    [Public Papers of the Presidents of the United States: William J. Clinton (1993, Book II)]
    [November 5, 1993]
    [Pages 1916-1917]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Letter to Congressional Leaders on the Proposed Balanced Budget
    Amendment
    November 5, 1993

    Dear Mr. Speaker:  (Dear Mr. Leader:)
        I write to express my firm opposition to the proposed balanced
    budget amendment to the Constitution of the United States (S.J. Res. 41
    and H.J. Res. 103). While I am deeply committed to bringing down our
    Nation's deficit, this proposed balanced budget amendment would not
    serve that end. It would promote political gridlock and would endanger
    our economic recovery.
        The Administration fought hard to pass a historic deficit reduction
    plan because we believe that deficit reduction is an essential component
    of a national economic growth strategy. As you know, I worked tirelessly
    with the Congress to gain passage of the largest deficit reduction
    package in the Nation's history. This legislation includes a ``hard
    freeze'' on all discretionary spending, a virtually unprecedented
    constraint on Federal spending. Through the National Performance Review,
    a new rescission package, and a major proposal to limit the growth of
    Medicare and Medicaid through comprehensive health care reform, we are
    taking continuing steps to keep the deficit on a downward path. I have
    also long supported such procedural innovations as enhanced rescission
    authority or a line-item veto and would consider workable budget
    proposals that distinguish between consumption and investment. The
    Bipartisan Commission on Entitlement Reform will come forward with
    suggestions on controlling entitlement costs and other serious budget
    reforms. Thoughtful, specific reforms are better policy than a rigid
    Constitutional amendment.
        The balanced budget amendment is, in the first place, bad economics.
    As you know, the Federal deficit depends not just on Congressional
    decisions, but also on the state of the economy. In particular, the
    deficit increases automatically whenever the economy weakens. If we try
    to break this automatic linkage by a Constitutional amendment, we will
    have to raise taxes and cut expenditures whenever the economy is weak.
    That not only risks turning minor downturns into serious recessions, but
    would make recovery from recession far more difficult. Let's be clear:
    This is not a matter of abstract economic theory. Contractionary fiscal
    policy in the 1930s helped turn an economic slowdown into a Great
    Depression. A balanced budget amendment could threaten the livelihoods
    of millions of Americans. I cannot put them in such peril.
        Moreover, at presently anticipated growth rates, the deficit
    reduction required by this amendment could be harmful to average hard-
    working American families. Supporters of this amendment must be straight
    with the American people. Given the current outlook for the FY 1999
    budget, the amendment would require some combination of the following:
    huge increases in taxes on working families; massive reductions in
    Social Security benefits for middle class Americans; and major cuts in
    Medicare and Medicaid that would make it impossible to pass meaningful
    health reform legislation. This latter result would be particularly
    ironic and counterproductive because comprehensive health reform is our
    best hope not only for providing health security for all Americans, but
    also for bringing down the long-term structural deficit. The fact that
    these consequences will not be clear to most Americans for a few years
    does not relieve us of the responsibility of facing them today.
        We must reject the temptation to use any budget gimmicks to hide
    from the specific choices that are needed for long-term economic
    renewal. The amendment by itself would not reduce the deficit by a
    single penny. The only way we can continue to make progress on bring-

    [[Page 1917]]

    ing down the deficit while investing more in our future is to continue
    the process of making tough and specific policy choices. If we avoid
    such straightforward debate now, the likely outcome will be accounting
    subterfuge and gimmicks when the easy promise of a balanced budget
    amendment runs up against difficult political realities. A gridlocked
    Congress would encourage members to look for an easy way out--for
    example, by moving more Federal programs off budget or by imposing more
    unfunded mandates on the States. Ironically, the amendment might
    encourage less rather than more fiscal responsibility.
        The amendment's potential impact on our constitutional system is as
    troublesome as its effect on the economy. The proposed amendments are so
    vague and complex that budgets quickly could be thrown into the courts
    to be written by appointed judges with life tenure, rather than the
    people's elected officials in the Congress. Surely, we can do better
    than this.
        Finally, I believe that economic and budgetary decisions should
    distinguish between investment and consumption. Those who manage a
    family budget know that there is a fundamental difference between
    spending money on a lavish meal, and paying the mortgage on a home that
    is an investment in one's future economic security. Under this balanced
    budget amendment, there is no distinction between cutting a dollar in
    waste and a dollar in a valuable investment in technology that could
    make us a richer and more competitive Nation in the future. That is
    unacceptable to me. We need to find ways to reduce the deficit and
    increase investment in ways that enhance not undermine the economic
    security and potential of our people and their communities. We must
    bring down the budget deficit at the same time we make progress on
    bringing down the investment deficit through investments in those who
    helped us win the cold war, through more resources to fight drugs and
    crime, and by giving all Americans the opportunity for quality education
    and training throughout their lifetimes.
        I remain firmly committed to the goal of deficit reduction. But I am
    just as firmly opposed to this balanced budget amendment, because it
    would simply delay honest debate over the hard choices needed for long-
    term economic growth and could imperil the economic stability of the
    Nation and our fledgling recovery.
        Sincerely,

                                                                Bill Clinton

    Note: Identical letters were sent to Thomas S. Foley, Speaker of the
    House of Representatives, and George J. Mitchell, Senate majority
    leader.