Time for US to Adopt Balanced-Budget Law

PRESIDENT Clinton's State of the Union address properly identified the federal deficit as the principal reason for our stagnant economy and noted deficit reduction as the most positive step that could be taken in dealing with the current sluggish situation.

What are his chances for success?

It is axiomatic by now to note the woeful lack of will on the part of successive administrations and the Congress to make any meaningful progress toward these goals. The most recent fiasco resulted in scrapping the highly touted Gramm-Rudman-Hollings mandates, which were to have produced a zero deficit by 1993. Congress and the Bush administration simply overrode these statutory mandates in the celebrated 1990 budget agreement.

Successive failures should remind us anew of the need for a balanced-budget amendment to the United States Constitution to provide the fiscal discipline necessary to force Washington policymakers to actually achieve what nearly all Americans acknowledge to be a necessary goal.

Strong support exists for this effort. The National Governors' Association, on a bipartisan basis, has long expressed support for the balanced-budget amendment, the presidential line-item veto, and a separate capital budget (differentiating investments from current outlays). These budget balancing tools are already available to most state governors and legislatures.

National polls consistently indicate that the overwhelming majority of Americans favor a balanced-budget amendment, while the legislatures of more than 30 states have called for a federal constitutional convention to consider such an amendment.

To the most frequently voiced objections of doubters, I offer the following responses:

First, it is argued that the amendment would "clutter up" our basic document in a way contrary to the intention of the Founding Fathers. This is clearly wrong. The framers of the Constitution contemplated that amendments would be necessary to keep it abreast of the times. It has been amended on 26 occasions.

Indeed, one of the major preoccupations at the time of the Constitutional Convention was how to liquidate the post-Revolutionary War debts of the states. The Treasury did not begin systematically to incur annual deficits until the mid-1930s.

Second, critics argue that adoption of a balanced-budget amendment would not solve the deficit problem overnight. No serious proponent of the amendment has ever claimed that it would. Obviously a period, such as the five years suggested by the nation's governors and originally embodied in the Gramm-Rudman-Hollings Act, would be required for the full phase-in.

During this interim period, however, budgetmakers would be constitutionally disciplined to meet declining deficit targets in order to reach a final balanced budget by the established date.

Third, it is argued that such an amendment would require vast cuts in social services, or the military, or other categories of expenditure. Not necessarily. True, these programs would have to be paid for on a current basis. Certainly, difficult choices would have to be made about priorities and levels of program funding in all areas. But the very purpose of the amendment is to discipline the executive and legislative branches actually to make these choices and not to propose or perpetuate vast spending p rograms without providing revenues to fund them. The amendment would, in effect, make Congress and the president more accountable for their spending decisions.

Fourth, critics say that a balanced-budget requirement would prevent or hinder our capacity to respond to national defense or economic emergencies. This concern is easy to counter. Of course, any sensible amendment would feature a "safety valve" to exempt deficits incurred in responding to such emergencies - perhaps the requirement of a two-thirds or three-fifths "super majority" in both houses of Congress. Congress could also institute "rainy day" funds to set aside current revenues during good times to

be used for counter-cyclical purposes during economic retrenchment, as is currently done in more than 30 states, or perhaps even for debt reduction as time goes on.

Fifth, it is said that a balanced-budget amendment would be "more loophole than law" and could be easily circumvented. The experience of the states suggests that this argument is also wrong. Balanced-budget requirements are now in effect in all but one of the 50 states and have served them well.

Moreover, the line-item veto, which is available to 43 governors, would assure that any specific congressional overruns (or loophole end-runs) could be dealt with by the president. The public's outcry, the elective process, and the courts would also provide backup restraint on any tendency to ignore a constitutional directive.

In the final analysis, most of the excuses raised for not enacting a constitutional mandate to balance the budget seem to rest on a stated or implied preference for solving our deficit dilemma through the "political process" - responsible action by the president and Congress.

As noted above, this has been tried and found wanting, again and again.

Surely, this country is ready for a simple, clear, and supreme directive that its elected officials fulfill their fiscal responsibilities. A constitutional amendment is the only instrument that will fulfill this need effectively. Years of experience at the state level argue persuasively in favor of such a step, and years of debate have produced no persuasive arguments against it.

And the stakes are high. Perhaps Thomas Jefferson said it best: "To preserve our independence, we must not let our rulers load us down with perpetual debt."

That is the aim of an effective balanced-budget amendment - truly the "missing piece" in current discussions concerning economic recovery.