Balanced budget amendment has best shot in '92 Voter antagonism, economic woes put heat on Congress

THE BALTIMORE SUN

WASHINGTON -- With political survival instincts and economic desperation fueling a bipartisan urge for action, Congress appears poised to pass a constitutional amendment mandating that the nation's budget be balanced yearly.

In coming weeks, both the House and Senate will vote on similar resolutions in an effort to get control of runaway spending that this year is expected to drive the federal deficit to $400 billion.

Passage this election year is likelier than ever as members of Congress respond to voter anger over the lawmakers' apparent inability to balance the nation's books any better than they handled their own accounts in the now-defunct House Bank.

There is also widespread recognition on Capitol Hill that previous efforts to get control of federal spending have failed and that something different must be tried.

But critics of a balanced budget amendment say it will deprive lawmakers of flexibility; provoke frequent policy changes, including tax rate adjustments; restrict federal investment in such crucial growth-promoting areas as infrastructure, education and training; threaten to make recessions more frequent and deeper; bring the courts into the budget process; and invite evasive book-keeping ploys.

"I am not sure all of the implications of this have been registered," said Paul Leonard of the liberal Center on Budget and Policy Priorities.

"What is worrying about [it] is this is the Constitution of the United States. This is not going to be something you are going to be able to get rid of if it doesn't work. In particular, you risk cheapening the basic legal foundation of our society in a desperate move to try to impose some political will into the Congress."

These arguments, which have previously blocked passage of an amendment, have less resonance today as Congress stands charged with overall ineptitude and its shaken members confront a surge of anti-incumbent sentiment.

It will take a two-thirds majority in both chambers and also approval by three-quarters of the states -- which could take several years -- to enact a balanced budget amendment. At the earliest, implementation is some time away.

The last time the Senate voted on the issue in 1986, it was just one short of the needed 67 votes. The House, in 1990, came up seven votes short of the required 289 majority.

A political straw in the wind floated up last week, when Rep. Bill Gradison of Ohio, senior Republican on the House Budget Committee, successfully moved a technical motion to instruct House conferees on the current budget resolution to endorse Senate language calling for adoption of a balance budget amendment. Mr. Gradison's initiative was approved 322-66.

"I think there's a strong feeling it's likely to happen this year," said a key House Budget Committee aide. "We have larger deficits, there is a lot of public anger, and members are looking for survival. That's the concern."

The Bush administration, like the Reagan one before it, has been pushing for a balanced budget amendment. Budget Director Richard G. Darman told Congress last week that an amendment was needed because the political system over the years had shown a "bias toward short-term political convenience at the expense of longer-term substantive responsibility."

"The reality is that our representative democracy is not working satisfactorily. . . . The public itself is now clearly fed up," he said.

The Bush administration favors keeping the balance by capping the growth of mandatory programs, including Medicare and Medicaid, as the only way to reduce the deficit without increasing taxes, which, it says, would slow growth.

Much to the relief of lawmakers, the administration proposal exempts Social Security from such a cap because the program is not now a major contributor to the spending explosion.

The proposed cap would be based on allowing the mandatory programs to increase only for the growth of eligible population plus inflation, with an initial small add-on to cover above-inflation growth during the transition period. The Office of Management and Budget estimates this would save $390 billion over five years, more than $2 trillion over 10 years.

Even Democratic leaders in the House, who have previously opposed a balanced budget amendment, are now working to shape one to their own political liking. They want any amendment linked to the sort of tough choices that will have to be made to balance the budget, including increased taxes and spending cuts on a large scale.

"If a balanced budget amendment is going to pass, we want to make it something that makes some sense," said a Democratic aide.

Congress is looking to the states for guidance. Only Vermont does not have a balanced budget requirement. Among the rest there is a wide variety of approaches: In some states, it is a statutory requirement; in others, it is constitutional; some exclude their capital budgets; in most, only the general funds budget, which comprises an average 50 percent of state spending, has to be balanced.

Maryland has had a constitutional requirement to balance its budget since 1973. Eloise Foster, state assistant secretary for budget and fiscal planning, said: "It puts control on just having wild spending sprees and spending above your means."

The National Association of State Budget Officers endorses a federal balanced budget amendment. Marcia Howard, the deputy director, said: "We think it is a discipline that has worked well for most states . . . that makes them more responsible, and it's a discipline that, at this point, the federal government could probably use since the other disciplines they have attempted to use have not been successful."

There are several proposals pending on Capitol Hill. Democrats have introduced similar, but not identical, resolutions in the House and Senate, which would require all federal revenues and outlays to be balanced two years after ratification of the constitutional amendment. Republicans are swinging behind a version that would make it more difficult to use tax increases to balance the budget.

Dan Mitchell, a political economist at the conservative Heritage Foundation, said: "If government simply replaces deficits with taxes, you have simply replaced one bad policy with another, and you are leaving the overall burden of government unchanged."

Any amendment is certain to have an escape clause. But conservatives want exemptions limited.

"It's very important to make it as ironclad and loophole-free as possible," said Mr. Mitchell. "Basically members of Congress, when it comes to federal spending, are like 5-year-olds choosing what they want to eat: They just don't have discipline, they don't understand what's right.

"You have to set up a system that takes away their discretion. We don't want them to have the power because they have clearly misused it."

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