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PRIVATE GROUPS

CHASE MANHATTAN BANK

1. Richard C. Aspinwall—Vice President 2. Richard W. Everett Vice President and Former President

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AMERICAN FEDERATION OF TEACHERS, AFL-CIO,

Washington, D.C., December 11, 1979. Hon. Birch Bayi, U.S. Senate, Washington, D.C.

DEAR SENATOR Bays: The American Federation of Teachers, AFL-CIO, strongly opposes a constitutional amendment requiring a balanced federal budget. Such a proposal would violate the structure and purpose of a constitution. Such an amendment could have a potentially dangerous effect on the ability of our country to act in a crisis.

Economic policies such as a balanced federal budget or a budget in deficit are currently determined by a balancing of economic choices and consequences. A constitutional requirement for a balanced budget could prevent the incurring of a deficit in a national defense emergency. Most of the existing federal deficit was incurred through the financing of World War II. Available federal revenues would never have allowed the U.S. to raise its level of military preparedness fast enough to resist aggression and defend our constitutionally guaranteed freedoms.

Amending the constitution is generally a painstaking and permanent process once amended the process of undoing an unwise amendment could so hamstring the options available to our leaders that federal policies could again become hostage to a minority in the Congress and among the states.

Requiring a balanced budget is an economic and political action, presidents and members of Congress are accountable through their electorates. The people may agree to accept or not accept a balanced budget or a federal deficit when they elect the congress and president that proposes them.

Amending the constitution is a dangerous step that could lead to a weakening of the U.S. and the world and would not result in any additional accountability of our public officials. Such an amendment would result in economic policies that could not remedy economic problems. It is a bad idea that would work to the detriment of our economic and political stability: I ask that this letter be included in your Hearing Record. Sincerely,

GREGORY A. HUMPHREY,

Director of Legislation.

PREPARED STATEMENT OF THE AMERICAN JEWISH CONGRESS

INTRODUCTION The last year and a half has produced dozens of proposals for Constitutional amendments which would restrain the Federal government's spending. While all of them would impose on Congress and the President a formula to govern its spending, there are substantial differences in how they would accomplish this goal. The major categories of proposals include the following:

1. Balance the budget-these would require Congress to annually balance the budget. Exceptions are made for war or other national emergencies when a deficit could be approved. Such action would require approval by an extraordinary majority.

2. Expenditure limitations—these would link increases in Federal spending to the growth in the nation's economy. Some of the formulas suggested for this include provisions for considering the annual inflation rate.

3. Debt reduction—these would mandate a reduction in the national debt by a specific percentage every year. Under one proposal, the decline would be 3 percent in 1980, 4 percent in 1981 and 5 percent annually thereafter.'

4. Tax limitations—these would decrease income taxes or index them to the annual growth in inflation. One of the best known of these proposals in KempRoth, which would reduce individual income taxes by 10 percent annually for several years.

5. Review—these would require the President to submit to Congress a balanced budget proposal in any year in which he submits a budget which contains a deficit. This would enable the Congress to consider the impact of balancing the budget.

1 It must be pointed out that the implementation of this proposal would require not a balanced budget, but a budget surplus.

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