Budget balance is the gateway

Nation's Business, Feb, 1997 by Michael Barrier

President Clinton frequently talks about balancing the federal budget, but he does so in a disturbingly vague way. He has suggested several times that he and Republican congressional leaders work together on a plan to achieve that goal. He has talked about "reducing the deficit in the right way."

The fact is that a plan to balance the budget is readily available: a proposed constitutional amendment mandating that policy. And Clinton surely must realize that the only "right way" to keep spending within income is to ensure it, program by program. It's really not all that complicated.

The president claims that the lower deficits of recent years testify to his commitment to eventual budget balance. But this slowdown in the flow of red ink is temporary, and growing deficits are not far down the road.

The president's continuing refusal to tackle the issue of budget balance head-on is disturbing because it suggests he will pursue the same course in the new Congress that he did in the last-endorsing the goal while fighting initiatives to get there.

That would be unfortunate. An unbreachable mandate to match spending to income is the vital beginning step to adoption of other policies, generally based on reducing the size and reach of government, that the nation sorely needs to meet the domestic and global challenges of these closing years of the 20th century.

Business is intimately familiar with those challenges. The most effective plan for dealing with them has been developed by the U.S. Chamber of Commerce, the most representative of all business organizations, in its 1997-1998 National Business Agenda.

This comprehensive listing of legislative and regulatory priorities, the federation says, "calls for policies that will help achieve a smaller, less intrusive federal government and trigger an explosion in jobs, wages, and business opportunities at home and abroad."

Fiscal discipline is paramount. The Chamber says: "Topping the list is balancing the federal budget, which would lower interest rates and keep America fiscally strong, while providing, in effect, a tax cut to benefit everyone."

Noting the many failed efforts to balance the budget through legislation, the agenda comments:

"The fiscal discipline of an amendment to the Constitution is necessary to break the federal government's borrowing habit. Because lawmakers can push paying for current programs into the indefinite future, they are able to postpone the full costs of their spending decisions. This leads to more spending than taxpayers are willing to fund."

With budget restraint setting the tone for less government, the Chamber agenda also calls for a fairer and simpler tax system, including lower capital-gains tax rates, regulatory and civil-justice reform, and trade and labor policies that would enhance U.S. competitiveness.

The initiatives on behalf of sound public policies will be carried out in nine general areas of top business concern--budget, taxes, and the economy; entitlement reform; education and training; environment and resources; global economics and trade; health care; regulatory and legal impediments; transportation and telecommunications infrastructure; and work force, labor, and benefits issues. Those areas are further subdivided into 63 specific legislative and regulatory categories.

Obviously this job is not easy, but it can be done. But there will be times when lawmakers will have to make politically risky decisions.

At those points, business people should be ready to reassure members of Congress making the tough calls that they are on the right course from both policy and political perspectives and that the vast majority of voters appreciate those efforts.