From: pjm@anegada.sps.mot.com (Patrick J. McGuinness)
Subject: Re: Congress and the balaced budget scam
Organization: Motorola Inc., Austin TX
Date: Mon, 27 Jul 1992 22:49:02 GMT

In article nelson_p@apollo.hp.com (Peter Nelson) writes:
>pjm@anegada.sps.mot.com (Patrick J. McGuinness) writes:
>>>nelson_p@apollo.hp.com (Peter Nelson):
>>>>    More ca-ca.   It's apples and oranges.   A vote for a balanced budget
>>>>    amendment is a vote for something abstract.   A vote for a cutting a 
>>>>    spending program is a vote for something quite real and concrete.  
>>>>    Only a moron would think these are comparable.  
>>
>>Yes, they are different.  But it is wrong to say a balanced budget amendment
>>is "abstract". The Bill of Rights is "abstract" is you want to look at it
>>a certain way.  But it has a very real and concrete influence on
>>Governmental behavior. 
>
>  What I mean is that a balanced budget is a mom & apple pie issue -- 
>  I have *never* heard a politician oppose it *in principle*.

Well, not this year. But if you go back to the Walter Heller era and salad
days of Keynesianism, say mid-1960's to the mid-1970's, some people
*did* support budget deficits as a growth-improvement device.
In this year, we have 150 House Reps that voted against the
balanced budget amendment. Their reasons included the belief that
balancing the budget would do nasty things to Governmental largesse,
and would hurt recipients of Government aid and entitlements.
To me, that indicates that the priority of balancing the
budget was lower than other priorities, and so was hardly a sacred
principle to them.
Their unwillingness to voice opposition in principle to balancing
budgets can be laid to either common sense or political sail-trimming
in the face of 80% support for BBA. 

> But 
>  in practice the actual steps that would have to be taken to balance
>  the budget such as huge spending cuts or massive tax increases along
>  with some guarantee that these increases could only go to deficit
>  reduction, were/are politically impossible.

I would dispute the "huge and massive" assertion.
Even with the $330 billion deficit (or $380 billion if the Congress had passed
S&L bailout money), we have what is essentially a budget that is,
long-term, about 20% or $200 billion out of balance.
The deficit will fall in the coming years, even if we continue to
increase spending at our current (high) rates.

Now, if we simply freeze overall Federal spending, we can come much closer
to balance by 1996, saving about $100 billion.
And if we add in reasonable growth assumptions, we can get increased
revenue from the growing economy.

With medium growth and some tax increases (about $100 billion),
and 3% (real) reduction in overall Federal spending per year,
and you can balance it in the next 4 years.

With high-growth, you don't need to raise taxes at all:
Tax revenue increases through economic growth, and capped spending
can bring about a balanced budget within 5 to 6 years.

Unless 3% reduction in overall spending per year is considered
"massive cuts", there is no need for "massive" or "huge" tax
increases or spending cuts.  (Well, in looking back in previous
budget wars, maybe it is considered so to some groups.)

>  Moreover there was genuine 
>  concern about what effects such steps would have on the national
>  economy.  A few weeks before the vote a large group of economists
>  including six (?) Nobel laureates wrote an open letter opposing the 
>  BBA.  

>
>>The Balanced Budget Amendment, because it would be permanent and beyond
>>simple legislative override, would have a powerful and concrete impact
>>on the budget process. Consider this: if we had a balanced budget amendment
>>over the last 30 years, would we have had 29 unbalanced budgets?
>>Would we have been 1 for 30?
>
>  But note that putting in a BBA *after* you've already run up a $400
>  billion deficit is different (politically) from doing so beforehand,
>  because the former doesn't require massive austerity and sacrifice.

Again, "massive" austerity is not needed. Just zero/slightly negative
changes in spending.
Unless, again, you are talking austerity in political terms and
not economic terms. To third-worlders, "austerity" means a gallon
of gasoline costs more than your monthly take-home pay. To U.S.
citizens, apparently, it means 10 cents more at the gas pump. 

>  Nobody wants *their* ox gored (I'm referring to voters, not just
>  politicians).   

>
>  What scared people about the BBA was/is the uncertainty of what would
>  be the concrete steps taken as a result of it.

No, it was the *certainty* that those steps would be taken that scared
them. :-)

>The only politically
>  possible way for a BBA to pass(not just the House, but the states) would
>  be to have a bipartisan agreement BEFOREHAND on the necessary spending
>  cuts/tax increases; THEN vote on a BBA as a kind of "enabling" or
>  "enforcing" measure.

I disagree. First the armistice and *then* the peace treaty to clean up
the details.  If you spend your time quibbling over how to get from
here to there, you'll never get off the dime, as we have seen for the
last several years.
Any balanced budget strategy has to be multi-year anyway, but these
budget "summits" and agreements tend to fray within months.
Only Gramm-Rudman had much effect and even that's dead now.
Pass the BBA to take effect within 5 years, and let the politicians
come up with the plan to get there in the time required.
If they can, then *we* can.
--------
P.McGuinness