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Washington, D.C. The subcommittee met at 9:30 a.m., pursuant to call, in room 2228, Dirksen Senate Office Building, Hon. Birch Bayh (chairman of the subcommittee) presiding.

Present: Senators Bayh, Heflin, Thurmond, Hatch, and Simpson.

Staff Present, Subcommittee on the Constitution: Nels Ackerson, chief counsel and executive director; Mary K. Jolly, staff director; Kevin O. Faley, general counsel; Linda Rogers-Kingsbury, chief clerk; Louise Milone, legislative assistant; Christie Johnson, assistant clerk; Steve Holley, staff assistant; Tom Parry, minority chief counsel; Steve Markman, minority counsel; Jim Lockemy, counsel to Senator Thurmond; and Charles Wood, counsel to Senator Simpson.

Senator HEFLIN. Senator Bayh, chairman of this subcommittee, is unavoidably detained and will be here shortly, but I will go ahead. I will not make any opening statement. I have a statement that I want to make, but I will submit it after Senator Bayh's opening statement.

(The opening statements submitted by members of the subcommittee follow:)


Senator Bayh. Today the Subcommittee on the Constitution resumes its series of hearings on the various proposals introduced in the Senate that seek to amend the Constitution to require a balanced Federal budget.

The issues of excess Federal spending and waste are of increasing concern to me, as well as many of our citizens. Over the past years, we have seen our spending increase and our debt grow at a steady and, at times, alarming rate. We have endured a seemingly endless rise in inflation-a cruel and harsh phenomenon which can eat away the fruits of a lifetime of work and turn the simple practice of saving money into apparent economic foolishness.

At times, it seems that our problems with inflation, energy, spending, shrinking resources, and growing government are about to overwhelm us—that somehow we have lost our ability to attack these problems rationally and plan for constructive change.

I for one do not believe that these problems are beyond solution. I believe that by working together, rather than by seeking to blame, by planning carefully rather than reacting in haste, and by forging real solutions to meet our needs, we can succeed in overcoming the challenges which confront us.

I believe that we can move to gain greater control over Federal spending.

We can and must move to approach budgetary decisions in a responsible manner.

We must realize that simply because a program may be good or desirable, it is not always achievable in an era of tight budgets and limited resources.

The purpose of these hearings is to determine if the best way of assuring greater control over Government spending is a balanced budget amendment to 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 spelling books for grade school students and nuclear aircraft carriers for national defense. Federal spending affects, for good or ill, our mortgage rates, transportation, energy, health, environment, and learning. It influences our food prices in the supermarket as well as the stock prices on Wall Street. 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 wellbeing of this country can be solved by the quick fix and the easy cire.

Those who say that we can end inflation by simply reducing Federal deficits are either misleading us, or are misled themselves.

Those who would have us believe that achieving a balanced budget will not require hard, and at times painful choices, are not leveling with the American people.

There are no panaceas, no magic solutions to these difficult problems.

Although the problems are complex, I believe we must begin to seek the answers. We must explore questions such as the economic and social impact of a balanced budget, the constitutional enforcement problems surrounding such an amendment, whether recent statutory measures adopted by the Congress in the budgetary process would reduce the need for drastic constitutional action, and whether such an amendment can provide the fiscal discipline it seeks at the same time it allows for the budgetary flexibility necessary to meet recessions.

In closing, I would like to again stress 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.

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.



Senator Thurmond. Mr. Chairman, I am pleased that you have scheduled this second day of hearings on proposals for a constitutional amendment to require a balanced Federal budget. My support for such an amendment has been long and determined with the hope that someday the Senate will have an opportunity to act on this measure. Enormous Federal spending and rising deficits have understandably alarmed the American people. They deserve action by the Senate on what many feel is the answer to this problem.

As you know, Mr. Chairman, a number of Senators have formed an informal caucus to achieve the goal of having a proposed amendment reported to the Senate Calendar. We hope to have this accomplished by the Independence Day recess. The membership of this bipartisan caucus includes 5 of the 7 members of this subcommittee as well as 8 of the 17 members of the full Judiciary Committee. With such support, it is clear that deliberate action is warranted on this important proposal.

I understand the problem, Mr. Chairman, that with so many different proposals, it will be difficult to center on just one for subcommittee consideration. However, the caucus is presently working to remedy this problem by centering its support on one specific proposal. This will be accomplished soon, giving the subcommittee the opportunity to art on what all proponents agree is the best amendment.

The previous day of hearings and this one today are valuable to provide a forum to discuss the concept of a balanced budget and hear

a proponents describe their particular amendments. Therefore, I hope that we can continue to schedule these hearings until one specific proposal can be agreed upon. Knowing you, Mr. Chairman, and your determination to keep this subcommittee active on important issues, I am confident that this will be the case.

Thank you, Mr. Chairman.



Senator Dole. Mr. Chairman, I commend you for moving forward with hearings on the pressing need for a constitutional amendment to balance the Federal budget. I had the pleasure of testifying before this subcommittee at the first round of hearings on this subject held on March 12, 1979. Since that time there has been growing Senate interest in promptly completing subcommittee action on the various balanced-budget proposals. Indeed, a substantial group of Senators, including myself, have been regularly meeting in an informal caucus to promote action on a balanced-budget amendment.

Mr. Chairman, the constituent mail that I have received overwhelmingly favors adoption of a balanced budget amendment. This mail is reflective of the broad sentiment of the American people as revealed by numerous public opinion polls. I believe the American people are right. A constitutional amendment to balance the budget offers the only realistic prospect for restoring fiscal responsibility to Washington. Accordingly, on the first day of this Congress, I introduced Senate Joint Resolution 5, a proposed constitutional amendment that is a three-pronged attack on the fiscal problems facing this Nation. Senate Joint Resolution 5 not only requires a balanced budget, but it also directly limits Federal spending and taxation. The proposal is drafted to provide the flexibility needed to manage the economy and to respond to any financial or political crisis, yet it still requires reasonable fiscal restraint.

I strongly disagree with those who label a constitutional amendment to balance the budget as a quick-fix or gimmick. Proposed amendments, such as Senate Joint Resolution 5, represent a fundamental philosophical shift toward greater_fiscal discipline and toward a smaller and necessary more efficient Federal Government. If Congress fails to heed the message now being delivered by the States and the American people by moving forward on a reasonable measure, such as Senate Joint Resolution 5, the States will have no choice but to impose their own solution to the constitutional amendment procedure.



Senator Simpson. Mr. Chairman, before we proceed with the hearing, I should like to make a few comments on the critical need for some form of constitutional restraint on the fiscal behavior of the Federal Government.

I believe that the first thing we must recognize is the will of the American people. We should all, regardless of our personal views on the need for a balanced budget constitutional amendment, accept and seek to understand the fact that, at the present time, the people of this Nation are crying out for such an amendment.

Since I am one of the new boys on the block, I may notice it more than most, but I am sensing that it is quite easy to lose touch with the real America "way out there" beyond Washington. It is easy to be overwhelmed by the metropolitan media and the currently fashionable view of what the "responsible” position is on any particular

I urge my colleagues not to underestimate the strength of public opinion in this area. It would be a serious misreading of the public mood to assume that this issue will simply "go away.”

Tax and spending limitation initiatives approved by voters in 13 States in November 1978, together with those approved earlier in 1978 in Tennessee and California, represent the single greatest effort to control Government fiscal power in the Nation's history. Furthermore, 30 States have now applied to Congress for a Constitutional Convention in order to draft an amendment requiring a balanced Federal budcret.

Soon after the passage of proposition 13, a State senator in Oregon stated:

The first bullet has hit local governments and the second bullet may hit State Government. But the Federal Government is the ultimate target and the third bullet is already on its way to Washington, D.C.

What should the overwhelming public consensus on this issue mean to us as Members of Congress?

I think we should take it very seriously. We are elected to represent the best interests of our constituents-yet the degree of public support for a balanced budget amendment is evidence of a major dissatisfaction with the Federal Government and with our performance. Our constituents seem convinced that we in Congress are not representing their best interest.

We should analyze the public support for such an amendment in order to discover what problems are regarded by most Americans as being so great that a constitutional amendment is needed. We may or may not agree with any proposed solution to such a problem but we cannot ignore the dissatisfaction that the people feel.

The proper response is not hostility or defensiveness, such as that which some colleagues have been venting upon State legislatures who have applied for a Constitutional Convention, even to the extent of threatening to withhold “Federal” funds. Those who make such threats apparently forget that such Federal funds come from and belong to the people, not Congress. Spending must be reduced-with or without a balanced budget amendment-and the cuts should come from programs that are the least effective in promoting the public good.

I believe that the proper attitude is a problem-solving attitude. Let us ask: What national problems lead the people to support such an amendment and what are the best solutions to those problems?

I believe that two major concerns lie at the base of the support for a balanced budget amendment: One, inflation; and two, the excessive size of the Federal Government.

I believe that inflation-a rise in prices across the entire economyis caused largely by deficit spending of the Federal Government and the pressure this kind of spending places on the Federal Reserve Board to expand the money supply. A balanced budget amendment could eliminate this pressure.

The American people may not necessarily hold that clear a view of the exact relationship between deficit spending and inflation, but they deeply feel that there is such a link. Most people realize that they must live within their means. Their borrowings involve spreading their own payments over time. They do not want to pass on debts to their children. In their daily experience only irresponsible persons

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