Balanced budget bill may pass, but will it work?
Congress, staggered by $100 billion deficits, is about to act on a constitutional amendment that would require a balanced federal budget.Skip to next paragraph
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The measure will come to a Senate vote within a week, and stands a good chance of passage, according to Congressional leaders. In the House, a discharge petition has been filed in an effort to poke a companion amendment loose from the Judiciary Committee, where it has stalled. President Reagan, who was host at a lunch July 12 for supporters of a constitutional spending cap, has said he approves of such a move.
As action on the issue nears a crucial stage, a key question has arisen: Will the particular amendment being considered effectively cage federal spending? Proponents say ''yes.'' But critics - not all of whom fit the mold of free-spending liberals - argue the measure has too many loopholes.
On Monday, the Senate opened debate on SJ Res. 58. This proposed constitutional amendment, written by Milton Friedman and various other conservative economists, would require Congress each year to adopt a balanced budget, unless three-fifths of both chambers vote otherwise.
In addition, the US government's tax receipts couldn't increase faster than national personal income. To dodge this obstacle, Congress would have to pass specific tax increase legislation, a move that requires a majority vote and a presidential signature.
Linked together, these requirements would stop the tendency of government spending to constitute an ever-growing share of the economy, say backers of the amendment, such as Lewis Uhler, president of the National Tax Limitation Committee (NTLC).
Debate finished, the Senate should vote on the resolution by early next week. With 61 co-sponsors (supporters say several more senators are about to join) the legislation stands a good chance. A two-thirds vote - 67 members - is needed, and supporters claim they have the necessary numbers.
Its future on the other side of Capitol Hill is more uncertain. The House companion to SJ Res. 58, HJ Res. 350, is currently stuck in the Judiciary Committee, whose chairman, Rep. Peter W. Rodino Jr. (D) of New Jersey has called the proposed amendment unenforceable, and an unwise economic straitjacket. Despite the Senate's action, Representative Rodino - who has often stalled conservative constitutional amendments - has no plans to take up the issue.
''His position hasn't changed,'' says an aide to Rodino.
Rep. Barber B. Conable Jr. (R) of New York, a sponsor of HJ Res. 350, has filed a discharge petition, a little-used parliamentary procedure, to force the issue onto the floor. A majority of the House, 218 members, must sign the petition if it is to be successful. HJ Res. 350 currently has about 223 co-sponsors, so backers are optimistic about their chances.
''We have a reasonable shot at (getting enough) signatures,'' says William Shaker, vice-president of the NTLC. ''Rodino seems to be taking a lot of time. We'd like a vote (in the House) before the election.''
If passed by both chambers, the amendment would need the approval of 38 state legislatures before becoming law.
But, against a background of horrendous deficit, some critics raise a crucial objection: They say the amendment won't really cut government spending.
''It is an amendment that is fairly loosely written, and has a lot of loopholes,'' says Dr. Rudolph Penner, an economist with the American Enterprise Institute, a relatively conservative think tank.
SJ Res. 58 requires Congress to adopt a balanced budget at the beginning of each fiscal year. But Dr. Penner points out that government outlays depend heavily on changes in the economy. An unexpected rise in unemployment, for instance, can add billions to federal spending.
''Congress and the President would be responsible to ensure actual outlays don't exceed planned outlays, but I don't see how they'd do it,'' says Penner.
Penner says he's worried such a measure would lead to legislative standoffs, and that Congress would use non-budgetary institutions to balance the budget on paper.