[Weekly Compilation of Presidential Documents Volume 29, Number 45 (Monday, November 15, 1993)]
[Pages 2283-2284]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Letter to Congressional Leaders on the Proposed Balanced Budget 
Amendment

 November 5, 1993

Dear Mr. Leader:  (Dear Mr. Speaker:)

    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 bringing 
down the deficit

[[Page 2284]]

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. This item was not received in time for publication in the 
appropriate issue.