. Changes in existing law.........................................76
                               I. Purpose

    The Balanced-Budget Constitutional Amendment sets forth, in 
the Nation's governing document, the basic principle that the 
Federal Government must not spend beyond its means. This 
principle, Thomas Jefferson once said, is of such importance 
``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's words ring true today. The 
discipline imposed by a balanced-budget amendment may be the 
only way to avoid leaving future generations of Americans with 
an overwhelming legacy of debt.
    The notion of a limitation of the Government's budgetary 
authority by a governing document is deeply rooted in our 
traditions; it is a notion which goes back as far as the Magna 
Carta. Our predecessors were entirely aware of these traditions 
when they said:

          The public debt is the greatest of dangers to be 
        feared by a republican government.

And

          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 * * * 
        additional means for the display of individual 
        enterprise.

The first statement was made by Thomas Jefferson and the second 
by Andrew Jackson.
    These two quotations illustrate an important truth: No 
concept is more a part of traditional American fiscal policy 
than that of the balanced budget. In fact, Jefferson himself 
wished the Constitution had included a prohibition on 
government borrowing because he thought that one generation 
should not be able to obligate the next generation.
    James Madison, in explaining the theory undergirding the 
Government he helped create, had this to say about governments 
and human nature:

          Government [is] the greatest of all reflections on 
        human nature. If men were angels, no government would 
        be necessary. If angels were to govern men, neither 
        external or internal controls on government would be 
        necessary. In framing a government that is to be 
        administered by men over men, the great difficulty lies 
        in this: You must first enable the government to 
        control the governed; and in the next place oblige it 
        to control itself. A dependence on the people is no 
        doubt the primary control on government; but experience 
        has taught mankind the necessity of auxiliary 
        precautions.

[Federalist No. 51.]

The Balanced-Budget Amendment is an additional ``auxiliary 
precaution'' which helps restore two important elements in the 
constitutional structure: limited government and an accountable 
deliberative legislative assembly, both of which are vital to a 
free and vibrant constitutional democracy.
    A deliberative assembly, the essence of whose authority is, 
in Alexander Hamilton's words, ``to enact laws, or in other 
words to prescribe rules for the regulation of society'' for 
the common good, was considered by the Framers of the 
Constitution the most important branch of government because it 
reflected the will of the people. Yet, as the maker of laws, it 
was also considered the most powerful and the one that needed 
to be guarded against the most.
    Recognizing that ``[in] republican government the 
legislative authority, necessarily, predominates'' and to 
prevent ``elective despotism,'' James Madison, the ``Father of 
the Constitution,'' recommended that the Philadelphia 
Convention adopt devices in the Constitution that would 
safeguard liberty. These include: bicameralism, separation of 
powers and checks and balances, a qualified Executive veto, 
limiting congressional authority through enumerating its 
powers, and, of course, the election of legislators to assure 
accountability to the people.
    However, in the late twentieth century, these 
constitutional processes, what Madison termed ``auxiliary 
precautions,'' have failed to limit the voracious appetite of 
Congress to legislate into every area of private concern, to 
invade the traditional bailiwick of the States, and, 
consequently, to spend and spend to fund these measures until 
the Federal Government has become functionally insolvent and 
the economy placed in jeopardy.
    The Balanced-Budget Amendment will go a long way toward 
ameliorating this problem. It will create an additional 
constitutional process--an ``auxiliary precaution''--that will 
bring back legislative accountability to the constitutional 
system. The Balanced-Budget Amendment process accomplishes this 
by making Federal deficit spending significantly more 
difficult.

                        II. Legislative History

    In 1936, Representative Harold Knutson of Minnesota 
proposed the first constitutional amendment to balance the 
budget (H.J. Res. 579, 74th Cong.). This proposal would have 
established a per capita limitation on the Federal public debt. 
Since that time, numerous constitutional provisions have been 
proposed to require a balanced budget.
    S.J. Res. 1 derives from work begun in the Senate Judiciary 
Subcommittee on the Constitution in the 96th Congress. 
Throughout 1979 and early 1980, the subcommittee held a series 
of hearings across the country--eight in total--on the subject 
of a balanced-budget amendment. Senators Hatch, Thurmond, 
DeConcini, Heflin, and Simpson introduced S.J. Res. 126, which 
was reported out of the subcommittee on December 18, 1979, by a 
vote of 5 to 2. On March 15, 1980, the full Committee on the 
Judiciary defeated S.J. Res. 126 by a vote of 9 to 8.
    The same principal sponsors reintroduced S.J. Res. 126 in 
the 97th Congress as S.J. Res. 58. During the early part of 
1981, the subcommittee held four additional days of hearings. 
On May 6, 1981, the subcommittee voted 4 to 0 to report out the 
amendment, but only after adopting an amendment in the nature 
of a substitute offered by Senator Hatch. On May 19, 1981, the 
full Committee on the Judiciary favorably reported S.J. Res. 58 
by an 11-to-5 vote.
    On July 12, 1982, the Senate began consideration of S.J. 
Res. 58. On August 4, 1982, following the adoption of a package 
of amendments by Senators Domenici and Chiles and the 
acceptance of an amendment by Senators Armstrong and Boren, the 
Senate passed S.J. Res. 58 by a 69-to-31 vote. This marked the 
first time either House of Congress had approved such a 
measure.
    On October 1, 1982, following a successful discharge 
petition effort, the House of Representatives considered H.J. 
Res. 350, the House counterpart to S.J. Res. 58. Although a 
substantial majority of the House voted in favor of the 
amendment, the 236-to-187 margin fell short of the necessary 
two-thirds vote.
    In the 98th Congress, the Subcommittee on the Constitution 
held 2 days of hearings on S.J. Res. 5. On March 15, 1984, the 
subcommittee approved S.J. Res. 5 by a 4-to-1 vote and referred 
the measure to the full committee. On September 13, 1984, 
following the adoption of an amendment offered by Senator 
DeConcini, the full Committee on the Judiciary approved S.J. 
Res. 5 by a vote of 11 to 4. However, the full Senate did not 
vote on the measure before the 98th Congress came to a close.
    S.J. Res. 13 was introduced by Senator Thurmond on the 
first day of the 99th Congress. Following a hearing, the 
Subcommittee on the Constitution held a markup of S.J. Res. 13 
on May 15, 1985, at which the subcommittee adopted an amendment 
in the nature of a substitute offered by Senator Thurmond, and 
then approved S.J. Res. 13, as amended, by a unanimous 5-to-0 
vote. After considering S.J. Res. 13 during May, June, and 
July, the full Judiciary Committee reported it favorably on 
July 11, 1985, by a vote of 11 to 7. At the same time, the 
committee approved S.J. Res. 225, a simplified proposed 
amendment introduced by Senators Thurmond, Hatch, DeConcini, 
and Simon, by a vote of 14 to 4.
    On March 25, 1986, the Senate defeated S.J. Res. 225 by a 
vote of 66 to 34, thus failing to achieve the constitutional 
two-thirds requirement by a single vote.
    In the 100th Congress, the Subcommittee on the Constitution 
held hearings on S.J. Res. 11, S.J. Res. 112, and S.J. Res. 
116, on March 23, 1988. On May 25, 1988, the subcommittee 
approved S.J. Res. 11, with an amendment in the nature of a 
substitute, by a vote of 3 to 2, and reported the measure to 
the full Committee on the Judiciary. The committee considered 
S.J. Res. 11 in a markup session on August 10, 1988, but no 
action was taken.
    In the 101st Congress, the Subcommittee on the Constitution 
held hearings on S.J. Res. 2, S.J. Res. 9, and S.J. Res. 12 on 
July 27, 1989. On the same day, Senator Simon introduced, and 
the subcommittee approved, S.J. Res. 183, which incorporated 
ideas from each of the other three bills. By a vote of 4 to 2, 
the subcommittee reported S.J. Res. 183 to the full Committee 
on the Judiciary.
    On June 14, 1990, the committee accepted an amendment in 
the nature of a substitute offered by Senators Simon, Thurmond, 
DeConcini, Hatch, and Heflin, and then approved S.J. Res. 183, 
as amended, by a vote of 11 to 3.
    Following a successful discharge petition effort, the House 
of Representatives considered H.J. Res. 268, the House 
counterpart to S.J. Res. 183, on July 17, 1990. The House fell 
seven votes short of the two-thirds majority required to 
approve the constitutional amendment, failing by a vote of 279 
to 150. S.J. Res. 183 did not come before the full Senate for 
consideration in the 101st Congress.
    In the 102d Congress, S.J. Res. 18 was introduced by 
Senator Simon on January 14, 1991. The measure, identical to 
the bill reported out of the full committee in the previous 
Congress, was originally sponsored by Senators Thurmond, 
DeConcini, Hatch, Heflin, Simpson, and Grassley. Senator 
Specter also became a cosponsor.
    The Subcommittee on the Constitution reported S.J. Res. 18 
favorably to the full committee on the Judiciary by a vote of 4 
to 2, on March 8, 1991. S.J. Res. 5, a similar measure 
introduced by Senator Specter, was also reported out.
    On May 23, 1991, the committee adopted, by a vote of 10 to 
4, an amendment to S.J. Res. 18 offered by Senator Heflin 
regarding military conflict. The committee then approved S.J. 
Res. 18, as amended, by a vote of 11 to 3. S.J. Res. 5, amended 
to include a three-fifths vote requirement for tax increases, 
was defeated by a vote of 6 to 8.
    On June 9, 1992, after a series of procedural votes, the 
House of Representatives took up H.J. Res. 290, a balanced-
budget proposal introduced by Representative Stenholm. After 
extensive negotiations among key House and Senate sponsors, a 
bicameral, bipartisan, consensus version of the bill was 
submitted as a substitute amendment. On final passage, the vote 
in favor of the amendment was 280 to 153, nine votes short of 
the two-third necessary for adoption. Following this defeat, 
Senate leaders stated that they would not call up S.J. Res. 18 
before the full Senate. Accordingly, the Senate did not vote on 
S.J. Res. 18 during the 102d Congress.
    S.J. Res. 41 was introduced into the 103d Congress by 
Senators Simon and Hatch on February 4, 1993. The measure was 
virtually identical to the bicameral consensus proposal 
hammered out during the summer of 1992. Twenty-one Senators 
joined Senator Simon and Senator Hatch as original sponsors, 
including Senators DeConcini, Thurmond, Heflin, Craig, Moseley-
Braun, Grassley, Kohl, Brown, Daschle, Cohen, Bryan, Pressler, 
Shelby, Bennett, Mathews, Smith, Campbell, Kempthorne, Graham, 
Nickles, and Lugar. In addition, Senators Murkowski, Gregg, 
Chafee, Feinstein, Warner, Simpson, Robb, Boren, Bingaman, 
Jeffords, and Roth subsequently joined as cosponsors.
    On March 16, 1993, hearings were held on S.J. Res. 41 
before the Subcommittee on the Constitution. Soon after the 
hearing, the subcommittee reported the measure favorably to the 
full committee by a vote of 4 to 2.
    On July 22, 1993, the Senate Committee on the Judiciary 
approved S.J. Res. 41 by a vote of 15 to 3 [the largest margin 
of any balanced-budget amendment yet reported out of the 
Committee on the Judiciary].
    S.J. Res. 41 was debated on the floor of the Senate from 
February 22, 1994, until March 1, 1994. After a resounding 
defeat of a substitute amendment offered by Senator Reid, by a 
vote of 22 to 78, S.J. Res. 41 failed to be adopted by only 
four votes, 63 to 37.
    S.J. Res. 1 was introduced into the 104th Congress by 
Senate Majority Leader Robert Dole, on behalf of the primary 
sponsors Senator Orrin G. Hatch, the new chairman of the Senate 
Judiciary Committee, and Senator Paul Simon, as the first joint 
resolution of the new Congress, on the first day of the 104th 
Congress, January 4, 1995. The measure was again virtually 
identical to the bicameral consensus proposal hammered out 
during the summer of 1992. Thirty-nine Senators joined Senators 
Dole, Hatch, and Simon as original sponsors, including Senators 
Thurmond, Heflin, Craig, Moseley-Braun, Brown, Kohl, Simpson, 
Grassley, Specter, Kyl, Feinstein, Nickles, Murkowski, Bryan, 
Hutchison, Exon, Shelby, Campbell, Smith, Cohen, Pressler, 
Gregg, Gorton, Ashcroft, Burns, McConnell, Inhofe, Gramm, Lott, 
DeWine, Snowe, Roth, Lugar, Bond, Thomas, Coverdell, Santorum, 
Grams, and Mack.
    On January 5, 1995, Senator Orrin G. Hatch convened and 
chaired the first full committee hearings of the Senate 
Judiciary Committee in the 104th Congress to consider S.J. Res. 
1. In addition to Senators Thurmond, Simon, Heflin, Craig, 
Cohen, Feinstein, Kyl, and Snowe, those testifying included 
Hon. Griffin Bell, former Attorney General of the United 
States; Hon. Alice M. Rivlin, Director, Office of Management 
and Budget; Hon. Walter Dellinger, Assistant Attorney General, 
Office of Legal Counsel, Department of Justice; Governor 
Michael Leavitt, of Utah; Hon. Paul Tsongas, former U.S. 
Senator from Massachusetts; Professor David Strauss, University 
of Chicago; Hon. William Barr, former Attorney General of the 
United States; Hon. Lowell Weicker, former Governor of 
Connecticut; Herbert Stein, American Enterprise Institute; 
Edward Regan, former New York State Comptroller; Fred Bergsten, 
Director, Institute for International Economics; Kenneth Ashby, 
Utah Farm Bureau Federation; James Davidson, National Taxpayers 
Union; Martin Regalia, U.S. Chamber of Commerce; Alan Morrison, 
Public Citizen Litigation Group; Robert J. Myers, former Chief 
Actuary, Social Security Administration.
    On January 18, 1995, the Senate Committee on the Judiciary 
approved S.J. Res. 1 by a vote of 15 to 3.

                            III. Discussion

    While Congress has the ability to balance the Federal 
budget, it lacks the discipline to make the difficult, but 
necessary, decisions. The national debt is now over $4.7 
trillion, over three times what it was 10 years ago. Although 
persistent deficits threaten the Nation's long-term prosperity, 
the Federal Government has shown itself unwilling or unable to 
act in a fiscally responsible way. The search for popular, 
painless ways to limit deficit spending has proved to be 
futile. A balanced-budget amendment to the Constitution may be 
the only way to provide the fiscal discipline the Nation 
desperately needs.

                      dangers of a budget deficit

    Influenced by individuals such as Adam Smith, David Hume, 
and David Ricardo, the drafters of the Constitution and their 
immediate successors at the helm of the new government strongly 
feared the effects of public debt. The taxing and borrowing 
provisions of the new Constitution reflected a need of the new 
Republic to establish credit and governmental notes and 
negotiable instruments that would spur commerce.
    The Founders and early American Presidents were in virtual 
unanimous agreement on the dangers of excessive public debt. 
Consequently, for approximately 150 years of our history--from 
1789 to 1932--balanced budgets or surplus budgets were the 
norm.
    Indeed, throughout most of the Nation's history, the 
requirement of budget balancing under normal economic 
circumstances was considered part of what has been called our 
``Unwritten Constitution.''
    Once that unwritten rule was broken, Pandora's Box was 
opened. In 1929, Federal expenditures of $3 billion represented 
just 3 percent of GNP. By 1950, the Federal share had risen to 
16 percent of GDP or about $43 billion. For fiscal year 1993, 
Federal Government spending of over $1.4 trillion commanded 
nearly 23 percent of GDP.
    To illustrate this growth in another way, the first $100 
billion budget in the history of the Nation occurred as 
recently as fiscal year 1962, more than 179 years after the 
founding of the Republic. The first $200 billion budget, 
however, followed only 9 years later in fiscal year 1971. The 
first $300 billion budget occurred 4 years later in fiscal year 
1975; the first $400 billion budget 2 years later in fiscal 
year 1977; the first $500 billion budget in fiscal year 1979; 
the first $600 billion budget in fiscal year 1981; the first 
$700 billion budget in fiscal year 1982; the first $800 billion 
budget in fiscal year 1983; the first $900 billion budget in 
fiscal year 1985; and the first $1 trillion budget in fiscal 
year 1987. The budget for fiscal year 1993 was over $1.4 
trillion.
    This tremendous amount of Federal spending does damage to 
the economy. By consuming such an overwhelming part of the 
capital in the economy, the Government ``crowds out'' private 
sector investment. Thus, when government spending rises 
unchecked by fiscal responsibility, it chokes off the primary 
engines of economic growth and risks our long-term security.
    In spite of these dangers, during the past three decades 
the Federal Government has run deficits in all but a single 
year. The deficits have come during good times, and they have 
come during bad times. They have come from Presidents who have 
pledged themselves to balanced budgets, and they have come from 
Presidents whose fiscal priorities were elsewhere. They have 
come from Presidents of both parties. Once Congress began to 
engage in deficit spending it started down the path of 
sacrificing the long-term health of the economy for short-term 
gain.
    The time has come for a solution strong enough that it 
cannot be evaded for short-term gain. We need a constitutional 
requirement to balance our budget. S.J. Res. 1, the Balanced-
Budget Amendment, is that solution.

                       interest on national debt

    Gross interest on the national debt is now the second 
largest expenditure in the entire budget--higher than defense 
spending. Interest payments are the fastest growing item in the 
budget. Up from $75 billion in fiscal year 1980, this year the 
Federal Government will spend an estimated $295 billion on 
interest, an increase of nearly 400 percent. Even controlling 
for inflation, interest payments have grown by over 95 percent 
during the past 12 years. By 1995, service on the gross 
national debt is projected to surpass Social Security payments 
as the single largest government expense.
    Every day, the Government throws away over $800 million on 
interest payments. None of this money goes toward education, 
health care, or the battle against drugs and crime. Spending 
more and more on interest leaves fewer and fewer resources to 
spend on the goods and services needed to address other, 
serious problems facing the Nation.
    The money for these payments comes out of the pockets of 
taxpayers, primarily middle-income families. These same 
families are also burdened by the high interest rates that the 
deficit sustains. Furthermore, these payments are going 
increasingly overseas, to wealthy investors in other countries.

                           statutory efforts

    Critics of the Balanced-Budget Amendment argue that 
Congress does not need a constitutional amendment to balance 
the budget; Congress can achieve that goal statutorily, right 
now, without waiting to ratify a constitutional amendment. 
Technically, these arguments are, of course, correct. The 
Balanced-Budget Amendment provides no new authority to cut 
spending or raise revenues. However, recent efforts have shown 
that Congress does not have the will to balance the budget.
    The Federal Government has not run a budget surplus in over 
25 years; the last one was in 1969. And that is the only time 
in 30 years that we have achieved a balanced budget. Enacting 
responsible budgets is not easy. While a spending program often 
has a particular constituency that strongly supports it, the 
general interest in restricting spending is diffuse.
    Statutory efforts to balance the budget previously have 
failed because it is too easy for Congress simply to change its 
mind and rescind its previous declarations. Statutory efforts 
are vulnerable to a change of heart or a weakening of resolve. 
Deficit reduction targets in such legislation can be 
continually changed, and the legislation can be several years 
in operation before the budget must be balanced. An amendment 
to the Constitution forces the Government to live within its 
means. S.J. Res. 1 requires a balanced budget by 2002 or 2 
years after the amendment is ratified by the States, whichever 
is latest.

                     implementation and enforcement

    S.J. Res. 1 contains the flexibility that an amendment to 
the Constitution must have. It does not prescribe a particular 
mechanism that Congress must employ in order to achieve a 
balanced budget. Instead it leaves political decisions to the 
political system. The amendment is, however, self-enforcing. 
Because, historically, it has been easier for Congress to raise 
the debt ceiling, rather than reduce spending or raise taxes, 
the primary enforcement mechanism of S.J. Res. 1 is section 2, 
which requires a three-fifths vote to increase the debt 
ceiling.
    The amendment contemplates that Congress will execute its 
responsibilities under the amendment through the exercise of 
its currently existing authority. The Constitution already 
empowers Congress with such authority. Section 8 of article I 
grants Congress the power ``[t]o  make  all  Laws  which  shall 
 be  necessary  and  proper * * *.'' Furthermore, Members of 
Congress are required by article VI generally to ``support this 
Constitution'' while the President is required by article II, 
section 1, clause 7, to ``preserve, protect, and defend the 
Constitution''.
    The committee expects fidelity to the Constitution, as does 
the American public. Both the President and Members of Congress 
swear an oath to uphold the Constitution, including any 
amendments thereto. Honoring this pledge requires respecting 
the provisions of the proposed amendment. Flagrant disregard of 
the proposed amendment's clear and simple provisions would 
constitute nothing less than a betrayal of the public trust. In 
their campaigns for reelection, elected officials who flout 
their responsibilities under this amendment will find that the 
political process will provide the ultimate enforcement 
mechanism.
    It is the committee's view that: (1) the language and the 
intent of S.J. Res. 1 are clear; (2) Congress and the President 
are to abide by this language and intent; and (3) when 
necessary, Congress must enact legislation that will better 
enable the Congress and the President to comply with the 
language and intent of the amendment.
           judicial enforcement and presidential impoundment

    The committee believes that S.J. Res. 1 strikes the right 
balance in terms of judicial review. By remaining silent about 
judicial review in the amendment itself, its authors have 
refused to establish congressional sanction for the Federal 
courts to involve themselves in fundamental macroeconomic and 
budgetary questions, while not undermining their equally 
fundamental obligation to ``say what the law is,'' Marbury v. 
Madison, 1 Cranch 137, 177 (1803). The committee agrees with 
former Attorney General William P. Barr who stated that there 
is:

        Little risk that the amendment will become the basis 
        for judicial micromangement or superintendence of the 
        Federal budget process. Furthermore, to the extent such 
        judicial intrusion does arise, the amendment itself 
        equips Congress to correct the problem by statute. On 
        balance, moreover, whatever remote risk there may be 
        that courts will play an overly intrusive role in 
        enforcing the amendment, that risk is, in my opinion, 
        vastly outweighed by the benefits of such an amendment.

    There exists three basic constraints that prevents the 
courts from becoming unduly involved in the budgetary process: 
(1) limitations on Federal courts contained in article III of 
the Constitution, primarily the doctrine of ``standing''; (2) 
the deference courts owe to Congress under both the ``political 
question'' doctrine and section 6 of the amendment itself, 
which confers enforcement authority in Congress; and (3) the 
limits on judicial remedies to be imposed on a coordinate 
branch of government--limitations on remedies that are self-
imposed by courts and that, in appropriate circumstances, may 
be imposed on the courts by Congress.
    To succeed in any lawsuit, a litigant must demonstrate 
standing to sue. To demonstrate article III standing, a 
litigant at a minimum must meet three requirements: (1) 
``injury in fact''--that the litigant suffered some concrete 
and particularized injury; (2) ``traceability''--that the 
concrete injury was both caused by and is traceable to the 
unlawful conduct; and (3) ``redressibility''--that the relief 
sought will redress the alleged injury. For example, Lujan v. 
Defenders of Wildlife, 112 S.Ct. 2130, 2136 (1992); Valley 
Forge Christian College v. Americans United for Separation of 
Church & State, Inc., 454 U.S. 464, 482-83 (1982). In 
challenging measures enacted by Congress under a balanced-
budget regime, it would be an extremely difficult hurdle for a 
litigant to demonstrate something more concrete than a 
``generalized grievance'' and burden shared by all citizens and 
taxpayers, the ``injury in fact'' requirement. See Frothingham 
v. Mellon, 262 U.S. 447, 487 (1923).
    Even in the vastly improbable case where an ``injury in 
fact'' was established, a litigant would find it near 
impossible to establish the ``traceability'' and 
``redressibility'' requirements of the article III standing 
test. Litigants would have a difficult time in showing that any 
alleged unlawful conduct--the unbalancing of the budget or the 
shattering of the debt ceiling--``caused'' or is ``traceable'' 
to a particular spending measure that harmed them. Furthermore, 
because the Congress would have numerous options to achieve 
balanced-budget compliance, there would be no legitimate basis 
for a court to nullify the specific spending measure objected 
to by the litigant.
    As to the ``redressibility'' prong, this requirement would 
be difficult to meet simply because courts are wary of becoming 
involved in the budget process--which is legislative in 
nature--and separation of power concerns will prevent courts 
from specifying adjustments to any Federal program or 
expenditures. Thus, for this reason, Missouri v. Jenkins, 495 
U.S. 33 (1990), where the Supreme Court upheld the district 
court's power to order a local school district to levy taxes, 
is inapposite because it is a 14th amendment case not involving 
``an instance of one branch of the Federal Government invading 
the province of another.'' Id. at 67. Courts simply will not 
have the authority to order Congress to raise taxes. 
Furthermore, the well-established ``political question'' and 
``justiciability'' doctrines will mandate that courts give the 
greatest deference to congressional budgetary measures, 
particularly since section 6 of S.J. Res 1 explicitly confers 
on Congress the responsibility of enforcing the amendment, and 
the amendment allows Congress to ``rely on estimates of outlays 
and receipts.'' See Baker v. Carr, 369 U.S. 186, 217 (1962). 
Under these circumstances, it is unlikely that a court would 
substitute its judgment for that of Congress.
    The committee believes that the ``taxpayer'' standing case, 
Flast v. Cohen, 392 U.S. 83 (1968), also is not applicable to 
enforcement of the balanced-budget amendment. First, the Flast 
case has been limited by the Supreme Court to establishment 
clause cases. See Valley Forge Christian College, 454 U.S. at 
480. Second, by its terms, Flast is limited to cases 
challenging legislation promulgated under Congress' 
constitutional ``tax and spend'' powers when the expenditure of 
the tax was made for an illicit purpose. Sections 1 and 2 of 
S.J. Res. 1, limit Congress' borrowing power and the amendment 
contains no restriction on the purposes of the expenditures. 
Finally, in subsequent cases, the Supreme Court has reaffirmed 
the need for a litigant to demonstrate particularized injury, 
thus casting doubt on the vitality of Flast. See Lujan, 112 S. 
Ct. at 2136. The committee also believes that there would be no 
so-called ``congressional'' standing because Members of 
Congress would not be able to demonstrate that they were harmed 
by any dilution or nullification of their vote and that under 
the doctrine of ``equitable discretion,'' Members would not be 
able to show that substantial relief could not otherwise be 
obtained from fellow legislators through the enactment, repeal 
or amendment of a statute. See Melcher v. Open Market Comm., 
836 F.2d 561, 563 (D.C. Cir. 1987).
    A further limitation on judicial interference is section 6 
of S.J. Res. 1. Under this section, Congress must adopt 
statutory remedies and mechanisms for any purported budgetary 
shortfall, such as sequestration, rescission, or the 
establishment of a contingency fund. Pursuant to section 6, the 
committee believes that Congress, if it finds it necessary, 
could limit the type of remedies a court may grant or limit the 
court's jurisdiction in some other manner to proscribe judicial 
overreaching. Congress has adopted such limitations in under 
circumstances pursuant to its article III authority. See, for 
example, Norris-LaGuardia Act, 29 U.S.C. 101-115; Federal Tax 
Injunction Act, 28 U.S.C. 2283; Tax Injunction Act, 26 U.S.C. 
7421(a).
    Finally, it is not the intent of the committee to grant the 
President any impoundment authority under S.J. Res. 1. In fact, 
up to the end of the fiscal year, the President has nothing to 
impound because Congress in the amendment has the power to 
ratify or to specify the amount of deficit spending that may 
occur in that fiscal year. In any event, under section 6 of the 
amendment, Congress can specify exactly what type of 
enforcement mechanism it wants and the President, as Chief 
Executive, is duty bound to enforce that particular 
congressional scheme to the exclusion of impoundment. See 
Kendall v. United States ex rel. Stokes, 37 U.S. (12 Pet.) 542 
(1838).

                      the experience in the states

    In contrast to Federal fiscal policies, continued deficit 
spending by the States has been a rarity. More States incur 
general surpluses than incur general deficits. Forty-eight 
States have constitutional provisions limiting their ability to 
incur budget deficits. While there are significant differences 
in the problems and resources that the State and Federal 
Governments face, the State experience is nonetheless 
instructive. The constitutional constraints have proven to be 
workable in the States and have not inhibited their ability to 
perform their most widely accepted functions. Because it has 
been required, State legislatures have learned to operate 
effectively within the external limitation of their 
constitutions.
                               conclusion

    A balanced-budget amendment steers a disciplined course 
which protects our future economic strength and national 
standard of living. Both flexibility and a strong mandate are 
needed for a fiscally responsible path for our Nation. Senate 
Joint Resolution 1 provides both these elements. A 
constitutional balanced-budget amendment can serve as a moral 
and legal beacon to guide the Nation in the fundamental choices 
of governance.

                       IV. Votes of the Committee

    Pursuant to paragraph 7 of rule XXVI of the Standing Rules 
of the Senate, each committee is to announce the results of 
rollcall votes taken in any meeting of the committee on any 
measure or amendment. The Senate Judiciary Committee, with a 
quorum present, met on Wednesday, January 18, 1995, at 8:30 
a.m. to mark up S.J. Res. 1. The following rollcall votes 
occurred on amendments proposed thereto:
    (1) The Feinstein amendment to exempt Social Security. The 
amendment was tabled: 10 yeas to 8 nays.
        YEAS                          NAYS
Thurmond (proxy)                    Specter (proxy)
Simpson                             Biden
Grassley                            Kennedy (proxy)
Brown                               Leahy
Thompson                            Heflin
Kyl                                 Kohl
DeWine (proxy)                      Feinstein
Abraham                             Feingold
Simon
Hatch

    (2) The Biden amendment to exempt capital expenditures. The 
amendment was tabled: 12 yeas to 5 nays.
        YEAS                          NAYS
Thurmond (proxy)                    Biden
Simpson (proxy)                     Kennedy (proxy)
Grassley                            Leahy (proxy)
Brown                               Feinstein
Thompson                            Feingold
Kyl
DeWine (proxy)
Abraham
Heflin (proxy)
Simon
Kohl
Hatch

    The Judiciary Committee met on Wednesday, January 18, 1995, 
at 2 p.m. to mark up S.J. Res. 1. The following rollcall votes 
occurred on S.J. Res. 1 and amendments proposed thereto:
    (3) The Feingold glide path amendment. The amendment was 
tabled: 12 yeas to 5 nays.
        YEAS                          NAYS
Thurmond                            Biden
Simpson                             Kennedy (proxy)
Grassley                            Leahy (proxy)
Brown                               Feinstein
Thompson (proxy)                    Feingold
Kyl (proxy)
DeWine (proxy)
Abraham
Heflin
Simon
Kohl
Hatch

    (4) The Kennedy impoundment amendment. The amendment was 
tabled: 11 yeas to 5 nays.
        YEAS                          NAYS
Thurmond                            Biden
Simpson (proxy)                     Kennedy
Grassley (proxy)                    Leahy
Brown                               Kohl (proxy)
Thompson                            Feingold
Kyl
DeWine
Abraham
Heflin (proxy)
Simon
Hatch

    (5) The Kennedy amendment on enforcement. The amendment was 
tabled: 12 yeas to 5 nays.
        YEAS                          NAYS
Thurmond                            Biden
Simpson                             Kennedy
Grassley (proxy)                    Leahy
Brown                               Feinstein
Thompson (proxy)                    Feingold
Kyl
DeWine
Abraham
Heflin
Simon
Kohl (proxy)
Hatch

    (6) Motion to favorably report S.J. Res. 1. The motion was 
adopted: 15 yeas to 3 nays.
        YEAS                          NAYS
Thurmond                            Kennedy
Simpson                             Leahy
Grassley (proxy)                    Feingold
Specter (proxy)
Brown
Thompson
Kyl
DeWine
Abraham
Biden
Heflin
Simon
Kohl (proxy)
Feinstein
Hatch

                         V. Text of S.J. Res. 1

                        [104th Cong., 1st sess.]
  JOINT RESOLUTION proposing an amendment to the Constitution of the 
               United States to require a balanced budget
    Resolved by the Senate and House of Representatives of the 
United States of America in Congress assembled, (two-thirds of 
each House concurring therein), That the following article is 
proposed as an amendment to the Constitution, which shall be 
valid to all intents and purposes as part of the Constitution 
when ratified by the legislatures of three-fourths of the 
several States within seven years after the date of its 
submission to the States for ratification:

                              ``Article --

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

                    VI. Section-by-Section Analysis

Section 1

    The core provision of Senate Joint Resolution 1 is 
contained in section 1, which establishes as a fiscal norm the 
concept of a balanced Federal budget. This section mandates 
that ``Total outlays for  any  fiscal year shall not exceed 
total receipts for that year, * * *.''
    The section does not specify the process that Congress must 
follow in order to achieve a balanced budget. The committee 
recognizes that there may be many equitable means of reaching 
that goal; it is therefore not the committee's intent to 
dictate any particular fiscal strategy upon the Congress. 
Rather, the committee expects the Congress to use its full 
range of legislative powers in order to comply with the 
amendment.
    Section 1 also contains an exception; the balanced-budget 
requirement applies ``* * * unless three-fifths of the whole 
number of each House of Congress shall provide by law for a 
specific excess of outlays over receipts by a rollcall vote.'' 
This provision preserves Congress' flexibility and capacity to 
respond to economic crises without sacrificing accountability.
    Nothing in this section either anticipates nor requires any 
alteration in the balance of powers between the legislative and 
executive branches.
    ``* * * fiscal year * * *'' is intended as a term defined 
by statute and, as such, is to have no constitutional standing 
independent from its statutory definition. The amendment does 
not require an immutable definition; other fiscal years could 
be defined without necessarily straining the intent of the 
amendment.
    ``* * * shall not exceed * * *'' is a clear mandate: a 
command. It means that outlays may not be greater than receipts 
for any given fiscal year. Receipts may exceed outlays.
    ``* * * unless three-fifths * * *'' identifies the minimum 
proportion of the total membership of each House needed for 
action by the Congress. Under current law, three-fifths of the 
Senate membership is 60, and three-fifths of the House of 
Representatives is 261. [Vacancies would reduce the minimum 
majorities.]
    ``* * * the whole number of each House * * *'' is intended 
to be consistent with the phrase ``the whole number of 
Senators'' in the 12th amendment to the Constitution, denoting 
the entire membership of each individual House of Congress in 
turn.
    ``* * * for a specific excess of outlays over receipts * * 
*'' means that the maximum amount of deficit spending to be 
allowed must be clearly identified. The committee intends that 
the vote to permit deficit spending be limited to the issue of 
such a deficit. By forcing Congress to identify and confront 
any particular deficit, this clause will promote 
accountability.
    ``* * * by a rollcall vote.'' specifies what is already 
implicit. A rollcall vote will be required to ensure that the 
required three-fifths vote has been recorded. The committee 
makes this provision explicit in order to emphasize 
accountability in the approval of any deficit.

Section 2

    Section 2 provides that ``The limit on the debt of the 
United States held by the public shall not be increased, unless 
three-fifths of the whole number of each House shall provide by 
law for such an increase by a rollcall vote.'' Section 2 works 
in tandem with section 1 to enforce the balanced-budget 
requirement.
    Section 2 focuses public attention on the magnitude of 
government indebtedness. To run a deficit, the Federal 
Government must borrow funds to cover its obligations. Section 
2 removes the borrowing power from the Government, unless 
three-fifths of the total membership of both Houses votes to 
raise the debt limit. As a result, whenever the Government 
exceeds the debt ceiling, it runs a theoretical risk of 
default, a powerful incentive for balancing the budget. The 
committee expects that the three-fifths vote to increase 
borrowing will be the exception, not the norm.
    Votes to suspend the balanced-budget requirement under 
section 1 and to raise the debt-ceiling under section 2 need 
not be made separately. [The committee recognizes that, in 
certain cases, both decisions could be approved together, in 
one piece of legislation, by the same, three-fifths vote.]
    ``* * * the limit on the debt * * *'' assumes the 
establishment of a new statutory limit on the measure of 
government indebtedness. This limit may be established in 
addition to, or as a replacement for, any present statutory 
limit on the debt held by the public.
    ``* * * debt of the United States held by the public * * 
*'' is a widely used and understood measurement tool. The 
General Accounting Office, in its ``Glossary of Terms Used in 
the Federal Budget Process'' [(Exposure Draft, January 1993)] 
defines ``Debt Held by the Public'' as ``That part of the gross 
federal debt held outside the federal government. This includes 
any federal debt held by individuals, corporations, state or 
local governments, the Federal Reserve System, and foreign 
governments and central banks. Debt held by government trust 
funds, revolving funds, and special funds is excluded from debt 
held by the public.'' The current, accepted meaning of ``debt * 
* * held by the public'' is intended to be the controlling 
definition under this article.

Section 3

    Section 3 requires that ``Prior to each fiscal year, the 
President shall transmit to the Congress a proposed budget for 
the United States Government for that fiscal year, in which 
total outlays do not exceed total receipts.''
    This section reflects the committee's belief that sound 
fiscal planning should be a shared governmental responsibility. 
The section is not intended to grant the President formal 
authority or power over budget legislation or spending. It is 
the committee's expectation that, charged with like 
responsibilities, the President and the Congress will more 
readily collaborate in fiscal planning.
    ``Prior to each fiscal year * * *'' is intended to ensure 
that the President transmits a budget proposal before the first 
day of the statutory fiscal year.
    ``* * * the President shall transmit to the Congress * * 
*'' is intended to impose on the President a constitutional 
duty to communicate to the Congress a proposed budget that is 
balanced. Article II enumerates several duties currently 
required of the President, including delivering the State of 
the Union address, receiving foreign Ambassadors, and 
commissioning Officers of the United States. It is the 
committee's belief that this new duty similarly merits 
constitutional status.
    ``* * * a proposed budget * * * in which total outlays do 
not exceed total receipts.'' is intended to require a 
responsible proposal that should anticipate a level of outlays 
no greater than the level of receipts. Such a proposal 
necessarily requires a projection of future events. The 
committee anticipates good faith on the part of the President 
with respect to projected economic factors.

Section 4

    By requiring approval ``* * * by a majority of the whole 
number of each House by a rollcall vote'' for any ``bill to 
increase revenue * * *'', section 4 provides a responsible and 
balanced amount of tax limitation and improves congressional 
accountability for revenue measures.
    ``* * * bill to increase revenue * * *'' is intended to 
include those measures whose intended and anticipated effect 
will be to increase revenues to the Federal Government.
    ``* * * by a majority of the whole number of each House by 
a rollcall vote.'' is intended, like similar provisions in 
section 1, to identify the minimum proportion necessary to 
approve the relevant measure. Here the requirement is a 
majority. The terms relating to ``the whole number of each 
House'' and ``rollcall vote'' are intended to have the same 
meaning as in section 1.

Section 5

    This section guarantees that Congress will retain maximum 
flexibility in responding to clear national security crises 
such as a declared war or imminent military threat to national 
security.
    ``* * * may waive * * *'' is intended to provide Congress 
with discretionary authority to operate outside of the 
provisions of this article in the event of declarations of war. 
The waiver specified in the first sentence of this section 
would require a concurrent resolution of Congress, but would 
not have to be submitted to the President for approval.
    ``* * * the provisions of this article * * *'' is intended 
to refer primarily to sections 1, 2, 3, and 4 of the amendment. 
The Congress may waive any or all of these provisions.
    ``* * * declaration of war * * *'' is intended to be 
construed in the context of the powers of the Congress to 
declare war under article 1, section 8. The committee intends 
that ordinary and prudent preparations for a war perceived by 
Congress to be imminent would be funded fully within the 
limitations imposed by the amendment, although Congress could 
establish higher levels of spending or deficits for these or 
any other purposes under section 1.
    ``* * * for any fiscal year * * * is in effect.'' is 
intended, in the first sentence of this section, to require a 
separate waiver of the provisions of the amendment each year. 
Congress may not adopt a waiver resolution which applies to 
more than one fiscal year. Rather, Congress must annually adopt 
a separate waiver for the fiscal year at issue.
    ``The provisions of this article * * *'' in the second 
sentence has the same meaning as in the first sentence of this 
section. See above.
    ``* * * may be waived * * *'' is intended to provide 
Congress with discretionary authority to operate outside of the 
provisions of this article in the event the United States is 
engaged in certain kinds of military conflict. The waiver 
specified in the second sentence of this section would require 
a joint resolution rather than a simple concurrent resolution 
of Congress.
    ``* * * for any fiscal year * * *'' in the second sentence 
has the same meaning as in the first sentence of this section. 
See above.
    ``* * * is engaged in military conflict * * *'' is intended 
to limit the applicability of this waiver to situations 
involving the actual use of military force, which nonetheless 
do not rise to the level of a formal declaration of war.
    ``* * * imminent and serious military threat to national 
security * * *'' is intended to define those situations in 
which Congress, in order to respond to urgent national security 
crises with additional outlays for the defense of the Nation, 
needs more flexibility than the three-fifths vote requirement 
in section 1 would provide.
    ``* * * so declared by a joint resolution, * * * which 
becomes law.'' is intended to require Congress to pass a joint 
resolution, rather than a simple or concurrent resolution, and 
to specify that the resolution must be enacted into law before 
it can be effective for the purposes of this section.
    ``* * * a majority of the whole number of each House, * * 
*'' has the same meaning as the similar provision in section 4. 
See above.

Section 6

    Section 6 states that ``[t]he Congress shall enforce and 
implement this article by appropriate legislation, which may 
rely on estimates of outlays and receipts.'' This section makes 
explicit what is implicit, that Congress has a positive 
obligation to fashion legislation to enforce this article.
    Section 6 underscores Congress' continuing role in 
implementing the balanced-budget requirement. The provision 
precludes any interpretation of the amendment that would result 
in a shift in the balance of powers among the branches of 
government.
    ``The Congress shall enforce and implement * * *'' creates 
a positive obligation on the part of Congress to enact 
appropriate legislation to implement and enforce the article. 
This section recognizes that an amendment dealing with subject 
matter as complicated as the Federal budget process must be 
supplemented with implementing legislation.
    ``* * * which may rely on estimates of outlays and 
receipts.'' confirms that Congress has the authority to use 
reasonable estimates, where appropriate, as a means of 
achieving the normative result required in section 1. 
``Estimates'' means good faith, responsible, and reasonable 
estimates made with honest intent to implement section 1, and 
not evade it.
    This provision gives Congress an appropriate degree of 
flexibility in fashioning necessary implementing legislation. 
For example, Congress could use estimates of receipts or 
outlays at the beginning of the fiscal year to determine 
whether the balanced-budget requirement of section 1 would be 
satisfied, so long as the estimates were reasonable and made in 
good faith. In addition, Congress could decide that a deficit 
caused by a temporary, self-correcting drop in receipts or 
increase in outlays during the fiscal year would not violate 
the article. Similarly, Congress could state that very small or 
negligible deviations from a balanced budget would not 
represent a violation of section 1. If an excess of outlays 
over receipts were to occur, Congress can require that any 
shortfall must be made up during the following fiscal year.

Section 7

    Section 7 is intended to clarify further the relevant 
amounts that must be balanced.
    ``* * * Total receipts * * *'' is intended to include all 
moneys received by the Treasury of the United States, either 
directly or indirectly through Federal or quasi-Federal 
agencies created under the authority of acts of Congress, 
except those derived from borrowing. In present usage, 
``receipts'' is intended to be synonymous with the definition 
of ``budget receipts,'' which are not meant to include off-
setting collections or refunds.
    ``* * * except those derived from borrowing. * * *'' is 
intended to exclude from receipts the proceeds of debt 
issuance. To borrow is to receive with the intention of 
returning the same or equivalent. It is intended that those 
obligations the title to which can be transferred by the 
present owner to others, like Treasury notes and bonds, be 
excluded from receipts. Contributions to social insurance 
programs, though also carrying an implied obligation, are not 
transferable and should be included in receipts.
    ``* * * Total outlays * * *'' is intended to include all 
disbursements from the Treasury of the United States, either 
directly or indirectly through Federal or quasi-Federal 
agencies created under the authority of acts of Congress, and 
either ``on-budget'' or ``off-budget,'' except those for 
repayment of debt principal.
    Among the Federal programs that would not be covered by 
S.J. Res. 1 is the electric power program of the Tennessee 
Valley Authority. Since 1959, the financing of that program has 
been the sole responsibility of its own electric ratepayers--
not the U.S. Treasury and the Nation's taxpayers. Consequently, 
the receipts and outlays of that program are not part of the 
problem S.J. Res. 1 is directed at solving.
    ``* * * except for those for repayment of debt principal.'' 
is intended to exclude from outlays the repurchase or 
retirement of Federal debt. Debt principal is intended to be 
distinguished from interest payments, which are not excluded 
from outlays, and refers to a capital sum due as a debt.
Section 8

    This section states that the amendment will take effect 
some specified time after it is adopted, so as to allow 
Congress a period to consider and adopt the necessary 
procedures to implement the amendment, and to begin the process 
of balancing the budget.
    ``* * * beginning with fiscal year 2002 * * *'' states 
that, once ratified, the amendment will go into effect no 
earlier than fiscal year 2002.
    ``* * * or with the second fiscal year * * *'' provides 
that the amendment will go into effect 2 years after 
ratification by the States, so long as that period is later 
than 2002.
    ``* * * its ratification, * * *'' is intended to be 
construed as ratification of this article under article V of 
the Constitution.

                           VII. Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, January 19, 1995.
Hon. Orrin G. Hatch,
Chairman, Committee on the Judiciary,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed S.J. Res. 1, a joint resolution proposing a balanced 
budget amendment to the Constitution of the United States, as 
ordered reported by the Senate Committee on the Judiciary on 
January 18, 1995.
    S.J. Res. 1 would propose an amendment to the Constitution 
to require that the Congress, each year, adopt a budget in 
which total outlays of the United States do not exceed total 
receipts, unless the Congress approves a specific excess of 
outlays over receipts by a three-fifths vote in each House. The 
proposed budget submitted by the President would have to be 
balanced as well. The amendment also would require a three-
fifths vote in each House to raise the limit on federal debt 
held by the public and a simple majority on a roll call vote in 
each House to increase revenue. Such provisions could be waived 
for any fiscal year in which a declaration of war is in effect 
or in which the United States is engaged in military conflict 
that causes an imminent and serious military threat to national 
security. The amendment would have to he ratified by three-
fourths of the states within seven years of its submission for 
ratification, and would take effect beginning with fiscal year 
2002 or the second fiscal year after its ratification, 
whichever is later.
    The budgetary impact of this amendment is very uncertain, 
because it depends on when it takes effect and the extent to 
which the Congress would exercise the discretion provided by 
the amendment to approve budget deficits. The earliest the 
amendment could take effect would be for fiscal year 2002.
    According to CBO's latest projections of a baseline that 
assumes inflation adjustments for discretionary spending after 
1998, some combination of spending cuts and tax increases 
totaling $322 billion in 2002 would be needed to eliminate the 
deficit in that year. The amounts of deficit reduction called 
for in the years preceding 2002 depend both on the exact 
policies adopted and on when the process is started.
    For illustrative purposes, CBO has devised one possible 
path leading to a balanced budget in 2002 (see table on next 
page). Starting from the baseline that assumes an inflation 
adjustment for discretionary spending after 1998, that path 
first shows the savings that would be achieved if discretionary 
spending were instead frozen at the dollar level of the 1998 
cap through 2002. Such a freeze, along with the resulting debt-
service effects, would produce $89 billion of the required 
savings of $322 billion in 2002. Under this freeze policy, the 
buying power of total discretionary appropriations in 2002 
would be approximately 20 percent lower than in 1995.
    CBO also built into the illustrative path a possible course 
of savings from further policy changes. The amounts of those 
savings are not based on the adoption of any particular set of 
policies, but they do assume that policy changes are phased in 
between 1996 and 1999 in a pattern that is similar to the 
changes in mandatory spending enacted in the last two 
reconciliation acts. After 1999, the assumed savings increase 
at the baseline rate of growth for entitlement and other 
mandatory spending, excluding Social Security. Such a pattern 
of savings implies that the cuts implemented in earlier years 
are permanent and that no additional policy changes are made. 
If those savings were achieved entirely out of entitlement and 
other mandatory programs (excluding Social Security), they 
would represent about a 20 percent reduction from current-
policy levels for those programs.
    Over the entire 1996-2002 period, the savings in CBO's 
illustrative path that result directly from policy changes 
total more than $1 trillion (in relation to a baseline that 
includes an inflation adjustment for discretionary spending 
after 1998). Savings from policy changes, measured relative to 
a baseline with discretionary spending frozen after 1998, would 
be about $200 billion less. The required savings from policy 
changes would be smaller, and the debt service savings would be 
greater, if, as we would anticipate, ongoing deficit reduction 
efforts over this period were to result in lower interest 
rates.
    This resolution would not directly affect spending or 
receipts, so there would be no pay-as-you-go scoring under 
section 252 of the Balanced Budget and Emergency Deficit 
Control Act of 1985.
    Enactment of this legislation would not directly affect the 
budgets of state and local governments. However, steps to 
reduce the deficit so as to meet the requirements of this 
amendment could include cuts in federal grants to states, a 
smaller federal contribution towards shared programs or 
projects, an increased demand for state and local programs to 
compensate for reductions in federal programs, and/or an 
increase in federal mandates imposed on states or localities.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are James 
Horney and Mark Grabowicz.
            Sincerely,
                                      Robert D. Reischauer,
                                                          Director.

                                                           ILLUSTRATIVE DEFICIT REDUCTION PATH                                                          
                                                        [By fiscal year, in billions of dollars]                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          1995       1996       1997       1998       1999       2000       2001       2002    1996-2002
--------------------------------------------------------------------------------------------------------------------------------------------------------
CBO January Baseline Deficit With Discretionary                                                                                                         
 Inflation After 1998 \1\............................        176        207        224        222        253        284        297        322         NA
Freeze Discretionary Outlays After 1998 Discretionary                                                                                                   
 reduction...........................................          0          0          0          0       --19       --38       --58       --78      --193
  Debt service.......................................          0          0          0          0        --1        --2        --6       --10       --19
                                                      --------------------------------------------------------------------------------------------------
    Total deficit reduction..........................          0          0          0          0       --19       --40       --63       --89      --212
CBO January Baseline Deficit Without Discretionary                                                                                                      
 Inflation After 1998 \2\............................        176        207        224        222        234        243        234        234         NA
Additional Deficit Reduction Policy changes \3\......          0       --32       --65       --97      --145      --156      --168      --180      --843
  Debt service.......................................          0        --1        --4       --10       --18       --28       --40       --54      --156
                                                      --------------------------------------------------------------------------------------------------
    Total deficit reduction..........................          0       --33       --69      --106      --163      --184      --208      --234      --998
Resulting Deficit....................................        176        174        155        116         71         59         26      (\4\)         NA
Total Change from Baseline...........................                                                                                                   
Deficit With Inflation After 1998 Policy changes.....          0       --32       --65       --97      --164      --194      --225      --259    --1,035
  Debt service.......................................          0        --1        --4       --10       --19       --31       --46       --64      --175
                                                      --------------------------------------------------------------------------------------------------
    Total deficit reduction..........................          0       --33       --69      --106      --182      --225      --271      --323   --1,210 
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Assumes compliance with discretionary spending limits of Balanced Budget and Emergency Deficit Control Act through 1998. Discretionary spending is  
  assumed to increase at the rate of inflation after 1998.                                                                                              
\2\ Assumes compliance with discretionary spending limits of Balanced Budget and Emergency Deficit Control Act through 1998. Discretionary spending is  
  frozen at the 1998 level after 1998.                                                                                                                  
\3\ This represents only one of an infinite number of possible paths that would lead to a balanced budget. The exact path depends on when the deficit   
  reduction begins and the specific policies adopted by the Congress and the President. This path is not based on any specific policy assumptions, but  
  does assume policies are fully phased in by 1999.                                                                                                     
\4\ Less than $500 million.                                                                                                                             
                                                                                                                                                        
Source: Congressional Budget Office.                                                                                                                    
                                                                                                                                                        
Note: NA = Not applicable.                                                                                                                              

                   VIII. Regulatory Impact Statement

    Pursuant to paragraph 11(b), rule XXVI of the Standing 
Rules of the Senate, the committee, after due consideration, 
concludes that Senate Joint Resolution 1 will not have direct 
regulatory impact.
                    IX. ADDITIONAL VIEWS OF MR. KYL

    S.J. Res. 1, the Balanced Budget Amendment, establishes the 
framework and imposes the discipline that is so urgently needed 
to force Congress to put its fiscal house in order. I support 
it, believing it represents the best and only chance to send a 
Balanced Budget Amendment to the States for ratification in the 
foreseeable future.
    Nevertheless, it is not the amendment I would have written. 
Ideally, it should have included an explicit tax or spending 
limitation. I support either kind of limit, but prefer a 
spending limitation as the most direct approach and the easiest 
to implement.
    The Balanced Budget/Spending Limitation Amendment, S.J. 
Res. 3, which I introduced on January 4, 1995, includes such a 
spending limit. It requires a balanced budget and limits 
spending to 19 percent of Gross National Product (GNP), which 
is roughly the level of revenue the federal government has 
collected for the last 40 years.
    Limit spending and there is no need to consider tax 
increases. Congress wouldn't be allowed to spend the additional 
revenue that is raised. Link federal spending to economic 
growth, as measured by GNP, and an incentive is created for 
Congress to promote pro-growth economic policies. The more the 
economy grows, the more Congress is allowed to spend, but 
always proportionate to the size of the economy.
    A spending limitation has a further advantage. It reflects 
the fact that the economy has already imposed an effective 
limit on revenues, relative to GNP.
    Despite tax rate increases and tax cuts, recessions and 
expansions, and fiscal policies pursued by Presidents of both 
political parties, revenues as a share of GNP have fluctuated 
only around a relatively narrow band of 18 to 20 percent for 
the last generation.
    That is because changes in the Tax Code change people's 
behavior. Lower tax rates stimulate the economy, resulting in 
more taxable income and transactions, and more revenue to the 
Treasury. Higher tax rates discourage work, production, savings 
and investment, so there is ultimately less economic activity 
to tax.
    Revenues amounted to about 19 percent of GNP when the top 
marginal income tax rate was in the 90 percent range in the 
1950's. They amounted to just under 19 percent of GNP when the 
top marginal rate was in the 28 percent range in the 1980's. 
Revenues amounted to about 19 percent of GNP in the 1970's 
during one of the longest post-war economic contractions, and 
about 19 percent during the longest peacetime expansion during 
the 1980's.
    Since revenues remain relatively constant at about 19 
percent of GNP, the significance of our nation's tax policy is 
how Congress taxes, not how much it can tax. The key is whether 
tax policy fosters economic growth and opportunity, measured in 
terms of GNP, or results in a smaller and weaker economy. In 
other words, 19 percent of a larger GNP represents more revenue 
to the Treasury than 19 percent of a smaller GNP.
    The benefit of writing a spending limitation into the 
Balanced Budget Amendment is that it will preclude futile 
attempts by Congress to balance the budget by raising taxes. 
Raising taxes will merely impede economic growth and harm the 
nation's standard of living. A spending limitation provides 
Congress with the guidance at the outset that there is really 
only one way to balance the budget--by cutting government 
spending.
    While my preference is that a spending limit be included in 
the Balanced Budget Amendment, I believe the issue can also be 
addressed if need be in subsequent implementing or enforcement 
legislation. The quest for the perfect should not become an 
excuse to defeat the very good. The stakes are too high, in 
terms of the mountain of additional debt Congress is passing on 
to future generations, to miss yet another opportunity to send 
a Balanced Budget Amendment to the States for ratification.
    If there is insufficient support for inclusion of a 
spending limit in the Amendment itself I believe Congress 
should approve S.J. Res. 1 as reported by the Judiciary 
Committee and then turn to consideration of a federal spending 
limit as the means of implementing the balanced budget 
requirement.
                    X. ADDITIONAL VIEWS OF MR. BIDEN

    I have long supported the concept of a balanced budget 
amendment. Amending the Constitution of the United States is an 
extraordinary step, but I believe an extraordinary response is 
necessary to address the continuing deficit problems facing the 
country. Notwithstanding my support for the concept of a 
balanced budget amendment, I remained concerned about the form 
such an amendment takes. The stakes are never higher, as we all 
recognize, than when we consider amending our basic document of 
governance.
    Although I believe the amendment could be substantially 
improved in form, and I attempted unsuccessfully to offer such 
improvements in committee, I voted in favor of reporting the 
amendment so that the Senate as a whole would have the 
opportunity to consider and vote on this important issue. I 
offer these additional views to summarize my specific concerns 
about the form of this balanced budget amendment in advance of 
floor consideration of S.J. Res. 1.
    The form of the amendment raises the following questions:
    Do we risk unsettling--permanently--the balance of powers 
carefully struck by the framers of the Constitution?
    Do we risk skewing--permanently--the budget process by 
failing to recognize that long-term capital investment may best 
be paid for by long-term borrowing, and that Social Security is 
a unique institution with unique, and vast, demands and 
effects?
    Do we risk an economic catastrophe by setting a target date 
for a balanced budget, without ensuring that we follow a 
measured ``glide path'' to that goal that will avoid a sudden 
one-year contraction of our entire economy?
Constitutional Concerns: Maintaining the Balance of Powers
    My greatest concern is that this balanced budget amendment 
will fundamentally shift the constitutional balance of powers 
between Congress and president that has served us so well. The 
remarkable resiliency of our Constitution is due to the 
prudence of its authors, who restricted their prescriptions to 
how decisions are made, and who crafted a self-regulating 
balance of powers that has endured for two centuries.
    We now consider a change in that Constitution. I am in full 
agreement with my colleagues who--quite appropriately citing 
Thomas Jefferson--conclude that the decision to pass debt on to 
future generations is one worthy of constitutional treatment. I 
am less certain that the vehicle we are considering today can 
accomplish its goal without unintended consequences in other 
areas of the Constitution.
    The founders gave taxing and spending powers to Congress 
because that is the branch of our system that is closest to the 
people. Indeed, some delegates at the Constitutional Convention 
favored restricting these powers to the House of 
Representatives alone, because the Senate--at that time, to be 
appointed by the state legislatures, not elected by the 
people--was too distant from popular needs and desires. The 
founders compromised by requiring that all revenue bills 
originate in the House, and then pass on to the Senate. But the 
principle was set--the people's representatives should hold the 
purse-strings.
    The founders also intended the power of the purse to be one 
of the legislative branch's strongest bulwarks against 
incursions by the executive, and the key to maintaining an 
enduring balance of powers. James Madison--truly named in the 
main body of this report the ``Father of the Constitution''--
wrote in The Federalist Papers (No. 58) that this ``power over 
the purse'' is

        the most complete and effectual weapon with which any 
        constitution can arm the immediate representatives of 
        the people, for obtaining a redress of every grievance, 
        and for carrying into effect every just and salutary 
        measure.

    It is my fear that S.J. Res. 1 may fundamentally rearrange 
that allocation of powers by sharing that power of the purse 
with the president. I agree with the many noted constitutional 
scholars who argue that presidents will seize on the language 
of the balanced budget amendment as a justification to impound 
funds duly appropriated by Congress.
    This power to impound would give the president an 
unprecedented and powerful tool with which to oppose Congress. 
With a stroke of his impoundment pen, the president could undo 
spending decisions made by Congress, and in the process impose 
his own political and policy biases--concluding that too much 
is being spent on a particular program, or in a particular 
region or state. The balance of power over spending will have 
shifted dramatically away from the branch closest to the 
people, where the framers wisely placed it.
    Because of my substantial constitutional concerns, I 
strongly supported Senator Kennedy's amendment in committee 
that would have made it clear that ``[n]othing in this article 
shall authorize the President to impound funds appropriated by 
Congress by law,'' or to impose taxes, another fear expressed 
by some constitutional scholars. This language, if added to the 
balanced budget amendment, would permanently foreclose the 
claim that the amendment gives the President substantial new 
power, power that the Constitution gives to the Congress.
    For these same reasons I supported a second amendment 
offered by Senator Kennedy, to require Congress to pass 
legislation now to clarify what the role of the President and 
the courts should be in the enforcement of this balanced budget 
amendment. That amendment, too, was defeated in committee.
    The durable yet delicate balance of powers struck by our 
founding fathers has served us well for over 200 years. I will 
continue to work on the floor of the Senate to modify this 
balanced budget amendment to make it clear that nothing in this 
amendment should be construed to unsettle that delicate 
balance.
Practical Concerns: Properly Accounting for the Long-Term Needs of the 
        Nation

    I have two concerns about the way that S.J. Res. 1 will 
work in practice. Both concerns arise from the fact that S.J. 
Res. 1 sets a blanket rule--``Total outlays for any fiscal year 
shall not exceed total receipts for that fiscal year''--without 
properly accounting for the long-term needs of the nation.
    My first practical concern is that S.J. Res. 1 fails to 
provide for a capital budget for such items as roads, bridges, 
buildings, and defense needs. My second practical concern is 
that S.J. Res. 1 fails to properly account for the Social 
Security Trust Fund.

Creating a Capital Investment Budget

    My concern about the lack of a capital budget is shared by 
one of the most respected conservative publications in the 
nation. When I opened the Wall Street Journal following last 
November's election and saw an editorial on the balanced budget 
amendment to the Constitution, I was struck by the fact that it 
cautioned that we not move precipitously on the balanced budget 
amendment.
    Among its concerns, the Journal stressed that the proposed 
amendment does not recognize the need for long-term investing 
by the federal government. The Journal editorial says, ``To 
understand the economics, start here: if all Americans were 
required to balance their budgets every year, no one could ever 
buy a house.'' The Journal continues: ``Of course, households 
don't think about their budgets that way; they figure `balance' 
means meeting their mortgage payments. Similarly, state and 
local governments with `balanced budget' requirements can still 
borrow money for capital improvements * * *.''
    S.J. Res. 1 throws all manner of programs and 
responsibilities and government functions into the same annual 
budget, and does not provide for a capital budget. By failing 
to do so, this balanced budget amendment will pit major 
investments with long-term payoffs against programs with more 
attractive short-term economic and political returns. The 
result will be to put the future at a disadvantage compared to 
the present--just the opposite of what our budget policy should 
be.
    Long-term investments should not be counted the same way as 
salaries for the FBI or purchases of office supplies. No 
individual, no business, no state or local government--indeed, 
no other industrial economy--keeps its books that way.
    I do not believe we should keep our books that way either. 
I proposed an amendment in committee to provide for an 
investment budget in the balanced budget amendment that would 
not be included in the ``total outlays'' of the federal budget. 
This amendment, which was based on the experiences of the 
states, including my own state of Delaware, was narrowly drawn. 
It created a capital budget for ``major public physical capital 
investments,'' limited that capital budget to 10 percent of 
annual outlays (about what the federal government has been 
spending on such major physical capital items in recent years), 
and required a three-fifths vote of both houses to place an 
item within the capital budget. I did not want to make it easy 
to treat an item as a ``capital investment''--I wanted to make 
it hard. But I wanted to create a mechanism for distinguishing 
between long-term investment that merits long-term borrowing, 
and short-term operating needs that should be balanced every 
year.
    Although my amendment was defeated in committee, I will 
work to include such a narrowly-drawn capital budget in S.J. 
Res. 1 on the floor.

Properly Accounting for Social Security

    A second practical concern--shared by many citizens in my 
own state of Delaware--has to do with the treatment of the 
Social Security Trust Fund. S.J. Res. 1 makes no special 
provision for this unique institution, and instead includes the 
Social Security Trust Fund in the revenues and expenditures of 
the federal government.
    I support Senator Feinstein's effort to keep the Social 
Security Trust Fund where it is today, independent from the 
calculations of the federal budget. If we throw it into the mix 
with every other program, we will make it more difficult--and 
thus, less likely--that we will undertake the reforms necessary 
to keep the system healthy in the future.
    With its sizeable surpluses in the near future--a hundred 
billion dollars per year--and its impending deficits in the 
next century, the Social Security System presents unique 
problems. I fear that those problems will take a back seat to 
annual budget pressures unless it is protected. I also fear 
that if Social Security is not set apart, we will rely on its 
substantial surpluses in the near future to mask substantial 
deficits in the rest of the federal government.
    For all these reasons, I supported Senator Feinstein's 
amendment in committee, and will support efforts on the floor 
of the Senate to extend to Social Security the protection it 
deserves.

A ``Glide Path'' to a Balanced Budget

    In committee, I also supported an amendment offered by 
Senator Feingold to require Congress to spell out how it will 
achieve a balanced budget before sending it to the states for 
ratification. I consider such disclosure important for two 
reasons. First, the states should understand how a balanced 
budget amendment will affect them.
    Second, and more important, we need to ensure that we do 
not arrive at the target date of 2002 without a measured plan 
to reduce the annual deficit gradually. As the economics 
experts who testified before the Judiciary Committee agreed, a 
sudden one-year cut in the deficit as we reach 2002 could have 
severe economic consequences for the nation. This balanced 
budget amendment would be improved if it provided for such a 
``glide path'' to a balanced budget.

Conclusion

    These are my concerns, and I have long held them. I am 
concerned as well, though, that after years of budget deficits 
and trillions of dollars of growing debt, we must take 
aggressive action towards fiscal responsibility. Despite my 
doubts about potential side-effects of this proposed amendment, 
I have no doubt that we must change the way we make budget 
choices. In crafting the final form of the amendment, I hope we 
will work to be as certain as possible that the change we adopt 
will have the effects we desire, and that we understand what 
those effects will be.
    As I have in past years, I voted in committee to report 
this amendment to the full Senate so that the important issues 
it presents can receive the treatment they deserve. Once on the 
floor, I will continue to support attempts to improve how the 
amendment will work and to clarify what it will do.
      XI. MINORITY VIEWS OF SENATORS KENNEDY, LEAHY, AND FEINGOLD

                   contents--introduction and summary

    I. The Proposed Amendment Would Undermine the Separation of 
Powers Under Our Constitution.
          A. The Amendment Would Force the State and Federal 
        Courts to Resolve Budgetary Issues Appropriately Left 
        to the Elected Branches of Government.
          B. The Amendment Would Give the President Broad 
        Powers to Impound Appropriated Funds.
          C. The Proposed Amendment may also Confer upon the 
        President the Authority to Impose Taxes, Duties and 
        Fees.
          D. No Amendment Should be Proposed Before the 
        Enforcement Legislation Called for by Section 6 is 
        Considered.
          E. Proposing A Balanced Budget Constitutional 
        Amendment That Was Enforceable Only by Congress would 
        be a Serious Mistake.
    II. Congress should Pass a Concurrent Resolution Spelling 
Out How to Get to a Balanced Budget Before Any Amendment is 
Sent to the States.
    III. The Balanced Budget Amendment Would Shift Financial 
Burdens to State and Local Governments.
          A. Ratification of the Proposed Amendment Would 
        Result In the Imposition of Greater Financial Burdens 
        on State and Local Governments.
          B. No Statutory Ban on Unfunded Mandates Can Bind 
        Congress.
    IV. The Proposed Constitutional Amendment is Unsound 
Economic Policy.
          A. The Proposed Amendment Would Hamper The 
        Government's Ability to Deal with Recessions and 
        Natural Disasters.
          B. The Proposed Constitutional Amendment Would 
        Undermine the Value of Treasury Bonds and Drive Up 
        Interest Costs Paid by the Federal Government.
          C. The Experience of the States Does Not Support 
        Passage of the Proposed Constitutional Amendment.
    V. The Proposed Constitutional Amendment Would Forbid 
Placing Social Security Off Budget, and Would Prohibit 
Establishing a Separate Capital Budget.
          A. The Proposed Constitutional Amendment Would 
        Imperil Social Security.
          B. The Proposed Constitutional Amendment Would 
        Prohibit Exempting Capital Expenditures from the 
        Balanced-Budget Calculation.
    VI. The Balanced Budget Amendment Would Promote Gridlock 
and Undermine Majority Rule.

                        Introduction and Summary

    We agree with the Committee majority that the Federal 
Government should maintain a balanced budget. Indeed, all of us 
believe that the huge budget deficits run up during the 1980's 
unfairly and irresponsibly saddled future generations with 
burdensome debt; and all of us believe that Congress must take 
dramatic action to reduce the deficit and place the Nation on a 
course of sound fiscal management.
    We part company with the Committee majority on but one 
point: We believe that the so-called balanced budget 
constitutional amendment is an unwise and unsound political 
gimmick that will pose a threat to our economy and seriously 
damage the separation of powers enshrined by the Framers of the 
Constitution while doing nothing to reduce the deficit.
    Congress does not have to amend the Constitution to balance 
the budget. All we have to do is make the difficult decisions 
on taxing and spending needed to achieve that goal.
    The entire Federal deficit for the current fiscal year--
estimated at $176 billion--represents the interest owed on the 
huge national debt--$2.462 trillion--run up in the twelve years 
of the Reagan and Bush Administrations. The rest of the budget 
is already balanced, and it didn't require a constitutional 
amendment to do it.
    The progress we have made in the past two years toward 
reducing the deficit is the result of the success of President 
Clinton's economic plan, which was approved by Congress in 
1993, and which will achieve approximately $500 billion in 
deficit reduction over the period 1994 to 1998. There is 
nothing preventing Congress from continuing to reduce the 
deficit. A constitutional amendment is not needed. If it is not 
necessary to amend the Constitution, it is necessary not to 
amend it.
    As we discuss below, the proposed constitutional amendment 
would drastically alter the constitutional system of checks and 
balances. It would give the President broad authority when an 
unauthorized deficit arises to impound appropriated funds and 
impose taxes, duties and fees. And it would give State and 
Federal courts extraordinary power to curtail unauthorized 
deficits by enjoining spending and ordering the imposition of 
taxes.
    Supporters of the proposed amendment contend that Congress 
could avoid these outcomes through the passage of the 
enforcement legislation required by section 6 of the proposed 
amendment. But those supporters have steadfastly refused to 
provide anyone with that enforcement legislation; and both the 
President and the judiciary have powers and duties under the 
Constitution far beyond those that might be granted to them by 
such a statute.
    At the same time, by requiring supermajorities to authorize 
a deficit or increase the debt ceiling, the amendment would 
undermine majority rule--the core principle of our Democracy--
by giving a forty-percent-plus-one minority in one House of 
Congress unprecedented power to dictate to the majority. In so 
doing, it would constitutionalize the gridlock occasioned by 
filibusters in the Senate, and extend it to the House of 
Representatives as well.
    When the economy is in a recession, revenues fall (due to 
rising unemployment and falling profits) while expenditures 
increase (because of increased demand for unemployment 
benefits, food stamps, and other programs to assist the 
unemployed). This ``countercylical'' spending helps to maintain 
consumer demand and thereby reduce the length and seriousness 
of the recession.
    Because the proposed constitutional amendment requires a 
balanced budget each fiscal year (rather than over the course 
of the business cycle), it would prohibit the government from 
engaging in this form of ``countercylical'' spending; in fact, 
it would require the government to raise taxes and/or cut 
spending during economic downturns. As a result, the amendment 
could turn recessions into depressions, causing untold economic 
misery for our citizens.
    The amendment would also prohibit capital budgeting, a 
practice used by 42 States and millions of American businesses 
and households, under which expenditures for major assets with 
long useful lives are paid for over the period when the asset 
is in use. Any American who has taken out a mortgage to finance 
the purchase of a home appreciates the need for capital 
budgeting.
    The amendment would also require that all revenues 
received, and all expenditures made, by the Social Security 
Trust Fund be included in the calculations made to determine 
whether the budget is in balance. This requirement would 
undermine the long-term security of Social Security by allowing 
Congress to use the current surplus in the Trust Fund to avoid 
making the difficult decisions necessary to achieve a balanced 
overall budget in the near term. And it would encourage 
Congress to refrain from addressing the long-term deficit that 
Social Security will face in the next century.
    At the same time, the proposed constitutional amendment 
will create a strong incentive for Congress to place additional 
financial burdens on the States. These burdens are likely to 
occur through the imposition by Congress of so-called 
``unfunded mandates'' on the States; and no legislation 
curtailing unfunded mandates passed by this Congress could stop 
a subsequent Congress from waiving that legislation and 
imposing new mandates on the States. In addition to unfunded 
mandates, the proposed constitutional amendment is likely to 
increase the financial burden on the States by prompting 
Congress to cease Federal involvement in a host of activities 
that would have to be undertaken by State and local 
governments.
    For these reasons, and many others, we strongly believe 
that before any balanced budget constitutional amendment is 
submitted to the States for ratification, Congress should pass 
a concurrent resolution specifying in detail the nature of the 
steps that will have to be taken over the next seven years to 
achieve a balanced budget by 2002. Before they are called upon 
to amend our Constitution, the American people, and their 
representatives in the State Legislatures, have a right to know 
the kinds of actions that will have to be taken to achieve a 
balanced budget.
    Supporters of the proposed constitutional amendment argue 
against giving the public this important information before the 
amendment is submitted for ratification, contending that the 
tough actions required to balance the budget will be so 
unpopular with the electorate that State Legislatures will 
recoil, and refuse to pass the amendment. If so, one might ask, 
won't Congress refuse to take any tough action to balance the 
budget until after an amendment is ratified? Won't passage of a 
balanced budget constitutional amendment without this 
information just give Congress an excuse not to act to cut the 
deficit for years to come?
    Supporters of the amendment also argue that if the 
ratification process is delayed until Congress passes a 
resolution spelling out how to balance the budget, the 
amendment will never be submitted to the States for 
ratification, because Congress will forever lack the nerve to 
make the tough decisions necessary to balance the budget.
    Congress does not lack the nerve to balance the budget; 
some Members do. Not everyone voted for the irresponsible tax 
cuts in 1981 that caused the deficit to balloon out of control; 
not one of us did. In the past two years, with President 
Clinton's leadership, Congress for the first time in more than 
a decade has made impressive progress in shrinking the deficit. 
Passage of his economic plan reduced by $500 billion for fiscal 
years 1994-1998. For the first time since the Truman 
Administration, deficits are projected to decline for three 
years in a row. And the annual deficit has fallen from 4.9% of 
gross domestic product to 2.4%.
    Rather than tinkering with the Constitution that has served 
Americans so well for over two hundred years, let us focus our 
attention on reducing the deficit and building our economy to 
enable our children and grandchildren to live in as prosperous 
and secure a Nation as we inherited from our parents. Let us 
put aside the balanced budget constitutional amendment as an 
ineffective, ill-advised and pointless distraction from that 
urgent task.
  I. The Proposed Amendment Would Undermine the Separation of Powers 
                         Under Our Constitution

    As James Madison wrote in The Federalist No. 48, ``the 
legislative department alone has access to the pockets of the 
people.'' Our Constitution now gives Congress the primary 
authority, and responsibility, with regard to the raising and 
expenditure of outlays. Article I, section 7 stipulates that 
``all Bills for raising Revenue'' must originate in the House 
of Representatives; article I, section 8 grants Congress the 
powers ``to lay and collect Taxes, Duties, Imposts and 
Excises,'' and ``to borrow Money on the credit of the United 
States; and article I, section 9 provides that ``[n]o Money 
shall be drawn from the Treasury, but in Consequence of 
Appropriations made by Law.''
    The proposed amendment would dramatically alter the 
allocation of powers set forth in the Constitution. It would 
cast the State and Federal courts in the role of ``super Budget 
Committees,'' deciding in myriad cases whether the Federal 
budget is impermissibly out of balance, and where it is, 
ordering spending cuts and revenue increases to remedy the 
constitutional violation. And it would give the President broad 
powers to impound appropriated funds or raise taxes.

A. The amendment would force the State and Federal courts to resolve 
        budgetary issues appropriately left to the elected branches of 
        Government

    In the memorable words of Chief Justice Marshall, ``[i]t 
is, emphatically, the province and duty of the judicial 
department, to say what the law is.'' Marbury v. Madison, 5 
U.S. (1 Cranch) 137, 176 (1803). Since that historic decision, 
the Supreme Court has had the preeminent role in defining the 
scope and meaning of our Constitution.
    If the proposed constitutional amendment were ratified, the 
fulfillment of this role by the Supreme Court and the inferior 
Federal and State courts would inevitably require them to 
address complex budgetary issues that courts are singularly 
ill-suited to resolve. As de Tocqueville wrote more than one 
hundred forty-six years ago, ``Scarcely any political question 
arises in the United States that is not resolved, sooner or 
later, into a judicial question.'' \1\ If the proposed 
constitutional amendment were ratified, several of its 
provisions would give rise to cases and controversies that the 
courts would be compelled to resolve.
    \1\ Alexis de Tocqueville, Democracy in America, pt. I, ch. 16 
(1848).
---------------------------------------------------------------------------
    Section 1 of the amendment contains a flat prohibition on 
``total outlays'' exceeding ``total receipts'' in any fiscal 
year by an amount greater than that specifically authorized by 
a three-fifths vote of each House of Congress. What happens 
when total outlays do exceed total receipts in a fiscal year, 
and Congress fails to muster the votes, or the political will, 
to authorize the excess?
    Similarly, section 2 provides that ``[t]he limit on the 
debt of the United States held by the public shall not be 
increased, unless three-fifths of the whole number of each 
House shall provide by law for such an increase by a rollcall 
vote.'' What happens when the government incurs obligations 
that increase the debt, such as entering into loan guarantees, 
or committing to clean up toxic waste sites, without the 
requisite congressional supermajorities?
    Disputes over these matters will inevitably wind up in the 
State and Federal courts. Taxpayers will claim standing to sue 
under Flast v. Cohen, 392 U.S. 83 (1968). There the Supreme 
Court found that taxpayers had a standing to challenge 
government spending that violated the Establishment Clause. It 
ruled that taxpayer standing exists where the claim is that the 
action in question ``exceeds specific constitutional 
limitations imposed upon the exercise of the congressional 
taxing and spending power and not simply that the enactment is 
generally beyond the powers generally delegated to Congress by 
Article I, section 8.'' Id. at 103 (emphasis added).
    It may be argued that the proposed constitutional amendment 
would impose exactly the kind of ``specific constitutional 
limitations imposed upon the exercise of the congressional 
taxing and spending power'' referred to in Flast. There is thus 
a strong likelihood that a court would find that taxpayers have 
standing to challenge alleged violations of the amendment.
    In addition, the Houses of Congress, and individual members 
of Congress will undoubtedly assert standing to challenge the 
failure to obtain the requisite supermajorities. See, e.g., 
Burke v. Barnes, 479 U.S. 361 (1987); Kennedy v. Sampson, 511 
F.2d 430 (D.C. Cir. 1974).
    Even if courts were to reject taxpayer or congressional 
standing, however, ample opportunities will exist for the 
courts to resolve cases under the proposed constitutional 
amendment.
          If a President impounds Social Security benefits to 
        avoid an unauthorized deficit, Social Security 
        recipients will surely have standing to sue.
          If a President withholds a pay increase due Federal 
        workers in order to avoid an unauthorized deficit, the 
        workers will surely have standing to sue.
          It total outlays exceed total receipts in a fiscal 
        year in an amount higher than that authorized by the 
        congressional supermajorities, then persons who suffer 
        injury by reason of those outlays will surely have 
        standing to sue.
These are but a few of the examples of disputes that will arise 
in Federal courts around the United States if the proposed 
constitutional amendment were adopted. Moreover, neither the 
requirement of standing nor the political question doctrine 
prevent state courts from resolving any of the myriad issues 
that will be presented by the amendment.\2\
    \2\ The political question doctrine will not prevent disputes under 
the balanced budget constitutional amendment from reaching the courts 
because none of the criteria laid down in Baker v. Carr, 369 U.S. 186 
(1962), for determining whether a case presents a political question 
are met. There is no textual commitment in the amendment to resolution 
of disputes by the political branches; to the contrary, the amendment 
is silent as to how it would be enforced.
    Judicially manageable legal standards for resolving disputes are 
not lacking.The amendment specifically prohibits ``total outlays'' from 
exceeding ``total receipts'' in a fiscal year, except by an amount 
specifically authorized by a three-fifths vote of each House of 
Congress; and any increase in the debt limit must be authorized by a 
similar vote.
    There is no need for unquestioning adherence to a political 
decision already made on the questions presented. Indeed, the very 
reason why supporters of the proposal claim that a constitutional 
amendment is needed is their view that the political branches cannot be 
relied upon to balance the budget. Recent cases suggest a narrowing of 
the political question doctrine. E.g., United States v. Munoz-Flores, 
495 U.S. 385 (1990); Department of Commerce v. Montana, 112 S. Ct. 1415 
(1992).
---------------------------------------------------------------------------
    For that reason, scholars as diverse in legal philosophy 
and approach as Harvard University Law School Professor 
Laurence H. Tribe and former Solicitor General and Federal 
judge Robert Bork have opposed the balanced budget 
constitutional amendment before us because it would embroil the 
courts in endless lawsuits over its enforcement. As Judge Bork 
stated:

          The result * * * would likely be hundreds, if not 
        thousands, of lawsuits around the country, many of them 
        on inconsistent theories and providing inconsistent 
        results. By the time the Supreme Court straightened the 
        whole matter out, the budget in question would be at 
        least four years out of date, and lawsuits involving 
        the next three fiscal years would be slowly climbing 
        toward the Supreme Court.\3\
    \3\ Robert H. Bork, ``On Constitutional Economics,'' AEI J. on 
Gov't and Soc'y (Sept.-Oct. 1983), reprinted in ``Proposed Balance 
Budget Constitutional Amendments: Hearings Before the Subcomm. on 
Monopolies and Commercial Law of the House Comm. on the Judiciary,'' 
100th Cong., 1st Sess. 645, 649 (1987). See ``Constitutional Amendment 
to Balance the Budget: Hearings Before the Comm. on the Budget,'' 
United States Senate, 102nd Cong., 2d Sess. 23-32 (1992) (hereafter 
``1990 Budget Committee Hearings'') (statement of Professor Laurence H. 
Tribe).

    The questions that would be presented by the balanced 
budget constitutional amendment litigation would inevitably be 
complex, difficult, and expensive for the courts to address. 
When a deficit is challenged as being greater than that 
authorized by a congressional supermajority, a court would be 
required to receive evidence on what constitutes an ``outlay,'' 
what constitutes a ``receipt,'' and on what amounts of each 
were expended and received by the United States Government 
during a particular fiscal year. The trial in each such case 
could take years, years during which the status of the accounts 
and obligations of the United States would be under a legal 
cloud.
    In suits where a violation were found, courts would be 
required to make remedial decisions that should properly be the 
responsibility of the political branches. The authority of the 
Federal courts to remedy constitutional violations is broad 
indeed, as was demonstrated in Missouri v. Jenkins, 495 U.S. 33 
(1990), where the Supreme Court upheld a court of appeals 
decision setting forth the circumstances under which a Federal 
district court could order a local jurisdiction to levy taxes 
to pay for the cost of complying with an order remedying 
unconstitutional school desegregation.
    Should an across-the-board freeze on Federal spending be 
ordered? Should spending cuts be targeted so as to minimize the 
resulting harm? If so, which programs should be cut and by how 
much? Should Congress be ordered to raise taxes to remedy the 
constitutional violation? These are but few of the questions 
that courts would be called upon to answer in proceedings to 
establish the appropriate remedy for a violation of the 
proposed constitutional amendment.
    That the amendment is likely to be construed to authorize 
courts to enjoin spending and order taxes to be raised is 
confirmed by the omission from S.J. Res. 1 of the language of 
the Danforth Amendment that was adopted as part of S.J. Res. 41 
when the latter measure was before the Senate in the 103rd 
Congress. That amendment added to section 6 of the proposal the 
following sentence:

          The power of any court to order relief pursuant to 
        any case or controversy arising under this Article 
        shall not extend to ordering any remedies other than a 
        declaratory judgment or such remedies as are 
        specifically authorized in implementing legislation 
        pursuant to this section.\4\
    \4\ 140 Cong. Rec. S2089 (March 1, 1994).

The absence of such language in the pending proposal strongly 
supports the view that S.J. Res. 1 would authorize the courts 
to order cuts in spending and increases in taxes to remedy 
unauthorized deficits.
    In The Federalist No. 78, Alexander Hamilton described the 
judiciary as ``the least dangerous branch'' because it ``has no 
influence over either the sword or the purse, no direction 
either of the strength or the wealth of the society.'' He then 
qualified his description, quoting Montesquieu as warning 
``that `there is no liberty, if the power of judging be not 
separated from the legislative and executive powers.' ''
    Adopting a balanced budget constitutional amendment would 
create precisely the peril warned against by Hamilton, because 
it would force unelected judges to decide policy questions of 
this kind, and in so doing to exercise powers heretofore 
largely reserved to the legislative and executive branches. It 
would be a mistake of historic proportions to ignore Hamilton's 
warnings and enact such a proposal.
    The Committee majority suggests that problems raised by the 
prospect of judicial enforcement could be addressed in the 
enforcement legislation required by section 6, in which, they 
assert, Congress could limit courts' role in the balanced 
budget constitutional amendment cases. But as former Solicitor 
General Fried has testified, if Congress attempted through 
legislation passed pursuant to section 6 to eliminate Federal 
court jurisdiction of questions arising under the balanced 
budget constitutional amendment, ``that limitation itself might 
very well be unconstitutional.'' ``Balanced Budget Amendment--
S.J. Res. 41: Hearings Before the Senate Comm. on 
Appropriations,'' 103rd Cong., 2d Sess. 84 (1994) (hereinafter 
``1994 Appropriations Committee Hearings'').
    The majority's argument is also inconsistent with the 
approach that the Federal courts have taken under other 
constitutional amendments. When legislation enacted by Congress 
did not provide an effective remedy for a constitutional 
violation, the courts have found the existence of other, 
judicial remedies. See, e.g., Bivens v. Six Unknown Named 
Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971); 
Davis v. Passman, 442 U.S. 228 (1979); Carlson v. Green, 446 
U.S. 14 (1980). Thus, if Congress were to adopt enforcement 
legislation that failed to provide an effective remedy for 
violations of the amendment, there is every reason to believe 
that the courts would permit a judicial remedy.
    The Committee majority also asserts that the experience of 
state courts in enforcing state constitutional balanced budget 
requirements suggests that fears of excessive judicial 
involvement in the enforcement of the Federal balanced budget 
constitutional amendment are unwarranted. But as former 
Solicitor General Charles Fried has testified, ``[t]he 
experience of state court adjudication under state 
constitutional provisions that require balanced budgets and 
impose debt limitations shows that courts can get intimately 
involved in the budget process and that they almost certainly 
will.'' 1994 Appropriations Committee Hearings at 86. General 
Fried went on to state that while ``the greatest part of 
[state] litigation has dealt with the validity of debt 
instruments issued to supplement budgets that would otherwise 
have been out of balance, ``[t]here is no reason to believe 
that litigation under a Federal balanced budget amendment would 
be so confined.'' \5\
    \5\ See also letter from Assistant Attorney General Walter 
Dellinger to Chairman Orrin Hatch, January 9, 1995 (discussing state 
court experience and reaching the same conclusion as General Fried).
---------------------------------------------------------------------------

B. The amendment would give the President broad powers to impound 
        appropriated funds

    That the balanced budget constitutional amendment would 
authorize the President to impound funds appropriated by 
Congress is clear from the text of the Constitution and the 
proposed amendment. Article II, section 3, obligates the 
President to ``take care that the Laws be faithfully 
executed,'' and article II, section 7, requires the President 
to take an oath to ``preserve, protect and defend the 
Constitution.''
    Section 1 of the proposed constitutional amendment provides 
that ``[t]otal outlays for any fiscal year shall not exceed 
total receipts for that fiscal year, unless three-fifths of the 
whole number of each House of Congress shall provide by law for 
a specific excess of outlays over receipts by a rollcall 
vote.'' The amendment thus would forbid outlays from exceeding 
revenues by more than the amount specifically authorized by a 
three-fifths supermajority of each House of Congress. In any 
fiscal year in which it is clear that in the absence of 
congressional action, ``total outlays'' will exceed ``total 
receipts'' by a greater-than-authorized amount,\6\ the 
President is bound by the Constitution and the oath of office 
it prescribes to prevent the unauthorized deficit.
    \6\ Such an excess can occur for a wide range of reasons: Congress 
may lack the political will to cast a vote authorizing a deficit as 
large as the one it actually anticipates; or unanticipated drops in 
revenue or increases in expenditures may result from natural disasters 
or the vagaries of the business cycle.
---------------------------------------------------------------------------
    The powers and obligations conferred upon the President by 
the Constitution and the proposed constitutional amendment 
would clearly be read by the courts to include the power to 
impound appropriated funds where the expenditure of those funds 
would cause total outlays to exceed total receipts by an amount 
greater than that authorized by the requisite congressional 
supermajorities.
    This commonsense reading of the proposed constitutional 
amendment is shared by a broad range of highly regarded legal 
scholars. Assistant Attorney General Walter Dellinger, who as 
head of the Office of Legal Counsel at the Department of 
Justice is responsible for advising the President and the 
Attorney General regarding the scope and limits on presidential 
authority, testified before the Judiciary Committee that the 
proposed constitutional amendment would authorize the President 
to impound funds to insure that outlays do not exceed 
receipts.\7\ Similarly, Harvard University Law School Professor 
Charles Fried, who served as Solicitor General during the 
Reagan Administration, testified that in a year when actual 
revenues fell below projections and a bigger-than-authorized 
deficit occurred, section 1 ``would offer a President ample 
warrant to impound appropriated funds.'' \8\ Others who share 
this view include former Attorney General Nicholas deB. 
Katzenbach,\9\ Stanford University Law School Professor 
Kathleen Sullivan,\10\ Yale University Law School Professor 
Burke Marshall,\11\ and Harvard University Law School Professor 
Laurence H. Tribe.\12\
    \7\ 1995 Hearings at 99.
    \8\ 1994 Appropriations Committee Hearings at 86.
    \9\ 1994 Appropriations Committee Hearings at 166 (``the proposed 
amendment provides a powerful constitutional argument for a 
Presidential right to impound grounded in the language of section 1 * * 
*'').
    \10\ 1994 Appropriations Committee Hearings at 182.
    \11\ 1994 Appropriations Committee Hearings at 204-05.
    \12\ 1990 Budget Committee Hearings at 26-27.
    The fact that the proposed constitutional amendment would 
confer impoundment authority on the President is confirmed by 
the actions of the Judiciary Committee this year. Supporters of 
the amendment opposed and defeated an amendment offered by 
Senator Kennedy before the Judiciary Committee that would have 
---------------------------------------------------------------------------
added the following section to the proposed amendment:

          Section   . Nothing in this article shall authorize 
        the President to impound funds appropriated by Congress 
        by law, or to impose taxes, duties or fees.\13\
    \13\ The amendment was tabled by a vote of 11-5, with Senators 
Hatch, Thurmond, Simpson, Grassley, Brown, Thompson, Kyl, Abraham, 
DeWine, Simon and Heflin voting in favor of tabling the amendment, and 
Senators Biden, Kennedy, Leahy, Kohl, and Feingold voting against 
tabling.

If the supporters of the proposed constitutional amendment do 
not intend to give impoundment authority to the President, 
there is no legitimate explanation for their failure to include 
the text of the Kennedy amendment in the proposed article.
    The impoundment power that would be conferred on the 
President by the proposed constitutional amendment is far 
broader than any proposed presidential line-item veto authority 
now under consideration by the Congress. The line-item veto 
proposals would allow a President to refrain from spending 
funds proposed to be spent by a particular item of 
appropriation in a particular appropriations bill presented to 
the President. As Assistant Attorney General Dellinger 
testified, the impoundment authority conferred upon the 
President by the proposed constitutional amendment would allow 
a President to order across-the-board cuts in all Federal 
programs, target specific programs for abolition, or target 
expenditures intended for particular States or regions for 
impoundment.\14\
    \14\ 1995 Judiciary Committee Hearings at 100.
---------------------------------------------------------------------------
    The Committee majority makes two arguments to support its 
assertion that the balanced budget constitutional amendment 
does not give the President impoundment authority. Both are 
wrong.
    The first is the suggestion that ``up to the end of the 
fiscal year, the President has nothing to impound because 
Congress in the amendment has the power to ratify or to specify 
the amount of deficit spending that may occur in that fiscal 
year.'' In essence, the majority asserts that there will never 
be an unauthorized, and therefore unconstitutional, deficit, 
because Congress will always step in at the end of the year and 
ratify whatever deficit has occurred. If true, then the 
balanced budget is a complete sham, because it would impose no 
fiscal discipline whatsoever.
    But if the majority is wrong in its prediction--that is, if 
a Congress failed to act before the end of a fiscal year to 
ratify a previously unauthorized deficit, all of the 
expenditures undertaken by the Federal government throughout 
the fiscal year would be unconstitutional and open to challenge 
in the state and Federal courts (see part I.A, supra). It is 
inconceivable that the President, sworn to preserve, protect 
and defend the Constitution, would be found to be powerless to 
prevent such a result.
    Second, the majority argues that ``under section 6 of the 
amendment, Congress can specify exactly what type of 
enforcement mechanism it wants and the President, as Chief 
Executive, is duty bound to enforce that particular 
congressional scheme to the exclusion of impoundment.'' The 
fact that Congress is required by section 6 of the proposed 
amendment to enact enforcement legislation certainly does not 
suggest that the amendment itself would not grant the president 
authority to impound appropriated funds. Nothing in the 
proposed article stipulates that the enforcement legislation 
must be effective to prevent violations of the amendment. 
Indeed, there is every reason to believe that no enforcement 
legislation could prevent violations from occurring.\15\
    \15\ Even when Congress authorizes a specific deficit in advance, 
an unanticipated circumstance, such as a deterioration in economic 
conditions or an earthquake or other natural catastrophe, may cause 
revenues to drop below expectations while outlays increase. The result 
would be a deficit larger than the one authorized by Congress. No 
enforcement legislation enacted by Congress can eliminate the business 
cycle or outlaw unanticipated events such as natural disasters, wars, 
and other catastrophes.
---------------------------------------------------------------------------
    The President's obligation to faithfully execute the laws 
is independent of Congress's. That duty is not ``limited to the 
enforcement of acts of Congress * * * according to their 
express terms, * * * it include[s] the rights, duties and 
obligations growing out of the Constitution itself, * * * and 
all the protection implied by the nature of the government 
under the Constitution[.]'' In re Neagle, 135 U.S. 1, 64 
(1890). If an unconstitutional deficit were occurring, Congress 
could not constitutionally stop the President from seeking to 
prevent it.\16\
    \16\ See 1994 Appropriations Committee Hearings at 182 (testimony 
of Professor Kathleen Sullivan) (``this amendment if enacted would, of 
course, be constitutional law, fundamental law. It would trump [the 
Impoundment Control Act of 1974] or any other statute designed to 
umpire disputes between the President and Congress * * *'').
    Kendall v. United States ex rel. Stokes, 37 U.S. (12 Pet.) 524 
(1838), cited by the committee majority, actually supports the view 
that the balanced budget constitutional amendment would grant 
impoundment authority to the President. In that case, Congress had 
ordered the Postmaster General to pay the claimant whatever sum an 
outside arbitrator determined was the appropriate settlement. When the 
Postmaster General paid a smaller amount that he deemed to be an 
appropriate settlement, the Supreme Court held that the Postmaster 
General could be ordered to comply with the congressional directive. 
The Court ruled that the President, and those under his supervision, 
did not possess inherent authority to impound funds that Congress had 
ordered to be spent: ``To contend that the obligation imposed on the 
President to see the laws faithfully executed, implies a power to 
forbid their execution, is a novel construction of the constitution, 
and entirely inadmissible.'' Id. at 611. But if the balanced budget 
constitutional amendment were part of the constitution, the President's 
obligation ``to see the laws faithfully executed'' would itself 
authorize the President to take necessary acts, including impounding 
appropriated funds, to ensure that the amendment's balanced-budget 
requirement were obeyed.
C. The proposed amendment many also confer upon the President the 
        authority to impose taxes, duties and fees

    As discussed above, when a greater-than-authorized deficit 
occurs, the balanced budget constitutional amendment would 
impose upon the President an obligation to stop it. While 
greater attention has been paid to the prospect that the 
amendment would grant the President authority to impound 
appropriated funds, the amendment would enable future 
Presidents to assert that they have the power unilaterally to 
raise taxes, duties or fees in order to generate additional 
revenue to avoid an unauthorized deficit. See Testimony of 
Assistant Attorney General Walter Dellinger, 1995 Judiciary 
Committee Hearings at 102.
    This outcome would turn on its head the allocation of 
powers envisioned by the Framers. No longer would ``the 
legislative department alone ha[ve] access to the pockets of 
the people'' as Madison promised in The Federalist No. 48. 
Instead, intermixing of legislative and executive power in the 
President's hands would constitute the ``source of danger'' 
against which Madison warned.

D. No amendment should be proposed before the enforcement legislation 
        called for by section 6 is considered

    Despite the contention of the Committee majority that the 
proposed constitutional amendment ``is self-enforcing,'' it is 
clear that the amendment is anything but that. The amendment 
sets forth no procedure for enforcing the balanced-budget 
requirement in section 1. If ``total outlays'' exceed ``total 
revenues'' in any fiscal year by an amount greater than that 
specified by the requisite supermajority vote by each House of 
Congress, what happens?
          May the President impound funds appropriated by 
        Congress in order to avoid such a deficit?
          Can a Social Security recipient whose check is 
        impounded file suit in State or Federal court to 
        challenge the impoundment?
          Can the President refuse to pay interest on Treasury 
        bonds, because doing so would add to the deficit?
          Can a bondholder file suit to recover?
          Can a State or Federal court enjoin government 
        spending to eliminate the unauthorized deficit?
          Can a State or Federal court order Congress to raise 
        taxes to eliminate the unauthorized deficit?
          May the President raise taxes or fees in order to 
        eliminate an unauthorized deficit?
The balanced budget constitutional amendment itself contains no 
answer to any of these questions.
    The Committee majority responds by claiming that the 
enforcement legislation required by section 6 will provide 
answer to all questions about how the balanced budget 
constitutional amendment would be enforced. But although 
balanced budget constitutional amendments have been before the 
Judiciary Committee and the Congress for the past fifteen 
years, the supporters of an amendment have steadfastly declined 
to make available proposed enforcement legislation.
    For that reason, Senator Kennedy offered an amendment 
before the Judiciary Committee providing that the proposed 
constitutional amendment should not be submitted to the States 
for ratification until ``the enactment of legislation 
specifying the means for enforcing the provisions of the 
amendment.'' The supporters of the balanced budget 
constitutional amendment opposed the Kennedy amendment, and it 
was tabled by a vote of 12-5.\17\
    \17\ Senators Hatch, Thurmond, Simpson, Grassley, Brown, Thompson, 
Kyl, DeWine, Abraham, Simon, Heflin and Kohl voted to table the Kennedy 
amendment; Senators Biden, Kennedy, Leahy, Feinstein and Feingold voted 
against tabling.
---------------------------------------------------------------------------
    In the past decade, Congress has repeatedly enacted 
legislation establishing binding procedures for limiting the 
deficit. These include the so-called Gramm-Rudman-Hollings law 
of 1986, as well as the 1990 and 1993 reconciliation laws. 
There is thus absolutely no justification for the persistent 
refusal of supporters of the proposed constitutional amendment 
to offer enforcement legislation.\18\
    \18\ There is solid precedent for passing enforcement legislation 
before a constitutional amendment is ratified. When the Eighteenth 
Amendment was pending, Congress passed the Volstead Act (to take effect 
upon ratification of the Amendment).
E. Proposing a balanced budget constitutional amendment that was 
        enforceable only by Congress would be a serious mistake

    When confronted with the above problems with the balanced 
budget constitutional amendment, the measure's supporters 
sometimes assert that Congress would or should be given 
exclusive authority to enforce the amendment. But even if 
Congress were given exclusive enforcement authority, and the 
courts and the President were given absolutely no role, passage 
of a constitutional amendment would be a serious mistake.
    The central premise of the supporters' argument for a 
constitutional amendment is that Congress cannot be trusted to 
make the tough decisions necessary to balance the budget. By 
their reasoning, giving Congress the exclusive power to 
determine whether a violation of the balanced budget 
constitutional amendment has occurred would thus be putting the 
proverbial fox in charge of the chicken coop.
    Supporters of the amendment respond that if a balanced 
budget requirement were included in the Constitution, then 
Congress would be more likely to obey it. But Congress has 
certainly been known to violate the Constitution. Indeed, the 
Supreme Court has found that Congress has violated the 
Constitution in no fewer than 125 cases.\19\
    \19\ ``The Constitution of the United States of America: Analysis 
and Interpretation'' (J. Killian & G.A. Costello eds.) 1885-1912 and 
1990 Supp. at 239-242.
---------------------------------------------------------------------------
    In these circumstances, giving Congress exclusive authority 
to enforce the balanced budget constitutional amendment would 
be tantamount to enacting an unenforceable constitutional 
amendment. When the American public learns that there is no 
meaningful sanction for violating the constitutional 
requirement, the result would be understandable cynicism about 
the Constitution and the rule of law. Because so much of the 
public's lack of faith in our governmental system already 
results from the failure of many in Congress to confront the 
deficit, it would be a tragic mistake to compound that loss of 
faith by placing an unenforceable promise in the Constitution.

 ii. congress should pass a concurrent resolution spelling out how to 
  get to a balanced budget before any amendment is sent to the states

    The proposed constitutional amendment suffers an essential 
defect: it does not balance the budget nor outline a single 
spending cut or tax increase. As the distinguished economist 
Herbert Stein, who was Chairman of the Council of Economic 
Advisors during the Nixon Administration, noted in his 
testimony before the Committee:

          Objection to a balanced budget amendment is not an 
        objection to balancing the budget. It is, instead, 
        objection to using an appeal to a traditional symbol as 
        a smoke-screen behind which to hide unwillingness to 
        face our real problems.

    The Constitution is our great national contract, intended 
to bind our Nation now and for generations to come. Before the 
people are asked to support a change in that contract, they are 
entitled to read the fine print and to see a specific plan of 
action. Professor Stein was right when he said:

          I believe it is basically improper and unfair to 
        propose a balanced-budget amendment without revealing 
        how the balance would, or might, be achieved--by what 
        combination of expenditure cuts and tax increases. I do 
        not think the American people should be asked to commit 
        themselves to a Constitutional limit on their future 
        decisions without knowing what would be involved.

    A specific plan of deficit reduction is the only way the 
budget will be balanced, and conditioning the proposed 
constitutional amendment on enactment of such a plan will do 
what the supporters of the proposed constitutional amendment 
state is their goal: force Congress to make the tough decisions 
needed to eliminate the deficit.
    During the Judiciary Committee's markup, Senator Feingold 
offered an amendment to require a specific plan of action. The 
Feingold amendment would have required that before a proposed 
constitutional amendment is submitted to the States, Congress 
must first adopt a concurrent resolution outlining a budget 
plan for each of the fiscal years from fiscal year 1996 through 
to the first fiscal year in which the proposed amendment would 
take effect. That budget plan would have required a detailed 
list, description, and effective date of the spending cuts or 
revenue increases, and the resulting changes in Federal law 
required to carry out the plan.
    But the supporters of the amendment refused to require that 
a specific plan be spelled out. The Feingold amendment was 
rejected in Committee by a vote of 12 to 5.\20\
    \20\ Senators Hatch, Thurmond, Simpson, Grassley, Brown, Thompson, 
Kyl, DeWine, Abraham, Simon, Heflin and Kohl voted to table the 
Feingold amendment; Senators Biden, Kennedy, Leahy, Feinstein and 
Feingold voted against tabling.
---------------------------------------------------------------------------
    Supporters of the proposed constitutional amendment assert 
that a constitutional mandate is necessary to prod lawmakers 
into doing what they are otherwise unwilling to do. According 
to this logic, a constitutional requirements of a balanced 
budget would give lawmakers the backbone to make the requisite 
tough decisions because they will be able to tell angry 
constituents: ``The Constitution made me do it.''
    This flawed and cynical view of our political process 
ignores its own logical conclusion: those who require the 
political cover of a constitutional amendment to make the tough 
decisions necessary to balance the budget are unlikely to make 
those decisions until that constitutional amendment is in 
force. This would mean that no specific deficit reduction plan 
would be offered until after the States have ratified the 
amendment, and the amendment were in effect, i.e., fiscal year 
2002 at the earliest, or possibly not until 2004.
    Indeed, under the supporters' reasoning, Congress would 
have but two years to achieve a balanced budget if the 
amendment were ratified any time after 1999. The so-called 
glide path needed to balance the budget would turn into an 
economic kamikaze dive.
    Without a specific deficit reduction plan before us, 
Congress could adopt the proposed amendment, declare victory, 
and do nothing until 2002. Those same lawmakers who refuse to 
propose a specific plan of action concurrent with a 
constitutional amendment would declare victory in the war on 
the deficit and hide behind a smokescreen, as professor Stein 
suggested. Holding Congress' proverbial feet to the fire by 
forcing formulation of a specific plan before the proposed 
amendment is sent to the States would prevent delay and evasion 
on balancing the budget.
    Equally important, a specific deficit reduction plan would 
provide the voters, local; government officials, and State 
legislators with the minimum information they need before 
considering whether to ratify this proposed amendment. They are 
entitled to know what the supporters of the proposed 
constitutional amendment intend to do to achieve a balanced 
budget by 2002 before they modify the Constitution of the 
United States to require that action.
    Indeed, the effort to reduce the deficit could be severely 
jeopardized without the broad-based support of the Nation. In 
the end, without popular support, a plan that makes the 
difficult decisions necessary to achieve a balance budget would 
be rejected by the American people.
    House Majority Leader Richard Armey, a strong supporter of 
the proposed constitutional amendment, offered one explanation 
for the supporters' refusal to offer a detailed budget 
reduction plan, stating that if Members of Congress knew what 
it took to comply with the proposal, ``their knees will 
buckle.'' \21\ He also is reported to have said that ``putting 
together a detailed list beforehand would make passing the 
balanced budget amendment virtually impossible.'' \22\
    \21\ CNN Late Edition, January 8, 1995.
    \22\ Washington Times, January 7, 1995, at A1.
---------------------------------------------------------------------------
    Treating the process by which we amend our Constitution as 
a game, with the cards held close to the vest, does a 
disservice to our Nation. Proponents of this amendment must 
deal honestly and forthrightly with the American people if they 
hope to persuade them that this amendment to our Constitution 
is necessary.
    A specific plan to reduce the deficit should be passed 
before any constitutional amendment requiring a balanced budget 
is forwarded to the states for ratification. Such a budget 
reduction plan would not only serve as a safeguard against 
later inaction, but also ensure that Congress deals with the 
American people in a manner that does not invite additional 
cynicism and frustration with their elected representatives.
  iii. the balanced budget amendment will shift burdens to state and 
                           local governments

    The proposed constitutional amendment, in the form of S.J. 
Res. 1, is a prescription for shifting of financial burdens to 
State and local governments. Cost shifting to State and local 
governments will be an irresistible impulse--the easy way out 
of our Federal deficit. Consequently, State and local leaders 
rightfully fear that ratification of the proposed 
constitutional amendment would result in a massive shift of the 
Federal Government's responsibilities and financial 
requirements to the shoulders of State and local governments 
and the pocketbooks of State and local taxpayers.
    Governor Michael O. Leavitt, of Utah, testified that 
consideration of the proposed amendment and of its likely 
effect on the States are linked, that ``the two topics cannot 
be separated.'' \23\ Nevertheless, the Committee majority 
simply ignore this issue, apparently because addressing the two 
issues together would, in the words of one supporter, 
``needlessly complicate the debate.'' \24\
    \23\ 1995 Judiciary Committee Hearings at 3 (statement of Honorable 
Michael O. Leavitt).
    \24\ Response of the U.S. Chamber of Commerce to written questions 
propounded by Senator Leahy.
---------------------------------------------------------------------------
    Complicated issues do not disappear, however, simply 
because we ignore them. The impact of a constitutional 
amendment on State and local governments would not go away, and 
it must not be ignored. State and local governments should not 
be left holding the bag and having to raise their taxes so that 
the Federal government can appear to pare its deficit.

A. Ratification of the proposed amendment would result in the 
        imposition of greater financial burdens on State and local 
        governments

    In its January 19, 1995 letter to the Committee analyzing 
the impact of the proposed constitutional amendment, the 
Congressional Budget Office notes:

          [S]teps to reduce the deficit so as to meet the 
        requirements of this amendment could include cuts in 
        Federal grants to states, a smaller Federal 
        contribution towards shared programs or projects, an 
        increased demand for state and local programs to 
        compensate for reductions in Federal programs, and/or 
        an increase in Federal mandates imposed on states or 
        localities.

    Can anyone honestly deny that this balanced budget 
amendment will likely shift burdens to State and local 
government? We need only remember our recent history: In the 
1980s, tax reductions for the wealthy and a bloated defense 
budget resulted in burgeoning deficits and massive reductions 
in the amounts of Federal grants and assistance to the States. 
The Senate Committee on Governmental Affairs reports that 
Federal aid to State and local governments fell sharply in the 
1980s. Indeed, during those years, Federal funds went from 
18.6% of State and local revenues to only 13.2%, a drop of 
almost one-third. S. Rep. No. 104-1, 7-8. In order to meet the 
critical needs that were left unmet by these Federal 
reductions, local and State property and other taxes had to be 
increased in many States across the country.
    If the proposed constitutional amendment were ratified, we 
would likely enter another period in which State and local 
taxes were significantly increased to pay for the shifts in the 
cost burdens and State and local government being left to catch 
those who fall through a shredded Federal ``safety net'' of 
nutrition, housing, education and medical care programs.
    As Governor Roy Romer, of Colorado, cautioned in his 
testimony before the Constitution Subcommittee earlier this 
year: ``Before we take on that kind of burden [from the 
balanced budget amendment], the people of Colorado need to 
understand the impact such a burden will have on their daily 
lives.'' \25\
    \25\ Hearings on Balanced Budget/Unfunded Mandates before the 
Senate Judiciary Subcommittee on the Constitution, 103rd Cong., 2nd 
Sess. (January 3, 1995) (Statement of Honorable Roy Romer at 2).
---------------------------------------------------------------------------
    This is the ultimate budget gimmick--passing the buck to 
the States. The U.S. Treasury Department recently released a 
study of what may happen to State and local taxes under the 
proposed constitutional amendment. Assuming that Social 
Security and defense cuts were ``off the table,'' the Treasury 
Department's analysis predicts cuts in Federal grants to States 
of $71.3 billion and cuts of an additional $176.4 billion in 
other Federal spending that directly benefits State residents 
in such programs as Medicaid, highway funds, Aid To Families 
With Dependent Children (AFDC), education, job training, 
environment, housing and other areas.
    The Treasury Department also estimated how much each 
State's taxes would have to be raised if the State attempted to 
offset the reduction in Federal grants necessitated by passage 
of the proposed constitutional amendment.\26\ As the following 
chart shows, the results are startling.
    \26\ Letter from Joyce Carrier, Deputy Assistant Secretary for 
Public Liaison, Department of Treasury to the Honorable Howard Dean, 
Chairman, National Governor's Association (January 12, 1995).
Balanced budget amendment--Impact on States required State tax increases

        State                     Required State tax increase in percent
Alabama.......................................................      16.4
Alaska........................................................       9.8
Arizona.......................................................      10.4
Arkansas......................................................      16.5
California....................................................       9.2
Colorado......................................................      11.8
Connecticut...................................................      11.2
Delaware......................................................       7.2
DC............................................................      20.4
Florida.......................................................      10.2
Georgia.......................................................      12.0
Hawaii........................................................       6.8
Idaho.........................................................       9.9
Illinois......................................................      11.6
Indiana.......................................................      13.8
Iowa..........................................................      10.9
Kansas........................................................      13.0
Kentucky......................................................      14.5
Louisiana.....................................................      27.8
Maine.........................................................      17.5
Maryland......................................................       9.9
Mass..........................................................      12.6
Michigan......................................................      13.2
Minnesota.....................................................       9.4
Miss..........................................................      20.8
Missouri......................................................      15.5
Montana.......................................................      19.8
Nebraska......................................................      13.3
Nevada........................................................       6.2
N.H...........................................................      17.6
New Jersey....................................................      12.7
New Mexico....................................................      12.9
New York......................................................      17.4
N. Carolina...................................................      11.1
N. Dakota.....................................................      19.7
Ohio..........................................................      14.4
Oklahoma......................................................      12.4
Oregon........................................................      12.2
Penn..........................................................      12.7
R.I...........................................................      21.4
S. Carolina...................................................      14.3
S. Dakota.....................................................      24.7
Tennessee.....................................................      19.5
Texas.........................................................      14.0
Utah..........................................................      11.4
Vermont.......................................................      17.4
Virginia......................................................       8.2
Washington....................................................       8.4
W. Virginia...................................................      20.6
Wisconsin.....................................................      10.3
Wyoming.......................................................      18.7
    A February 1994 study by the Wharton Econometrics 
Forecasting Associates likewise concludes that a balanced 
budget amendment would devastate the States' economies. In 
particular, the study found that such an amendment would cause 
severe job losses--an average of 135,000 jobs lost per State by 
2003--and a drastic cut in personal income--an average of 13.5% 
by 2003.
    Reduction of the Federal deficit should not be financed by 
unfairly increasing the burdens or other jurisdictions and 
requiring our partners in State and local government to pay for 
the profligate budgetary practices of the Federal Government. 
Most importantly, working people can afford tax increases no 
more easily simply because they are imposed by State and local 
authorities, rather than by the Federal government.
    Governors, local authorities and the people of every State 
are correctly concerned about the potential ``double whammy'' 
of S.J. Res. 1: increased shifting of responsibility from the 
Federal Government to State and local governments, at the same 
time that direct Federal assistance is being reduced or 
terminated. Mayor Jeffrey N. Wennberg, of Rutland, Vermont, 
testifying this month on behalf of the National League of 
Cities, warned that ``[a]ny balanced budget amendment would 
almost certainly increase unfunded mandates on cities and towns 
as well as decrease what little Federal assistance currently 
remains to fund existing mandates.''\27\
    \27\ H.J. Res. 1: Hearings before the House Judiciary Subcommittee 
on the Constitution, 104th Cong., 1st Sess. (1995) (statement of 
Honorable Jeffrey N. Wennberg at 5) (hereinafter House Judiciary 
Hearings).
---------------------------------------------------------------------------

B. No statutory ban on unfunded mandates can bind Congress

    Legislation such as S.1, the so-called ``Unfunded Mandate 
Reform Act of 1995,'' offers minimal protection from the likely 
shift of burdens to State and local government. Even if 
enacted, S. 1 would not become effective until 1996 and, by its 
terms, applies only to legislation introduced on or after it 
becomes effective. It would not apply to current legislation 
and programs or to unmet needs that arise from cutbacks in 
Federal assistance.
    As Governor Roy Romer recently testified:

          [T]he Governors are concerned that attempts to 
        balance the Federal budget will come at the cost of 
        states and localities. I appreciate that we may see a 
        Federal provision protecting state and local 
        governments from new unfunded mandates. But this will 
        not protect us from having to pickup the cost of 
        programs, such as child care, mass transit and 
        education, that were previously supported with Federal 
        funds.\28\

    \28\ Senate Judiciary Subcommittee Hearings (statement of Honorable 
Roy Romer at 2).
---------------------------------------------------------------------------
    Moreover, it is axiomatic that mere legislation restricting 
unfunded Federal mandates cannot prevent Congress from waiving 
or ignoring that legislation in order to comply with a 
constitutional mandate for a balanced Federal budget. Governor 
Michael O. Leavitt analogized unfunded mandates legislation to 
a ``barrier of sand bags'' that will not hold up against a 
balanced budget amendment, which is ``a structural barrier of 
concrete and steel.''\29\
    \29\ 1995 Judiciary Hearings (statement of Honorable Michael O. 
Leavitt at 3).
---------------------------------------------------------------------------
    Legislation by its nature is subject to modification or 
waiver by passage of legislation by a simple majority in 
Congress. It is not irrevocably binding on future Congresses. 
Mayor Wennberg predicted that ``[t]he pressure to order state 
and local spending will grow geometrically under a balanced 
budget amendment unless an equally powerful restriction on 
[unfunded Federal] mandates is enacted.''\30\In the absence of 
constitutional protection against unfunded Federal mandates, 
Governor Howard Dean of Vermont, the Chairman of the National 
Governors Association, described ``a vote for such a balanced 
budget amendment as a vote to raise state and local 
taxes.''\31\
    \30\ House Judiciary Hearings, (statement of Honorable Jeffrey N. 
Wennberg at 1).
    \31\ Governor Howard Dean, ``Trickle-Down Tax Increase,'' 
Washington Post, January 19, 1995, at A25.
---------------------------------------------------------------------------
    In light of these concerns, it would irresponsible for 
Congress to propose a constitutional amendment before it has 
determined how the requirements of the amendment will be 
implemented, how the State will be affected, how our 
partnership with State and local government will be altered, 
and what kinds of additional responsibilities and financial 
burdens State and local governments will be called upon to 
meet. See part II, supra.
    We ill serve our State and local governments, and 
ultimately our constituents, by not considering and not 
assembling the information necessary for them to consider the 
likely impact at the State and local level of ratification of 
the proposed constitutional amendment. Before they consider 
such an amendment, they have a right to know how we in the 
Congress intend to meet out obligations to eliminate Federal 
deficits under this constitutional amendment, given that the 
manner by which we do so will likely affect their 
responsibilities and increase their burdens for many years to 
come. And they have a right to know what additional 
responsibilities ratification of this constitutional amendment 
would likely impose on them.
  iv. the proposed constitutional amendment is unsound economic policy

    That a balanced budget amendment is unsound economic policy 
is a view shared by a hundreds of the Nation's most respected 
economists, including at least seven Nobel Laureates, as well 
and present and former government officials, including the 
former Chair of President Nixon's Council of Economic Advisors, 
Herbert Stein, and the current Director of the Office of 
Management and Business, Alice Rivlin.

A. The proposed amendment would hamper the government's ability to deal 
        with recessions and natural disasters

    Tying the Nation's fiscal policy, and with it the economic 
prosperity of its citizens, to the arbitrary political schedule 
of Congress is both futile and reckless. The proposed 
constitutional amendment can no more prevent a recession than 
it can an earthquake, but it can restrict our ability to deal 
with the effects of both. The constitutional straitjacket in 
which the advocates for the proposed amendment would put our 
national economic policy could well be disastrous.
    In a March 1993 report, the General Accounting Office 
detailed the dire implications for our Nation's economy if the 
balanced budget amendment were ratified:

          The Federal budget's unique macroeconomic role could 
        be compromised by a strict balanced budget mandate. For 
        example, the federal budget acts as an automatic 
        stabilizer during economic downturns primarily because 
        spending is maintained as revenue declines, but also 
        because spending for unemployment assistance and other 
        forms of aid rises. However, it could be turned into a 
        destabilizing influence if the mandated response to a 
        recession were an automatic spending cut or tax 
        increase that could only be overridden by a three-
        fifths majority vote, as proposed in recent amendments.

    Although the Committee majority outlines the dangers of a 
budget deficit, their report fails to address how the proposed 
amendment will affect the Federal Government's ability to 
stabilize our economy during times of economic stress. It 
ignores the testimony of OMB Director Rivlin at this year's 
hearing:

          [E]nforcing a rule that we must balance the budget 
        every year, regardless of the state of the economy, 
        would be a big economic mistake. Now one can think 
        that, and still think that budget deficits ought to be 
        much smaller than they are now, and I do believe that.
          But if we were living in a world in which the budget 
        had to be balanced every year, when a recession 
        threatened--and we have not repealed the business cycle 
        and I do not know how one would do that--when a 
        recession threatened, and people were laid off, they 
        would naturally be paying less taxes.
          So there would be an automatic deficit in the Federal 
        budget. Now, if the Congress were then required to 
        rectify that by either cutting spending, or raising 
        taxes, the recession would be worse. People would have 
        less income. More people would be laid off. The 
        Congress might have to cut back on unemployment 
        benefits, and things like that.
          So you would have exactly the wrong kind of fiscal 
        policy in a recession. Now, you might say three-fifths 
        of the Congress could be wise enough to foresee that, 
        and do something about it, even if the amendment were 
        in place.
          But forecasting is very uncertain. Even people who do 
        it professionally, full time, are not very good at it, 
        and the Congress of the United States is unlikely to be 
        very good at it.
          So I think we would have worse recessions, and it 
        would just exaggerate the boom/bust cycle if we had to 
        balance every year.\32\
    \32\ 1995 Judiciary Committee Hearings at 97-98 (emphasis added).
    Similarly, a natural disaster, such as a large-scale flood, 
earthquake or fire, could require the Federal government to 
expend large sums to assist the victims and begin to rebuild 
the ravaged area. The proposed constitutional amendment would 
make these kinds of sudden emergency expenditures difficult, if 
not impossible, because they would cause an unauthorized 
increase in the deficit. Humanitarian efforts could and would 
be held hostage while the requisite supermajorities were 
rounded up in each House of Congress; and a minority in either 
House could block such efforts altogether or extort other 
benefits from the majority.

B. The proposed constitutional amendment would undermine the value of 
        treasury bonds and drive up interest costs paid by the federal 
        government

    Section 2 of the proposed constitutional amendment provides 
that ``[t]he limit on the debt of the United States held by the 
public shall not be increased, unless three-fifths of the whole 
number of each House shall provide by law for such an increase 
by rollcall vote.'' As Deputy Secretary of the Treasury Frank 
Newman explains in a letter to Senator Sarbanes, this 
supermajority requirement will hamper the ability of the 
Federal government to finance the debt and increase the 
interest costs paid by the government, and the taxpayers.

          First, the proposed Amendment's requirement for a 
        three-fifths majority of each House to raise the debt 
        limit raises significant problems for the stability and 
        cost of Treasury financing because a minority in either 
        House could hold our Government's finances hostage.
          The Treasury sells over $2 trillion of debt each 
        year, mainly to refinance maturing debt issues, as well 
        as to finance the deficit and other cash needs. 
        Increasing market uncertainty about our ability to sell 
        debt would increase Treasury's interest rates and 
        thereby increase the interest expense for taxpayers. 
        Interruptions in our legal ability to sell debt could 
        risk default on the Government's financial and 
        programmatic obligations, with negative financial, 
        economic, legal, and human consequences.
          Second, even if the budget is fully balanced, the 
        proposed debt limit provision of the Amendment would be 
        virtually unworkable. There are legitimate reasons for 
        the debt to increase even with a balanced budget, and a 
        constitutionally constrained limit could create 
        significant problems in financing Congressionally 
        mandated programs even after these programs have been 
        fully authorized, appropriated and accounted for in the 
        balanced budget. Cash requirements, and the 
        corresponding debt issuance, can vary from year to year 
        due to timing mismatches in outlays and receipts and 
        the vagaries of the calendar. * * *
          Third, cash requirements can vary from one fiscal 
        year to the next. In the area of federal deposit 
        insurance, for example, it is difficult to estimate the 
        timing and cost of bank and thrift failures. Also, 
        resolving bank or thrift failures requires the deposit 
        insurer to have working capital funds in order to hold 
        assets in some years until they can be sold to recover 
        the Government's funds in subsequent years. These 
        potentially large and unpredictable changes would 
        affect outlays and debt subject to limit and would 
        complicate efforts to balance the budget each year. * * 
        *
          Finally, the Amendment's provisions would make it 
        harder to pass programs with least-cost financing and 
        easier to pass programs in forms which can cost the 
        taxpayers real money. For example, because of our lower 
        cost of financing compared with other borrowers, 
        purchasing essential capital assets is usually cheaper 
        for the Government than leasing over several years, but 
        a purchase would have a bigger one-time impact on the 
        budget, as well as on the debt limit. Additionally, 
        more costly off-budget mechanisms, such as Refcorp, 
        could be exempt from the three-fifths requirement.\33\

    \33\ Letter from Deputy Secretary of the Treasury Frank N. Newman 
to Senator Paul Sarbanes, January 20, 1995.
---------------------------------------------------------------------------
    It is thus ironic, but true, that because of the 
supermajority requirement for increasing the debt limit, the 
proposed constitutional amendment could significantly increase 
the cost of refinancing the debt, and thereby exacerbate the 
deficit.
C. The experience of the atates does not support passage of the 
        proposed constitutional amendment

    The Committee majority ignores the inevitable negative 
consequences of the proposed constitutional amendment. It 
points instead to the experience of the forty-eight States that 
have balanced budget requirements. But for the reasons stated 
below, using the States as models for the impact of the 
proposed constitutional amendment is inappropriate, however.
    The States do not have the critical role in forming 
national economic policy and in stabilizing our economy that 
the Federal government has, nor are they responsible for 
overseeing a foreign policy or our national defense.
    Moreover, the States are hardly the model of responsible 
budgeting that advocates for the proposed constitutional 
amendment suggest they are. Mr. Edward V. Regan, who was New 
York State Comptroller from 1979 through 1993, told the 
Committee that state balanced-budget requirements ``have tended 
to push public officials into manipulative actions and outright 
deceptions.'' \34\
    \34\ Statement of Edward V. Regan, 1995 Judiciary Committee 
Hearings at 1.
---------------------------------------------------------------------------
    Mr. Regan and other experts have noted that states engage 
in a variety of dubious practices to disguise actual deficits. 
These include shifting expenditures off budget; manipulating 
receipt and payment activities; accelerating tax revenues; 
postponing expenditures; delaying refunds to taxpayers and 
salaries to employees into a following fiscal year; delaying 
vendor payments, especially medical payments, to mask deficits 
in one year; reducing contributions to pensions funds by 
forcing changed actuarial assumptions; and, borrowing 
repeatedly against the same assets by refinancing them after 
the original debt has been mostly repaid.
    If these budgeting practices are what we can expect under 
the proposed constitutional amendment, then the provision will 
do little more than degrade the Constitution.
    Furthermore, more than forty States and virtually all 
cities except from their balanced budget requirements capital, 
enterprise or trust funds that are financed primarily by 
borrowing rather than by current revenue. State and local 
governments, as well as major corporations, spread the cost of 
long-term capital investments over time--often over the useful 
life of the investment. By contrast, the proposed 
constitutional amendment provides no such leeway. See part V, 
infra.
 v. The Proposed Constitutional Amendment Would Forbid Placing Social 
Security Off Budget, and Would Prohibit Establishing a Separate Capital 
                                 Budget

A. The proposed constitutional amendment imperils social security

    Social Security is unique in our history as an economic 
safety net for retirees, and as a political covenant with the 
American people. Unlike other Federal programs, which no matter 
how worthy, are competitors for a common pool of resources, 
Social Security is self-sustaining. Social Security currently 
operates with a surplus that masks the true size of our budget 
problem, and will do so into the next century. Without explicit 
exclusion from the balanced budget requirement in the proposed 
constitutional amendment, the Social Security surplus will 
prove to be a tempting target for a Congress seeking to balance 
the budget.
    Refusing to exempt Social Security from the proposed 
constitutional amendment would risk the integrity of the Social 
Security system and obscure the very problem that the 
amendment's proponent seek to address--reducing the Federal 
deficit.
    At the Judiciary Committee's consideration of the proposed 
constitutional amendment, supporters of the amendment suggested 
that Social Security would be protected as part of the 
implementing legislation. They asserted that including special 
provisions in the Constitution to exempt the Social Security 
Trust Fund would only allow Congress to avoid the provisions of 
the proposed constitutional amendment by including other 
programs in the Trust Fund.
    But this argument has a critical problem. Section 7 of the 
proposed constitutional amendment would prohibit Congress from 
exempting the Social Security Trust Fund from the balanced-
budget calculation. It states that ``Total receipts shall 
include all receipts of the United States Government except 
those derived from borrowing. Total outlays shall include all 
outlays of the United States Government except for those for 
repayment of debt principal. (emphasis added)''
    While Congress undoubtedly has some leeway in interpreting 
a constitutional amendment, ``all'' means ``all.'' Section 7 
would thus require that all contributions made by Americans to 
the Social Security Trust Fund be included in the calculation 
required by Section 1 to determine whether the budget is in 
balance.
    To avoid this outcome, Senator Feinstein offered an 
amendment during the Judiciary Committee's deliberations to 
exempt Social Security. But supporters of the proposed 
constitutional amendment opposed the Feinstein amendment, which 
was defeated by a 10 to 8 vote.\35\
    \35\ Senators Hatch, Thurmond, Simpson, Grassley, Brown, Thompson, 
Kyl, DeWine, Abraham, and Simon voted to table the Feinstein amendment; 
Senators Biden, Kennedy, Leahy, Kohl, Heflin, Feinstein, Feingold and 
Specter voted against tabling.
    Enactment of the proposed constitutional amendment thus 
would essentially force Congress to include the Social Security 
Trust fund in its balanced-budget calculations. As a result, a 
historic covenant between the American people and their 
government would be threatened.

B. The proposed constitutional amendment would prohibit exempting 
        capital expenditures from the balanced-budget calculations

    Forty-two States and most cities except from their 
balanced-budget requirements capital, enterprise or trust funds 
that are financed primarily by borrowing rather than by current 
revenue. Like American families when they borrow to purchase a 
home, State and local governments and most businesses spread 
the cost of long-term capital investments over time--generally 
over the useful life of the investment. By contrast, the 
proposed constitutional amendment prohibits this kind of 
commonsense accounting.
    Some supporters of the proposed constitutional amendment 
suggest that while a separate capital budget is a good idea, it 
should be included in implementing legislation, not in the 
proposed amendment itself. They maintain that constitutional 
recognition of a capital budget would be a loophole Congress 
could use to avoid their budgeting responsibilities.
    As wasrue with regard to the Social Security Trust fund, 
however, section 7 of the proposed constitutional amendment 
would prohibit excluding capital expenditures from the 
balanced-budget requirement. For that reason, Senator Biden 
offered an amendment during the Committee's deliberations to 
exclude ``major public physical capital investments'' from the 
balanced budget requirement, limit such capital investments to 
10 percent of total outlays each fiscal year, and require a 
three-fifths vote for passage of the capital budget. By a 12 to 
5 vote, however, supporters of the proposed amendment defeated 
the Biden amendment.\36\
    \36\ Senators Hatch, Thurmond, Simpson, Grassley, Brown, Thompson, 
Kyl, DeWine, Abraham, Simon, Heflin and Kohl voted to table the Biden 
amendment; Senators Biden, Kennedy, Leahy, Feinstein and Feingold voted 
against tabling.
---------------------------------------------------------------------------
    The failure to permit a capital budget may have severe 
consequences by discouraging long-term investment. Just as a 
budget deficit unfairly harms future generations, so too does 
the failure to differentiate capital expenditures from 
consumption expenditures, because the inevitable result will be 
more current consumption and less investment in our country's 
future.

 VI. The Proposed Constitutional Amendment Would Promote Gridlock and 
                        Undermine Majority Rule

    The proposed constitutional amendment would require three-
fifths supermajorities in each House of Congress to designate 
specific amounts by which ``total outlays'' could ``exceed 
total receipts'' in any fiscal year and like supermajorities to 
increase ``the limit on the debt of the United States held by 
the public.'' Supporters of the proposal rely on these 
supermajority vote requirements as the proposed constitutional 
amendment's ``primary enforcement mechanism'' to make ``Federal 
deficit spending significantly more difficult.'' See Committee 
majority report at 3.
    These supermajority voting requirements are inconsistent 
with the principle of majority rule upon which our 
constitutional democracy rests. Requiring a supermajority to 
enact ordinary legislation is unprecedented, dangerous and in 
the words of former Solicitor General Fried, ``profoundly 
undemocratic.'' \37\
    \37\ Appropriations Committee Hearings at 85.
---------------------------------------------------------------------------
    In essence, we are being asked to subject our ability to 
govern ourselves as a Nation to the tyranny of a minority on 
economic matters. Rather than setting the stage for the 
consensus and cooperation we need to confront our fiscal 
problems, the proposed amendment would direct us toward 
institutional gridlock and increased opportunities for 
brinkmanship. Empowering a minority to override the will of the 
majority is, as Yale University Law School Professor Burke 
Marshall noted, an ``invitation to gridlock'' \38\ and would 
undercut congress' ability to address national problems.
    \38\ Appropriations Committee Hearings at 201.
    Alexander Hamilton painted an alarming picture in The 
Federalist No. 22 of the destructive consequences of these 
---------------------------------------------------------------------------
supermajority voting requirements:

          [W]hat at first sight may seem a remedy, is in 
        reality a poison. To give a minority a negative upon 
        the majority (which is always the case where more than 
        a majority is requisite to a decision) is, in its 
        tendency, to subject the sense of the greater number to 
        that of the lesser number * * * This is one of those 
        refinements which, in practice, has an effect the 
        reverse of what is expected from it in theory. The 
        necessity of unanimity in public bodies, or of 
        something approaching towards it, has been founded upon 
        a supposition that it would contribute to security. But 
        its real operation is to embarrass the administration, 
        to destroy the energy of the government, and to 
        substitute the pleasure, caprice, or artifices of an 
        insignificant, turbulent, or corrupt junto to the 
        regular deliberations and decisions of a respectable 
        majority. In those emergencies of a nation in which the 
        goodness or badness, the weakness or strength, of its 
        government is of the greatest importance, there is 
        commonly a necessity for action. The public business 
        must in some way or other go forward. If a pertinacious 
        minority can control the opinion of a majority, 
        respecting the best mode of conducting it, the majority 
        in order that something may be done must conform to the 
        views of the minority; and thus the sense of the 
        smaller number will overrule that of the greater and 
        give a tone to the national proceedings. Hence, tedious 
        delays; continual negotiation and intrigue; 
        contemptible compromises of the public good. And yet, 
        in such a system it is even happy when such compromises 
        can take place: for upon some occasions things will not 
        admit of accommodation; and then the measures of 
        government must be injuriously suspended, or fatally 
        defeated. It is often by the impracticability of 
        obtaining the concurrence of the necessary number of 
        votes kept in a state of inaction. Its situation must 
        always savor of weakness, sometimes border upon 
        anarchy.

    We should heed Hamilton's warning. The supermajority 
requirements in the proposed constitutional amendment are 
intended permanently to fix the congressional scales in favor 
of those who oppose spending, deficit budgets, or tax increases 
by requiring more than a majority to take action raising the 
debt limit or allowing a fiscal year deficit. As Hamilton 
recognized, however, adding these supermajority requirements to 
the Constitution may lead to the opposite result. Professor 
Fried cautioned that these requirements would give each 
recalcitrant member on Congress a potent lever to extract 
advantages from the majority, with the perverse result that 
spending, and perhaps deficits, would be increased rather than 
decreased.\39\ Assistant Attorney General Walter Dellinger, as 
well as other eminent constitutional scholars, have concurred 
in this assessment.\40\
    \39\ Appropriations Committee Hearings at 85, 88.
    \40\ Id. at 134.
    Nicholas Katzenbach, Attorney General in the Johnson 
---------------------------------------------------------------------------
Administration, testified, for example:

          If, due to the size of the existing deficient or poor 
        economic conditions, a balance cannot be achieved 
        without serious damage to other national objectives, a 
        minority, even a shifting minority, is in a stronger 
        position than it would be today to insist that its 
        sacred cow not be the one to be gored. Thus, in 
        reality, the effect of requiring a three-fifth vote to 
        have any deficit may well lead to a far greater deficit 
        than would otherwise occur.\41\
    \41\ Appropriations Committee Hearings at 165.

    Professor Kathleen Sullivan of Stanford University also 
testified about the risks of supermajority voting requirements 
---------------------------------------------------------------------------
in the balanced budget amendment. She explained:

          [S]upermajority requirements in the context of 
        legislative, substantive policymaking enable a minority 
        of each House to hold the legislative agenda hostage, 
        blocking majority choices until the minority factions 
        can exact the policy concessions that they want from 
        the majority as the price of their acquiescence to a 
        supermajority vote. * * * It might be a particularly 
        acute problem of minority veto in this context, because 
        permitting minority vetoes here might permit people to 
        have their favorite spending program be the ticket to 
        their vote in a request for deficit spending by the 
        majority--which would, of course, be counterproductive 
        in the end. It would increase spending, rather than 
        rein it in.\42\
    \42\ Appropriations Committee Hearings at 179-80.

    Not only do the supermajority requirements risk increasing 
the deficits, they also tempt Congress to engage in more budget 
gimmickry. Inaccurate and unrealistic budget estimates could be 
used to avoid triggering the supermajority requirements and 
empowering a parochial minority faction.\43\
    \43\ Appropriations Committee Hearings at 165 (testimony of 
Nicholas Katzenbach).
---------------------------------------------------------------------------
    For small States, the supermajority voting requirements in 
the balanced budget amendment could be particularly 
devastating. In the House, only 175 votes would be necessary to 
defeat any appropriations bill that might result in a fiscal 
year deficit. This means that concerted action by the 
representatives of as few as six States--California, New York, 
Texas, Florida, Illinois and Pennsylvania, with a total of 177 
representatives--could thwart the requirement of a three-fifths 
vote to waive the requirement of a balanced budget or increase 
the debt ceiling. This results in a virtual veto power to a 
very small number of populous States.\44\
    \44\ Appropriations Committee Hearings at 101 (testimony of 
Professor Burke Marshall, Yale University).
---------------------------------------------------------------------------
    What could this mean for small states? We need look no 
further than last year's crime bill to see the possible ill 
effects of a supermajority voting requirement. In authorizing 
funds for community policing, corrections programs and crime 
victims assistance, each State received a minimum allocation. 
Under the proposed constitutional amendment, the most populous 
states could forestall any deficit spending until such formulas 
were modified to be based solely on population.
    We should not hold our policymaking hostage to House or 
Senate minorities.\45\ Instead of hamstringing Congress with 
supermajority requirements, we should be seeking ways to 
increase our ability to take action to reduce the deficit and 
to deal with a fast-changing and increasingly global economy. 
To require economic policymaking to be subject to minority rule 
pursuant to constitutional mandate is to proceed in precisely 
the wrong direction.
    \45\ Alternatively, in the Senate the combination of 
representatives from 21 of the smallest States representing 
approximately only 11.2% of the nation's population could block any 
action. Thus, it would encourage unholy alliances and splintering 
regional combination in order to exact tribute on parochial matters.
    Our Founding Fathers wisely rejected requiring 
supermajorities to enact legislation. The constitutional 
exceptions to majority rule can be counted on one hand. Each is 
justified by the need to protect our Democracy, not to weaken 
it.\46\
    \46\ The exceptions, each of which requires a two-thirds vote are 
to override a Presidential veto (Art. I, sect. 3); impeach a federal 
officeholder (Art. I, sect. 3); approve treaties made by the President 
(Art. II, sect 2); expel a Member from either House (Art. I, sect. 5); 
and amend the Constitution. Only the first and last require a two-
thirds vote of each House.
---------------------------------------------------------------------------
    In matters of substantive policymaking within the 
jurisdiction of Congress, our constitutional democracy has from 
its inception been predicated upon the concept of majority 
rule. Federal legislative power is nowhere in the Constitution 
subjected to a supermajority requirement.
    As Professor Sullivan pointed out:

          In Federalist 58 * * * James Madison argued that if 
        `more than a majority' were required for legislative 
        decision, then `in all cases where justice or the 
        general good might require new laws to be passed, or 
        active measures to be pursued, the fundamental 
        principles of free government would be reversed. It 
        would be no longer the majority that would rule: the 
        power would be transferred to the minority.' In other 
        words, according to Madison, requiring a supermajority 
        to pass ordinary legislation turns democracy on its 
        head.\47\
    \47\ Appropriations Committee Hearings at 184-85 (emphasis added).

    Former Solicitor General Fried testified with considerable 
reluctance in opposition to this proposed amendment. He 
recognized, however, that the proposed supermajority 
requirements are ``against the spirit and genius of our 
Constitution, which is a charter for democracy; that is, for 
majority rule.'' \48\ His comments are worth quoting at length:
    \48\ Appropriations Committee Hearings at 84.

          So I am brought to why a balanced budget amendment in 
        any form, even if workable, is a bad idea. The reason 
        quite simply is that the political judgments underlying 
        the amendment--sound and important though they are--are 
        just that: political judgments, and as such they should 
        not be withdrawn from the vicissitudes of ordinary 
        majoritarian politics that the Constitution establishes 
        as the general rule for our public life as a nation. I 
        am not entitled to have my bias against government 
        spending enshrined in the Constitution, to frustrate 
        the will of my fellow citizens expressed by a majority 
        of our representatives.
          Majority rule is so basic a principle of our 
        Constitution that it is nowhere state explicitly, but 
        pervades the whole document. It is striking that in 
        Article I the Constitution nowhere states that the 
        ordinary action of the two Houses shall be by majority 
        vote of a quorum. The Constitution speaks only of a 
        bill `passed' by a House. Details about the type of 
        majority contemplated come up only in the five 
        instances in which a vote greater than a simple 
        majority is required: veto override, ratification of 
        treaties, the proposal of constitutional amendments to 
        the states, convictions of impeachments and expulsion 
        of members of either House. In none of these instances 
        does the Constitution specify a particular subject 
        matter, as would the balanced budget amendment. Rather, 
        in the first two instances the Constitution seeks to 
        maintain the balance between the two branches. * * * In 
        short, the constitutional norm is that the elected 
        bodies act by majority rule.
           * * * My point is that majority rule--imperfect as 
        it is--is the rule that best expresses democracy. * * * 
        To put this all more practically, the balanced budget 
        amendment would just make it that much harder to 
        govern, giving those who want to put obstacles in the 
        way of government new opportunities for obstruction. * 
        * * 
          People choose a President and Congress to govern. If 
        they govern badly they should be thrown out, not 
        provided with excuses. It is simple enough, and this is 
        what majority rule is about.\49\
    \49\ Appropriations Committee Hearings at 87-88.

    Professor Sullivan recognized another important respect in 
which the proposed amendment undermines our Democracy. It 
reflects a profound lack of faith in the ability of voters to 
hold responsible those Members of Congress who irresponsibly 
---------------------------------------------------------------------------
drive up the deficit.

          What this amendment is saying to the coal miner, the 
        domestic worker, the office worker, the person on the 
        street is we do not trust you enough to impose fiscal 
        responsibility on your elected officials at the ballot 
        box. * * *
          We do not trust you to be as prudent with respect to 
        your children and the deficit burdens that you might 
        impose on them. We think that you are likely to support 
        all this taxing and spending, taxing and spending, and 
        we do not trust politics to cure that.
          Now, I think the American people are a good deal 
        smarter than that and capable of taking serious 
        consideration of the issues posed by the deficit, 
        debating them in the crucible of politics, which is the 
        normal forum for fiscal debates to take place, and to 
        fight the tendencies to leave to tomorrow burdens of 
        debt because everyone can understand that concept. * * 
        * \50\
    \50\ Appropriations Committee Hearings at 187-88.

    Nowhere in this year's proceedings, in the Judiciary 
Committee's hearing, its deliberations, or the Committee 
majority's report do the supporters of the amendment 
satisfactorily explain this unprecedented departure from the 
underlying principle of our constitutional democracy. Nowhere 
does the Committee majority acknowledge the radical damage this 
proposal will do to the fundamental principles of our 
democratic form of government.
    This proposal for constitutional supermajority requirements 
has already spawned a series of look-alikes proposals for 
constitutional amendments addressing revenue measures and so-
called unfunded mandates. There will undoubtedly be more.
    We should not proceed down the road to constitutionally-
mandated minority rule. Rather, let us have ``faith in 
ourselves to act responsibly, and in the people to discipline 
[us] if [we] do not.'' \51\
    \51\ Appropriations Committee Hearings at 85 (testimony of 
Professor Fried).
---------------------------------------------------------------------------

                               Conclusion

    Majority rule, in Congress and at the ballot box, has been 
the central rule of our representative democracy for over two 
centuries. It should not be tossed aside because some Members 
of Congress lack the will to make the tough decisions and cast 
the tough votes needed to balance the budget.
    The fault is not in the Constitution. Let us rededicate 
ourselves to achieving lasting economic prosperity for the 
Nation in ways that count, and spend no more time debating 
gimmicks that have no place in the Constitution.
             XII. SUPPLEMENTAL MINORITY VIEWS OF MR. LEAHY

    During the course of the last 15 years, the Senate 
Judiciary Committee has considered at least 11 resolutions 
calling for a constitutional amendment purporting to require a 
balanced budget. Once again, I have voted against it. While I 
share the anger, frustration and impatience of those who want 
greater deficit reduction, I am convinced that a constitutional 
amendment is not the way to achieve that goal.
    The current version of such a constitutional amendment, 
S.J. Res. 1, is not only unnecessary, it is dangerous. It would 
demean our Constitution, endanger our economy and destabilize 
the balance of power among our three branches of government 
that provide us our greatest protection. It would head us down 
the road to minority rule and undermine our constitutional 
democracy. It would likely result in a shifting of burdens, 
responsibilities and costs to Vermont's State and local 
governments that they are ill-equipped to assume.
    Both because of what it would do and what it would not 
accomplish, I oppose passage of S.J. Res. 1 as the 28th 
amendment to the Constitution.
    I endorse the Minority Views in opposition to S.J. Res. 1. 
In addition, I submit the following supplemental views:
1. S.J. Res. 1 does not reduce the debt or the deficit
    The proposed constitutional amendment will not cut a single 
penny from the federal budget or deficit this year, next year 
or any year. By its terms, S.J. Res. 1 cannot, even if passed 
and ratified, become effective before 2002, seven years and 
three federal election cycles from now. It is a cop-out.
    There are only two responsible ways to reduce our budget 
deficit--cut spending or raise taxes. The majority report 
acknowledges that Congress already has all the constitutional 
power necessary to take these steps. Indeed, in exhorting a 
balanced budget, Congress is merely being called upon to 
exercise its currently existing authority.
    Proceeding with further consideration of the proposed 
amendment serves to delay us from making progress against the 
deficit. In addition, I fear that its passage will be used by 
some as an excuse to delay further deficit reduction far into 
the future as they await congressional consideration of the 
amendment, then the lengthy ratification process in the states, 
then the consideration of implementing legislation, and then 
the consideration of budgets consistent with such implementing 
legislation, which is where the necessary cuts will finally 
have to be specified.
    It makes more sense to cast votes that will cut the deficit 
now and not wait until the next century. I want to continue to 
lower the deficit now, not wait until sometime after the year 
2002. We showed in the last Congress that we can make progress 
on undoing the mistakes of the deficit-building decade of the 
1980's without this proposed amendment to the Constitution. The 
past Congress cut the deficit by 40 percent. As a share of our 
gross domestic product, the deficit has been cut in half, from 
4.9 percent in fiscal year 1992 to a projected 2.4 percent in 
fiscal year 1995. For the first time since Harry Truman was 
President, the deficit is projected to decline for three years 
in a row.
    As part of our efforts, we passed legislation that has cut 
tens of billions of dollars of taxpayer-financed government 
programs. For example, Senator Lugar and I sponsored 
legislation that reorganized the U.S. Department of Agriculture 
to become a more efficient and effective agency. The Leahy-
Lugar bill passed Congress at the end of last year and will 
result in saving over $3 billion and closing about 1,200 USDA 
field offices--including eight offices in my home State of 
Vermont.
    This proposed constitutional amendment is a ``feel good'' 
vote that does nothing now to balance the federal budget or 
address the federal debt. Many of the same people who so 
eagerly support S.J. Res. 1 are responsible for the huge and 
unprecedented budget deficits of the Reagan and Bush years. I 
am one of seven remaining Senators, who voted against the 1981 
Reagan budget package that increased defense spending while 
cutting taxes--causing our debt to explode. Twelve years of 
Republican administrations left us with over $2.6 trillion in 
additional debt.
    This proposed constitutional amendment remains now what it 
was then--political cover for those failed policies of the 
1980's and their tragic legacy. Those mistakes continue to cost 
our country almost half a billion dollars every workday in 
interest on the deficits rung up during the last two Republican 
administrations. Indeed, were it not for the interest on this 
Republican debt, we would have had a balanced budget last year.
    Of course, this year there is additional irony in that the 
Republican Party has assumed majority status in both the House 
and Senate. As such it can likely pass any budget it wants. 
That only requires a majority vote. If they want to balance the 
budget, eliminate the deficit, pay off the debt--they can do 
all that by a simple majority vote in both Houses. They do not 
need a constitutional amendment to do any of this, and to do it 
now. Yet in the opening days of the resumption of Republican 
control of Congress they are proceeding not toward building 
consensus of a deficit reduction package but, instead, 
insisting on consideration of a constitutional amendment whose 
justification is a lack of political will and political courage 
by the legislative majority in each House. Instead, we should 
heed the advice of our former Republican colleague Lowell 
Weicker, to quit looking for an automatic pilot to make the 
hard choices and do it ourselves.
2. S.J. Res. 1 will shift burdens to state and local governments
    The proposed amendment contains no protection against the 
Federal Government seeking to balance its budget by shifting 
costs and burdens to the States. If it were to be passed, 
ratified and effective, it would be a prescription for a 
disaster for small States that are ill-equipped to handle the 
extra load.
    Can anyone honestly deny that any impact from a balanced 
budget amendment would likely be to shift burdens to State and 
local government? Can anyone deny that we will be sending less 
assistance to State and local government? As the Minority Views 
note, during the 1980's Federal contributions to State and 
local governments fell sharply--a drop of almost one-third. 
During that same decade, Vermont was forced to make up the 
difference and had to raise its State income tax rate from 23 
percent to 28 percent. In addition, State and local property 
taxes and taxes of all kinds had to be increased.
    That is not the way to cut the Federal deficit--shifting 
burdens to State and local government and requiring them to 
raise the revenues necessary to take up the slack. As we state 
in our Minority Views: ``Working people cannot afford tax 
increases any more easily because they are imposed by State and 
local authorities.'' This is the ultimate budget gimmick--pass 
the buck to the States. I know that the Governor, local 
authorities and people of my State are vitally concerned about 
this likelihood.
    Recently, in response to a request from Governor Dean, the 
Treasury Department made a study of what can happen to State 
and local taxes under the balanced budget amendment and the 
Federal tax reductions of the so-called ``Contract with 
America.'' Assuming that Social Security and Defense cuts were 
``off the table,'' the Treasury analysis predicts cuts in 
Federal grants and other Federal spending that directly 
benefits State residents. Treasury estimates that Vermont would 
loose over $200 million in Federal assistance and over $400 
million in other Federal spending in Vermont. To try to offset 
these losses, Vermont would have to increase State taxes by 
23.9 percent across the board.
    These Treasury Department numbers are not the only ones to 
forecast hardship for the States under a balanced budget 
amendment. A study released in February 1994 by the Wharton 
Econometrics Forecasting Associates concluded that a balanced 
budget amendment would devastate the State's economy. In 
particular, the study found that such an amendment would cause 
severe job losses and a drastic cut in personal income. For 
Vermont, this study predicted a loss of personal income of $1.2 
billion, an average of 5.4 percent, and 3,900 lost jobs, 
resulting in a .5 percent rise in Vermont's unemployment rate.
    As I prepare these additional views, the Senate is 
currently debating how exactly to define ``unfunded mandates''. 
My concerns extend beyond what the lawyers would determine were 
``legally binding obligations'' to those programs that respond 
to basic needs of individuals. Human needs are no less real 
because they are not set forth in a Federal statute. Hunger and 
illness do not need statutory definition to cause suffering. If 
we try to balance the Federal budget by scaling back essential 
services, we will just as surely be shifting these costs and 
burdens on State and local governments.
    I know that the people of Vermont are not going to let 
their neighbors go hungry or without medical care and I expect 
people elsewhere will not either. As much as our churches, 
synagogues, charities and volunteers will contribute, a large 
part of the problem and a large share of the costs will fall to 
State and local governments.
    Representative Richard Armey, the new House Republican 
Majority Leader said a few days ago that he did not want to 
spell out the effects of this constitutional amendment before 
it was passed because he was afraid that Congress would not 
vote to pass it if we knew what it would do. He later 
reinforced his remark by warning supporters not to reveal where 
the necessary cuts would be made because ``knees would 
buckle.''
    Thus, we are deliberately being asked to buy a pig in a 
poke or, as I believe it should be renamed, a ``STEALTH'' 
amendment. I call it ``STEALTH'' because we do not know and are 
not supposed to investigate and consider the likely impact, 
such as the likely burdens that will be shifted to State and 
local governments. ``STEALTH'', because that is an acronym for 
what the amendment will likely become: ``The State Tax 
Enhancement and Local Tax Heightening'' amendment.
    This vagueness of the terms in the proposed constitutional 
amendment and the manner in which we are proceeding does not 
allow us to consider its likely consequences. No record of 
likely impacts on each State were presented at the Committee 
hearings. On the contrary, I asked the question of a number of 
witnesses and none could give a definitive answer.\1\ Where is 
the testimony of the state legislatures and local governments? 
Where is the careful study of likely impact?
    \1\ Senator Leahy asked in written questions: ``What is your 
estimate of the effect on each State's economy and, in particular, on 
personal income levels and job losses in each State, of requiring a 
balanced budget?'' In response, the American Farm Bureau Federation 
bluntly stated, ``Not known,'' and the U.S. Chamber of Commerce 
explained, ``The complexity of discerning reliable answers is further 
heightened by the uncertainty over which programs Congress will decide 
to cut as it moves to a balanced budget.'' Former Attorneys General 
Griffin Bell and William Barr indicated that they had no information on 
which to answer the question.
---------------------------------------------------------------------------
    I believe that before we are called upon to consider S.J. 
Res. 1, we need to know what its impact is likely to be. 
Certainly before any State is called upon to consider 
ratification of such a constitutional amendment, it should be 
advised of the likely effects on its economy and, in 
particular, on personal income levels and jobs losses in the 
State. Let us get some answers and know where we are headed.

3. S.J. Res. 1 will encourage budget gimmickry

    This proposed constitutional amendment would invite the 
worst kind of cynical evasion and budget gimmickry. The 
experience of States with balance budget requirements only 
bears this out.
    Indeed, the majority report describes the State experience 
as ``instructive''. I agree, but for different reasons. While 
the majority report cites the States' experience with balanced 
budget requirements as proof that the proposed constitutional 
amendment will work, the testimony presented at the Committee 
hearing demonstrates the contrary.
    The former chief financial officer of New York State, 
Edward Regan, presented startling testimony that many States 
with a balanced budget requirement achieve compliance only with 
``dubious practices and financial gimmicks.'' These gimmicks 
include shifting expenditures to off-budget accounts or the 
financing of certain functions to so-called independent 
agencies or authorities. States have engaged in a number of 
other ploys as well to help the bottom line and avoid 
developing red ink, including accelerating revenue receipts 
such as tax payments, postponing payments to localities and 
school district suppliers, delaying refunds to taxpayers and 
salary and expense payments to employees until the next fiscal 
year, deferring contributions to pension funds or forcing 
changes in actuarial assumptions, and selling State assets.
    The proposed balanced budget amendment does not prohibit 
the Federal Government from using these same ``dubious 
practices and gimmicks.'' With Congress facing a constitutional 
mandate, the overwhelming temptation will be to exaggerate 
estimates of economic growth and tax receipts, underestimate 
spending and engage in all kinds of accounting tricks, as was 
done before the ``honest budgeting'' effort of 1993. The result 
will be that those who do business with the Government may 
never be certain in what fiscal year the Government will choose 
to pay up or deliver and those who rely on tax refunds can 
expect extended delays from the IRS.
    Passing a constitutional directive that will inevitably 
encourage evasion, will invite public cynicism and scorn not 
only toward Congress, but toward the Constitution itself. Let 
us not debase our national charter in a misguided, political 
attempt to curry favor with the American people by this 
declaration against budget deficits. Let us not make the 
mistake of other countries and turn our Constitution into a 
series of hollow promises.

4. S.J. Res. 1 is loaded with loopholes

    The loopholes in S.J. Res. 1 already abound. One need only 
consult the language of the proposed amendment and the majority 
report for the first sets of exceptions and creative 
interpretations that will allow Congress to reduce the deficit 
only so far as Members choose to cast responsible votes.
    Of course, the proposed amendment itself includes a number 
of escape hatches, like the three-fifths majority provision of 
section 1, the waiver provisions of section 5 and the reliance 
on estimates in section 6.
    The majority report chooses to add additional 
``flexibility''. For example, although the proponents of the 
constitutional amendment have made clear their intention to 
include the Social Security trust funds, the highway trust 
funds, the crime trust fund and other self-sustaining funds and 
programs in their calculations of outlays and receipts, they 
expressly exempt the Tennessee Valley Authority as ``[a]mong 
the Federal programs that would not be covered by S.J. Res. 
1.'' What other exemptions are contemplated or will be granted? 
What is the basis or principled distinction for such off-budget 
matters as Social Security? Why are the user-fee funded 
operations of the Patent and Trademark Office not exempt? When 
the Post Office is fully spun off, will its operations and 
funding be included? What about the FDIC, the RTC, OPIC, loan 
guarantee programs, and obligations backed by the full faith 
and credit of the United States but not directly from the 
Government? What else will be off-budget for purposes of the 
constitutional amendment?
    Further, the majority report ultimately recognizes the 
arbitrary and artificial nature of the ``fiscal year'' as a 
basis for measuring budget balance. The proponents of this 
constitutional amendment seek in their report to ameliorate the 
express language of the proposed amendment by according the 
seemingly straightforward concept ``fiscal year'' with a 
flexible definition. According to the majority report ``fiscal 
year'' is not subject to ``constitutional standing,'' ``does 
not require an immutable definition,'' and ``other fiscal years 
could be defined without necessarily straining the intent of 
the amendment.'' What this all means is that ``fiscal year'' 
can mean whatever a majority in Congress wants it to mean. It 
may mean one thing this year and another the next. It can be 
shifted around the calendar as Congress deems appropriate. 
Watch out for the shifting of ``fiscal years'' in order to 
juggle accounts when elections are approaching.
    The majority report also explains that in relying on 
estimates to measure the budget, they need only be 
``reasonable'' and ``appropriate''. Indeed, the majority report 
describes bust how much discretion Congress will have in 
exercising the ``appropriate degree of flexibility'' when it 
notes:

          Congress could decide that a deficit caused by a 
        temporary, self-correcting drop in receipts or increase 
        in outlays during the fiscal year would not violate the 
        Article. Similarly, Congress could state that very 
        small or negligible deviations from a balanced budget 
        would not represent a violation of Section 1. If an 
        excess of outlays over receipts were to occur, Congress 
        can require that any shortfall must be made up during 
        the following fiscal year.

Just think about those loopholes.
    Congress could decide that it is not violating the proposed 
amendment because it deems the deficit ``a temporary, self-
correcting drop in receipts'' or ``a temporary self-correcting 
* * * increase in outlays.'' My guess is that unless it becomes 
a political bone of contention between political parties as we 
approach an election, we could go a long time without Congress 
declaring itself in violation of this proposed amendment.
    Congress could state that ``very small'' or ``negligible'' 
violations are not violations of the express directive of the 
proposed amendment. What is ``small'', what is ``negligible''? 
To paraphrase the words of Everett Dirksen: ``A billion here, a 
billion there, after a while it does not add up.'' Does a 
congressional statement of a de minimis shortfall require a 
vote, a recorded roll call vote, a simple majority, a so-called 
``constitutional'' majority, a three-fifths majority? Is a 
congressional declaration of ``no violation'' binding on the 
President or the courts?
    Under what circumstances is ``an excess of outlays over 
receipts'' not a deficit? Under what circumstances are deficits 
carried forward into other years? Is such a carry forward 
limited to the next fiscal year or can it be rolled over again 
and again? Over what period of time may such a carry forward be 
effectuated. If we can have deficits carried forward, can they 
also be carried back? Can past successes be netted against 
future failure? Can surpluses be carried forward, as well? The 
accountants and tax lawyers are going to have a field day with 
this.

5. S.J. Res. 1 may harm the economy

    This proposed constitutional amendment could be 
economically ruinous. During recessions, deficits rise because 
tax receipts go down and various Government payments, like 
unemployment insurance go up. By contrast, S.J. Res. 1 would 
demand that taxes be raised and spending be cut during a 
recession or depression. As Herbert Hoover taught us in the 
1930's, that is precisely the wrong medicine at the wrong time.
    Of course, a supermajority of both Houses of Congress could 
waive the balanced budget requirements, but why should we hold 
economic policy hostage to House or Senate minorities?
    Economic policy must be flexible enough to deal with a 
changing and increasingly global economy. Yet, the requirements 
of S.J. Res. 1 will tie Congress' hands to address national 
problems that may necessitate deficit spending. Alexander 
Hamilton, this Nation's first Secretary of Treasury, vigorously 
defended Congress' broad powers over the purse and warned 
against limits on those powers. In words that we should heed 
today, Hamilton wrote in Federalist Paper No. 36:

          I acknowledge my aversion to every project that is 
        calculated to disarm the government of a single weapon, 
        which in any possible contingency might be usefully 
        employed for the general defense and security.

    We should not hamstring the legislative power expressly 
authorized in Article I, section 8 of the Constitution. Let us 
not undo that which our Founding Fathers wisely provided--
flexibility. Let us not limit choices and accountability. 
Instead, let us exercise our constitutional responsibilities in 
the best interests of the American people.

6. S.J. Res. 1 invites constitutional clashes with the executive

    This proposed constitutional amendment risks seriously 
undercutting the protection of our constitutional separation of 
powers. No one has yet convincingly explained how the proposed 
amendment will work and what roles the President and the courts 
are to play in its implementation and enforcement. The majority 
report concedes that the amendment is ``silent about judicial 
review,'' but asserts that this provides ``the flexibility that 
an amendment to the Constitution must have.''
    Notwithstanding this ominous silence, even the proponents 
of this proposed amendment concede that the President would 
have a constitutional duty to uphold and enforce it. They fail 
to reconcile this presidential duty with the purportedly 
``self- enforcing'' nature of this proposed amendment, however. 
A balanced budget amendment is not merely an open invitation to 
the President to control federal spending, it would mandate the 
President's involvement in achieving a balanced budget.
    Suppose, for example, that estimated receipts and outlays 
proved wrong and that, nine months into a fiscal year, it 
became clear that outlays would exceed receipts. This is hardly 
a fanciful notion--OMB just forecast an increase of almost $25 
billion in the deficit for fiscal year 1995 over its previous 
estimates.
    In such a situation, arguments would be heard that S.J. 
Res. 1 allowed the President to exercise power to impound 
funds--not just a line-item veto, but the unfettered authority 
to control all spending and all cuts through the rest of the 
fiscal year. In the absence of implementing legislation or 
prompt congressional action, the President would likely argue 
that the Executive was ensuring that the Constitution was being 
``faithfully executed,'' as is its duty. Not since the dark 
days of Watergate and the Nixon impoundments have we faced such 
a constitutional crisis, but S.J. Res. 1 invites it.
    Instead of creating future constitutional crises, let us do 
the job we were elected to do. Let us make the tough choices 
and cast the difficult votes and make progress toward a 
balanced budget.

7. S.J. Res. 1 will shift power to unelected judges

    Constitutionalizing the budget and economic policy would 
inevitably throw the nation's fiscal policy into the courts, 
the last place issues of taxing and spending should be decided.
    This proposed constitutional amendment flatly states: 
``[T]otal outlays for any fiscal year shall not exceed total 
receipts for that fiscal year.'' But who, after all, is going 
to determine what is an ``outlay'' and what is a ``receipt''? 
What happens if estimates and projections are off and during 
the course of a year, at its end or thereafter, there is reason 
to believe that ``total outlays'' do exceed ``total receipts''? 
Does the President then have the unilateral authority to cut 
programs to ensure compliance? Do the courts? Can program 
beneficiaries or taxpayers who rush to court first, frame the 
court's decision regarding which spending to enjoin? Can the 
courts be called upon to require increased revenue--that is 
higher taxes--to comply with the constitutional imperative of 
balance?
    Robert Bork, among others, points out that once fiscal 
policy is made a matter of constitutional law the courts could 
be called upon to interpret and enforce it. Former Attorney 
General Barr raised concerns during Committee hearings that 
state courts might involve themselves, as well.
    The effect of the proposed amendment could be to toss 
important issues of spending priorities and funding levels to 
thousands of lawyers, hundreds of lawsuits and dozens of 
federal and state courts. If approved, S.J. Res. 1 would have 
let Congress off the hook by kicking massive responsibility for 
how tax dollars are spent to unelected judges. Constitutional 
scholars may not agree on many things, but one thing they do 
agree on is that the judiciary will be called upon to decide 
important matters of compliance with S.J. Res. 1.

8. S.J. Res. 1 erodes the fundamental principle of majority rule

    Our Founding Fathers rejected requirements of 
supermajorities. We should look to their sound reasons for 
rejecting supermajority requirements before we impose on our 
citizens a three-fifths supermajority vote to adopt certain 
budgets.
    Alexander Hamilton painted an alarming picture in 
Federalist Paper No. 22 of the consequences of the ``poison'' 
of supermajority requirements that serve ``to destroy the 
energy of the government, and to substitute the pleasure, 
caprice, or artifices of an insignificant, turbulent, or 
corrupt junto to the regular deliberations and decisions of a 
respectable majority.'' These supermajority requirements are a 
recipe for increased gridlock not more efficient action. As 
Hamilton noted long ago: ``Hence, tedious delays; continual 
negotiation and intrigue; contemptible compromises of the 
public good.''
    Such supermajority requirements reflect a basic distrust 
not just of Congress, but of the electorate itself. I reject 
that notion and am prepared to keep faith with and in the 
American people.

9. S.J. Res. 1 will result in distressing surprises

    There is much truth to the axiom that the ``devil is in the 
details.'' We do not have the details for the proposed 
constitutional amendment, S.J. Res. 1. Indeed, the majority 
report admits that the proposed amendment ``does not specify 
the process that Congress must follow in order to achieve a 
balanced budget.'' The proposed constitutional amendment uses 
such general terms that even its sponsors and proponents 
concede that implementing legislation will be necessary to 
clarify how it will work.
    What are the issues that proponents seek to defer to 
implementing legislation? Definitions of the programs that will 
be off-budget, explanation of the roles of the courts and the 
President in executing and enforcing the amendment, directions 
on what will be considered ``compliance'' with the amendment, 
guidance on how much of a deficit may be financed and carried 
over to the next year, and other core matters that are critical 
to our understanding of what this amendment means.
    I do not think that Congress should be asked to amend the 
Constitution by signing what amounts to a blank check. Nor 
should any State be asked to ratify a pig in a poke. In the 
interests of fair disclosure, Congress should first determine 
the substance of any implementing legislation, as it did in 
connection with the 18th Amendment, the other attempt to draft 
a substantive behavioral policy in to the Constitution.
    Proper consideration of how the amendment would be 
implemented before having to vote on it need not affect the 
measure's distant effective date. Let us get the horse in front 
of the cart and not seek to evade accountability. This proposed 
constitutional amendment is hardly the work of an ``accountable 
deliberative legislative assembly,'' as the majority report 
contends. Rather, its proponents seek to delay until after its 
approval any attempt to specify how the proposed amendment 
would work and how it would be implemented. For my colleagues 
who are enamored of popular polling, I note that current polls 
demonstrate that over 75 percent of the American people are 
sensible enough to believe that we should specify how we intend 
to cut the deficit before we vote on S.J. Res. 1.

10. S.J. Res. 1 is not constitutionally necessary

    Amending the Constitution of the United States should not 
be a matter undertaken lightly, but only after careful 
deliberation. Instead of a sloganeering amendment, what we need 
is the wisdom to ask what programs we must cut and how much we 
need to raise revenues, and the courage to explain to the 
American people that there is no procedural gimmick that can 
cut the deficit or the debt. Let us not proceed with a view to 
short-run popularity, but with vision of our responsibilities 
to our constituents and the nation in accordance with our 
cherished Constitution.
    Last year, our distinguished colleague from West Virginia, 
Senator Robert C. Byrd, conducted a series of extraordinary 
hearings before the Appropriations Committee on this subject. I 
urge all of my Senate colleagues to review those comprehensive 
hearings and not merely to rely on the slender reed of our 
Judiciary hearing on the second date of this Congress.
    I am confident that upon serious reflection the Senate 
should collectively determine that S.J. Res. 1 does not meet 
the requirements of Article V of the Constitution for proposal 
to the States--it is not constitutionally ``necessary''.
    I look forward to our discussion and debate. I hope that we 
will use this opportunity to try to learn more about how the 
proposed amendment would work, how we might reach a balanced 
budget, what cuts will be needed, how we intend to protect 
against the temptation to shift burdens onto local and State 
governments, how we will ensure that the safety net is not 
shredded, how the proposal would be implemented and enforced, 
what effects it will have on our basic constitutional 
protection of separation of powers and what consequences it 
would have for our democratic form of government.
                   XI. ADDITIONAL VIEWS OF MR. HEFLIN

    I believe that the opportunity to adopt a constitutional 
amendment requiring a balanced federal budget and submitting it 
to the states for ratification may now be at hand, and I look 
forward to help guiding its passage on the floor of the U.S. 
Senate. I have introduced such a proposal at the beginning of 
each Congress, and the proposal I introduced this year, S.J. 
Res. 13, is identical to measure, S.J. Res. 1, which I have 
cosponsored and which the Judiciary Committee has just 
considered and approved by a vote of 15-3. S.J. Res. 1 will now 
go to the floor for debate and a vote by the entire body, and I 
expect it will receive the necessary two-thirds vote of the 
entire membership of the Senate.
    I congratulate Chairman Hatch on the way and manner in 
which he expeditiously conducted the committee hearing and 
mark-up. I and a number of Senators were allowed to testify at 
the hearing on January 5, 1995, and a wide cross section of 
additional witnesses were heard at the committee hearing. 
Further, a number of amendments were offered, debated, and 
voted upon publicly at the committee executive meetings which 
were held on January 17 and 18, 1995. This is American 
democracy at work and, in my judgement, at its best--there was 
no effort to stifle debate nor prevent votes on any amendments.
    I want to reiterate a couple of points that I made in my 
floor speech when I introduced identical legislation on this 
issue. First, it is particularly important that the Senate and 
House of Representatives  go  ahead and act now. Interest rates 
are going up * * * how far we do not yet know. A major portion 
of our nation's operating budget--$295 billion in fiscal year 
1995--deals with debt service. Interest payments are the second 
largest expenditure of the federal budget--interest payments 
are greater than defense spending.
    It does not take a rocket scientist to see how this cancer 
is eating up resources which are badly needed in other areas 
such as infrastructure repair, the battle against cancer, the 
war on drugs and crime, and health care. If interest rates were 
to double from current rates, and they well could, one can 
plainly see that the amount of money needed to service the 
federal debt would immediately soar also further eroding our 
nation's ability to carry out its constitutional 
responsibilities.
    I want to emphasize several matters of particular interest 
to me. First, Section 5 contains a provision allowing a waiver 
of the amendment in the time of war or where the United States 
finds itself engaged in military conflict which causes an 
imminent and serious threat to national security. That 
provision reads as follows:

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

    Section 5 maintains the traditional approach that Congress 
has given throughout our nation's history towards national 
defense: when the Congress and the President have formally 
declared war, financing the war effort should have priority 
with regard to our nation's budget. The waiver mentioned in the 
first sentence of Section 5 would require a concurrent 
resolution of Congress, but it would not have to be submitted 
to the President for approval. The waiver mentioned in sentence 
two of Section 5, however, requires a joint resolution of 
Congress, which would have to be submitted to the President for 
approval.
    Earlier versions contained only the first sentence of 
Section 5 relating to a ``declared'' war. In 1982, I offered an 
amendment on the floor of the Senate, which failed to carry by 
a few votes, which would have contained a provision also 
allowing for a waiver of the amendment where the United States 
found itself in a serious military conflict, yet short of an 
outright formally declared war. Working with my colleagues, we 
were successful subsequently in including such a provision 
which is now sentence two of Section 5 of S.J. Res. 1.
    This particular provision of Section 5 goes to the problem 
of national security in as much as this nation has fought 
relatively few declared wars as compared to the vast number of 
``conflicts'' or undeclared wars. The Korean Conflict, the 
Vietnam War, and Gulf War were all undeclared wars which have 
occurred within the last fifty years of our nation's history.
    I firmly believe that Congress should have the option to 
waive the requirement for a balanced budget in cases of less 
than an outright declaration of war. Looking back over the 
history of our nation, we find that we have had only five 
declared wars: the War of 1812, the Mexican War, the Spanish-
American War, the First World War, and the Second World War.
    While the United States has engaged in only five declared 
wars, it has engaged in hostilities abroad which required no 
less commitment of human lives or American resources than 
declared wars. In fact, our nation has been involved in 
approximately 200 instances in which the United States has used 
military forces abroad in situations of conflict.
    The most recent encounters of the United States in armed 
conflict with enemies have been undeclared wars. We fought the 
Gulf War without a declaration of war. In addition, we fought 
both the Vietnam War and the Korean Conflict without formal 
declarations of war.
    In other instances, American troops have been sent to 
foreign countries in times of crisis--Lebanon in 1958, and the 
Dominican Republic in 1965. Other critical situations, 
including the confrontation in the Formosa Straits in 1955, the 
Cuban Missile Crisis in 1962, the seizure of the Mayaquez in 
1975, have been met by the use of American military forces.
    There are other instances in which our nation has been 
involved in conflicts, short of a formally declared war, but 
which have been of a serious nature. During 1914 to 1917, a 
time of revolution in Mexico, there were at least two major 
armed actions by U.S. forces in Mexico. The hostilities 
included the capture of Vera Cruz and Pershing's subsequent 
expedition into northern Mexico.
    In June and July of 1918, marines landed at Vladivostok to 
protect the American consulate. The United States landed 7,000 
troops which remained until January 29, 1919, as part of an 
allied occupation force. In September of 1918, American troops 
joined the allied intervention force at Archangel and suffered 
some 500 casualties.
    In 1927, fighting at Shanghai caused American naval forces 
and marine forces to be increased in the area. In March of 
1927, a naval guard was stationed at the American consulate at 
Nanking after Nationalist forces captured the city. A United 
States and British warship fired on Chinese soldiers to protect 
the escape of Americans and other foreigners. By the end of 
1927, the U.S. had 44 naval vessels in Chinese waters, and 
5,670 men ashore.
    Thirty-one years later when a pro-Nasser coup took place in 
Iraq in January of 1958, the President of Lebanon sent an 
urgent plea for assistance to President Eisenhower, saying 
Lebanon was threatened by both internal rebellion and indirect 
aggression. President Eisenhower responded by sending 5,000 
marines to Beirut to protect American lives and help the 
Lebanese maintain their independence. This force was gradually 
increased to 14,000 soldiers and marines who occupied strategic 
positions throughout the country.
    This country can be faced with military emergencies which 
threaten our national security, without a formal declaration of 
war being in effect. The most recent circumstance occurred on 
January 12, 1991, when the Senate, agreeing with the House of 
Representatives, voted by a slim margin of 52-47 to approve the 
use of force to stop Iraqi aggression against the state of 
Kuwait. This slim margin illustrates how difficult it would be 
without my provision, to achieve the needed sixty votes to take 
the budget into a deficit posture in order to finance the Gulf 
War. Thus, circumstances may arise in which Congress may need 
to spend significant amounts on national defense without a 
declaration of war. Congress and the President must be given 
the necessary flexibility to respond rapidly when a military 
emergency arises.
    I also support Senator Feinstein's amendment to exempt 
Social Security from the balanced budget calculation. In the 
Budget Enforcement Act of 1990, Congress clearly declared that 
the Social Security trust fund is off-budget. In the past, the 
surplus which is accumulating in the trust fund has been used 
to mask the true size of the federal budget deficit.
    Social Security is a self financing, contributory 
retirement program--workers must contribute 6.2 percent of 
their salaries to the program and employers are required to 
match that amount. These funds, by law, are held in a trust, 
and the American people have a right to expect that Congress 
will maintain the integrity of that fund.
    The funds are now in surplus and this is expected to 
continue until the year 2012, when the baby boom age begins to 
dramatically draw these funds down as they reach retirement 
age. Thus, failure to exempt the Social Security trust funds 
from the balanced budget calculation will surely place the 
trust fund in jeopardy.
    Finally, some of the criticism that has been raised centers 
on the concerns that such an amendment places fiscal policy in 
a straitjacket and upsets the balance within Congress, and 
between the executive and judicial branches of Government. 
These two issues are legitimate points of discussion; however, 
the real point to be remembered is that the nation's budget 
deficits are simply out of control, and a drastic dose of 
constitutional medicine is required and must be taken in order 
to restore this nation's health.
                   XIV. MINORITY VIEW OF MR. FEINGOLD

    During the Committee's consideration of S.J. Res. 1, I 
proposed but did not press for a vote on a Sense of the Senate 
Resolution focused upon the fact that proposals being advanced 
in the 104th Congress to enact middle class and other general 
tax cuts are inconsistent with the goal of reducing the federal 
deficit and achieving a balanced budget. I intend to raise this 
issue at an appropriate point on the Senate floor and take this 
opportunity to address this conflict.
    I strongly believe that deficit reduction should be our 
highest economic priority although I oppose the proposed 
constitutional amendment because I do not believe that it is an 
effective mechanism for bringing about real deficit reduction. 
Indeed, I believe that the proposed constitutional amendment 
will only make deficit reduction and a balanced budget more 
difficult to achieve.
    But irrespective of one's views of the efficacy of the 
proposed constitutional amendment as a tool for deficit 
reduction, it is essential to recognize that we simply cannot 
cut taxes and sufficiently reduce the federal deficit at the 
same time.
    It is truly ironic that just as the 104th Congress begins 
its deliberations over the balanced budget amendment to the 
Constitution, a bidding war appears to be starting over 
proposed tax cuts. Some proponents of such cuts have not even 
identified any areas for spending reductions to offset the 
costs of these tax cuts. The Administration has been far more 
responsible in identifying specific areas for spending 
reductions to pay for proposed tax cuts. Yet, those spending 
reductions would be better used to continue to reduce the 
federal deficit and move us towards a balanced budget.
    The way to reduce the federal deficit is to enact specific 
spending cuts. Enacting those spending cuts is a difficult and 
painful process, as we have learned in the last two years. 
Every federal program which is cut has a constituency that 
struggles to maintain its funding, and many Americans, from 
veterans to farmers, have made real sacrifices in the past two 
years as the federal government has reduced spending in 
specific areas in order to achieve deficit reduction. The 
savings produced by the additional spending cuts under 
consideration should be used to reduce the federal deficit, not 
offset new tax cuts.
    During the 103rd Congress, we made a good start on reducing 
the federal deficit created in large part by the irresponsible 
budget policies of the 1980's. President Clinton's 1993 deficit 
reduction package was a critical turning point in our fight to 
reduce the deficit. We are now in the third straight year of 
progressively lower deficits, something that has not happened 
since Harry Truman was President.
    But there is still a great deal to be done, and there are 
signs that the progress that we have made is at considerable 
risk. The new tax cut fever is the most recent example of how 
far we seem to be straying from the path toward economic 
stability.
    It is interesting to note that some of the most vocal 
supporters of the proposed constitutional amendment are also 
leading the stampede to cut taxes. That should serve as a 
warning to anyone who believes that the proposed change to our 
Constitution will do anything to actually lower our budget 
deficits.
    Though obviously contradictory economic policy goals, the 
balanced budget amendment and various tax cut proposals do 
share one common theme--they are both politically appealing 
proposals that involve no tough or painful choices.
    Indeed, those who advocate both the balanced budget 
amendment and new tax cuts also refuse to reconcile the 
inconsistencies of the two proposals by offering a specific 
plan to balance the budget while cutting taxes.
    Yet, contrary to the conventional and cynical wisdom that 
produces both the proposed constitutional amendment and the new 
tax cut proposals, many taxpayers recognize that these tax cut 
proposals, however appealing, are poor public policy. They 
recognize the importance of reducing the federal budget 
deficit, and getting our nation's fiscal house in order.
    In just the last few weeks, phone calls and letters to my 
office have been running about 10 to 1 in favor of reducing the 
deficit over cutting taxes.
    A gentleman from Birnamwood, Wisconsin, wrote to me:

          By all means, cut government spending. But use that 
        savings to eliminate the deficit and pay down the debt 
        that threatens to overwhelm us. That is the only 
        responsible thing to do.

    A woman from Cornucopia, Wisconsin, wrote:

        * * * I can't figure out why this is happening--this 
        race to cut taxes--when the majority of people, 
        according to all I've seen, heard, and read, don't 
        care. We want the deficit cut, and we want our money 
        spent more wisely * * *

    And a gentleman from Waupaca, Wisconsin, wrote this to me:

          I want you to know that I strongly support your 
        position against the proposed tax cuts. With an income 
        of $50,000 I guess I would benefit from most of the tax 
        cut plans, but I feel the benefit would be short lived 
        and would clearly be detrimental to the country. I hope 
        that you will continue to oppose these tax cut plans 
        that are clearly nothing more than attempts to buy 
        votes.

    These views are widely shared outside Wisconsin as well. A 
USA Today/CNN poll published on December 20 found that 70 of 
those polled said if Congress is able to cut spending, then 
reducing the deficit is a higher priority than new tax cuts.
    It is frustrating to hear constituents, who could certainly 
use the money, urge Congress to make deficit reduction a higher 
priority than tax cuts, and then watch the rush to see who can 
propose the biggest tax cut.
    With or without a balanced budget amendment, we will not 
make any progress on reducing the federal deficit if we get 
into another bidding war on tax cuts.

                      XV. Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the committee finds no changes in 
existing law caused by passage of Senate Joint Resolution 1.