[Senate Report 105-3]
[From the U.S. Government Publishing Office]



                                                        Calendar No. 12
105th Congress                                                   Report
                                 SENATE

 1st Session                                                      105-3
_______________________________________________________________________


 
              THE BALANCED-BUDGET CONSTITUTIONAL AMENDMENT

                                _______
                                

                February 3, 1997.--Ordered to be printed

  Filed under authority of the order of the Senate of January 30, 1997

_______________________________________________________________________


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

                              R E P O R T

                             together with

                     ADDITIONAL AND MINORITY VIEWS

                       [To accompany S.J. Res. 1]

    The Committee on the Judiciary, to which was referred the 
joint resolution (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 joint resolution do pass.

                                CONTENTS

                                                                   Page
  I. Purpose..........................................................2
 II. Legislative history..............................................3
III. Discussion.......................................................7
 IV. Votes of the Committee..........................................16
  V. Text of S.J. Res. 1.............................................18
 VI. Section-by-section analysis.....................................19
VII. Cost estimate...................................................24
VIII.Regulatory impact statement.....................................26

 IX. Additional views of Senator Grassley............................27
  X. Additional views of Senator Kyl.................................29
 XI. Additional views of Senator Abraham.............................31
XII. Minority views of Senators Leahy, Kennedy, and Feingold.........33
XIII.Additional views of Senator Torricelli..........................76

XIV. Changes in existing law.........................................79

                               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 
precept, 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 limiting the Government's budgetary authority 
by a governing document is deeply rooted in our traditions, 
extending as far back as 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. As more than 200 economists 
told the Congress in an open letter:

          We have lost the moral sense of fiscal responsibility 
        that served to make formal constitutional restraints 
        unnecessary. We cannot legislate a change in political 
        morality; we can put formal constitutional constraints 
        in place.

    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 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 by 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 8 to 9.
    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 4 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 
requirement of a two-thirds majority by a single vote.
    In the 100th Congress, the Subcommittee on the Constitution 
held a March 23, 1988, hearing on S.J. Res. 11, S.J. Res. 112, 
and S.J. Res. 116. 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 and the amendment died.
    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.
    Shortly thereafter, 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, with 
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 by 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 
House vote in favor of the amendment was 280 to 153, nine votes 
short of the two-thirds 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 cosponsors, 
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.
    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.
    On January 4, 1995, S.J. Res. 1 was introduced in the 104th 
Congress as the first joint resolution of the new Congress by 
Senate Majority Leader Robert Dole, on behalf of the primary 
sponsors Senator Orrin G. Hatch, the new Chairman of the 
Judiciary Committee, and Senator Paul Simon. The measure was 
again virtually identical to the bicameral consensus proposal 
forged during the summer of 1992. Thirty-nine Senators joined 
Senators Dole, Hatch, and Simon as original cosponsors.
    On January 5, 1995, Senator Hatch convened and chaired the 
first full Committee hearings of the Senate Judiciary Committee 
in the 104th Congress to consider S.J. Res. 1.
    On January 18, 1995, the Senate Committee on the Judiciary 
approved S.J. Res. 1 by a vote of 15 to 3.
    On January 26, 1995, the U.S. House of Representatives 
voted 300 to 132 in favor of H.J. Res. 1, the Balanced-Budget 
Amendment. This marked the first time in the history of the 
Republic that the House passed the Balanced-Budget Amendment.
    On January 30, 1995, the Senate began debate on an 
identical measure, S.J. Res. 1, the Balanced-Budget Amendment. 
The floor debate lasted until March 2, 1995. On March 2 the 
Senate voted 65 to 35, failing to approve the amendment. The 
actual support for the amendment was 66 to 34, but Senator Dole 
changed his vote to no in order to preserve his right to call 
up the Balanced-Budget Amendment for reconsideration. Thus, the 
Senate fell a mere one vote short of sending the Balanced-
Budget Amendment to the States for ratification.
    On June 4, 1996, Senator Dole exercised his right to call 
the amendment up for a reconsideration vote. The vote occurred 
on June 6, 1996, and once again the amendment was narrowly 
defeated, 64 to 35. The Balanced-Budget Amendment lost two 
votes due to the replacement of Senator Packwood by Senator 
Wyden and by Senator Exon switching sides. Senator Pell was not 
available and thus did not vote on June 6.
    In the current Congress, on January 17, 1997, Senator Hatch 
convened and chaired the Judiciary Committee for its first 
hearing of the 105th Congress to consider the Balanced-Budget 
Amendment. Those testifying included Hon. Robert E. Rubin, 
Secretary of the Treasury; Hon. James C. Miller III, former 
Director of the Office of Management and Budget; Dr. Martin A. 
Regalia, U.S. Chamber of Commerce; Martin J. Dannenfelser, Jr., 
Family Research Council; James D. Davidson, National Taxpayers 
Union; Robert Greenstein, Center on Budget and Policy 
Priorities.
    On January 21, 1997, the Balanced-Budget Amendment was 
introduced by Senator Hatch in the Senate and once again 
designated S.J. Res. 1. Joining Senator Hatch as original 
cosponsors were 61 other Senators: Senators Lott, Thurmond, 
Craig, Nickles, Domenici, Stevens, Roth, Bryan, Kohl, Grassley, 
Graham, Specter, Baucus, Thompson, Breaux, Kyl, Moseley-Braun, 
DeWine, Robb, Abraham, Ashcroft, Sessions, D'Amato, Helms, 
Lugar, Chafee, McCain, Jeffords, Warner, Coverdell, Cochran, 
Hutchison, Mack, Gramm, Snowe, Allard, Brownback, Collins, 
Enzi, Hagel, Hutchinson, Roberts, Smith of Oregon, Bennett, 
Bond, Burns, Campbell, Coats, Faircloth, Frist, Gorton, Grams, 
Gregg, Inhofe, Kempthorne, McConnell, Murkowski, Santorum, 
Shelby, Smith of New Hampshire, and Thomas.
    On January 22, 1997, Senator Hatch convened and chaired the 
Judiciary Committee for a second hearing on the Balanced-Budget 
Amendment. In addition to Senators Craig, Lautenberg, Graham, 
Conrad, Bryan, and Dorgan those testifying included Hon. Paul 
Simon, former U.S. Senator; Hon. Stuart Gerson, former Acting 
Attorney General; David Malpass, Bear Stearns & Company; Alan 
B. Morrison, Public Citizen, and Gene Lehrmann, American 
Association of Retired Persons.
    On January 30, 1997, the Judiciary Committee approved S.J. 
Res. 1 by a vote of 13 to 5.

                            III. DISCUSSION

    Washington has not balanced the Federal budget since 1969. 
As a result, our national debt currently stands at over $5.3 
trillion. This debt--which translates into $20,000 for every 
American--has contributed to the increased economic pressure 
straining older Americans, families, and local communities. 
Just as one would do with an out-of-control credit-card 
shopper, America needs to limit Washington's access to credit 
and force it to confront the budget problems it has disregarded 
for too long. Hundreds of economists agree that Washington has 
lost its moral sense of fiscal responsibility and, while we 
cannot legislate a change in political morality, Congress can 
put a formal constitutional restraint into place by passing the 
Balanced-Budget Amendment.
    Opponents argue that Washington must maintain the budget 
flexibility to deficit spend in times of emergency. However, 
the Balanced-Budget Amendment recognizes this prospect, 
allowing for the approval of deficits in times of real need by 
a three-fifths vote of Congress. Furthermore, nothing in the 
Balanced-Budget Amendment prevents Washington from maintaining 
a rainy day fund for contingencies. Meanwhile, the Balanced-
Budget Amendment will help save worthy programs like Social 
Security by strengthening the economy, reducing interest rates 
and inflation (which helps those on fixed incomes), and 
ensuring the Government will have the money needed to pay 
Social Security when its obligations come due.
    Still others suggest that since Washington seems interested 
in passing a statutory balanced-budget plan for the year 2002, 
America does not need a constitutional amendment. Yet, since 
1978, Americans have been sold no fewer than five statutory 
balanced-budget remedies, including the Gramm-Rudman law. None 
have worked. And even if Washington does reach agreement on a 
plan, will we really see a balanced budget in 2002, 2003, 2004, 
2005, and every year after that without constitutional 
pressure?
    The fact is that the Balanced-Budget Amendment will force 
Washington to do what needs to be done: determine our long-term 
spending priorities; address projected deficits in important 
programs; shift power back to the States, local communities, 
and families; and provide incentives for savings and 
investment. By forcing Washington to address these problems and 
kick its credit-card shopping addiction, the Balanced-Budget 
Amendment will make the economy more stable, in the process, 
improve the economic prospects for all Americans--our older 
Americans, our families, and our future generations.

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 1996, 
Federal Government spending of about $1.6 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 1996 was about $1.6 
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 $248 billion on 
interest, an increase of well over 300 percent.
    Every day, the Government throws away over $670 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. 
Over 17 percent of the gross Federal debt is now held by 
foreign interests. That is a 28-percent increase in our 
reliance on foreign creditors since 1992.

Statutory efforts

    Critics of the Balanced-Budget Amendment argue that 
Congress does not need a constitutional amendment to balance 
the budget; they aver that 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, as 
outlined above, recent efforts have shown that Congress simply 
does not have the will to balance the budget for 1 year, much 
less keep it balanced.
    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 almost 40 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.
    Previous statutory efforts to balance the budget have 
failed because it is too easy for Congress simply to reverse 
course and rescind its previous declarations. Since 1979 it has 
been amply proven that 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:

        [L]ittle risk that the amendment will become the basis 
        for judicial micromanagement 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 exist three basic constraints that prevent 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 in which 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 dutybound 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 President must enforce any mandated--as opposed to 
discretionary--congressional spending measure pursuant to his 
duty to faithfully execute the law pursuant to article II, 
section 3 of the Constitution). The Kendall case was given new 
vitality in the 1970's, when lower Federal courts, as a matter 
of statutory construction, rejected attempts by President Nixon 
to impound funds where Congress did not give the President 
discretion to withhold funding. For example, State Highway 
Commission v. Volpe, 479 F.2d 1099 (8th Cir. 1973).
    Under section 6 of the amendment, as stated, Congress must 
mandate exactly what type of enforcement mechanism it wants, 
whether it be sequestration, rescission, the establishment of a 
contingency (or rainy day) fund, or some other mechanism. The 
President, as Chief Executive, is dutybound under the 
Constitution to faithfully enforce a particular requisite 
congressional scheme to the exclusion of any hypothetical 
impoundment power.
    Currently, the only explicit delegated budgetary power the 
President now possesses is the line-item veto. Unless Congress 
grants the President further powers, the limited line-item veto 
authority, which is subject to congressional override, is the 
only power the President has to assure a balanced budget in a 
hypothetical situation where Congress refuses to balance the 
budget. The Committee believes that the President is dutybound 
by his oath to faithfully execute the laws to enforce the 
congressional scheme or powers delegated to him. Consequently, 
unless Congress grants the President impoundment power, the 
President, as a practical matter, will not be able to impound 
funds under this amendment.

Social Security and the Balanced-Budget Amendment

    Opponents of S.J. Res. 1 have raised the specter that the 
Balanced-Budget Amendment may cause the Federal Old-Age and 
Survivors Insurance and Disability Insurance Trust Funds 
(Social Security Trust Funds or Trust Funds) to be ``raided'' 
because the amounts of the present-day surplus will be included 
in budget calculations. They therefore argue that the Social 
Security Program should be exempted from the requirements of 
the Balanced-Budget Amendment. The Committee believes that 
these contentions are erroneous for various reasons.
    Simply counting the surplus does necessarily not mean that 
the actual surplus will be used to balance the budget. Nor does 
it mean that benefits will be cut. Indeed, the United States 
has a unified budget, and obligations such as Social Security 
benefits by law are paid out of general Treasury, regardless of 
whether the trust fund runs a surplus or not. Furthermore, 
Congress by statute has created ``firewalls'' that protect the 
trust funds from budgetary congressional rescission or 
Presidential sequestration. Additional protection is not 
necessary. In fact, not including or exempting the present day 
surplus in budgetary calculations, the Committee believes, will 
both harm the future viability of the trust funds and require 
more cuts than necessary in other Federal programs. Finally, 
contrary to the critics contention that passage of the 
Balanced-Budget Amendment will harm social security, the 
Committee believes that passage and implementation of S.J. Res. 
1, with the Social Security Program subject to its 
requirements, are necessary for the feasibility of Social 
Security and for a balanced budget and a healthy economy.
            Why the Balanced-Budget Amendment is good for Social 
                    Security
    Indeed, those worried about the future of the Social 
Security Trust Funds should support the Balanced-Budget 
Amendment. This is no better illustrated than by the testimony 
the Committee received from Robert J. Myers, who has worked for 
the Social Security Administration in many capacities over the 
last four decades, including as Chief Actuary and Deputy 
Commissioner. Testifying on behalf of the proposed Balanced-
Budget Amendment in 1995, Mr. Myers told the Committee that, 
``the most serious threat to Social Security is the 
Government's fiscal irresponsibility.'' Mr. Myers suggested our 
current profligacy will result either in the Government raiding 
the trust fund or printing money, either of which will reduce 
the real value of the trust funds.
    If the country should ever decide to monetize the debt, 
that is, simply print more money to cover its interest 
payments, the resulting inflation would hit hardest those 
living on fixed incomes. Although the Federal Reserve Board 
would probably attempt to avoid this result, seniors would bear 
a large part of the burden if this option is chosen. If 
inflation returns in any other form because of our debt burden, 
seniors would again be hit.
    Additionally, the money in the Social Security Trust Funds 
is invested in Government bonds. The trust funds' reserves are 
in large degree only a claim on the general Treasury funds, 
with no capital to back up that claim. If the country ever 
defaults on its debts, the Social Security Trust Funds would 
suffer.
    For this reason alone, Social Security recipients, both 
current and future, and those who are concerned about them, 
should strongly support the Balanced-Budget Amendment. The 
Committee believes that this Nation must get our entire fiscal 
house in order for the sake of older Americans, families, 
children, and grandchildren.
            An exemption will not prevent cuts to Social Security and 
                    would create a ``loophole'' to any balanced budget
    The motivation for exempting Social Security from the 
Balanced-Budget Amendment is to ensure that Social Security 
benefits will not be cut. The Committee understands this 
concern, but believes it to be misplaced. Passage of S.J. Res. 
1 does not in any way mean Social Security benefits will be 
reduced. It only requires Congress to choose among competing 
programs in allocating budget cuts. There is every reason to 
believe the power of the electorate will continue to ensure 
that Social Security will compete very well.
    The Committee feels compelled to note that, ironically, the 
proposed exemption from the Balanced-Budget Amendment does 
nothing to respond to the concern that benefits will be 
reduced. Nothing in the exemption would protect Social Security 
recipients from either benefit cuts or tax increases.
    Exempting Social Security would create an emphatic 
incentive either: (1) to run a deficit in the Social Security 
Trust Funds to offset revenue increases elsewhere in the 
budget, or (2) to redefine spending programs as ``Social 
Security'' and pay for them through what could become a giant 
loophole in any attempt to balance the budget.
    With the constitutional loophole proposed by this exemption 
in place, there would be an almost irresistible inducement for 
future Congresses to redefine unrelated programs as Social 
Security. Exempting Social Security would in essence create two 
budgets. One budget would be under the aegis of the Balanced-
Budget Amendment, and would be required to be balanced. The 
other, containing Social Security, would be allowed to run 
deficits.
    This is almost certainly to create a powerful incentive for 
Congress to include high cost welfare programs as part of 
Social Security. The inclusion of these programs into Social 
Security could deny the trust funds of its surplus and leave it 
insolvent. The Committee maintains that the argument for 
exempting Social Security from the Balanced-Budget Amendment 
must be rejected.

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 in many States, legislatures there have learned 
to operate effectively within the external limitation of their 
constitutions.

Response to President Clinton

    President Clinton's letter to Senator Daschle, dated 
January 28, 1997, concerning opposition to the balanced-budget 
constitutional amendment, contained misconceptions that the 
Committee feels are necessary to address.
    The primary thrust of the letter is the contention that the 
Social Security Program will be harmed if it is included within 
the scope of S.J. Res. 1. The Committee believes that the 
contents of the letter supporting that position will unduly 
frighten our senior citizens. There is nothing to suggest that 
Social Security will be harmed by its inclusion within the 
Balanced-Budget Amendment. In fact, proposals to exclude Social 
Security from S.J. Res. 1 would have a far greater chance of 
harming Social Security.
    The President states in his letter that in the event of a 
budget impasse, he could stop disbursements of Social Security 
checks and that the courts would reduce benefits. He also 
alleges that no statutory program could protect Social Security 
because a balanced-budget amendment would override such 
statutes.
    However, case law and sound jurisprudence support the view 
that the President may not impound any entitlement funds or any 
mandatory disbursements. This has been settled as a matter of 
law since the 19th century Supreme Court decision in Kendall v. 
United States. The Balanced-Budget Amendment does not grant the 
President any new enforcement powers. Indeed section 6 of S.J. 
Res. 1 confers upon Congress plenary power to enforce the 
amendment. Once implementing legislation is passed that 
remedies situations where a budget is not balanced at the end 
of the year, the President is dutybound by his oath of office 
to enforce the congressional procedure to the exclusion of all 
others.
    Moreover, the existing statutes which protect Social 
Security Trust Funds through the procedures known as 
``firewalls,'' will still be in place. While it is of course 
true that constitutional provisions trump conflicting statutory 
provisions, the Committee sees nothing in the text of S.J. Res. 
1 inconsistent with such firewall protections. Thus, the 
Committee believes they would remain in force.
    With regard to the issue of judicial review, the Committee 
notes that courts will be bound by past precedent and the 
political question, standing, justiciability, and separation-
of-powers doctrines from interfering in the budget process. 
Thus, the claim that the courts will stop Social Security 
checks from flowing lacks legal support.
    The Committee also notes that the President's budgets have 
consistently included the Social Security surpluses. Indeed, 
Treasury Secretary Rubin's testimony before the Committee 
indicated that he agreed with this practice and would continue 
it in the future.
    The Committee recognizes that in the coming decades Social 
Security will go into debt. Since the trust fund contains 
Government securities, the key question for the future health 
of the Social Security Program is whether the Federal 
Government will be able to honor the notes held by the trust 
fund. The Committee firmly believes that the fiscal 
responsibility that will come as a result of passing the 
Balanced-Budget Amendment is the most important step that can 
be taken toward guaranteeing the ability of the Government to 
repay those debts.
    The best protection for Social Security is passing and 
ratifying S.J. Res. 1. This would create the needed discipline 
to balance the budget. Payments on debt interest will be 
substantially reduced. The chance for Government default will 
be significantly diminished. The economy will grow at a brisker 
pace. And repayment of Social Security obligations will be 
assured.

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.\1\
---------------------------------------------------------------------------
    \1\ Senator Kohl does not necessarily agree with all statements in 
the majority views.
---------------------------------------------------------------------------

                       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 Thursday, January 30, 1997, at 10 a.m., 
to mark up S.J. Res. 1. The following rollcall votes occurred 
on amendments proposed thereto:
    (1) The Feinstein substitute amendment to exempt Social 
Security and capital budgets, and suspend the balanced-budget 
rule during recession. The amendment was rejected: 8 yeas to 9 
nays.
        Yeas                          Nays
Leahy                               Thurmond (proxy)
Kennedy                             Grassley (proxy)
Biden (proxy)                       Thompson (proxy)
Kohl (proxy)                        Kyl (proxy)
Feinstein                           DeWine
Feingold (proxy)                    Ashcroft
Durbin                              Abraham
Torricelli                          Sessions
                                    Hatch

    (2) The Torricelli amendment to exempt capital expenditures 
and Social Security and suspend the balanced-budget rule during 
recession. The amendment was rejected: 8 yeas to 9 nays.
        Yeas                          Nays
Leahy                               Thurmond (proxy)
Kennedy                             Grassley
Biden (proxy)                       Thompson (proxy)
Kohl (proxy)                        Kyl (proxy)
Feinstein (proxy)                   DeWine
Feingold                            Ashcroft
Durbin                              Abraham
Torricelli                          Sessions (proxy)
                                    Hatch

    (3) The Leahy amendment on the debt limit. The amendment 
was rejected: 8 yeas to 9 nays.
        Yeas                          Nays
Leahy                               Thurmond (proxy)
Kennedy                             Grassley
Biden (proxy)                       Thompson (proxy)
Kohl (proxy)                        Kyl
Feinstein (proxy)                   DeWine (proxy)
Feingold                            Ashcroft
Durbin                              Abraham
Torricelli (proxy)                  Sessions
                                    Hatch

    (4) The Kennedy amendment to exempt Social Security. The 
amendment was rejected: 9 yeas to 9 nays.
        Yeas                          Nays
Specter (proxy)                     Thurmond (proxy)
Leahy                               Grassley
Kennedy                             Thompson (proxy)
Biden (proxy)                       Kyl
Kohl (proxy)                        DeWine (proxy)
Feinstein (proxy)                   Ashcroft
Feingold                            Abraham
Durbin                              Sessions
Torricelli (proxy)                  Hatch

    (5) The Durbin amendment on taxes. The amendment was 
rejected: 8 yeas to 9 nays.
        Yeas                          Nays
Leahy (proxy)                       Thurmond (proxy)
Kennedy                             Grassley
Biden (proxy)                       Thompson
Kohl (proxy)                        Kyl (proxy)
Feinstein (proxy)                   DeWine
Feingold                            Ashcroft
Durbin                              Abraham
Torricelli (proxy)                  Sessions
                                    Hatch

    (6) The Feingold amendment on ratification. The amendment 
was rejected: 6 yeas to 9 nays.
        Yeas                          Nays
Leahy (proxy)                       Thurmond (proxy)
Kennedy                             Grassley
Kohl (proxy)                        Thompson
Feingold                            Kyl
Durbin                              DeWine
Torricelli                          Ashcroft
                                    Abraham
                                    Sessions
                                    Hatch

    (7) Motion to favorably report S.J. Res. 1. The motion was 
adopted: 13 yeas to 5 nays.
        Yeas                          Nays
Thurmond (proxy)                    Leahy
Grassley                            Kennedy
Specter (proxy)                     Feinstein
Thompson                            Feingold
Kyl                                 Durbin
DeWine                                
Ashcroft                              
Abraham                               
Sessions                              
Biden (proxy)                         
Kohl (proxy)                          
Torricelli                            
Hatch                                 

                         V. TEXT OF S.J. RES. 1

  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 of the United 
States, which shall be valid to all intents and purposes as 
part of the Constitution if ratified by the legislatures of 
three-fourths of the several States within 7 years after 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, as amended, 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 of 
Congress * * *'' 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.
    ``* * * 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 30, 1997.
Hon. Orrin G. Hatch,
Chairman, Committee on the Judiciary,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S.J. Res. 1, a joint 
resolution proposing an amendment to the Constitution of the 
United States to require a balanced budget.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is James Horney.
            Sincerely,
                                 June E. O'Neill, Director.

    Enclosure.

     s.j. res. 1--a joint resolution proposing an amendment to the 
     constitution of the united states to require a balanced budget

 As ordered reported without amendment by the Senate Committee on the 
                     Judiciary on January 30, 1997

     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 rollcall 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 be ratified by three-
fourths of the States within 7 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.
    CBO projects that the deficit will be $188 billion in 
fiscal year 2002 if there are no changes in current policies 
(and assuming that discretionary spending grows at the rate of 
inflation after 1988). CBO estimates, however, that policy 
savings totalling $154 billion in 2002 (including associated 
debt service effects) would balance the budget in that year. 
The additional $34 billion in deficit reduction--the so-called 
fiscal dividend--would come from favorable changes in the 
economy induced by balancing the budget.
    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.
    S.J. Res. 1 contains no intergovernmental or private sector 
mandates as defined in the Unfunded Mandates Reform Act of 1995 
(Public Law 104-4) and would not directly affect the budgets of 
State, local, or tribal governments. However, steps to reduce 
the deficit to meet the requirements of this amendment could 
include cuts in Federal grants to these governments, a smaller 
Federal contribution for shared programs or projects, and/or 
increased demands on State, local, and tribal governments to 
compensate for reductions in Federal programs.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are James 
Horney (for Federal costs), who can be reached at 226-2880, Leo 
Lex (for State and local costs), who can be reached at 225-
3220, and Matthew Eyles (for the private-sector costs), who can 
be reached at 226-2649. This estimate was approved by Paul N. 
Van de Water, Assistant Director for Budget Analysis.

                   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 SENATOR CHARLES E. GRASSLEY

    I am submitting additional views to the Committee Report on 
S.J. Res. 1 because I want to highlight the significant flaws 
of the amendments offered in Committee to abandon the unified 
budget by taking social security ``off budget.'' In my view, 
these amendments would harm the social security program and 
force unconscionably deep cuts in many of America's most vital 
social programs.
    For many years, under Democratic and Republican Presidents 
and with Republicans or Democrats in control of Congress, 
social security has been included in a unified budget. The 
unified budget has historically served to protect social 
security as well as many other important government programs.
    Now, however, Congress is being asked to abandon this 
tried-and-true approach to the federal budget. I can see no 
reason for this radical change, although there are many reasons 
to believe that abandoning the protective shield of the unified 
budget would have devastating consequences. It is beyond 
dispute that should Congress scrap the unified budget and 
exempt social security, truly draconian cuts in important 
social programs would be absolutely necessary to balance the 
budget. In fact, according to the most recent figures, 295 
billion dollars in cuts would have to occur in order to achieve 
balance.
    In the spirit of ``truth in budgeting,'' I challenge the 
supporters of scrapping the unified budget to identify what 
programs will be cut and how large those cuts will be. Prior to 
the 104th Congress, those who supported a balanced budget were 
repeatedly asked to provide details of how a balanced budget 
would be achieved. I believe the same standard should apply to 
those who propose exempting social security.
    When it comes to facing up to the difficult issue of 
suggesting such deep cuts, it may be some of those who support 
abandoning the unified budget will also abandon a balanced 
budget.
    Importantly, scrapping the unified budget will harm the 
social security program. While the social security program is 
currently generating surpluses, that situation will not 
continue. By 2018, the Social Security trust fund will be in 
deficit-spending mode. By 2029, the trust fund will be 
insolvent. In that year, the deficit attributable to Social 
Security will be $647 billion.
    In the spirit of ``truth in budgeting,'' I believe that the 
proponents of abandoning the unified budget should explain to 
the American people how they would save social security once 
the protective shield of the unified budget has been removed.
    In 1986 and 1990, Congress passed two pieces of legislation 
which moved social security off-budget. I supported this 
legislation because we were creating broad, general categories 
for programs to fit into. Social Security would have been 
included in the category of mandatory spending. Automatic cuts 
would have been triggered in the program if our spending plans 
were not achieving the goals set. As has been pointed out, 
social security has earmarked revenues and is intended to pay 
for itself. I believed then, and I believe now, that automatic 
cuts should not be made to social security as long as it is 
paying for itself.
    Under the umbrella of a constitutional amendment, it is 
unwise and potentially dangerous to exempt social security. How 
programs like Social Security, with a dedicated revenue stream, 
are treated in a unified budget is an issue which will be the 
subject of implementing legislation.
    In conclusion, I agree with Mr. Robert Myers, the former 
Chief Actuary for the Social Security program. He testified 
before the Judiciary Committee on January 5, 1995 that a 
balanced federal budget is the best way to protect social 
security. There are too many unanswered questions associated 
with exempting social security from the unified budget through 
a constitutional amendment. Until Congress and the American 
people have real answers to those questions, Congress should 
not cavalierly move to scrap the unified budget which has 
worked so well for so long.

                                                    Chuck Grassley.
                     X. ADDITIONAL VIEWS OF MR. KYL

    Each Member of the U.S. Senate has a different idea of what 
the ideal balanced-budget amendment should look like. Some may 
not want any constitutional constraint at all.
    Some of us who support S.J. Res. 1 believe a better version 
of the amendment would not only require a balanced budget, it 
would limit Federal spending or Congress' ability to raise 
taxes. I sponsored alternatives to S.J. Res. 1 that include 
such limits: the Balanced Budget/Spending-Limitation Amendment 
(S.J. Res. 8), and the Tax Limitation Amendment (S.J. Res. 9).
    A balanced budget is critically important. But it is also 
important how balance is achieved and at what level of taxing 
and spending. Congress could conceivably double Federal 
spending to $3 trillion and try to raise taxes to match in 
order to achieve a balanced budget. But that is not what 
American families, whose budgets are already stretched to the 
limit because of high taxes, expect out of a balanced-budget 
amendment. Such an oppressive tax burden would certainly push 
the economy into severe recession which, in turn, would 
eliminate the revenues necessary to fund the Government and 
maintain a balanced budget.
    The Balanced-Budget Amendment should not become anyone's 
excuse for raising taxes. But neither should a spending or tax 
limit become anyone's excuse for opposing a constitutional 
requirement for a balanced budget. The mountain of debt our 
Government is passing on to future generations is growing too 
large to miss yet another opportunity to send a balanced-budget 
amendment--with or without a tax or spending limit--to the 
States for ratification. I will support S.J. Res. 1, but I also 
intend to press for the prompt consideration of a tax or 
spending limit as the essential next step after the Senate has 
completed action on the Balanced-Budget Amendment.
    I have long advocated a spending limit as the best 
approach. Modeled after an initiative that won the support of 
78 percent of Arizona voters in 1978, the Balanced Budget/
Spending-Limitation Amendment would require a balanced budget 
and limit spending to 19 percent of Gross Domestic Product 
(GDP), which is roughly the level of revenue the Federal 
Government has collected for the last 40 years. That is, 
revenues have remained relatively constant at 19 percent of GDP 
despite tax rate increases and tax cuts, despite recessions and 
expansions, and despite fiscal policies pursued by Presidents 
of both political parties. This suggests that the economy has 
already established an effective limit on how great a tax 
burden it will bear.
    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 guiding principle that there is really only 
one way to balance the budget: by limiting spending to no more 
than the level of tax revenues that the economy has 
historically been willing to bear.
    Limit spending, and there is no need to consider tax 
increases. Congress would not be allowed to spend additional 
revenue that might be raised. Link Federal spending to economic 
growth, as measured by GDP, and an incentive is created for 
Congress to promote pro-growth economic policies. The more the 
economy grows, the more spending Congress is allowed to 
propose, but always proportionate to the size of the economy.
    A tax limit is the next best approach. Like the BBSLA, the 
Tax-Limitation Amendment (TLA) has its roots in initiatives 
started at the State level. A tax limit was approved by 72 
percent of Arizona voters in 1992. Nevadans approved a similar 
limit last year with 70 percent of the vote, as did 69 percent 
of Florida voters. In all, 14 States have imposed some form of 
tax limitation on their State governments. The Federal TLA 
would require a two-thirds vote of each House of Congress to 
approve tax increases. It would make an important addition to 
the Constitution, whether or not the Balanced-Budget Amendment 
is approved. But, it is particularly important if the Balanced-
Budget Amendment does become part of the Constitution so that a 
constitutional requirement for a balanced budget does not 
become an excuse to raise taxes.
    Although a balanced-budget amendment with a spending or tax 
limitation is preferable, the time has come to ensure that we 
at least have a constitutional requirement for a balanced 
budget. I support S.J. Res. 1.
                                                           Jon Kyl.
                  XI. ADDITIONAL VIEWS OF MR. ABRAHAM

    No issue is more important to the health of this Nation and 
the security of future generations than passing a 
Constitutional amendment requiring balanced Federal budgets. 
The Federal budget has been in deficit for 28 straight years, 
while total Federal borrowing is now over $5 trillion. A child 
born today faces almost $200,000 in additional taxes just to 
service the interest on this debt. Nevertheless, the Balanced-
Budget Amendment remains extremely contentious in the Senate, 
as evidenced by a number of amendments offered in the Judiciary 
Committee which would either undermine the enforcement 
provisions of the amendment or make it impossible for future 
Congresses to comply with its provisions. While I had the 
opportunity to address several of these amendments during the 
markup, I wanted to take this opportunity to focus on the issue 
of exempting Social Security from the Balanced-Budget 
Amendment.
    Of the six amendments offered during markup, three 
contained provisions designed to exempt the Social Security 
System from calculations of Federal revenues and outlays. And 
while these amendments differed slightly in detail, they had in 
common two devastating flaws. First, they each would mandate 
massive spending cuts to education, health care, and the 
environment and/or major tax increases on hard-working American 
families. Second, none of these amendments does anything to 
protect future Social Security benefits or help ensure that 
Federal debt obligations to Social Security will be repaid. In 
fact, by mandating draconian spending cuts and tax increases, 
these amendments may actually harm future generations of 
seniors and damage the Social Security System they supposedly 
protect.
    First, consider the massive spending cuts and tax increases 
made necessary by these various amendments. In 2002 alone, 
Congress would have to first balance the unified budget, and 
then save an additional $104 billion to balance the budget 
exempting Social Security. Over the years 2002 to 2007, these 
amendments would require that Congress either cut spending, 
raise taxes, or both, by an additional $706 billion.
    To put that in perspective, the discretionary spending 
savings from last year's budget resolution--which were 
described as draconian--were only $291 billion. The Medicare 
savings from last year's budget resolution were only $158 
billion. And the projected revenues from the 1993 Clinton tax 
increase were only $241 billion. The Torricelli and Kennedy 
amendments would require that Congress cut spending and raise 
taxes more than all three combined!
    On the other hand, by delaying the exemption of the Social 
Security System from budget calculations by 1 year, the 
Feinstein amendment will require Congress to balance the 
unified budget in 2002, and then save an additional $109 
billion to offset the Social Security surplus in 2003. In 
total, the Feinstein amendment will require additional savings 
of $602 billion between 2003 and 2007.
    What does this mean to Federal spending? Between 2003 and 
2007, Congress is projected to spend $118 billion on veterans 
benefits, $160 billion on food stamps, $59 billion on child 
nutrition, $25 billion on farm supports, $140 billion on the 
earned income credit, $21 billion on student loans, and $16 
billion on veterans' pensions--all told, $539 billion. We would 
have to eliminate all those programs and more to comply with 
the Feinstein amendment.
    If Congress chooses to raise taxes instead of cutting 
spending, then income taxes would have to be raised by 12 
percent higher than they are today. That means raising the 15 
percent bracket to 17 percent, the 28 percent bracket to 31 
percent, and the 39.6 percent bracket to 44 percent. For the 
average taxpayer in Michigan, that means an additional $672 per 
year in income taxes.
    These levels of spending cuts and tax increases are clearly 
unworkable, which means the adoption of any of these three 
amendments would kill any chance the Balanced-Budget Amendment 
has to be ratified.
    Second, none of these amendments does anything to protect 
Social Security benefits from future Congresses or ensure that 
the treasury bonds held by Social Security will be repurchased. 
Under Federal law, assets of the Social Security trust funds 
are required to be invested in special bonds issued by the 
Treasury Department. Neither the Kennedy, the Feinstein, nor 
the Torricelli amendments change this law or make Social 
Security payments a priority over other Federal accounts.
    Nor do any of these amendments protect Social Security 
benefits for future retirees. These benefits are established 
under law, and are subject to change by future Congresses. 
These amendments do nothing to ensure that these benefits will 
not be altered in future years.
    Finally, as was pointed out during the markup, the Social 
Security System is currently under funded and, beginning around 
the year 2029, will be able to fund only 75 percent of the 
benefits promised to future retirees. Neither the Kennedy, the 
Feinstein, nor the Torricelli amendments will do anything to 
relieve this imbalance. In fact, by making Social Security a 
constitutional issue, these amendments may impede reforms to 
the Social Security System that would help protect future 
benefits.
    For these reasons and others, I opposed the Feinstein, 
Torricelli, and Kennedy amendments.

                                                   Spencer Abraham.
      XII. MINORITY VIEWS OF MESSRS. LEAHY, KENNEDY, AND FEINGOLD

  i. this proposed constitutional amendment is neither necessary nor 
                               justified

    The real question this year is not whether to reduce the 
deficit, but by how much and what cuts to make in order to 
bring the budget into balance. That is the real work that lies 
before us.
    While ``enacting responsible budgets is not easy,'' that is 
the task in which this Congress should be engaged. This 
proposed constitutional amendment does not reduce the deficit 
by a single dollar or move us one inch closer to achieving 
those goals. Rather, it is a political exercise.
    Congress working with the President can do the job. Hard 
choices and bipartisan cooperation are what are needed. The 
majority's report admits: ``Congress has the ability to balance 
the federal budget.'' The majority report concedes:

          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. (Emphasis added.)

Thus, this proposed constitutional amendment fails the standard 
contained in article V of the Constitution: It is not 
``necessary''.
    We cannot legislate political courage and responsibility. 
No amendment to the Constitution can supply the people's 
representatives with these essential attributes. Indeed, the 
majority report concludes that the ultimate enforcement 
mechanism that will lead to balancing the budget is the 
electorate's power to vote. This proposed constitutional 
amendment would undercut, rather than enhance, our democratic 
principles of majority rule and separation of powers. It would 
lead to a loss of political accountability to the electorate.
    Political courage has been an essential ingredient that has 
helped us achieve remarkable deficit reduction over the past 
four years--recent history that the majority report ignores. We 
have succeeded in reducing the deficit every year of the past 
four. We have cut the deficit by more than 60 percent while 
pursuing sound economic and strong fiscal policies. Now we need 
to stay the course and work in a bipartisan way to make further 
progress. We should now be focusing our energies on the 
strenuous tasks of building a working consensus on budget 
priorities and achieving agreement on how to balance the 
budget.
    This crusade for an illusory quick-fix by constitutional 
amendment only makes that job more difficult. Reconsideration 
of a constitutional amendment on the budget distracts from the 
real task at hand. That is one of the lessons of the past 
decade.
    The first time the Senate passed a constitutional amendment 
on budgeting was in 1982. It was no coincidence that 
simultaneously the Reagan Administration was in the process of 
creating record deficits. Presidents Reagan and Bush, and many 
who supported their budgets and fiscal policies, talked about 
the need for a constitutional amendment to balance the budget 
while voting for Reaganomics that tripled our national debt and 
quadrupled the deficit. Their legacy is record deficits of over 
$221 billion in 1986, $269 billion in 1991 and $290 billion in 
1992--all from an inherited deficit of less than $74 billion in 
1980. The 12 years of Reagan-Bush budgets--with a Republican-
controlled Senate for much of that time--ballooned the nation's 
debt by amounts exceeding those attributable to all prior 
Presidents combined.
    Without the annual interest on the Reagan-Bush debt, our 
budgets over the last few years would already be in balance. 
The burden of Reagan-Bush deficits inflicted on the decade of 
the 90's will not be lessened by more talk about a 
constitutional amendment.
    Historically, the Federal Government has run surpluses and 
deficits. The last surplus was recorded, ironically, in 1969 
and arose from the budget of the outgoing Johnson 
Administration, even with its expansive Great Society programs. 
The only year in our more than 200-year history in which the 
federal budget ``balanced'' in the way that this proposed 
constitutional amendment would require--in which a year's 
expenditures matched that year's receipts--was 1952.
    The majority report confuses our nation's history and 
ignores our current progress toward balance. It mixes concern 
about the expansion of federal spending and the national debt 
with the annual budget process and our common desire to reduce 
the deficit.
    Our Constitution has served as a charter for freedom and 
allowed economic and fiscal policies that have contributed to 
our economic prosperity. Let us not through this proposed 
constitutional amendment turn that fundamental charter of our 
free, democratic government into a mandate requiring adherence 
to the disastrous economic theories of the 1930's.
    This proposed constitutional amendment is opposed by 1,060 
economists, including 11 Nobel Laureates in economics, because, 
in their words: ``It is unsound and unnecessary.'' These 
economists advise that the proposed amendment, ``mandates 
perverse actions in the face of recessions,'' ``would prevent 
federal borrowing to finance expenditures for infrastructure, 
education, research and development, environmental protection, 
and other investment vital to the nation's future well-being,'' 
and that it ``is not needed to balance the budget.''
    According to these economists: ``The measured deficit has 
fallen dramatically in recent years, from $290 billion in 1992 
to $107 billion in 1996, to some 1.3 percent of gross domestic 
product, a smaller proportion than that of any other major 
nation.'' They ``condemn'' the proposed constitutional 
amendment and warn against putting the nation ``in an economic 
strait-jacket.'' 1
---------------------------------------------------------------------------
    \1\ Letter from 1,060 economists, including 11 Nobel Laureates, 
titled ``Economists Oppose A Balanced Budget Amendment,'' released 
January 30, 1997.
---------------------------------------------------------------------------
    Let us not be distracted from the true means to deficit 
reduction: Let us proceed to consider and adopt a budget and 
deficit reduction package consistent with the progress made 
since 1993. As Treasury Secretary Robert Rubin testified before 
the Committee on January 17, 1997: ``[P]olitically, 
historically, and economically, the forces are in place to 
balance the budget. We are not far apart. Now we need to get 
the job done.''
    Let us not sacrifice the Constitution or our nation's 
fiscal policies to a siren song but turn to the work needed to 
continue reducing the deficit without sacrificing our nation's 
commitments to seniors, veterans, education, the environment, 
public infrastructure and our fundamental constitutional 
principles. There is no need for a constitutional amendment to 
achieve our goals.

A. The last four years establish a remarkable record of deficit 
        reduction

    The President and Congress have shown over the past four 
years that we can make progress undoing the mistakes of the 
deficit-building 1980's without this proposed amendment to the 
Constitution. We succeeded in reducing the deficit each of the 
last four years, for the first time since the Truman 
Administration. Over the last four years we have cut the 
deficit while pursuing sound economic and strong fiscal 
policies.
    In 1993, we started down this road to concerted, consistent 
deficit reduction without a single Republican vote in the 
Congress for the President's budget. Over the last four years 
we have succeeded in reducing the deficit by 63 percent. When 
President Clinton took office, the deficit was at its highest 
point ever--$290 billion. Today, the deficit is at its lowest 
dollar figure since 1981--$107 billion--and at its lowest point 
as a percentage of the economy since 1974.
    In his testimony to the Committee, Robert Greenstein of the 
Center on Budget and Policy Priorities notes that over the past 
10 years the deficit has actually declined 70 percent as a 
percentage of Gross Domestic Product--from 5.1 percent in 1986 
to 1.4 percent in 1996.2 As a percentage of Gross Domestic 
Product our deficit is now at the lowest level of any major 
industrialized nation in the world.3
---------------------------------------------------------------------------
    \2\ January 17, 1997 Judiciary Committee Hearing, written statement 
of Robert Greenstein, at 13.
    \3\ ``The important measure of the debt, however, is not its 
absolute size, but its size relative to the country's Gross Domestic 
Product, just as the size of a mortgage that a family can safely carry 
is determined by that family's income.'' John Steele Gordon, Hamilton's 
Blessing, Walker Publishing 1997, p.197.
---------------------------------------------------------------------------
    This remarkable record of deficit reduction is an 
accomplishment of Clinton Administration policies that have 
restored fiscal sanity while keeping the economy strong. The 
results of the recent election are testimony to the American 
people's recognition of these facts.
    In 1980, the annual interest on the national debt was $75 
billion. This year's interest on the national debt is more than 
three times that amount--$248 billion. We are still paying the 
price for the failed fiscal and economic policies of the last 
decade. Were it not for the interest on the $2.462 trillion 
debt rung up in the Reagan-Bush years, our budgets over the 
last several years would already have been in balance. The rest 
of the budget, including entitlements, is already balanced.
    The majority report regrettably ignores our progress over 
the last several years. It should acknowledge that the daily 
amount paid by the Federal Government on interest payments has 
declined by $130 million a day--from $800 million a day in the 
1995 report to $670 million a day in this year's version. That 
reference is as close as the majority report comes to 
recognizing the deficit reduction progress that has been 
achieved over the last four years while keeping the economy 
strong. These interest payments and the national debt remain 
too high and must be reduced further, of course, but the 
proposed constitutional amendment is likely to delay actions 
that can make a real difference.

B. A balanced budget can be enacted this year

    Treasury Secretary Robert E. Rubin testified as the first 
witness at this year's Judiciary Committee hearings. He 
described the irrefutable progress that has been made in 
reducing deficits over the last several years--progress that 
even James C. Miller, former Reagan OMB Director, and David R. 
Malpass, former Republican staff of the Senate Budget 
Committee, had to acknowledge.4 Secretary Rubin observed:
---------------------------------------------------------------------------
    \4\ ``The deficit has been going down pretty quickly right now and 
that's impressive and it has been noted in the financial markets.'' 
January 22, 1997 Judiciary Committee Hearing Transcript, testimony of 
David R. Malpass, at 105.

          Last year, both the Administration and the Congress 
        proposed budgets that would eliminate the deficit by 
        2002 and both are expected to do so again this year.
          Not only has the atmosphere in Washington changed, 
        but there is also a new enforcing factor at work which 
        is the emergence of global markets that are highly 
        sensitive to a nation's degree of fiscal 
        responsibility. A nation that does not address fiscal 
        matters will be severely punished by markets with high 
        interests rates that could impair or even severely 
        impair its economy.
          The sum total is that politically, historically and 
        economically, the forces are in place to balance the 
        budget. We are not far apart. Now we need to get the 
        job done. * * *
          [I] have a deep commitment to the importance of 
        deficit reduction and fiscal discipline to our nation's 
        economic health, and I believe that we can put in place 
        balanced budget legislation this year.5
---------------------------------------------------------------------------
    \5\ January 17, 1997 Judiciary Committee Hearing, written statement 
of Robert E. Rubin, Secretary of the Treasury, at 1,6.

    In his recent letter to Minority Leader Daschle, the 
---------------------------------------------------------------------------
President of the United States wrote:

          Like you, I am profoundly committed to balancing the 
        budget. With your help and that of the bipartisan 
        leadership, I believe that a historic budget agreement 
        that achieves balance by 2002 is within reach this 
        year.6
---------------------------------------------------------------------------
    \6\ Letter from President Clinton to Hon. Thomas Daschle, January 
28, 1997.

    The measure of our changed circumstances from two and four 
years ago is that together Congress and the President can and 
should enact balanced budget legislation this year. In light of 
all we have experienced and accomplished in the last four 
years, there is no basis today for seriously contending that a 
constitutional amendment is needed as the only way to achieve a 
balanced budget.

C. The proposed constitutional amendment does not reduce the debt or 
        affect the deficit.

    The proposed constitutional amendment will not cut a single 
penny from the federal budget or deficit. By its terms, S.J. 
Res. 1 cannot, even if passed and ratified, become effective 
before 2002--five years and at least two federal election 
cycles from now. The Congressional Budget Office cannot 
estimate the budgetary impact of the amendment because that 
``depends on when it takes effect and the extent to which the 
Congress would exercise the discretion provided by the 
amendment to approve deficits.'' 7
---------------------------------------------------------------------------
    \7\ January 30, 1997 Cost Estimate of S.J. Res. 1 by The 
Congressional Budget Office.
---------------------------------------------------------------------------
    Two years ago Senator Mark Hatfield's decisive vote against 
a constitutional amendment on budgeting was a contemporary 
profile in courage. Senator Hatfield had wisdom gained from his 
years as a public servant, invaluable insights gained during 
the seminal set of hearings on this matter held by the 
Appropriations Committee under Senator Byrd in 1994 and 
extraordinary personal fortitude. He was put to the test and 
not only survived, but emerged as a powerful example for us 
all.
    In May 1995, after being attacked for his vote of 
conscience, Senator Hatfield offered the following observations 
about balancing the federal budget:

          I believe that a balanced budget can come only 
        through leadership and compromise. This compromise must 
        come from each one of us. More importantly, it must 
        come from those we represent. In the end, there is no 
        easy answer. If there is a political will to create a 
        balanced budget, we will create one, and if there is 
        will to avoid one, we will avoid it.8
---------------------------------------------------------------------------
    \8\ 141 Cong. Rec. S6878 (May 18, 1995).

---------------------------------------------------------------------------
    In June 1995, he elaborated:

          Mr. President, I support balancing the Federal 
        budget, and I will do all that I can as the chairman of 
        the Appropriations Committee during my last year in the 
        Senate to see that it is done. What I cannot do is 
        support a constitutional promise to the people of this 
        country that its elected representatives will balance 
        the Federal budget. Congress and the President can and 
        should, with the support of the public, balance the 
        budget.9
---------------------------------------------------------------------------
    \9\ 142 Cong. Rec. S5888 (June 6, 1995).

    By our Senate oath of office we each commit to ``support 
and defend the Constitution of the United States.'' We owe to 
our constituents our best judgment on matters of this 
importance. We owe to our children and future generations the 
protections of separation of powers and checks and balances 
from our Constitution that have served us so well. These 
foundations of our democracy ought not be diminished for 
political expediency.
    There is no secret about how to reduce the budget deficit. 
The majority report acknowledges that Congress already has all 
the constitutional power necessary to take the necessary steps. 
A vote for a constitutional amendment on budgeting is no 
substitute for making the tough decisions necessary to balance 
the budget.
    Too often in the past, those who have voted for such 
constitutional amendments have used those votes as an excuse to 
push the hard decisions off into the future. Having voted for 
such a constitutional amendment, representatives may be tempted 
to say that they did what they could: They ``assured'' a 
balanced budget--of course, it will then be up to the 
Constitution and future Congresses to take the actions 
necessary to achieve the balance.
    Moreover, there will be some who will want to wait to see 
whether the necessary number of States ratify the proposed 
amendment over a seven-year period. There will be some who will 
wait to consider implementing legislation until after that 
ratification process has concluded, just as proponents have 
refused to propose implementing legislation in conjunction with 
the constitutional amendment. When will Congress finally turn 
back to the funding questions that will be required to achieve 
balance?
    Let Congress abandon this high-profile, high-risk sideshow 
and get right to the main event. We can continue to lower the 
deficit now and achieve a balanced budget. On January 30, 1997, 
the day of the Judiciary Committee markup, the Washington 
Post's lead editorial was titled ``No to a Bad Amendment.'' The 
editorial observes:

          The right way to get the deficit down is to cast the 
        votes to do so now, not lay the burden on some future 
        Congress that may not be able to meet it. Members know 
        that. This is a fake show of strength and abuse of the 
        Constitution whose effect would be to harm the system 
        of government it purports to help.

    The time and resources devoted to reconsidering a 
constitutional amendment on the budget each year distract from 
the real task at hand. That is one of the lessons of the past 
decade, let us not repeat those mistakes and pursue what the 
Los Angeles Times correctly calls ``irresponsible governance, 
fiscally reckless and a false political star.'' 10
---------------------------------------------------------------------------
    \10\ January 31, 1997, Los Angeles Times Editorial, titled 
``Balanced Budget Plan: Looks, 10; Workability, 0.''
---------------------------------------------------------------------------
    Far from establishing ``legislative accountability,'' this 
proposed constitutional amendment is a prescription for 
unaccountability. It leaves to future Congresses the hard 
decisions we should be making now. It provides a framework for 
continuing the burdens of the fiscal irresponsibility of the 
1980's on our children and grandchildren. It is precisely the 
bumper sticker politics that has been used too often by those 
willing to settle for short-term, short-sighted political gain 
at the expense of sound fiscal and economic policy making.

  II. Social Security and Medicare Are Threatened Under This Proposed 
                        Constitutional Amendment

    The Social Security program is America's contract with its 
senior citizens. If S.J. Res. 1 is adopted as part of the 
Constitution of the United States, that contract may be broken 
irrevocably.
    Despite the good intentions of the proponents of S.J. Res. 
1 to keep Social Security solvent, once it is part of a 
constitutionally-mandated budget balancing act, Social Security 
becomes just another government program and is on the chopping 
block with everything else. When asked directly whether the 
proposed constitutional amendment would protect Social 
Security, the Chairman of the Judiciary Committee responded 
that under the proposed constitutional amendment: ``Social 
Security would have to fight its way, just like every other 
program and it has the easiest of all arguments to fight its 
way.'' 11
---------------------------------------------------------------------------
    \11\ January 30, 1997 Judiciary Committee Transcript, at 107 
(emphasis added).
---------------------------------------------------------------------------
    The majority views assert that this proposed constitutional 
amendment on budgeting reported by the Committee will protect 
Social Security. At least half the members of the Judiciary 
Committee disagree. When Senator Kennedy's amendment to protect 
Social Security was accorded an up or down vote at the 
Committee's January 30 markup it failed on a 9-9 tie vote. On 
this one vote a member of the majority party was willing to 
buck Republican discipline and vote to preserve, protect and 
defend our longstanding commitment to those entitled to Social 
Security. Further, four members of the Committee who support 
and voted for S.J. Res. 1 on final passage joined Senator 
Kennedy in his effort to protect seniors and honor our 
commitments to them and future generations.

A. Congress's actions since 1983 to protect Social Security from 
        overall budget cuts would be cast aside by S.J. Res. 1

    The Social Security Amendments of 1983 required Social 
Security to be placed off-budget within 10 years. That 
protective legislation passed the Senate 58-14 with a strong 
bipartisan majority. In fact, Congress accelerated this 
process. Rather than wait 10 years, the Balanced Budget and 
Emergency Deficit Control Act of 1985, commonly known as 
``Gramm-Rudman-Hollings,'' placed Social Security ``off 
budget'' beginning in 1986. This means that the congressional 
budget resolution in 1985 was the last time that Social 
Security was included in the federal budgets that Congress 
approves each year.
    Gramm-Rudman-Hollings permitted across-the-board spending 
cuts (``sequestration'') when budgetary goals are not achieved. 
By its actions placing Social Security off budget, Congress 
explicitly and intentionally exempted Social Security from the 
sequestration process. Gramm-Rudman-Hollings--with its 
protections for Social Security--passed the Senate 61-31 with a 
strong bipartisan majority.
    The Budget Enforcement Act of 1990 reinforced earlier 
protections by placing Social Security even more clearly off 
budget. Section 13301 of that Act is unequivocal on this point 
and deserves reading in full. It states:

SEC. 13301.  OFF-BUDGET STATUS OF OASDI TRUST FUNDS.

    (a) Exclusion of Social Security From All Budgets.--
Notwithstanding any other provision of law, the receipts and 
disbursements of the Federal Old-Age and Survivors Insurance 
Trust Fund and the Federal Disability Insurance Trust Fund 
shall not be counted as new budget authority, outlays, 
receipts, or deficit or surplus for purposes of--
          (1) the budget of the United States Government as 
        submitted by the President,
          (2) the congressional budget, or
          (3) the Balanced Budget and Emergency Deficit Control 
        Act of 1985.
    (b) Exclusion of Social Security From Congressional 
Budget.--Section 301(a) of the Congressional Budget Act of 1974 
is amended by adding at the end the following: ``The concurrent 
resolution shall not include the outlays and revenue totals of 
the old age, survivors, and disability insurance program 
established under title II of the Social Security Act of the 
related provisions of the Internal Revenue Code of 1986 in the 
surplus or deficit totals required by this subsection or in any 
other surplus or deficit totals required by this title.''.

    This bill, too, passed the Senate 54-45 with the bipartisan 
support of 35 Democrats and 19 Republicans.
    The proposed constitutional amendment turns its back on 
these many years of bipartisan progress in protecting Social 
Security from the ebb and flow of efforts to eliminate the 
deficit. We believe that our senior citizens deserve better.

B. Under this proposed constitutional amendment, Social Security and 
        Medicare checks could be stopped

    When the government overestimates revenues for an upcoming 
year, or underestimates expenses, or something changes in the 
course of the year to influence either, the budget goes out of 
balance and, under S.J. Res. 1, the government is out of money. 
The amendment's mandates would turn continued expenditures into 
constitutional violations of law. If this proposed 
constitutional amendment were enshrined in the Constitution, it 
could force the federal government to stop making payments for 
any number of obligations, including payment of Social Security 
checks, until the budget imbalance can be corrected.
    Treasury Secretary Rubin warned the Committee of this great 
risk, when he testified:

          ``[T]he amendment poses immense enforcement problems 
        that might well lead to the involvement of the courts 
        in budget decisions, unprecedented impoundment powers 
        for the President or the temporary cessation of all 
        federal payments. Any of these options could disrupt 
        Social Security and Medicare payments.'' 12
---------------------------------------------------------------------------
    \12\ January 17, 1997 Judiciary Committee Hearing, written 
statement of Hon. Robert E. Rubin, at 2.

    Further, if the President and Congress reached a budget 
impasse under the proposed constitutional amendment, Secretary 
---------------------------------------------------------------------------
Rubin cautioned that:

          Some proponents have suggested that under these 
        circumstances, the President would stop issuing checks, 
        including those for Social Security benefits. 
        Alternatively, judges might become deeply involved in 
        determining whether Social Security or Medicare checks 
        would be stopped. 13
---------------------------------------------------------------------------
    \13\ January 17, 1997 Judiciary Committee Hearing, written 
testimony of Hon. Robert E. Rubin, at 5. See also Reps. Dan Schaefer 
and Charles Stenholm, materials titled ``Cosponsor the Balanced Budget 
Amendment,'' November 18, 1996.

    This would be a disaster for senior citizens on fixed 
incomes who live on Social Security and Medicare from check to 
check. When they miss a check, they will not have the funds to 
pay the rent or meet the mortgage, buy groceries, pay their 
utility bills, heat their homes, pay for medical care or needed 
pharmaceutical drugs or meet other expenses.

C. Assertions that current law and court precedent will protect Social 
        Security and Medicare under this proposed constitutional 
        amendment are pure fiction

    Former Reagan Administration budget official James C. 
Miller III, argued before the Judiciary Committee on January 
17, 1997, that Social Security would be protected from the same 
cuts as other programs, even if Social Security is not exempted 
from this proposed constitutional amendment.
    Dr. Miller asserted:

          [T]he courts have concluded that up front are the 
        debt-holders and second in line are entitlements, 
        specifically those for which there are trust funds--
        Social Security, et al. 14
---------------------------------------------------------------------------
    \14\ January 17, 1997 Judiciary Committee Hearing Transcript, at 
94.

    However, when members of the Judiciary Committee queried 
the Congressional Research Service, the Social Security 
Administration, and the Treasury Department, they got a 
different answer. None of those offices could identify an 
established hierarchy of payment such as Dr. Miller described.
    In fact, the Treasury Department believes that while the 
President has some discretion to set such priorities, 
establishing a hierarchy of priorities among various federal 
payment obligations or simply preferring one obligation over 
another would inevitably result in legal challenges the outcome 
of which is at best uncertain.
    In other words, there is no legal assurance that Social 
Security would be protected under the proposed constitutional 
amendment. Even if a particular President sought to protect 
Social Security as an exercise of presidential discretion, 
there would be no assurance that the next President or the 
President in 2008 or beyond would continue that policy. The 
same is true for the Medicare Trust Fund.
    President Clinton understands the dilemma that the Social 
Security system would face if Social Security is not protected 
under this proposed constitutional amendment. In his recent 
letter to Senator Daschle, he stated:

          I am very concerned that Senate Joint Resolution 1, 
        the constitutional amendment to balance the budget, 
        could pose grave risks to the Social Security System. 
        In the event of an impasse in which the budget 
        requirements can neither be waived nor met, 
        disbursements or unelected judges could reduce benefits 
        to comply with this constitutional mandate. No 
        subsequent implementing legislation could protect 
        Social Security with certainty because a constitutional 
        amendment overrides statutory law. 15
---------------------------------------------------------------------------
    \15\ Letter from President Clinton to Hon. Thomas Daschle, January 
28, 1997.
---------------------------------------------------------------------------

D. Congress can balance the budget while protecting Social Security--
        but not under this proposed constitutional amendment

    The 1983 bipartisan Social Security Commission headed by 
Alan Greenspan recommending converting the Social Security 
system from a pure ``pay-as-you-go'' program to one that builds 
up surpluses to pay for the future retirement of the baby boom 
generation. The Greenspan Commission recommended taking Social 
Security off budget in order to meet this goal without 
subjecting the program to the vicissitudes of federal budgeting 
for other programs.
    Congress concurred with the Greenspan Commission's 
recommendations in passing the Social Security Amendments of 
1983. Just as families save for their retirements, the Social 
Security program currently is building up surpluses while baby 
boomers are still working in order to be able to afford their 
retirements in the next century.
    This proposed constitutional amendment, however, enshrines 
forever in the Constitution the use of Social Security 
surpluses to mask deficits in other programs. Passing this 
proposed constitutional amendment, which does not exempt the 
Social Security trust fund, does more. It encourages, even 
necessitates, Congress, the President and the courts using 
Social Security as a way to comply with the amendment. When the 
trust fund begins to shrink after the year 2020, this proposed 
constitutional amendment would add pressure on the government 
to cut Social Security rather than risk constitutional 
violation. Instead, we ought to be working on ways to honor our 
commitments and ensure the long-term solvency of Social 
Security.
    A recent analysis from the Center for Budget and Policy 
Priorities is telling. It says:

          The Leadership version [of S.J. Res. 1] would be 
        virtually certain to precipitate a massive crisis in 
        Social Security about 20 years from now, even if 
        legislation has been passed in the meantime putting 
        Social Security in long-term actuarial balance. To help 
        pay the benefits of the baby boom generation, the 
        nation would face an excruciating choice at that time 
        between much deeper cuts in Social Security benefits 
        than were needed to make Social Security solvent and 
        much larger increase in payroll taxes than would 
        otherwise be required. There would be only one other 
        alternative--to finance Social Security deficits in 
        those years not by drawing down the Social Security 
        surplus but by raising other taxes substantially or 
        slashing the rest of government severely. As a result, 
        the government might fail to provide adequately for 
        other basic services, potentially including the 
        national defense. 16
---------------------------------------------------------------------------
    \16\ Center on Budget and Policy Priorities, ``The Balanced Budget 
Amendment and Social Security,'' January 28, 1997, p. 2.

    We all know that steps must be taken--and will be taken--to 
ensure the solvency of the Social Security system. However, the 
measures undertaken must make sense for Social Security and 
America's seniors without interference from the rest of the 
budget. Our commitments to our seniors should not become just 
another negotiable piece of an overall federal budget, along 
with every other activity of our federal government.

E. This proposed constitutional amendment would imperil the Medicare 
        System

    The Medicare Trust Funds were created to ensure the basic 
health needs of our nation's elderly while reducing the 
financial hardship that medical expenses impose. One cannot 
overstate the importance of this system to elderly Americans, 
particularly those who are poor. For over 30 years, Medicare 
has been a lifeline to senior citizens, sustained public and 
non-profit hospitals that serve our poorest communities, 
pioneered incentive methods of paying health care providers, 
and served as a model of administrative efficiency.
    In 1997, 38 million Americans will rely on Medicare for a 
range of services including, hospital, hospice, nursing 
facility, home health care and physician services. The vast 
majority of Medicare funds will go to older Americans with 
annual incomes below $25,000, two-thirds for those with incomes 
below $15,000.
    Yet, despite the basic protections that Medicare provides, 
the average Medicare beneficiary must spend 21 percent of his 
or her income on out-of-pocket medical expenses. Without 
Medicare, many of these elderly Americans would not be able to 
afford health care, but working in partnership with the Social 
Security Trust Fund, Medicare ensures a basic standard of 
living.
    Clearly, the benefits of the Medicare System are numerous 
and too important to be unprotected should Congress, a 
President, or the courts implement cuts to balance the budget 
as required by this proposed constitutional amendment. Without 
any protection, Medicare will have to compete with other 
programs to maintain appropriate Federal government support. 
The Medicare System should not have to fend for itself in a 
Darwinian survival-of-the-fittest contest, particularly because 
history indicates that Medicare may be the loser.
    The debate during the 104th Congress is instructive. During 
the 104th Congress, the Republican leadership proposed cutting 
$270 billion from the Medicare System. If those cuts had become 
law, Medicare premiums would have doubled from $553 annually in 
1995 to $1,068 annually in 2002. Deductibles would have doubled 
from $100 to $210, the eligibility age would have been raised 
to 67 years of age, and every elderly couple would have paid an 
additional $2,400 over the seven years of the proposed 
Republican budget plan.
    If this proposed constitutional amendment becomes law, 
similar proposals might become law in the name of balancing the 
budget, with its supporters professing that ``the Constitution 
made me do it.''
    It should also be noted that while the Republican-led 
Congress proposed these cuts in the Medicare System--the 
equivalent of a $900 benefit cut for senior citizens--they also 
proposed a $20,000 tax cut for people making $350,000 annually. 
This is what could happen if this proposed constitutional 
amendment is adopted. As the measure threatens arbitrary cuts 
in the Medicare System, section 4 of S.J. Res. 1 protects 
corporate welfare and tax loopholes for the wealthy. During 
debate on S.J. Res. 1 before the Judiciary Committee, Senator 
Durbin offered an amendment that would have made it more 
difficult to create tax loopholes. The Durbin amendment was 
defeated by one vote.
    The Senate continues to show a propensity for cutting 
benefits for the elderly poor and preserving benefits for the 
wealthy. That is not a track record on which senior citizens 
can rely if S. J. Res. 1 becomes law. In the event of an 
impasse on the budget, Members of Congress who want to reduce 
the Medicare system could withhold the votes necessary to waive 
the balanced budget requirement or raise the debt ceiling 
unless cuts were made in the Medicare Trust Funds.
    In the circumstances of a budget stalemate, if both Houses 
of Congress have failed to waive the balanced budget 
requirement or raise the debt limit, the proposed 
constitutional amendment may allow unelected judges to order 
across-the-board cuts to programs, including the Medicare Trust 
Funds.
    If the President and Congress reached such a budget 
impasse, Treasury Secretary Rubin warned:

          Some proponents have suggested that under these 
        circumstances, the President would stop issuing checks, 
        including those for Social Security benefits. 
        Alternatively, judges might become deeply involved in 
        determining whether Social Security or Medicare checks 
        would be stopped.17
---------------------------------------------------------------------------
    \17\ January 17, 1997 Judiciary Committee Hearing, written 
testimony of Hon. Robert E. Rubin, at 5. See also Reps. Dan Schaefer 
and Charles Stenholm, materials titled ``Cosponsor the Balanced Budget 
Amendment,'' November 18, 1996.

    Enactment of the proposed constitutional amendment poses a 
clear and present danger to the very lifeline that so many 
senior citizens depend for health care. Year after year, 
Americans pay into the Medicare System, trusting that those 
benefits will provide for their health care in their senior 
years. The promise of those benefits cannot be breached.

 III. The Proposed Constitutional Amendment Prohibits Capital Budgeting

    As Senator Torricelli so forcefully pointed out during the 
Judiciary Committee deliberations on S.J. Res. 1, we as a 
nation are suffering from a capital investment crisis. 18 
In 1965, more than 6 percent of our federal expenditures were 
invested in infrastructure such as roads, bridges, ports and 
mass transit systems. By 1992, that share of capital investment 
had fallen by more than half to about 3 percent of our federal 
budget and this year it will approach barely 2 percent.
---------------------------------------------------------------------------
     18  January 30, 1997 Judiciary Committee Markup of S.J. Res. 
1 Transcript at 79-83.
---------------------------------------------------------------------------
    At the same time as our infrastructure funding has been 
shrinking, our nation's needs have continued to grow. The 
result is that we are becoming a nation in disrepair. For 
instance, more than a quarter of a million miles of roads need 
repair and more than 25 percent of our bridges have exceeded 
their life span.
    This failure to maintain adequate infrastructure is hurting 
our competitiveness in the global economy. We are competing 
against other countries with the foresight to repair their 
roads and bridges, modernize their transit systems, maintain 
their ports, build new schools and make the investments in 
telecommunications infrastructure that are the keys to success 
in today's global competition. The United States is dead last 
among the G-7 nations in public infrastructure investment as a 
percentage of Gross Domestic Product.
    We must reverse this trend and make the long-term 
investments needed to support a strong economy.

A. The proposed constitutional amendment prohibits exempting capital 
        expenditures from the balanced-budget calculations

    As was true with regard to the Social Security Trust Fund, 
sections 1 and 7 of the proposed constitutional amendment 
prohibit capital budgeting. All expenditures, whether the 
equivalent of operating expenses or capital investments, are 
tallied the same for purposes of this proposed constitutional 
amendment. The sponsors and proponents of this measure refuse 
to permit any exception and future Congresses will be forever 
barred from solving our infrastructure crisis by creating a 
capital budget for long-term investments.
    The majority report is silent on this important subject. 
The Committee's hearings in 1995 established an extensive 
record in support of maintaining a separate capital budget. 
Herbert Stein, of the American Enterprise Institute and former 
economic adviser to President Nixon, Edward V. Regan, of the 
Jerome Levy Economics Institute and former New York State 
Controller, and Dr. Fred Bergsten, on behalf of the bipartisan 
Competitiveness Policy Council and former Assistant Secretary 
of the Treasury during the Carter Administration, differed on 
the wisdom of enacting a constitutional amendment on the budget 
but all agreed on one thing: if such an amendment were to be 
considered it should separate capital investments for any 
annual balance requirement. 19
---------------------------------------------------------------------------
     19 In their testimony before the Judiciary Committee on January 5, 
1995 and in response to written questions from Senator Biden, they each 
strongly supported a separate capital budget.
---------------------------------------------------------------------------
    Nonetheless, when the Committee had the opportunity to 
consider amendments that would have allowed for a separate 
budget for capital investments, it rejected them. This was a 
principal thrust of the Torricelli substitute and an important 
aspect of the Feinstein substitute.
    Senator Torricelli offered a substitute constitutional 
amendment to establish a federal capital budget for ``only 
investments in physical infrastructure that provide long-term 
economic benefits.'' Senator Feinstein offered a substitute 
that permitted Congress to ``enact and implement a separate 
capital budget for those major capital improvements which 
require multi-year funding.'' She would have left further 
definition to implementing legislation, in the ``spirit'' of 
S.J. Res. 1. Even that possibility was flatly rejected by the 
majority and their ``no amendments'' approach to consideration 
of this proposed constitutional amendment. By a mere one-vote 
margin the Committee defeated both the Torricelli and Feinstein 
amendments--both were rejected by 8 to 9 votes with all 
Republican members who voted, voting against capital budgeting.
    This inflexibility is one of the principal objections of 
the more than 1,000 economists who oppose S.J. Res. 1. 20 
It is also one of the reasons President Clinton opposes this 
constitutional amendment on budgeting. As the President so 
clearly stated:
---------------------------------------------------------------------------
     20 Letter from 1,060 economists, including 11 Nobel 
Laureates, titled ``Economists Oppose A Balanced Budget Amendment,'' 
released January 30, 1997.

          We must give future generations the freedom to 
        formulate the federal budget in ways they deem most 
        appropriate. For example, some believe that the federal 
        government should do what many state governments do: 
        adopt a balanced operating budget and a separate 
        capital budget. Under this constitutional balanced 
        budget proposal, the government would be precluded from 
        doing so. 21
---------------------------------------------------------------------------
     21  Letter from President Clinton to Hon. Thomas Daschle, January 
28, 1997.

    During the Committee's January 17 hearing, Robert 
Greenstein of the Center on Budget and Policy Priorities 
---------------------------------------------------------------------------
explained:

          What families do when they balance their budget is 
        families say that all of their income, including money 
        they borrow, equals all the cash they pay out. Families 
        borrow money when they purchase a house through a 
        mortgage, when they buy a car, and especially when they 
        send a child to college. If families had to operate on 
        the basis that this amendment does, they would have to 
        pay for all of college education out of the current 
        year's income, all of the entire cost of a home, not 
        the down payment, the whole thing, out of the current 
        year's income. Nobody operates that way. 22
---------------------------------------------------------------------------
     22 January 17, 1997 Judiciary Committee Hearing Transcript at 152.

    The actions of Thomas Jefferson as President, as opposed to 
his oft-quoted ruminations about the evils of public debt, are 
also instructive but ignored by the majority. In 1803, 
President Jefferson had the United States borrow $15 million, 
in 1803 dollars, by selling bonds to finance the Louisiana 
Purchase. That amount approximates more than $225 billion in 
1993 dollars and exceeds every federal budget deficit except 
for the final two years of the Bush Administration. 23
---------------------------------------------------------------------------
     23 See Dear Colleague Letter from Hon. Larry Craig, Hon. Paul 
Simon, Hon. Robert Smith and Hon. Charles Stenholm, titled ``What did 
Thomas Jefferson get for $225 billion?'', March 15, 1994.
---------------------------------------------------------------------------
    Was President Jefferson wrong to invest in the Louisiana 
Territory that provided this country with 15 States? Of course 
not. But had the provisions of S.J. Res. 1 been included in the 
Constitution, our nation's westward expansion might well have 
ended at the Mississippi River.
    Under this proposed constitutional amendment, the failure 
to permit a capital budget would have severe consequences by 
discouraging long-term investment and ignoring our 
infrastructure crisis. Just as a budget deficit unfairly harms 
future generations so, too, does the failure to differentiate 
capital investments from operating and consumption 
expenditures. The inevitable result will be less investment in 
our country's future, pressure to operate through inefficient 
leasing practices and gimmickry.

B. The experience in the States supports a capital budget for long-term 
        investments

    Sound accounting practices like capital budgeting appear to 
the majority only as loopholes and gimmicks. Thus, the majority 
supporting S.J. Res. 1 reject the experience of the States. The 
majority report refuses even to acknowledge in its abbreviated 
allusion to the experience in the States that State balanced 
budget provisions ``have proven to be workable'' precisely 
because so many States differentiate between operating and 
capital expenditures.
    The majority ignores the fact that 42 States, most cities 
and businesses exclude from their balanced budget requirements 
capital, enterprise or trust funds that are financed primarily 
by borrowing rather than by current revenue.24 Moreover, 
most States with balanced-budget requirements use capital funds 
that finance major capital projects by issuing long-term debt. 
25
---------------------------------------------------------------------------
    \24\ National Association of State Budget Officers, Budget Process 
in the States, 1992, p.16.
    \25\ General Accounting Office Report, ``Balanced Budget 
Requirements: State Experiences and Implications for the Federal 
Government,'' March 1993, p. 19.
---------------------------------------------------------------------------
    The nation's leading economists agree that a capital budget 
is an essential part of the State experience with balanced-
budget requirements and that the omission of a capital budget 
in this proposed constitutional amendment is a major flaw. 
These economists note:

         Unlike many state constitutions, which permit 
        borrowing to finance capital expenditures, the proposed 
        federal amendment makes no distinction between capital 
        investments and current outlays. * * * The amendment 
        would prevent federal borrowing to finance expenditures 
        for infrastructure, education, research and 
        development, environmental protection, and other 
        investments vital to the nation's future well-being.'' 
        26
---------------------------------------------------------------------------
    \26\ Letter from 1,060 economists, including 11 Nobel Laureates, 
titled ``Economists Oppose A Balanced Budget Amendment,'' released 
January 30, 1997.

    The majority wishes to have it both ways when it comes to 
the experience in the States. Either the States' balanced 
budget constitutional experiences are instructive for the 
Federal Government or they are not. If instructive, then the 
lesson is that any balanced budget constitutional requirement 
should include a provision to allow for long-term investments.
    State and local governments spread the cost of long-term 
capital investments over time. By contrast, this proposed 
constitutional amendment prohibits this kind of common sense 
accounting.

C. The proposed constitutional amendment prohibits the use of a ``rainy 
        day'' fund

    Section 6 of this constitutional measure states: ``The 
Congress shall enforce and implement this article by 
appropriate legislation, which may rely on estimates of outlays 
and receipts.'' (emphasis added).
    What happens when these estimates of outlays and receipts 
fail to come true during the fiscal year? As is usually the 
case each year, Congress is wrong on its economic forecasts. 
For example, in June 1995 the Congress adopted a budget 
resolution that anticipated a deficit of $170 billion in the 
1996 fiscal year. In August 1995, the Congressional Budget 
Office anticipated a deficit of $189 billion for the 1996 
fiscal year. But the deficit for the 1996 fiscal year was 
actually $107 billion.
    In response to the usual budget forecast corrections, 
several of the majority's witnesses recommended to the 
Committee that S.J. Res. 1, should be amended to allow the 
Federal Government to establish a ``rainy day'' fund or 
stabilization fund. This fund would adjust to budget shortfalls 
or overruns during the fiscal year.
    For example, James Miller, the former Director of the 
Office of Management and Budget during the Reagan 
Administration, testified:

          I would urge you to consider incorporating a ``rainy 
        day fund.'' Thus, if one year revenues fell short (or 
        outlays ran over), you could dip into this fund without 
        violating the balanced budget requirement.27
---------------------------------------------------------------------------
     27 January 17, 1997 Judiciary Committee Hearing, written statement 
of Dr. James Miller, III, p.3. See also Response by Dr. Martin Regalia, 
Vice President for Economic Policy and the Chief Economist for the U.S. 
Chamber of Commerce, to written questions from Senator Leahy, where he 
testified: ``The government could build in a cushion by budgeting a so-
called `rainy-day' fund into the budget process each year.''

    If the experience in the states is instructive, which the 
majority seems to believe is the case in their report, then a 
rainy day fund is a necessity for any balanced-budget 
requirement. According to the American Legislative Exchange 
Council, 45 states have budget stabilization funds or ``rainy 
day funds'' to respond to unanticipated shortfalls in revenue 
or over runs in outlays.28
---------------------------------------------------------------------------
    \28\ See Response of Dr. James Miller, III, to written questions 
with attached chart on State Budget Stabilization Funds by the American 
Legislative Exchange Council, January 22, 1997.
---------------------------------------------------------------------------
    The majority, however, ignores the advice of its own 
witnesses and the experience in the States, and prohibits the 
use of a ``rainy day fund'' under this proposed constitutional 
amendment.

 IV. The Proposed Constitutional Amendment Would Increase The Risks Of 
                    Government Shutdown And Default

    Section 2 of the proposed constitutional amendment 
provides: ``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 rollcall vote.''
    We believe this supermajority vote requirement would 
recklessly endanger our economy and our democracy. The 
supermajority vote requirement vastly raises the stakes and 
risks to taxpayers and all citizens of a government shutdown 
and default. Instead of a simple majority in the House and 
Senate, this proposed constitutional amendment would raise the 
bar to a supermajority vote in both legislative bodies.
    We do not need to theorize or speculate about the costs and 
risks. The nation got a reminder just a year ago. After the 
longest government shutdown in history and a debt limit crisis 
that went on for months as part of a planned, partisan ``train 
wreck'' intended to extort policy changes from the President, 
we now know just how great these default risks would be to our 
economy and the public interest.
    The House-led effort was ultimately unsuccessful as the 
President held his ground and the American people rallied to 
his defense of their interests and values. But it was only 
through the extraordinary efforts of our Secretary of the 
Treasury that this country avoided falling into default and 
forever tarnishing our nation's creditworthiness and 
reputation. The Committee was fortunate to have him appear and 
testify regarding the dangers of default and the deepening 
danger of placing a supermajority requirement on future 
increases to the statutory debt ceiling.
    It was in light of these very real dangers that the 
Secretary testified in characteristically calm, thoughtful and 
measured phrases that this proposed constitutional amendment on 
the budget ``is a threat to our economic health'' and ``would 
subject the nation to unacceptable economic risks in 
perpetuity.''

A. The supermajority vote requirement to raise the debt limit raises 
        risks for the nation's financial stability and creditworthiness

    Treasury Secretary Rubin, based on his 26 years of 
financial experience on Wall Street and his 4 years in the 
Administration, warned the Committee in his testimony that 
default could throw our economy into chaos. His testimony 
should be a sobering reminder to us about the implications of 
taking such a precipitous step. He noted:

          Our creditworthiness is an invaluable national asset 
        that should not be subject to question for any reason. 
        Default on payment of our debt would undermine our 
        credibility with respect to meeting financial 
        commitments, and that in turn, in my judgment, would 
        have adverse effects for decades to come, especially 
        when our reputation is not healthy. Moreover, a failure 
        to pay interest on our debt could raise the cost of 
        borrowing not only for the Government, but for private 
        sector borrowers, from companies to homeowners making 
        payments on an adjustable mortgage.
          Furthermore, if we are not able to meet our 
        obligations, the issue does not stop simply with 
        failure to meet the obligations of our debt, but could 
        also prevent us from providing military pay, from 
        making payments to recipients of Social Security, or to 
        those who depend on Medicare and Medicaid. The risk of 
        any of these events happening must not be increased.
          Finally, the history of debt limits shows that 
        raising the statutory debt limit is never an easy 
        process. We all remember the enormous difficulties that 
        surrounded this issue in 1995 and 1996, when it took us 
        roughly 8 or 9 months to get from the beginning of the 
        process to final resolution of the debt limit issue 
        that we were then dealing with. A requirement for a 
        supermajority vote in both Houses could make this far 
        harder and increase the leverage of a minority.29
---------------------------------------------------------------------------
    \29\ January 17, 1997 Judiciary Committee Hearing Transcript at 18-
19.

    The Secretary went on to note the following in response to 
---------------------------------------------------------------------------
questions from Senator Leahy:

          Standard and Poors and Moody's, at the time of the 
        difficulties with respect to the debt limit in 1995 and 
        1996 issued reports in which they expressed great 
        concern about the possibility that some in responsible 
        positions were even countenancing the possibility of 
        default. I think it is a very, very serious issue and I 
        think the risk of default is increased measurably under 
        the balanced budget amendment.30
---------------------------------------------------------------------------
    \30\ January 17, 1997 Judiciary Committee Hearing Transcript at 68.

    Alan Greenspan, Chairman of the Federal Reserve, similarly 
had warned in 1995 that ``a failure to make timely payment of 
interest and principal on our obligations for the first time 
would put a cloud over our securities that would not dissipate 
for many years.'' And he warned, ``Breaking our word would have 
serious long-term consequences .'' 31
---------------------------------------------------------------------------
    \31\ Letter from Hon. Alan Greenspan to Hon. Alfonse D'Amato, 
November 8, 1995.
---------------------------------------------------------------------------
    Moreover, a default would waste billions of taxpayer 
dollars and devastate the lives of millions of Americans. The 
nonpartisan Congressional Budget Office has concluded:

          The government has never defaulted on its principal 
        and interest payments, nor has it failed to honor its 
        other checks. However, even a temporary default--that 
        is, a few days' delay in the government's ability to 
        meet its obligations--could have serious repercussions 
        in the financial markets. Those repercussions include a 
        permanent increase in federal borrowing costs.* * * 
        32
---------------------------------------------------------------------------
    \32\ Congressional Budget Office, The Economic and Budget Outlook: 
An Update, August 1995, p. 48.

    It is irresponsible to risk permanently increasing our 
federal borrowing costs through political brinkmanship.33
---------------------------------------------------------------------------
    \33\ Nonetheless, some have made a practice out of such standoffs. 
``While we were shepherding Gramm-Rudman-Hollings through Congress, we 
were also drawn into a crisis created by Congress' refusal to increase 
the legal ceiling on the national debt. * * * Toward the middle of 
November, however, all avenues were exhausted except the sale of gold 
at Fort Know, which President Reagan adamantly opposed. Thus, a default 
on U.S. government securities--the first ever in two hundred years--
seemed not only feasible but, to many high officials, likely. The 
results would have been tragic.'' Dr. James C. Miller III, ``Fix the 
U.S. Budget!'' Hoover Institution Press 1994, p. 36-37
---------------------------------------------------------------------------
    Just as the government shutdowns over the last two years 
cost money, so too an ideological, political, regional or other 
minority of only 175 House members or 41 Senators could, 
pursuant to the proposed constitutional amendment, overreach in 
a manner that would permanently mar the creditworthiness of the 
United States, raise its borrowing costs and complicate the 
chances of reaching balance.
    Moreover, the repercussions of a default would reach far 
beyond the government's borrowing costs. A default would raise 
mortgage rates for homeowners, car loan rates for consumers and 
capital costs for businesses borrowing to expand and create new 
jobs.

B. The amendment's supermajority vote requirements invite political 
        blackmail and gridlock

    The three-fifths supermajority votes to raise the debt 
limit and to have outlays exceed receipts in a given year 
invite political blackmail and brinkmanship. Forty percent plus 
one in either the House or the Senate could hold the debt 
ceiling or the budget hostage to their demands.
    The House sponsors of this proposed constitutional 
amendment have acknowledged this folly. In a November 1996 
paper on the balanced budget amendment, Representatives 
Schaefer and Stenholm wrote that their amendment would have the 
effect of ``lowering the `blackmail threshold * * * from 50 
percent plus one in either body to 40 percent plus one. * * *'' 
34
---------------------------------------------------------------------------
    \34\ Reps. Dan Schaefer and Charles Stenholm, materials titled 
``Cosponsor the Balanced Budget Amendment,'' November 18, 1996.
---------------------------------------------------------------------------
    As Robert Greenstein of The Center on Budget and Policy 
Priorities testified, the amendment's supermajority 
requirements would permit minority factions to extort pork 
barrel projects or extreme legislation as their price for 
avoiding a government shutdown and default and such demands 
would not have to be limited to budgetary matters.
    In light of the increased risks of a government default, 
shutdown and political blackmail, inherent in the use of these 
supermajority requirements as ``the primary enforcement 
mechanism of S.J. Res. 1,'' the majority meekly suggests only 
``that Congress will execute its responsibilities under the 
amendment.'' Thus proponents are in the position of arguing 
that every minority faction in both Houses should be trusted 
with increased power and the ability to shutdown the government 
or force a default. They are willing to ignore history at our 
peril.
    Senator Sarbanes instructed the Senate two years ago with 
respect to an historic example that demonstrates the folly of 
supermajority vote requirements on tough issues.35
---------------------------------------------------------------------------
    \35\ 141 Cong. Rec. S2778-2785 (February 16, 1995).
---------------------------------------------------------------------------
    In the summer of 1941, the Congress was confronted with 
extending the time of service for members of the armed services 
who had been drafted the year before. With the prospect of war 
increasing, President Roosevelt, in a special message to 
Capitol Hill, asked Congress to declare a national emergency 
that would allow the Army to extend the service of these 
draftees. With Speaker Sam Rayburn twisting arms in the well of 
the House of Representatives, the House passed the measure 
regarding the draft for World War II by just one vote, 203 to 
202. It then passed the Senate by a vote of 45 to 30.
    The nation was a few short months away from its entry into 
World War II, but neither the House nor the Senate vote would 
have met the supermajority requirement in this amendment. Even 
after the President has declared a national emergency, Congress 
could not muster a supermajority vote in either body.
    Actual declarations of war, matters on which unanimity of 
purpose would seem essential, have hardly been matters on which 
a supermajority was attainable.
    In 1812 Congress declared war on Great Britain by margins 
of 79 to 49 in the House and only 19 to 13 in the Senate. New 
England was strongly opposed. Then Congress adjourned without 
raising taxes or other revenue to pay for the war effort and 
the results were disastrous. Efforts to finance the efforts 
through the sale of $16 million of loan certificates to the 
public in March 1813 were unsuccessful and the Government of 
the United States, in the midst of a declared war with Great 
Britain, was virtually broke until the intervention of Stephen 
Girard and John Jacob Astor.36
---------------------------------------------------------------------------
    \36\ John Steele Gordon, ``Hamilton's Blessing,'' Walker Publishing 
1997, p.47-53.
---------------------------------------------------------------------------
    Nor should we forget the history of the repeal of the Civil 
War tax in 1872. Representatives of seven northeastern states, 
plus California, who collectively paid 70 percent of the income 
tax, voted 61-14 not to renew the tax. Meanwhile fourteen 
mostly southern and western states, which had paid only 11 
percent of the tax, voted 61-5 in favor. Support of the income 
tax, in other words, was almost perfectly inversely correlated 
with its local impact.37 It surely could not have been 
repealed if a 40 percent minority could have blocked that 
action.
---------------------------------------------------------------------------
    \37\ Id. at 83.
---------------------------------------------------------------------------
    The Congress has been less than successful on numerous 
occasions in developing even a simple majority in support of a 
budget plan. In 1947 and 1949 the Congress failed to reach 
agreement and produce a resolution.38 Likewise, in the 
last several years the Republican majority controlling Congress 
has shown itself unwilling to do the work necessary to reach 
agreement on appropriations bills and left the Government to 
continuing resolutions.
---------------------------------------------------------------------------
    \38\ Id. at 51-52.
---------------------------------------------------------------------------
    Also on point is Congress's long history of problems 
passing any debt limit increase. Since 1983, the Treasury 
Department has been forced to take some action, such as 
delaying Treasury bill auctions or investments in trust funds, 
15 times in the last 15 years because Congress failed to 
increase the debt limit in a timely manner.
    Raising the debt limit is a tough vote. Raising the bar for 
congressional action serves to ``lower the blackmail 
threshold'' and recklessly endangers our democratic process and 
our economy.
    Just two years ago, 165 Republican Members of the House of 
Representatives pledged to refuse to vote for raising the debt 
limit, unless President Clinton accepted their balanced budget 
plan. The Speaker of the House, Newt Gingrich, went along with 
this ultimatum, by declaring ``I am with them * * * I do not 
care what the price is.'' As a result of this blackmail 
politics, the American people suffered through two government 
shutdowns for a total of 27 days. Fortunately, the President 
stood up to this blackmail and the American public convinced a 
majority in Congress to act responsibly.
    Supermajority requirements only increase the leverage and 
embolden those factions that would use these tactics, again. A 
consequence under this proposed constitutional amendment would 
be to permanently empower minority factions to insist on their 
agenda or no agenda to the detriment of democratic principles, 
effective government and the nation's economic well-being. As 
Treasury Secretary Rubin, Robert Greenstein and Alan Morrison 
all observed during their testimony before the Committee, this 
is one of the most dangerous features of the proposed 
constitutional amendment.
    On January 24, 1997, the New York Times published a column 
by Anthony Lewis, entitled ``Gingrich's Revenge,'' in which he 
discusses the proposed constitutional amendment, its 
supermajority requirements and its risks to the nation:

          The possibility of a crisis over the debt ceiling is 
        only one provision of many in the proposed amendment 
        that alarm [economists] and other critics. The 
        amendment would effectively end majority rule in 
        Congress, giving minorities new blocking powers and 
        assuring stalemate again and again.
          The Republican leaders who are pushing the amendment 
        must be aware of those dangers. They have to be going 
        ahead, then, either because they are in the iron grip 
        of ideology or because they see a chance for partisan 
        point-scoring. Neither reason justifies endangering the 
        system that has enabled this country to survive and 
        prosper over 200 years.

    During the Judiciary Committee's markup, Senators Leahy, 
Feinstein and Torricelli each offered amendments to S.J. Res. 1 
that would have deleted the supermajority requirement in the 
proposed constitutional amendment for raising the debt limit. 
Each of these amendments were defeated on identical 8 to 9 
votes, with all Republican members who voted voting against.
    The consequences of a government default and shutdown are 
too serious to risk a supermajority vote requirement. We should 
honor the fundamental principle of majority rule, a principal 
that has been enshrined in our Constitution for more than 200 
years.

C. The proposed constitutional amendment undermines majority rule

    The proposed constitutional amendment's 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 Charles Fried, 
former Solicitor General in the Reagan Administration, 
``profoundly undemocratic.'' 39
---------------------------------------------------------------------------
    \39\ Balanced Budget Amendment--S.J. Res. 41: Hearings Before the 
Senate Comm. on Appropriations, 103rd Cong., 2d Sess. At 85 (1994) 
(hereinafter ``1994 Appropriations Committee Hearings'').
---------------------------------------------------------------------------
    In essence, we are being asked to subject our ability to 
govern ourselves as a nation to the tyranny of a minority on 
economic and other policy 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.
    Charles Fried cautioned that these requirements would give 
each recalcitrant member of 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.40 Walter Dellinger, the current Solicitor 
General, as well as other eminent constitutional scholars, have 
concurred in this assessment.41
---------------------------------------------------------------------------
    \40\ Id. at 85, 88.
    \41\ Id. at 134.
---------------------------------------------------------------------------
    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.42
---------------------------------------------------------------------------
    \42\ Id. at 202 (testimony of Professor Burke Marshall, Yale 
University).
---------------------------------------------------------------------------
    We should not hold our policy making hostage to House or 
Senate minorities.43 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 policy making to be subject to minority 
rule pursuant to constitutional mandate is to proceed in 
precisely the wrong direction.
---------------------------------------------------------------------------
    \43\ 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 Founders 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.44
---------------------------------------------------------------------------
    \44\ 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 policy making 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 Kathleen Sullivan of Stanford University has 
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.45
---------------------------------------------------------------------------
    \45\ 1994 Appropriations Committee Hearings at 184-85 (emphasis 
added).
---------------------------------------------------------------------------
    Charles Fried recognized 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.'' 46
---------------------------------------------------------------------------
    \46\ Id. at 84.
---------------------------------------------------------------------------
    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. * * 
        * 47
---------------------------------------------------------------------------
     47  Id. 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 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-alike proposals for 
constitutional amendments addressing revenue measures and there 
will undoubtedly be more. Indeed, even within the proposed 
constitutional amendment there is in section 4 an additional 
extra-majority provision.
    It was this provision that Senator Durbin sought to amend 
before the Committee in order to ensure that its provisions 
looked both ways. The thrust of his amendment was that if these 
requirements are to govern revenue increase, let them also 
govern corporate welfare and revenue loss due to tax breaks. 
The Republican majority defeated the Durbin amendment 8 to 9 
with every Republican who voted, voted against it.
    Political accountability to the public at the polls has 
powered our representative democracy for over two centuries. 
Even the majority must concede that is the ultimate mechanism 
to lead to a balanced budget. Let us overcome the narrow 
partisan barriers to deficit reduction rather than enact 
constitutional impediments that will irretrievably alter 
cherished principles of our democracy.
    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 would rather engage in the bumper sticker politics 
of supporting a constitutional amendment than 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.

  V. The Proposed Constitutional Amendment Is Unsound Economic Policy

    That this proposed constitutional amendment on budgeting is 
unsound economic policy is a view shared by more than 1,000 of 
the nation's most respected economists, including at least 11 
Nobel Laureates, as well as present and former government 
officials, including the former Chair of President Nixon's 
Council of Economic Advisors, the current and former Federal 
Reserve Board Chairmen, former Democrat and Republican 
Directors of the Congressional Budget Office, the former 
Republican Governor and Senator from Connecticut and the former 
Republican Senator from Oregon, just retired.

A. The proposed amendment would hamper the government's ability to cope 
        with economic downturns.

    Economists and financial experts agree that this proposed 
balanced budget constitutional amendment will strait-jacket the 
economy in hard times. It will hamstring the adjustment 
mechanisms that have been developed since the Great Depression 
to preserve jobs and restore the economy after a downturn.
    If the economy takes a downturn and Americans are losing 
their jobs--as happened in the early 1990's--this proposed 
constitutional amendment makes it more difficult for our 
government to respond to the needs of working families.
    As Treasury Secretary Rubin testified before this 
Committee:

          A balanced budget amendment would subject the Nation 
        to unacceptable economic risks in perpetuity * * * A 
        balanced budget amendment could turn slowdowns into 
        recessions, and recessions into more severe recessions 
        or even depressions.48
---------------------------------------------------------------------------
    \48\ January 17, 1997 Judiciary Committee Hearing Transcript at p. 
15.

    His judgment was reinforced by the testimony of Robert 
Greenstein of The Center for Budget and Policy Priorities who 
---------------------------------------------------------------------------
testified:

          In years when growth is sluggish, revenues rise more 
        slowly while costs for programs like unemployment 
        insurance increase. As a result, the deficit widens. 
        Under a balanced budget amendment, more deficit 
        reduction thus would be required in periods of slow 
        growth than in times or rapid growth.
          This is precisely the opposite of what should be done 
        to stabilize the economy and avert recessions. The 
        constitutional amendment consequently risks making 
        recessions more frequent and deeper. In the period from 
        1930 to 1933, for example, Congress repeatedly cut 
        federal spending and raised taxes, trying to offset the 
        decline in revenues that occurred after the great crash 
        of 1929. Yet those spending cuts and tax increases 
        removed purchasing power from the economy and helped 
        make the downturn deeper; they occurred at exactly the 
        wrong time in the business cycle.
          This is why a balanced budget requirement is called 
        ``pro-cyclical.'' It exacerbates the natural business 
        cycle or growth and recession. It also is why most 
        economists who favor tough deficit reduction measures 
        strongly oppose a constitutional balanced budget 
        amendment.

    Thus, the 1,060 economists and 11 Nobel Laureates who are 
opposing the proposed constitutional amendment condemn it 
because the amendment ``mandates perverse actions in the face 
of recessions.''
    We are deeply concerned about the impact that a balanced 
budget amendment will have on jobs for working families during 
times of recession. The following exchange between Senator 
Kennedy and Secretary Rubin may help illustrate the danger:

          Senator Kennedy. [W]e have not been very effective 
        over the period of certainly this century in 
        understanding when a recession was going to take place 
        or when we were going to get downturns. We have not had 
        that capacity or capability under Republicans or 
        Democrats.
          As I understand it, what you are saying is that if 
        you put this measure into effect as a constitutional 
        amendment, what its impact would be, again, in terms of 
        working families--the cycle that might be developed--is 
        that it would put a straightjacket on the economy. What 
        may be a small tip in terms of a temporary recision may 
        become something that would be much more serious. Could 
        you just elaborate on that point, please?
          Secretary Rubin. Senator, I spent 26 years on Wall 
        Street with a major investment banking firm and during 
        that entire time I was responsible for major trading 
        operations, global trading operations, and a lot of 
        what I did was to work with other people to try to make 
        judgments about what economic conditions were likely to 
        be.
          I think what you said is exactly right. You recognize 
        recessions quite a bit after they have started. 
        Predicting economic circumstances is well nigh 
        impossible, in my judgment, at least with any degree of 
        reliability. And under those circumstances, you can be 
        well into an economic downturn before you realize you 
        have to deal with it, and I think that is one of the 
        very serious problems that the balanced budget 
        amendment creates, as you have suggested.
          Senator Kennedy. That you, Mr. Secretary, and that, 
        translated, for most Americans would mean a loss of 
        jobs, increasing unemployment.

    As Secretary Rubin explained, the so-called automatic 
stabilizers in our economy would be ineffective under this 
proposed constitutional amendment. These are mechanisms that 
have been developed over the last 50 years to reduce the 
extremes of the ``boom-and-bust'' cycles. They are intended to 
prevent another Great Depression and have proven effective over 
time.
    Secretary Rubin testified that: ``[W]ithout automatic 
stabilizers, the Treasury Department has estimated that 
unemployment in 1992 that resulted from the 1990 recession 
might have hit 9 percent instead of 7.7 percent, which would 
have been in excess of 1 million jobs lost.'' 49
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    \49\ Judiciary Committee Hearing, written statement of Hon. Robert 
E. Rubin, January 17, 1997, p. 3 (emphasis added).
---------------------------------------------------------------------------
    The preamble to the Constitution and its stated purpose to 
``promote the general Welfare, and secure the Blessings of 
Liberty to ourselves and our Posterity'' ought not be 
overridden by a constitutional amendment that would deny jobs 
to hundreds of thousands--if not millions--of working families 
in hard times.
    Federal Reserve Chairman Alan Greenspan recently reiterated 
his opposition to the proposed constitutional amendment during 
questioning by Senator Lautenberg during his testimony before 
the Senate Budget Committee. He urged the Senate Budget 
Committee continue to eliminate the deficit, but he joined 
Secretary Rubin and our nation's leading economists in the 
conclusion that this proposed constitutional amendment places 
too many constraints on our economy. 50
---------------------------------------------------------------------------
    \50\ Testimony of Hon. Alan Greenspan, Senate Committee on the 
Budget, Hearing on the State of the U.S. Economy and Economic Outlook, 
January 21, 1997.
---------------------------------------------------------------------------
    The escape hatch allowing a waiver of its provisions by a 
supermajority vote of three-fifths of both Houses of Congress 
is small comfort to America's working families. Many national 
recessions start out in different regions of the country. For 
example, the most recent recession hit New England first. What 
if citizens of New England, who have fewer Members of the House 
of Representatives than other regions of the country, needed 
help, but could not get Senators and Representatives from other 
States, which were still experiencing good times, to waive a 
constitutional balanced budget requirement to help protect 
their livelihoods?
    Professor Robert Eisner of Northwestern University and past 
president of the American Economic Association understood the 
economic problems under this proposed constitutional amendment 
when he recently wrote:

          One need only recall the near-collapses, in recent 
        years, of the economies in New England, California and 
        Texas. Who would bail them out if their own tax 
        revenues again declined and there were surges of claims 
        for unemployment benefits, food stamps and general 
        assistance? 51
---------------------------------------------------------------------------
    \51\ Editorial by Robert Eisner, titled ``Balanced Budget: Bad 
Economics,'' the Wall Street Journal, January 22, 1997.

    Although the Committee majority outlines the dangers of a 
budget deficit, their report fails to address how the proposed 
amendment will provide for the flexibility needed in economic 
downturns without holding working families and hard hit regions 
hostage to a supermajority vote in Congress.

B. The proposed constitutional amendment would hamper the government's 
        ability to respond to emergencies and natural disasters

    The proposed constitutional amendment can no more prevent a 
recession than it can an earthquake, but it will restrict our 
ability to deal with the effects of both.
    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 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. A minority in either House could block such efforts 
altogether or extort other pay backs.
    In recent years, the Federal Government has been called on 
to give critical aid to supplement State and local efforts to 
protect the public health and safety in response to major 
disasters and emergencies. Much of this aid has been paid for 
by supplemental appropriations because of the unexpected nature 
of major disasters and emergencies.
    From fiscal years 1989 to 1995 Congress had to appropriate 
supplemental major disaster and emergency relief in every year 
but one. For example, in 1992, Congress passed an emergency 
supplemental appropriation over $4 billion to help victims of 
the Los Angeles riots, the Chicago floods and Hurricane Andrew. 
In 1993, Congress passed an emergency supplemental 
appropriation of $2 billion to help victims of the Midwest 
floods. In 1994, Congress passed an emergency supplemental 
appropriation of more than $4 billion to help victims of the 
Los Angeles earthquake.
    Relief for major disasters and emergencies must be 
flexible. Usually, a swift response from the Federal Government 
is needed to aid local relief efforts. Disaster and emergency 
relief by constitutional mandate is a prescription for 
gridlock, not swift action. When your state is hit by a major 
disaster or emergency, do you want critical federal assistance 
to hang on the whims of 41 Senators or 175 Representatives?
    Our Founders rejected requirements of supermajorities. We 
should look to their sound reasons for rejecting supermajority 
requirements before we impose on our most vulnerable and 
neediest citizens a three-fifths supermajority requirement to 
provide them federal relief from major disasters and 
emergencies.
    Alexander Hamilton painted an alarming picture in 
Federalist Paper Number 22 of the consequences of the 
``poison'' of supermajority requirements. Hamilton said that 
supermajority requirements 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. We reject 
that notion.
    We fear that a supermajority requirement will lead to some 
in Congress playing politics with critical relief from 
disasters and emergencies. Even with today's simple majority 
requirement for supplemental appropriations for disaster and 
emergency relief, we see the potential for partisan politics.
    In the last Congress a multi-billion dollar disaster aid 
package for California was caught in the budget wars between 
President Clinton and House Republicans. The House Republican 
leadership delayed action on a request from the President for 
supplemental appropriations for emergency relief for victims of 
the California floods and Los Angeles earthquake.52 
Fortunately, public outcry forced the House Republicans to 
relent. That political gamesmanship happened with only a simple 
majority requirement for supplemental appropriations for 
disaster and emergency relief. Think what would happen if 
Congress had to clear a supermajority hurdle to pass disaster 
and emergency relief.
---------------------------------------------------------------------------
    \52\ See Wall Street Journal, ``Budget Wars Pose Threat to Disaster 
Aid for California,'' Feb. 10, 1995, at A 10.
---------------------------------------------------------------------------

   VI. The Proposed Constitutional Amendment Will Result in Shifting 
                Burdens onto State and Local Governments

    The proposed constitutional amendment, in the form of S.J. 
Res. 1, is a prescription for shifting 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 in 1995 
that consideration of the proposed amendment and of its likely 
effect on the States are linked, that ``the two topics cannot 
be separated.'' 53 Nevertheless, the Committee majority 
simply ignore this important dimension of the debate. 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.
---------------------------------------------------------------------------
    \53\ 1995 Judiciary Committee Hearings at 3 (statement of Honorable 
Michael O. Leavitt).
---------------------------------------------------------------------------
    Efforts to reduce the federal deficit over the last several 
years have not been without significant impact on State and 
local government. We are just beginning to sort out the impact 
of welfare and immigration law changes passed in the 104th 
Congress. State and local officials are petitioning for changes 
in order to better be able to absorb the impact of the 
diminished federal role and contribution towards shared 
responsibilities.
    Can anyone honestly contend that this proposed 
constitutional amendment on budgeting will not likely shift 
burdens to State and local government? We need only remember 
our recent history: In the 1980's, 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 has reported that Federal aid to State and 
local governments fell sharply in the 1980's. 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. 54
---------------------------------------------------------------------------
    \54\ S. Rep. No. 104-1, at 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. State and local government would be 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 in 1995: 
``Before we take on that kind of burden [from the proposed 
constitutional amendment], the people of Colorado need to 
understand the impact such a burden will have on their daily 
lives.'' \55\
---------------------------------------------------------------------------
    \55\ 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. Reduction of the Federal deficit should not be 
financed by unfairly increasing the burdens on 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 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 in 1995 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.'' \56\
---------------------------------------------------------------------------
    \56\ 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'').
---------------------------------------------------------------------------
    To the extent the proposed constitutional amendment did not 
shift unfunded mandates to the States, it could well result in 
the emergency of unmet needs were the Federal Government to 
abandon involvement or responsibility for certain aspects of 
education, housing, home heating, medical care and nutrition.
    The needs will still exist, but they will simply not be 
addressed by federal efforts. As Governor Roy Romer 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 pick up the cost of 
        programs, such as child care, mass transit and 
        education, that were previously supported with Federal 
        funds.'' \57\
---------------------------------------------------------------------------
    \57\ Senate Judiciary Subcommittee Hearings (statement of Honorable 
Roy Romer at 2).

    During his testimony this year before the Judiciary 
Committee, Jim Miller, a former OMB Director, raised another 
---------------------------------------------------------------------------
specter for State and local government. He testified:

          [A Balanced Budget Constitutional Amendment] would 
        lead to increased efforts by Congress and the President 
        to seek other means of expanding government. I'm 
        particularly concerned about the tendency to substitute 
        regulation and mandates for direct spending programs. * 
        * * [I] believe other safeguards should be enacted--in 
        particular a ``regulatory budget.'' \58\
---------------------------------------------------------------------------
    \58\ January 17, 1997 Judiciary Committee Hearing, written 
statement of Dr. James Miller, III, at 3.

    Thus, Dr. Miller foresees the possibility that the proposed 
constitutional amendment will lead to expanding federal 
regulatory efforts to achieve the essential purposes of 
programs that the Federal Government is unable to fund directly 
or even indirectly.
    Mayor Wennberg predicted in 1995 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.'' \59\ 
In the absence of constitutional protection against unfunded 
Federal mandates, Governor Howard Dean of Vermont, then 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.'' \60\
---------------------------------------------------------------------------
    \59\ House Judiciary Hearings, (statement of Honorable Jeffrey N. 
Wennberg at 1).
    \60\ Governor Howard Dean, ``Trickle-Down Tax Increase,'' 
Washington Post, January 19, 1995, at A 25.
---------------------------------------------------------------------------
    In light of these concerns, it would be irresponsible for 
Congress to propose a constitutional amendment before it has 
determined how the requirements of the amendment will be 
implemented, how the States 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.
    We will 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 our 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.

 VII. 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. The proposed amendment would 
dramatically alter the allocation of powers set forth in 
article I, sections 7, 8 and 9.
    It risks casting the federal and state courts in the role 
of federal budget czars deciding in myriad cases whether the 
Federal budget is impermissibly out of balance, and where it 
is, forbidding spending and ordering what remedies it deems 
appropriate for the constitutional violations occasioned by 
circumstances in which outlays exceeding revenues in any year 
without supermajority approval of the Congress.

A. The amendment would result in budgetary issues being taken to the 
        courts

    Although the proponents of the proposed constitutional 
amendment have left it silent with regard to the role of the 
courts in its interpretation, implementation and enforcement, 
that silence is deafening.
    Section 1 of the amendment contains a flat prohibition on 
``total outlays'' exceeding ``total receipts'' in any fiscal 
year, except as expressly authorized by a supermajority in each 
House of Congress. Having embedded this mandate in the 
Constitution, this proposed constitutional amendment invites 
the courts to become actively involved in determining when this 
constitutional command is being violated and how such 
violations are to be remedied.
    In the memorable words of Chief Justice Marshall: ``It 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 articulating the scope and 
meaning of our Constitution. The majority report concedes the 
``fundamental obligation'' of the courts to ``say what the law 
is.''
    If the proposed constitutional amendment on budgeting were 
ratified, the fulfillment of this role by the Supreme Court, 
and other courts, could require them to address complex 
budgetary issues that courts are ill-suited to resolve. As de 
Tocqueville wrote more than 148 years ago: ``Scarcely any 
political question arises in the United States that is not 
resolved, sooner or later, into a judicial question.'' \61\ If 
the proposed constitutional amendment were ratified, several of 
its provisions would give rise to cases and controversies that 
the courts would be called upon to resolve.
---------------------------------------------------------------------------
    \61\ Alexis de Tocqueville, ``Democracy in America,'' pt. I, ch. 16 
(1848).
---------------------------------------------------------------------------
    Supporters of the proposed constitutional amendment, in 
fact, desire judicial involvement and enforcement of its terms. 
The representative from the U.S. Chamber of Commerce testified 
before the Judiciary Committee:

          [T]here is a legitimate and necessary role for the 
        courts in ensuring compliance with the amendment. 
        Congress could potentially circumvent balanced budget 
        amendment requirements through unrealistic revenue 
        estimates, emergency designations, off-budget accounts, 
        unfunded mandates, and other gimmickry. It is our view 
        that the need to proscribe judicial policy making can 
        be reconciled with a constructive role for the courts 
        in maintaining the integrity of the balanced budget 
        requirement. \62\
---------------------------------------------------------------------------
    \62\ January 17, 1997 Judiciary Committee Hearing, written 
statement of Dr. Martin A. Regalia, at 12-13.

    In response to questions from Senator Leahy, the 
representative of the National Taxpayers Union, another 
advocate for the proposed constitutional amendment on budgeting 
in spite of its potential to lead to tax increases in order to 
achieve balance, observed: ``We oppose denying judicial review 
authority, and believe that it would be more difficult to 
enforce the provisions of S.J. Res. 1 if Congress were to add 
such language to the Balanced Budget Amendment.'' \63\
---------------------------------------------------------------------------
    \63\ Response of James D. Davidson to written questions from 
Senator Leahy, January 22, 1997.
---------------------------------------------------------------------------
    The representative of the Family Research Council opposed 
adding express language on the role of the courts, noting that 
they ``would not object to language that would prevent judges 
from raising taxes'' and observed:

          Under our system of government, each branch has 
        certain limited means to require legal compliance by 
        one of the other branches. The use of this legal 
        authority is somewhat dependent on the political will 
        of each branch to exercise their proper authority. Each 
        branch of government will have its prerogatives to 
        enforce the amendment, subject to appropriate checks 
        and balances. \64\
---------------------------------------------------------------------------
    \64\ Response of Martin J. Dannenfelser, Jr. to written questions 
from Senator Leahy, January 22, 1997.

    Similarly, in 1995, in response to questions from Senator 
Leahy, the U.S. Chamber of Commerce noted: ``The BBA would be 
policed by the same balance of powers that the Framers so 
carefully crafted in the Constitution. Thus, excesses by the 
Congress would be controlled by both the executive and judicial 
branches.'' \65\
---------------------------------------------------------------------------
    \65\ Response of Dr. Martin A. Regalia to written questions from 
Senator Leahy, January 9, 1995.
---------------------------------------------------------------------------
    The former government attorneys who support the proposed 
constitutional amendment and have been called to testify before 
the Committee over the last several years on the problem of 
defining the judicial role have been unanimous about only one 
thing: Court involvement is not prohibited by the amendment.
    Stuart M. Gerson, a former Acting Attorney General, and 
William Barr, the official he replaced at the end of the Bush 
Administration, differed in what they regarded as the principal 
dangers posed by judicial intervention and in how they would 
seek to reduce the risks of courts involvement, but they did 
not say and could not say that the courts would not be involved 
in interpreting, implementing and enforcing the proposed 
constitutional amendment were it to be ratified.
    Mr. Gerson testified he thought judicial intervention would 
be ``limited in scope'' but conceded that our constitutional 
law ``does not remove the courts from the picture entirely 
where there is manifest abuse or disregard of unequivocal legal 
pronouncements.'' He noted, in his written statement, that 
``there is a category of case--that involving whether objective 
statutory terms have been satisfied--which always has been 
cognizable and will remain so under the Balanced Budget 
Amendment'' and, in his oral presentation, that ``in those few 
cases where a cognizable departure from the specific terms of 
the amendment can be shown, courts, indeed, must intervene.''
    He went on, in response to questioning from Senator 
Torricelli, to concede that standing for certain individuals 
and members of Congress is possible under this amendment:

          So, the answer to your question is that I think that 
        the standing of individuals and members of Congress is 
        very limited. I do concede--that there is a category of 
        cases as to which I would not deny jurisdiction to the 
        courts to make certain that the Constitution was being 
        enforced.\66\
---------------------------------------------------------------------------
    \66\ January 22, 1997 Judiciary Committee Hearing Transcript, at 
98.

    When asked by Senator Torricelli, as a example, whether the 
Senate sponsors of the proposed constitutional amendment on 
budgeting would have standing before a federal court to bring a 
---------------------------------------------------------------------------
suit to compel compliance with its terms, Mr. Gerson said:

          In fact, I think that situation is the most likely 
        situation in which Congressional standing, which has 
        never before been recognized, might be recognized and I 
        say so in my prepared testimony. * * * That is the one 
        situation that even Judge Bork in the D.C. Circuit 
        recognized might allow Congressional standing.\67\
---------------------------------------------------------------------------
    \67\ January 22, 1997 Judiciary Committee Hearing Transcript, at 
99. See, e.g., Burke v. Barnes, 479 U.S. 361 (1987); Coleman v. Miller, 
307 U.S. 433, 438 (1939)(Kansas state senators had standing to protest 
lack of effect of votes for ratification of proposed Child Labor 
Amendment, which ratification had been rescinded by subsequent act of 
the legislature); Kennedy v. Sampson, 511 F.2d 430 (D.C. Cir. 1974); 
cf. Spence v. Clinton, 942 F. Supp. 32, 37 (D.D.C. 1996)(``it is 
foreseeable that the congressional plaintiffs might yet be able to 
climb the requisite high wall of congressional standing''). A prominent 
House sponsor of the amendment was quoted by Senator Nunn last Congress 
as saying that ``a member of Congress or an appropriate administration 
official probably would have standing to file suit challenging 
legislation that subverted the amendment'' and that ``courts * * * 
could invalidate an individual appropriation or tax Act: and could 
``rule as to whether a given Act of Congress or action by the Executive 
violated the requirements of the amendment.'' 140 Cong. Rec. S1823-34 
(Feb. 24, 1995)(Senator Nunn quoting Representative Schaefer).

    The other expert witness who testified before the Judiciary 
Committee on questions of law and judicial review was Alan B. 
---------------------------------------------------------------------------
Morrison of the Public Citizen Litigation Group. He observed:

          [I]n the absence of a clear statement of the contrary 
        in the Amendment itself, it is likely that parties who 
        claimed that, for example, the requirements for revenue 
        increases in Section 4 had not been satisfied, could 
        show sufficient injury to meet the case or controversy 
        requirement in Article III of the Constitution. The 
        same is true for those objecting to a Presidential 
        impoundment.\68\
---------------------------------------------------------------------------
    \68\ January 22, 1997 Judiciary Committee Hearing, written 
statement of Alan B. Morrison, at 7-8.

    In his written testimony, Mr. Morrison proceeds over the 
course of 10 pages to sketch a few of the many questions raised 
by the proposed constitutional amendment that could find their 
way before a court for interpretation, implementation or 
enforcement. His testimony concluded with the following 
---------------------------------------------------------------------------
exchange:

          Mr. Morrison: Senator, you will note that Section 1 
        of S.J. Res. 1 is not put in terms of the Congress 
        shall enact and the President shall sign into law. It's 
        put in absolute terms--total outlays for any fiscal 
        year shall not exceed.
          It seems to me that is a very unusual kind of 
        constitutional command and that despite what the courts 
        have done in other cases, no person sitting at this 
        table or any place else in this country can accurately 
        predict what the courts will do, which is the reason 
        why I say it is so important that the Congress, in the 
        first instance, assume responsibility, take it on, of 
        saying what they want about judicial review and that 
        would be enforced in the courts.
          Senator Leahy: I think what you are going to end up 
        with, the way it is now, it's going to be glory days 
        for constitutional lawyers and courts under this. I 
        mean they would have a field day.\69\
---------------------------------------------------------------------------
    \69\ January 22, 1997 Judiciary Committee Hearing Transcript, at 
127-128.

    Written testimony was received by the Judiciary Committee 
from the Department of Justice. In that statement, the current 
head of the Office of Legal Counsel indicated that ``primary 
concern of the Department of Justice is how a balanced budget 
amendment would be enforced--an issue that none of the proposed 
amendments thus far has adequately addressed.'' The statement 
---------------------------------------------------------------------------
continues:

          If a balanced budget amendment were to be enforced by 
        the courts, it could restructure the balance of power 
        between the branches of government and could empower 
        unelected judges to raise taxes or cut spending--
        fundamental policy decisions that judges are ill-
        equipped to make.\70\
---------------------------------------------------------------------------
    \70\ January 22, 1997 Judiciary Committee Hearing, written 
statement of Dawn E. Johnsen, Acting Assistant Attorney General, at 2.

    The Department of Justice testimony on judicial enforcement 
included citation to court decisions in which judicial 
doctrines regarding standing and political questions were no 
barrier to court involvement.\71\
---------------------------------------------------------------------------
    \71\ Recent cases suggest a narrowing of the political question 
doctrine. See, e.g., United States v. Munoz-Flores, 495 U.S. 385 
(1990); Department of Commerce v. Montana, 503 U.S. 442 (1992); see 
also Bruneau v. Edward, 517 So. 2d 818, 824 (La. Ct. App. 1987)(refusal 
of state court to stay out of question arising under balanced budget 
amendment on political question grounds because ``determination of 
whether the Legislature has acted within, rather than outside, its 
constitutional authority must rest with the judicial branch of 
government'').
---------------------------------------------------------------------------
    The Department of Justice testimony also referred to prior 
statements by a former Solicitor General for President Nixon 
and federal judge, Robert H. Bork, and another former Solicitor 
General for President Bush and Harvard law professor, Charles 
Fried. Both men have observed that judicial self-restraint, 
based on doctrines of standing and political questions, did not 
overcome the possibilities of significant litigation over 
interpretation, implementation and enforcement of the proposed 
constitutional amendment on budgeting.
    The Department of Justice has not varied much from that of 
Robert H. Bork, 10 years ago:

          In the end, there is a range of views about the 
        extent to which courts would involve themselves in 
        issues arising under the balanced budget amendment. 
        Former Solicitor General Bork believes that there 
        ``would likely be hundreds, if not thousands, of 
        lawsuits around the country'' challenging various 
        aspects of the amendment. Similarly, Professor 
        Archibald Cox of Harvard Law School believes that 
        ``there is a substantial chance, even a strong 
        probability, that * * * federal courts all over the 
        country would be drawn into its interpretation and 
        enforcement,'' and former Solicitor General Charles 
        Fried has testified that, ``the amendment would surely 
        precipitate us into subtle and intricate legal 
        questions, and the litigation that would ensue would be 
        gruesome, intrusive, and not at all edifying.'' Other 
        commentators, such as former Attorney General William 
        Barr, believe that the political question and standing 
        doctrines likely would persuade courts to intervene in 
        relatively few situations, but that ``[w]here the 
        judicial power can properly be invoked, it will most 
        likely be reserved to address serious and clear cut 
        violations.''
          Former Attorney General Barr may well be right that 
        courts would be reluctant to get involved in most 
        balanced budget cases. However, none of the 
        commentators, included General Barr himself, believes 
        that the amendment would bar courts from at least 
        occasional intrusion into the budget process. 
        Accordingly, whether we would face an ``avalanche'' of 
        litigation or fewer cases alleging ``serious and clear 
        cut violations,'' a broad consensus exists that the 
        amendment creates the potential for the involvement of 
        courts in questions that are inappropriate for judicial 
        resolution.\72\
---------------------------------------------------------------------------
    \72\ January 22, 1997 Judiciary Committee Hearing, written 
statement of Dawn E. Johnsen, Acting Assistant. Attorney General, at 9-
10.

    The majority report does nothing to resolve this problem. 
It concedes that the text of the proposed constitutional 
amendment on budgeting is silent with respect to judicial 
review, contending that silence ``strikes the right balance.''
    Mr. Morrison is correct to challenge the Congress to say 
what it intends and what it means in the text of the proposed 
constitutional amendment itself. Instead, the majority is 
leaving to the courts themselves the determination of the 
challenges arising under the proposed amendment and its 
implementation and what they will hear and determine. They are 
to be guided by the vagaries of general, judicially-created 
doctrines of justiciability.
    The majority report also suggest that Congress may revisit 
this issue later through implementing legislation. Not only 
would such subsequent implementing legislation require 
agreement in both Houses and signature by the President or a 
supermajority override of a presidential veto, but even if 
ultimately enacted, it may not be able to restrict 
constitutionally-derived judicial power and responsibility and 
may itself be overridden by the commands of Article III and 
this proposed 28th amendment. Former Solicitor General Charles 
Fried has testified that a subsequent legislative effort to 
limit judicial power, ``itself might very well be 
unconstitutional.'' \73\
---------------------------------------------------------------------------
    \73\ 1994 Appropriations Committee Hearings at 84.
---------------------------------------------------------------------------
    Further, as Mr. Barr pointed out in 1995, the state courts 
are not limited by the federal requirement of ``case or 
controversy'' and its attendant justiciability doctrines:

          Before moving on, I should point out for the 
        Committee one area that I believe does hold some 
        potential for mischief and that Congress may wish to 
        address. That is the area of state court review. The 
        constraints of Article III do not, of course, apply to 
        state courts, which are courts of general jurisdiction. 
        State courts are not bound by the `case or controversy' 
        requirement or the other justiciability principles, 
        even when deciding issues of federal law, including the 
        interpretation of the Federal Constitution. Asarco, 
        Inc., 490 U.S. at 617. Accordingly, it is possible that 
        a state court could entertain a challenge to a federal 
        statute under the Balanced Budget Amendment despite the 
        fact that the plaintiff would not satisfy the 
        requirements for standing in federal court.\74\
---------------------------------------------------------------------------
    \74\ January 5, 1995 Judiciary Committee Hearings, S. Hrg. 104-506, 
at 127.

    Although Mr. Gerson's written statement included the same 
point, almost verbatim, the proposed constitutional amendment 
and majority report are conveniently silent on this significant 
dimension of the judicial review problem. Nowhere do the 
proponents of this constitutional amendment confront the 
problem of uncontrolled judicial review by states courts that 
has been articulated by their own witnesses on judicial review, 
who conclude that ``the state court in such a circumstance 
would have the authority to render a binding legal judgment.''
    The majority's dilemma may mirror that admitted by Mr. Barr 
at the 1995 hearings: Having acknowledged the concern that 
courts might order taxes raised as in Missouri v. Jenkins, Mr. 
Barr was asked by Senator Biden whether the proposed 
constitutional amendment ought not be revised to include an 
express limitation on court power and their authority to order 
certain types of remedies, Mr. Barr responded:

          If I were a Senator, I would put it in the amendment. 
        But if I felt that would mean the amendment would not 
        pass because it would generate these arguments, oh, 
        gee, this is sort of like Eastern Europe, then I would 
        without hesitation support the amendment as written * * 
        * 75
---------------------------------------------------------------------------
    \75\ January 5, 1995 Judiciary Committee Hearings, S. Hrg. 104-506, 
at 131.

    The majority is refusing to confront the possibility of 
state court involvement and the possibility that courts in 
different states might reach inconsistent determinations or 
order contradictory remedies because it is difficult, its 
discussion solution might offend, its solution might cost them 
a vote or two. This is no way to amend the Constitution. Such 
ambiguity and conscious disregard of potential problems 
deserves the process, the proposed amendment, the American 
people and, possibly, the generations to come who will suffer 
under its unintended consequences.
    In court challenges in which a constitutional violation was 
found by the court to exist, the question of appropriate remedy 
will loom large. Indeed, it is the possibility of judicially-
imposed remedies to ensure compliance with the proposed 
constitutional amendment's command for balance each fiscal year 
that has raised the most concern historically as Congress 
considers this matter.
    In 1994, Senator Danforth of Missouri successfully modified 
the proposed constitutional amendment on budgeting. He sought 
to restrict judicial involvement to issuing declaratory 
judgments unless Congress specifically authorized another form 
of relief through implementing legislation and his amendment 
was accepted by the floor manager.
    In 1995, the Senate likewise modified the proposed 
constitutional amendment when the floor manager adopted an 
amendment proffered by Senator Nunn of Georgia on judicial 
review. The Nunn amendment called for restricting the judicial 
power of the United States to matters specifically authorized 
by implementing legislation.
    Neither the Danforth nor the Nunn language nor anything 
like them was included in S.J. Res. 1. Indeed, in spite of 
these past attempts to limit judicial remedial authority in the 
proposed constitutional amendment and the only successful floor 
modifications to its text since 1993, the majority now rejects 
all such efforts. Instead, the majority chooses to remain 
silent on the many important issues surrounding judicial 
involvement in the interpretation, implementation and 
enforcement of the proposed constitutional amendment.
    The majority report tries to dismiss Missouri v. Jenkins, 
496 U.S. 33 (1990), and the dangers it portends for this 
proposed constitutional amendment in a single sentence. In that 
case, the United States Supreme Court upheld the power of a 
Federal District Court Judge in Kansas City, Missouri, to order 
tax increases in order to improve the public schools. The 
Supreme Court upheld a District Court order that a local school 
district levy taxes to raise funds to comply with the Court's 
order to remedy unconstitutional school segregation.
    This case has spawned concern about what is sometimes 
referred to as ``judicial taxation'' and the Judiciary 
Committee has held hearings on the issue and on suggested 
legislation in the area in the last several years. Senator 
Danforth cited this case in the course of offering his 
amendment in 1994:

          So after the case of Missouri versus Jenkins, decided 
        by the Supreme Court, it is clear that under certain 
        circumstances, the Federal courts have assumed the 
        power to impose taxes. And my concern was that Missouri 
        versus Jenkins could be the model for some future 
        action by the Federal courts. 76
---------------------------------------------------------------------------
    \76\ Proposed Constitutional Amendments to Balance the Federal 
Budget--103rd Congress, Budget Committee Print, S. Prt. 103-112, at 
1511 (February 28, 1994).

    The authority of the Federal courts to remedy 
constitutional violations is broad, as was demonstrated in 
Missouri v. Jenkins, 495 U.S. 33 (1990). In suits where a 
constitutional violation of the proposed budgeting amendment 
were found, courts would be left to make similar remedial 
decisions.
    In light of the deliberate omission of limiting language 
like that previously included by Senator Danforth and Senator 
Nunn, the proposed constitutional amendment is more likely to 
be construed to authorize courts to enjoin spending, order 
taxes or issue a negative injunction maintaining the status. 
That will appear to be the intention of Congress. The absence 
of any limitations on the power of the judiciary to review and 
remedy violations supports the interpretation that S.J. Res. 1 
is intended to authorize the courts to engage in judicial 
review without the limitations those amendments included.
    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 this proposed constitutional amendment would 
create precisely the peril warned against by Hamilton, because 
it would invite unelected judges to decide funding policy 
questions and exercise powers heretofore largely reserved to 
the legislative and executive branches. It would be a mistake 
of historic proportions.
    This is a constitutional amendment that is being proposed. 
In other settings in which constitutional rights are being 
vindicated, when legislation enacted by Congress did not 
provide an effective remedy, the courts have created judicial 
ones. 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, the courts might 
proceed on their own authority as required to fulfil their 
constitutional duties.
    These questions will not go away and cannot be ignored. 
They point to another fatal flaw in proposing to conduct our 
nation's economic and budgetary functions by means of a simply-
sounding constitutional declaration. A recent editorial in the 
Burlington Free Press said it more succinctly: ``Amending the 
Constitution to require a balanced budget would be like using a 
sledgehammer to nail a picket in a fence.''

B. The proposed constitutional amendment would allow the President 
        broad powers to prevent outlays from exceeding receipts in a 
        fiscal year

    The proposed constitutional amendment on budgeting would 
allow the President vast authority to deal with, and possibly 
even to impound, funds obligated by Congress. The circumstances 
that would prevail after ratification of the proposed 
constitutional amendment on budgeting will not have previously 
existed. The President will have a lot to do with determining 
how the President's constitutional duties under Article II, 
section 3, to ``take care that the Laws be faithfully 
executed,'' and Article II, section 7, to ``preserve, protect 
and defend the Constitution'' will be fulfilled.
    Section 1 of the proposed constitutional amendment commands 
that ``[t]otal outlays for any fiscal year shall not exceed 
total receipts for that fiscal year, unless three-fifths of the 
whole number of each House of Congress shall provide by law for 
a specific excess of outlays over receipts by a rollcall 
vote.'' In any fiscal year in which it becomes apparent that in 
the absence of congressional action, ``total outlays'' will 
exceed ``total receipts,'' the President would determine how 
best to proceed and might well proceed as if required by the 
Constitution and the oath of office it prescribes to act to 
prevent the unauthorized deficit.
    This common sense reading of the proposed constitutional 
amendment is shared by a broad range of highly-regarded legal 
scholars. Then Assistant Attorney General (now Solicitor 
General) Walter Dellinger testified in 1995 before the 
Judiciary Committee that the proposed constitutional amendment 
would authorize the President to impound funds to insure that 
outlays do not exceed receipts.
    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.'' 77 Others who share this 
view include former Attorney General Nicholas deB. 
Katzenbach,78 Stanford University Law School Professor 
Kathleen Sullivan,79 Yale University Law School Professor 
Burke Marshall,80 and Harvard University Law School 
Professor Laurence H. Tribe.
---------------------------------------------------------------------------
    \77\ 1994 Appropriations Committee Hearings at 86.
    \78\ 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 * * 
* '').
    \79\ 1994 Appropriations Committee Hearings at 182.
    \80\ 1994 Appropriations Committee Hearings at 204-05.
---------------------------------------------------------------------------
    This year the Secretary of the Treasury reenforced this 
prospect when he noted in his testimony before the Committee:

          Some proponents have suggested that under these 
        circumstances, the President would stop issuing checks, 
        including those for Social Security benefits. * * * The 
        President might also impound funds of his choosing. * * 
        * All of these potential outcomes are extremely 
        undesirable.81
---------------------------------------------------------------------------
    \81\ January 17, 1997 Judiciary Committee Hearing Transcript, 
written statement of Hon. Robert E. Rubin, at 5.

    The impoundment power that would be conferred on the 
President by the proposed constitutional amendment is far 
broader than the presidential line-item veto authority granted 
to the President last year. As Assistant Attorney General 
Dellinger testified in 1995, the impoundment authority implied 
within the proposed constitutional amendment might 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.82 He testified that he would advise the 
President that he not only had the right, but the 
``constitutional obligation'' to prevent the violation of a 
constitutional mandate against budgetary imbalance.
---------------------------------------------------------------------------
    \82\ 1995 Judiciary Committee Hearings at 100.
---------------------------------------------------------------------------
    The text of the proposed constitutional amendment does not 
address these matters. The majority report says that is not the 
intent of the Committee to grant the President any impoundment 
authority and suggests 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.'' The 
majority report, thus, assumes there can never be an 
unauthorized deficit, because Congress always has a theoretical 
possibility of stepping in before the last minute ending the 
fiscal year and ratify whatever deficit has occurred. Under 
this construction, the proposed constitutional amendment is a 
cruel joke.
    Moreover, nothing in the proposed constitutional amendment 
prevents the Executive from acting to implement its terms. A 
President may not be willing to withhold based on a theoretical 
possibility of what the President knows or has reason to 
believe will not occur. Indeed, a President may choose not to 
risk having all of the expenditures undertaken by the Federal 
government for a portion of a fiscal year declared to have been 
expended in violation of the Constitution. It is more likely 
that a President, sworn to preserve, protect and defend the 
Constitution, would not view the Executive as powerless to 
prevent such a result.
    Key House sponsors of the proposed constitutional amendment 
circulated materials on the role of the Executive that add 
context to the majority report's isolated declaration of intent 
and are consistent with this view of continuing involvement by 
the Executive in the implementation of the proscriptions 
contained within the proposed constitutional amendment. 
Representatives Schaefer and Stenholm acknowledge that the 
proposed constitutional amendment is intended to create ``an 
ongoing obligation to monitor outlays and receipts'' and to 
require the President ``at the point at which the government 
`runs out of money,' to stop issuing checks.'' 83
---------------------------------------------------------------------------
    \83\ Reps. Dan Schaefer and Charles Stenholm, materials titled 
``Cosponsor the Balanced Budget Amendment,'' November 18, 1996.
---------------------------------------------------------------------------
    We also have experience to instruct us. This 
Administration's senior advisers have testified both in 1995 
and in 1997 that their advice would be to terminate or delay 
expenditures if the proposed constitutional amendment is 
ratified and a budget impasse arose.84
---------------------------------------------------------------------------
    \84\ See testimony and written statement of Hon. Robert E. Rubin at 
January 17, 1997 Judiciary Committee Hearing.
---------------------------------------------------------------------------
    James Miller, former OMB Director under President Reagan, 
echoed that advice. He revealed legal advice from the Office of 
Legal Counsel of the Department of Justice that without 
congressional mandated spending priorities, the President could 
apply across-the-board reductions in outlays. Finally, he 
furnished a legal memorandum on presidential authority to 
forestall default on the public debt that was coauthored by a 
former Assistant Attorney General and head of the Office of 
Legal Counsel during the Reagan Administration that asserts 
``the President has inherent constitutional authority to choose 
which nondeferrable obligations to pay in the absence of a 
statute specifying a priority.'' 85
---------------------------------------------------------------------------
    \85\ Response from Dr. James C. Miller, III, to written questions 
with attached legal memorandum from Charles J. Cooper and Michael A. 
Carvin (dated October 18, 1995), January 22, 1997.
---------------------------------------------------------------------------
    A Memorandum to the Attorney General dated October 21, 
1995, that is now publicly available, reinforces these lines of 
reasoning:

          Although this Office has consistently taken the 
        position that as a general matter the President does 
        not possess inherent authority to impound funds, we 
        have carved out an exception to the general rule for 
        the situation in which the President faces a debt 
        ceiling and does not have any other feasible method of 
        raising funds. We have said that in such a situation, 
        because the President would be faced with conflicting 
        statutory demands, to comply with the direction to 
        spend yet not exceed the debt limit, he would be 
        justified in refusing to spend obligated funds. See 
        Memorandum from William H. Rehnquist, Assistant 
        Attorney General, Re: Presidential Authority to Impound 
        Funds Appropriated for Assistance to Federally Impacted 
        Schools (December 1, 1969). We believe that the 
        President's power to reconcile conflicting laws 
        according to his best judgment could be derived from 
        his ultimate power as Chief Executive ``to take Care 
        that the Laws be faithfully executed.''

    The OLC Memorandum concludes:

          Finally, at some point, after all other options have 
        been considered, consideration should be given to a 
        program of deferral of obligations and expenditures by 
        the President. Such a program would provoke 
        considerable public controversy, perhaps a 
        constitutional confrontation with Congress, and most 
        certainly would be subjected to legal challenge. On the 
        last point, although we have not had an opportunity to 
        arrive at a definitive conclusion, we believe a strong 
        argument can be made both on statutory grounds and on 
        the basis of his inherent authority, that the President 
        would have the power to engage in such a program.

    Similar analysis and reliance on inherent Executive 
authority could be expected to arise should the proposed 
constitutional amendment be ratified and the President faced 
with circumstances in which the legislative and executive 
branches are in gridlock over budgetary or spending matters or 
it appears to the President that the prediction for a balance 
between expenditures and revenues in any fiscal year is tilting 
toward deficit.
    The majority report alternatively comments that Congress 
could specify in implementing legislation how it wanted the 
President to proceed in a budgetary or debt limit crisis. 
Reliance of subsequent implementing legislation is risky, at 
best. Such legislation would be subject to Presidential veto 
and the need for a supermajority override in both Houses. 
Moreover, such legislation would have to be comprehensive 
enough to foresee and control all possible future contingencies 
to be effective.
    Further, 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.86
---------------------------------------------------------------------------
    \86\ 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 * * *'').
---------------------------------------------------------------------------
    Finally, the majority places substantial reliance on the 
159-year old case of Kendall v. United States ex rel. Stokes, 
37 U.S. (12 Pet.) 542 (1838). Unfortunately, that case can as 
easily be read to support presidential impoundment authority 
under the proposed constitutional amendment on budgeting as 
against. 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, 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.
    If the proposed constitutional amendment were ratified and 
became a part of the Constitution, the President's obligation 
to execute the laws would arguably have a constitutional 
fulcrum from which to leverage. The President could argue that 
when the constitutional duty to ensure fiscal year balance came 
into conflict with a statutory obligation to expend authorized, 
appropriated or obligated funds, the constitutional 
responsibility had to be given priority as predicated on 
superior authority.
    The proposed constitutional amendment's mandate to ensure 
budget balance for each fiscal year specifies no role or 
limitation on the power of the President. The majority report 
concedes that implementation and enforcement will necessarily 
involve the Executive Branch beyond the President's obligation 
pursuant to section 3 to have transmitted to the Congress a 
proposed budget prior to each fiscal year in which total 
outlays do not exceed total revenues. It notes:

          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 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. (Emphasis added.)

    If this proposed constitutional amendment were to become 
the supreme law of the land, some future President may well 
choose to enforce its terms, in the absence of binding 
limitations in implementing authority, to make greater use of 
Executive Branch discretion and authority than this Congress 
has taken the time to consider.
    This fundamental shift in the allocation of power and 
authority among the federal branches is neither wise nor 
necessary. It risks despotism at the very times when despots 
are most likely to arise and in which our fundamental 
guarantees of liberty and individual freedoms has been the 
checks and balances that the branches of our federal government 
exert over each other.

                               CONCLUSION

    Our constitutional protections of separation of powers and 
majority rule should not be sacrificed to enact this 
unnecessary and unworkable proposed constitutional amendment on 
budgeting.

                                   Patrick J. Leahy.
                                   Edward M. Kennedy.
                                   Russell D. Feingold.
                XIII. ADDITIONAL VIEWS OF MR. TORRICELLI

    I have no inherent opposition to the concept of amending 
the constitution of the United States to require a balanced 
budget. Indeed, I have voted for the resolution that this 
Committee reported on three other occasions. The Majority of 
States require a balanced budget and indeed the continental 
Congress of the United States considered a similar requirement 
over 200 years ago. I do however believe that it is incumbent 
upon all of us to make every effort possible to seek to ensure 
that what is enshrined in the Constitution is a feasible, 
effective document that will accomplish the goals we have 
established.
    Although I believe the Amendment that was reported by this 
Committee could be improved upon, I nonetheless voted to 
favorably report it so that the full Senate may have the 
opportunity to consider and vote on this important issue. I 
will, however, continue to seek and to work with all Senators 
to improve it.
    In committee I offered a substitute to address what I 
consider to be several flaws within the legislation. While the 
Balanced Budget Amendment before this committee would address 
the debt crisis we are in, it seems to operate in the belief 
that we have no other principal problems. Nothing could be 
further from the truth. The United States does find itself with 
a considerable and mounting national debt. After some two-
hundred years, the compact among the generations has been 
broken. There was an informal, but never the less, almost 
certain understanding, the United States Government would 
borrow in times of war and depression to overcome those 
national ills but return almost immediately to a surplus status 
and begin paying the principal on the accumulated debt.
    Succeeding generations kept this promise. It is almost now 
certainly been broken. It is however important to put in 
context, that as we deal with amending the constitution of the 
United States, the deficit crisis has at least subsided. The 
United States Government has had a declining annual national 
deficit for four successive years. The debt of the United 
States government as a percent of national revenues has fallen 
considerably so that it now is the smallest among each of the 
major western democracies. Indeed the debt of the United States 
government is a percentage both of our economy and government 
revenues is the smallest in nearly forty years. Over the last 
four years we have reduced the deficit by 63% so that today it 
stands at its lowest point since 1981. Due simply because of 
the leadership of the Clinton Administration the debt crisis is 
subsiding, does not mean that it is not important. We must 
continue our progress, but we must do so in a manner that 
ensures that we will make the necessary investments in capital 
infrastructure and that will protect the integrity of the 
Social Security Trust Funds.
    My difficulty is that this Amendment does not deal with the 
debt crisis of the United States Government in context of other 
national problems. As I suggested, while the United States does 
have a debt crisis it also has several other important economic 
crises.
    First among them in my judgement is the mounting investment 
crisis in the United States. This perils our quality of life 
and our national economic strength. It is best illustrated by 
the failure of the United States government itself to maintain 
current investment levels. In 1965, the United States 
government invested 6.3 percent of its revenues in the 
development of infrastructure. By 1992, that investment had 
declined to 3 percent of federal revenues, the lowest of any 
industrialized democracy in the world. The United States 
currently has one quarter million miles of highway systems in 
gross disrepair. 25 percent of all the bridges in the nation 
need to be rebuilt. The ports of our nation that provided for 
our national security and upon which our standard of living and 
dominance in international trade were built are total 
disrepair. Indeed, in the port of New York, once the worlds 
most mighty source of international trade cargo now off loads 
in the ocean onto garbage floats, as if the United States was a 
third world nation, unable to have our exports or our imports 
enter our own greatest city. The estimated costs of repair 
total over $1 billion. The economic cost if we don't is 
estimated at 43,000 jobs and $7.6 billion in lost commerce.
    This year the United States will spend less than 1% of its 
GDP on investment in our national infrastructure. While Japan, 
genuinely dealing in the midst of an economic crisis, will be 
able to invest six percent of their revenues for maintaining an 
infrastructure for the future. The United States is dead last 
among the G-7 nations in public infrastructure investment as a 
percentage of GDP.
    Germany has now approved 130 billion dollar expenditure for 
the high speed rails. France this year has announced a $4 
billion project for a single high-speed rail line. As our 
competitors prepare their infrastructure for the 21st century 
we are failing to meet that challenge.
    Under our current system of budgeting and under the 
balanced budget amendment, that you have proposed and I have 
voted for on other occasions, the adding of an employee at the 
Department of Commerce and the adding of a mile of new railroad 
or road are all considered of equal economic value. The General 
Accounting Office through the years has urged us to change this 
system. Capital expenditures cannot be equated with simple 
consumption by the United States government.
    The alternative I have offered provides for a capital 
budget. This would allow the United States government to do 
what at least 34 other states, almost all of our major economic 
competitors and virtually every major business enterprise in 
the United States does--distinguish between investments and 
consumption. In my own state of New Jersey, each and every year 
a capital planning commission meets to receive the budget of 
our governor and determine whether or not budget items deal 
with long term investments or constitute simply consumption. In 
the long history of the constitution of my state, and to my 
knowledge that of every other state in the nation there has not 
been a case where any governor, Democrat or Republican, has 
been found to have abused that power.
    The alternative I have offered would additionally address 
several other matters I am concerned about mainly, the 
integrity of the Social Security Trust Fund and the requirement 
of a three-fifths supermajority to raise the debt ceiling. The 
arguments surrounding these points have been persuasively 
presented in the Minority report.
    One additional concern is in ensuring that this Amendment 
provides the Congress the flexibility to deal with military and 
economic emergencies in a timely and sufficient manner. I 
believe not simply bad judgement but even dangerous to provide 
in the United States Constitution that there is a chance of 
misinterpretation or delay in the United States dealing with an 
international military emergency or a domestic economic 
emergency. It is known to us all that in 1941 this government 
by a single vote reauthorized the draft provision to the 
selective service of the United States government. That success 
but evident lack of will was almost certainly factored by the 
Axis powers in gauging how the United States would respond to 
international aggression. It would be an extraordinary 
disservice to this country if any future adversaries 
contemplating aggression against us or one of our allies were 
able to factor our response on the ability of the United States 
government to borrow funds to meet the crisis and whether this 
Congress would in a timely fashion or indeed eventually under 
any scenario be potentially unable to borrow or conduct 
expenditure to deal with that emergency. Indeed, I remind the 
Committee that in the years proceeding the second world war 
massive expenditures were made without a national emergency or 
without a declaration of war and which the United States was 
not egaged in hostilities.
    The United States must have the budget flexibility that if 
we are threatened by international circumstances and certainly 
if their is a declaration of war, that we have the full power 
to defend these United States. Additionally, I believe if we 
have learned anything from our economic experience in the 20th 
century, we have come to learn much about the business cycle 
and about the occasional recessions and even depressions of our 
capitalist systems. We have also learned about the need to 
utilize the full resources of this government to reverse these 
cycles through both the fiscal and monetary powers of the 
United States government.
    This outlines my concerns regarding S.J. Res. 1. I have 
voted to report this bill simply because I believe it is 
incumbent that the Senate take up and address this issue. I 
also believe it is incumbent upon the majority to work with us 
in the minority and not to pass a balanced budget amendment 
simply because it can be passed but to pass one that is in the 
best interest of this nation and those who have elected us to 
represent them.
    As this bill goes to the floor of the Senate, I will 
continue to work with Senators from both sides of the aisle to 
address the concerns I have raised and to improve upon the 
legislation that has been reported by this Committee.
                      XIV. 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.

                                
