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MONDAY, MARCH 12, 1979


Washington, D.C. The subcommittee met, pursuant to notice, at 9:10 a.m., room 6226, Dirksen Senate Office Building, Hon. Howard M. Metzenbaum and Hon. Birch Bayh (chairman of the subcommittee), presiding. Present: Senators Bayh, Metzenbaum, Heflin, Hatch and Simpson.

Staff present: Nels Ackerson, chief counsel and executive director; Mary K. Jolly, staff director; Kevin O. Faley, general counsel; Linda Rogers-Kingsbury, chief clerk; Thomas Parry, chief minority counsel; Stephen Markman, minority counsel; David Boies, chief counsel, Committee on the Judiciary.

Senator METZENBAUM (presiding). Senator Bayh has been unavoidably detained. He will be here shortly. However, he sent word that the last person in the Senate that he would like to delay is the presticious and the well-respected chairman of the Armed Services Committee.

[The opening statements submitted by Senators Bayh and Hatch follow :)


Today the Subcommittee on the Constitution begins an extensive series of hearings on the various proposals introduced in the Senate that seek to amend the Constitution to require a balanced Federal budget.

The issue of excess Federal spending is one of increasing concern to me as well as for many of our citizens. Each year our spending increases and each year our Federal debt grows larger and larger. At times it appears that the only things our Government can do efficiently are spend money and raise taxes. This increase in spending at all levels of government along with the spiraling rates of inflation are matched only by the rising frustration of the American people.

I believe that we must move to gain greater control over Federal spending and to approach our budgetary decisions in a more responsible manner. The purpose of these hearings is to explore whether the best way to achieve this end is to incorporate a balanced budget amendment in the Constitution.

In approaching this goal, however, we must be aware of the tremendous complexities surrounding these issues. The budget of the United States now reaches some $500 billion and touches the lives of every American. It provides eyeglasses for indigent senior citizens and nuclear aircraft carriers for national defense. Federal spending affects, for good or ill, our mortgage rates, transportation, energy, health, environment and technology. It influences our food prices on Earth and enables us to take pictures of Jupiter in space. A small increase or decrease can determine whether thousands of Americans will be employed or unemployed.

It has been said that every large problem has a solution that is quick, easy and wrong. We should not delude ourselves into thinking that problems concerning fiscal restraint and the economic well being of this Nation can be solved by the quick fix and the easy cure.

Although the problems are complex I believe we must begin to seek the answers. Through our hearing process we will explore questions such as the effect of cumulative budget deficits on inflation, the economic and social impact of a mandated balanced budget, the constitutional enforcement problems surrounding such an amendment, whether the amendment would result in a sharp increase in taxation rather than a decrease, and whether an amendment can provide the fiscal discipline it is intended to at the same time it allows for the budgetary flexibility necessary to meet recessions.

I should also emphasize one final point. We must remember that it is the Constitution that we are talking about in this process. That amazing document and its values have been passed down from generation to generation until today it survives, and thrives, as the oldest embodiment of existing constitutional government in the world.

Part of the reason for this is that Congress and the States have traditionally exercised very great restraint in amending the Constitution. Thus, the original document, which was only some four pages in length, has been amended only 26 times and deals almost exclusively with institutional arrangements, political processes, and the most fundamental procedural safeguards. The only real digression in this long history was the 18th amendment concerning prohibition, which was eventually repealed by the 21st amendment.

The American tradition is that the Constitution should be amended only for good reason and only after careful study. When we are considering the supreme law of the land, caution is preferable to error. To disregard this tradition would be to head down a road which will quickly lead to a very different kind of Constitution. As Henry Clay stated in a speech on the floor of the Senate almost 130 years ago:

The Constitution of the United States was made not merely for the generation that then existed, but for posterity-unlimited, undefined, endless, perpetual posterity.

I believe that most Americans cherish the timeless character of this document and I believe that most Americans would agree that we should not race precipitously into a thicket of economic and constitutional confusion. We will approach this question with responsibility and deliberation.



Article V of our Constitution establishes alternative means by which the permanent law of our country can be amended. The first, a method that has been resorted to with respect to each of the first 26 amendments to the Constitution, enables Congress to propose amendments and submit them to the States for ratification. The second method, never successfully resorted to, enables the States themselves both to propose and ratify amendments.

The second method, the Federal Convention approach, was included within the Constitution because the Founding Fathers were concerned that a recalcitrant Congress might be able indefinitely to prevent amendments desired by the States. Alexander Hamilton referred to the concern that "the persons delegated to the administration of the National Government will always be disinclined to yield up any portion of the authority of which they were once possessed." While never successful by itself in amending the Constitution, the Federal Convention approach was successful in the case of the 17th amendment, providing for the direct election of Senators, in prodding Congress to propose its own amendment. By the time Congress had proposed that amendment, at least 30 petitions from the States had been submitted to them calling for a Federal Convention. We find ourselves in a similar situation today.

The legislatures of 27 States have already made clear to Congress their desire for a constitutional amendment imposing greater restraints upon the fiscal activities of the Federal Government. There is clearly going to be considerable haggling at some point whether or not each of these States has properly communicated the identity of their concerns with each of the other States. Some of the petitions call for balanced budgets, others for balanced budgets with debt retirement, while others speak of spending limitations of one sort or another. What cannot reasonably be doubted, however, is that there is a tremendous grassroots effort in this country to change the way that the Federal Government conducts business.

And I for one cannot quarrel with that sentiment. The Federal budget has been balanced only twice in the past 23 years. During the 1950's, the average annual deficit in this country was less than $2 billion. During the 1960's, the war in Vietnam included, the average deficit was less than $6 billion. During the 1970's-and there is bipartisan responsibility-the average debt has soared to more than $30 billion. A deficit of $29 billion for fiscal year 1980 has been referred to as lean and austere. That may sell with some in Washington, but I can assure you it does not sell in Salt Lake City or Peoria.

The level of annual budget outlays during this same period has skyrocketed from $80 billion in 1958 to $180 billion 10 years later in 1968 to more than $530 billion today. Yet we are told that the budget is "lean and tight” because the rate of the rate of growth has slowed down. Believe me, I have not heard from many of my constituents who have expressed elation because the rate of the rate of budget growth in this country has been slowed.


Mr. Chairman, I have not taken a position on any one of the variety of balanced budget and spending limitation amendments that have been introduced. At the outset, I would like to state very briefly some of my concerns. I am concerned that we balance the need to be precise in our constitutional language with the need to be concise also in that language. I recognize the difficulty of incorporating relatively complex economic concepts into the Constitution but I believe that every effort should be made to insure that the simple grace and elegance of that document not be diminished. We must be specific enough and comprehensive enough so that opponents of fiscal restraint are not able easily to circumvent the Constitution through ingenious little contrivances. Yet our language must be such that it will be as easily understood and as workable a century from now as it is today.

I am concerned that a proposed amendment represent a meaningful response to the calls by the States for constitutional change, and not simple cosmetic reforms. It would be worthwhile for all of us to bear in mind that proposition 13 was achieved completely outside of the normal political processes, and over the objections of “responsible” party leaders. If Congress refuses to act and make substantive changes, there will certainly be a constitutional convention, a process which, in some respects, concerns us all.

And I am particularly concerned, as former ranking member of the now departed Separation of Powers Subcommittee that we assess the impact of various budget proposals upon the relationships between the executive and the legislative branches, and between the National and the State Governments,

There is one final point that I would like to make at the outset of these hearings. I have heard it remarked that budget policy should not be written into the Constitution, and that a balanced budget or spending limitation amendment would "trivialize" the Constitution. I emphatically disagree with this view. Our Founding Fathers conceived what was to be a "limited Government,” one whose activities were to be sharply circumscribed. The tenth amendment states it well: “The powers not delegated to the United States by the Constitution nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

It is the opinion of many in this country that we have strayed a great deal further from this conception of Federal Government than necessary. In my mind, a balanced budget, or spending limitation amendment has the potential to impose new limits upon the National Government replacing those that have regrettably eroded over the years. It has the potential to recreate a measure of the balance conceived by the Founding Fathers between the National Government, the States, and the people. This is certainly not a “trivial” objective. Rather, it goes to the heart of what our system of government is going to be in the future.

Senator Bayh, I commend you on your decision to convene these present hearings, as well as for your selection of such an outstanding group of witnesses to lead off the testimony for these historic hearings. I look forward to working with you, and the rest of the members of this subcommittee, closely on this issue.

[Senator Hatch's remarks from the Congressional Record upon introducing Senate Joint Resolution 86 follows:


[Congressional Record, June 7, 1979) By Mr. HATCH:

S.J. Res. 86. A joint resolution proposing a constitutional amendment to halance the Federal budget, limit Federal spending, and prevent an increasing share of the national income from being consumed by the Federal Government; to the Committee on the Judiciary.

Mr. Hatch. Mr. President, today I am introducing a joint resolution proposing an amendment to the Constitution of the United States to require a balanced Federal budget and to impose spending limitations upon the Federal Government.

While a great deal of emphasis has been placed upon the new mood of budgetary restraint supposedly operating in Washington since the adoption of proposition 13 in California last June, it is clear to me that this mood is more apparent than real. In January, for example, the President billed as "lean" and "austere” a budget containing expenditures of $42 billion more than last year, and a budget deficit of $29 billion.

I might also add that there is an additional $12 billion in off-budget items that are never mentioned, except when they have to be.

In its concurrent budget resolution, Congress has improved upon these figures only slightly, although the pained expressions on the faces of special interests dependent upon Federal dollars would lead one to believe otherwise. Most of the reduction in the deficit level proposed by Congress is attributable to increased revenue projections resulting from higher predicted levels of inflation.

Thus, in the midst of what has been described as a "new era in fiscal responsibility," a budget is being approved ($532 billion) that is nearly 50 percent higher than the budget for fiscal year 1976, only 4 short years ago; and a budget deficit is being approved never even approached in the history of our country during peacetime, prior to 1975. Only in Washington could this budget be described as anything less than obscene.

Where are the hard decisions made in this budget that have to be made? Nothing of any substance is done to insure that HEW and GSA waste is curbed. No reductions in the executive bureaucracy are made. No agencies or commissions are abolished. No grand Federal programs are eliminated or pared down. Food stamps, mass transportation subsidies, impact aid, and CETĂ are continued as before, in fact, more than before.

Foreign aid and the international financial institutions are maintained intact. The Federal Government continues its involvement in such dubious areas as aid to the arts and humanities, Davis-Bacon, affirmative action, and new Senate office building construction.

Mr. President, it seems to me that this Congress and this administration do not yet feel the sense of urgency that is felt by the people of this country about our economic situation:

Secretary of Treasury Blumenthal, for example, testifies before the Senate Judiciary Committee that the congressional budget process has made a major contribution toward bringing about comprehensive, logical, and responsible budget making. This, despite the fact that our Nation has incurred more than $300 billion in new debt since the Budget Act's implementation in fiscal year 1976.

Congressional leaders threaten to punish State and local officials, who call for increased Federal restraint, by eliminating revenue sharing.

Members of Congress consider ways by which this body can avoid having to respond to State petitions calling for a balanced budget constitutional convention.

All the while, inflation continues to creep into double figures, the tax burden on American citizens becomes increasingly oppressive, unemployment is maintained at intolerably high levels, the dollar wanes in value, and the productivity and innovativeness of the American economy continues to be sluggish. In short, the American standard of living declines.

It is my belief that a constitutional amendment is critically necessary to effect a measure of fiscal responsibility. It is necessary because our root prohlem is not simply the fact that there are too many members of this body who do not understand the relationship between their actions and the state of the American economy. While their number remains tragically high, just as critical is the fact that all of our legislators operate in an institutional environment in which votes cast for high levels of Federal spending are rewarded, while votes cast against such levels normally carry no immediate benefits.

Legislators are no different than any other individuals in their concerns for maximizing their own self-interest. In this case, their self-interest is reelection.

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