Budget plan creates jobs, helps families - need for balanced budget - Column

0 Comments | Insight on the News, March 28, 1994 | by Daniel R. Coats, | Larry E. Craig

This week, the Senate will have before it a simple but profound question: Should Congress be required by the Constitution to balance its budget? The issue is straightforward, and the American people have a vital interest in the outcome.

While there are arguments on both sides, there can be no question about the urgency of our circumstances. Every child born in America now inherits 17,000 in public debt. This is the destructive legacy of a Congress without courage. It is a failure of political will. It is a betrayal of moral commitments.

For decades Congress has enjoyed the luxury of making unlimited promises and financing them with unlimited debt. Some have discovered the popularity of criticizing this debt, secure in the knowledge that the budget process was rigged politically to prevent real accountability.

But now -- with one vote -- Congress holds its credibility in its hands. In one moment, we can prove our seriousness before a nation suspicious of its government. A balanced budget amendment is a Constitution-class solution for a Constitution-class crisis.

Amending the Constitution admittedly is serious business -- the most serious legislative act of which Congress is capable. The Constitution is the most basic social contract between government and citizens. But the continued accumulation of debt threatens the endurance of that contract -- an agreement not only with each other, but with our children.

The spending habits of Congress are simply too entrenched. Deficit spending has always made political sense. It allows Congress to please people in the present by placing burdens on the future. The next generation, significantly, has no vote in the next election.

Critics of a balanced budget amendment have begun to issue ominous warnings. As Robert Rubin, President Clinton's point man on economic issues, recently said, "We need to save the country from this disaster." The possibility of passage in the Senate has so alarmed Clinton that he dispatched five Cabinet-level appointees to testify against the amendment last week.

The White House claims that the only way to get a balanced budget by the turn of the century is by dramatic tax increases or draconian spending cuts. Their analysts say the amendment will lead to new taxes or to the slashing of many programs, including defense, and that drastic tax hikes would throw America into recession. They claim that balancing the budget would cost every American $700 in the year 2000, while ignoring the fact that the average American today pays more than $1,000 in taxes just to make interest payments on the nation's debt.

When it comes to raising taxes or gutting the Pentagon's budget, we do not question that this president speaks with authority. And we are glad the president acknowledges -- belatedly -- that raising taxes is akin to recession roulette. However, the truth is we don't have to raise taxes or eliminate every discretionary spending program to balance the books.

We have a plan that would balance the budget in eight years. Our bill, which is called the Family, Investment, Retirement, Savings and Tax Fairness Act -- or FIRST -- offers a blueprint for budget reform. It caps the growth of federal spending at 2 percent (spending is growing at an average of 4.5 percent a year). It creates a commission, modeled after the base-closure commission, to identify cuts needed to meet the cap.

If Congress fails to approve the commission's plan by a certain date, then across-the-board cuts would take place to meet the cap. (Social Security would not be affected.)

Further, since American families are overtaxed, and because high taxes rob families of the resources they need to care for their children, the bill provides a $500 per child tax credit. A $500 child tax credit will give a family of four more than $80 a month extra for groceries, school clothes for the kids or savings for education. It will empower families to make more of their own choices and rely less on the government. Fifty-one million children are eligible for this credit. A $500 tax credit per child is real relief in tight times.

Our bill also recognizes that the private sector, not government, creates jobs. We must reduce the cost of capital and encourage productive investment by reducing the tax on growth. We will find new jobs in economy, not in a growing government. FIRST provides incentives for businesses to create jobs, including a reduced capital gains tax rate, a neutral cost recovery plan for investments and expanded IRAs.

So, yes, Mr. President, there is a plan -- a plan that reorders priorities to balance the budget and, at the same time, allows families to keep more of their hard-earned dollars and unleashes the productive power of the American people. It is a plan that offers economics with a soul.