Keep the balanced-budget amendment on track - Editorial

Nation's Business, March, 1994

President Clinton's proposed budget -for the fiscal year beginning Oct. 1 sets the deficit at $176 billion, compared with $235 billion in the current fiscal year.

This reduction will be achieved, he said, largely through the elimination or curtailment of hundreds of programs. While a deficit reduction of the magnitude proposed by the president is highly welcome, it is ironically being used as a weapon against the ultimate anti-deficit weapon, a constitutional amendment requiring a balanced federal budget.

Critics of the amendment maintain that higher revenues from a strengthening recovery and fiscal restraints set by Congress in 1990 and 1993 are undermining the supporters' chief argument--that the strictures of a constitutional amendment are the only way to abolish the deficit spending that has seen the national debt increase more than fourfold since 1980.

Moreover, the anti-amendment forces say, the deficit will go down again in the next fiscal year.

Those claims need to be placed in the overall context of the new budget, which not only deals with the 1995 fiscal year but also projects federal finances through 1999. A close look at those numbers is highly enlightening.

While the deficit goes down in 1995 and 1996, it starts back up again in 1997, and by 1999 it again exceeds $200 billion.

The budget's assumptions about a strong economy and stable interest rates through the rest of the century may very well be correct, but a variation in either area could put additional pressures on the deficit.

Then there's the matter of the cost of the president's plan for health-care reform. He estimates that his proposals would reduce the deficit by $60 billion from 1995 to 2000, but the nonpartisan Congressional Budget Office says the fiscal impact would actually be a $70 billion increase.

In addition, assertions that the need for a balanced-budget amendment has faded in a new era of fiscal discipline ignore the reality of the many government programs known collectively as entitlements. The word derives from their nature the law establishes qualifications for recipients under these programs, and anyone who meets the criteria is entitled to benefits.

Lawmakers will find that any long-range hopes of dealing with the deficit problem are doomed if the growth of entitlements is not confronted. Thus far, however, they have allowed political considerations to override the necessity for a thorough examination of the entitlements question.

The long-term outlook for red-ink spending and growth of many major federal spending programs, factors that spurred the movement for a balanced-budget amendment, has not been sufficiently altered by the latest federal budget to justify abandonment of the goal of a balanced-budget amendment.

The drive for this amendment should continue unabated, and Congress should not be allowed to avoid it by claiming the need has passed.