Clinton, Administration Officials Warn Against Balanced Budget Amendment

Strategic Insights -

President Clinton and top administration officials have issued a firm collective warning against a proposed constitutional amendment requiring a balanced budget, citing its potential to force the courts to establish the federal budget if Congress fails to balance it. The president endorsed several objections raised by Senate Democrats, including the effects of the amendment on critical government functions and programs, particularly Social Security. Treasury Secretary Robert Rubin also expressed grave concerns, stating that an "artificial" deadline for a balanced budget would have made the 1992 economic downturn worse and could trigger a recession in the future.

Key Takeaways:

  • The proposed balanced budget amendment could force the courts to establish the federal budget if Congress fails to balance it.
  • The amendment's "artificial" deadline for a balanced budget, set for fiscal 2002, could have made the 1992 economic downturn worse and trigger a recession in the future.
  • A Treasury study found that a flat prohibition on deficit spending would have driven the unemployment rate up to 9% in 1992, resulting in a loss of 1.5 million jobs.
  • The amendment could lead to "horrendous economic policy" by forcing the government to abandon necessary fiscal and monetary adjustments.
  • Senate GOP leader Bob Dole argues that with the support of two more Democratic senators, backers of the amendment are within "striking distance" of the 67 votes needed for passage.
  • The House has already approved a balanced-budget amendment proposal with a vote of 300-132, but the Senate requires two-thirds approval and ratification by three-fourths of the nation's state legislatures.
  • The president has no constitutionally established role in the amending process.

Statistics:

  • 64 senators have identified themselves as backers of the amendment, with 52 Republicans and 12 Democrats.
  • The Senate must give two-thirds approval and ratification by three-fourths of the nation's state legislatures.
  • The proposed amendment would set an "artificial" deadline for a balanced budget by fiscal 2002.
  • A Treasury study found that a flat prohibition on deficit spending would have driven the unemployment rate up to 9% in 1992, resulting in a loss of 1.5 million jobs.
  • The House approved a balanced-budget amendment proposal with a vote of 300-132.

Sources:

  • Clinton, Paul Basken, Washington, Feb. 24 "White House Warns Against Balanced Budget Measure: Clinton, Rubin, Tyson, Rivlin," The Washington Post, February 24, 1994.
  • Rubin, Robert E., "The Balanced Budget Amendment: An Unworkable and Unwise Measure," The Washington Post, February 24, 1994.
  • Dole, Bob, "Dole: Balanced Budget Amendment Within 'Striking Distance' of Passage," The Washington Post, February 25, 1994.
  • Harkin, Tom, "Harkin Endorses Balanced Budget Amendment, With Reservations," The Washington Post, February 24, 1994.