The Balanced Budget Amendment

...Simply put, the government budget mixes capital outlays and current expenditures: A private accountant would be guilty of heinous misrepresentation in performing the same legerdemain in private enterprise...

...What is new is that the vehemence has become a vocal, organized growth industry...

...During his first months in office FDR did try to cut expenditures and induce government economies in a BB Sidney Weintraub, professor of economics at the University of Pennsylvania, is the author of Capitalism's Unemployment and Inflation Crisis and Keynes, Keynesians, and Monetarists...

...It is possible to revere Adam Smith's work as a great book with a grand theme...

...Franklin D. Roosevelt, in 1932, on the road to victory in the Great Depression signally indicted Herbert Hoover for failing to balance the budget...

...Great deficits may perhaps be avoided...

...Grumbling over taxes is not exactly novel in our history...

...Last year these amounted to about $80 billion...

...Why does Governor Brown sniff a more universal passion for the BB dogma...

...The Budget Message still goes up in January, but now the new budget becomes operational in October...

...Cutting government expenditures by $10 billion, $20 billion, $30 billion—assuming it could be done—would be a blip in a GNP of $2.5 trillion, or a blot compared to an annual hike in the money wage-salary bill of $140 billion for the same work...

...Al Smith, an implacable Roosevelt foe, exuded the doctrine as well...

...Inflation must result...

...So the BB drive is hitched to a cut expenditures chariot, with its goal set to eliminate the horror tales about government waste, handouts, frivolous spending...

...Economists backing the "rule" are of the same persuasion as those who advise that the money supply be increased by about 3 per cent per annum, distrusting brains in preferring even a crude mechanical guidance system...

...Swedish economists, J.M...

...that will depend on what our descendants think the proper functions of government to be...

...Likewise, it is possible to assemble econometri-cians to predict—oops, "project"—revenues, but these projections do not guarantee exact future dollars at the tax window...

...it was the gold standard era...

...Until 1977 (in modern times) the Budget Message was submitted by the President to Congress in January, for the period beginning July 1. Congress added or subtracted—mostly added?appropriations and acted according to its collective wisdom and the pressures on taxes...

...Of course, although a balanced budget is something of a mirage, it is undoubtedly possible to realize a greater balance than in the past—if we deem this desirable...

...Why, then, the accelerated fervor for a BB amendment...

...In any case, a precise balanced budget is unobtainable, and a constitutional mandate will not change that fact...

...Government spending, as the popular image is drawn, signifies higher taxes...

...Of course, in those days recessions were not gestated at the Federal Reserve...

...The same would hold true if Congress had to abide the rule...

...I leave it to others to determine whether his call for a Constitutional Convention, with its risk of a runaway attack on the nation's foundations, is the best medium for such an amendment...

...Even if the President was to pronounce a BB, the balance would have to involve fakery...

...To his discredit, Governor Brown has been silent on this aspect of Federal expenditures, though he is well aware that California has averted disaster under Proposition 13 by virtue of handy State funds...

...Can a balanced budget block inflation...

...Thus goes the perfunctory political debate on economic phenomena in which a former professional quarterback, not especially esteemed in that sport, instantly becomes a vice-presidential aspirant by virtue of advocating something so remarkably original as a whopping tax cut...

...THAT OLD TIME RELIGION The Balanced Budget Amendment BY SIDNEY WEINTRAUB It is easy to understand why the self-interest mossbacks call for a constitutional amendment to compel the Federal government to balance its budget annually...

...This, I surmise, is not bound to change with a constitutional stroke...

...In the inflation environment of the last 11 years, where prices have more than doubled, the tax bite comes down harder...

...Keynes, and a host of others, promulgated this BB version...

...Detailed, imperfect mechanics of this nature seem ominous as constitutional binds...

...For the more sophisticated analysts, government deficits require borrowing, with much of it involving loans from banks, thereby increasing the money supply?printing press" money, a strange reproach, as if money could circulate without being printed...

...Balanced budgeteers have occupied the polar extremity of the Republican Party that has made a lasting career out of losing elections "on principle," namely, on balancing budgets...

...So Brown and Carter have "discovered" a bygone America, and a "principle" long departed that might charitably be called that of a misguided accountant who confuses government with a corporation while myopically misallocating capital outlays to current expenses...

...Sheer hypocrisy prevails in the states advocating a Constitutional Convention to bring about a BB amendment (legal opinion differs over whether the number is 24 or 28...

...of whom Roosevelt opined that there were "too many Byrds" in Congress, parlayed the theme to a national reputation, winning the admiration of newspaper editors and political cartoonists who saw John Q. Public chained down by public debt...

...But in that particular passage he tripped over the "fallacy of composition," positing that what is true of a part must also describe the whole...

...The modern era may hold catastrophes emanating from nuclear energy, too...

...And all of it passes for enlightenment on TV's Meet the Press, etc., where somber panel "experts" respond to such drivel seriously...

...Full balance, however, can only exist-in paper plans...

...actually draws attention by "explaining" that this will enhance revenues...

...No need to cite Calvin Coolidge on the subject...

...In many of the presidential campaigns since 1940, right-wing Republicans derided their party's mildly liberal standard bearers—Wendell L. Wilkie, Thomas E. Dewey, Dwight D. Eisenhower—as "Me Too" candidates...

...Where a measure of flexibility would serve the better part df wisdom, in other words, the BB rigidity would be a humanly contrived strait jacket to forestall rational remedial action...

...I suspect that the reason is inflation...

...It is not possible for 220 million Americans to act on the same premise...

...Not least, there are possible calamitous economic downturns where the government may be hamstrung in initiating public works, or a welfare or relief program, that could alleviate matters before secondary repercussions hit while a tight constitutional clause was wending its way through amending channels...

...The President's balanced budget (BB) maxims constitute an inviolate reelection pledge that would earn the endorsement of William McKinley...

...By the late 1920s the idea of a cyclical BB was gaining favor...

...One way or another, therefore, the BB'ers see a handle on inflation, with self-interest reasoning that a limit to government spending and the resultant lower taxes would make it less ornery...

...Considering (1) the restrictive nature of the balanced budget amendment, (2) the necessary qualifications, and (3) the difference between a paper balance and a real outcome balance, some of the original intellectual sponsors have been toying with a substitute amendment to limit Federal expenditures to a growth, say, of about 3 per cent a year, roughly to match GNP growth...

...Nobody can foretell the exact pace of government outlays (despite the mad scramble to spend before the fiscal deadline, to disgorge allottments so as to earn kudos toward a renewed or enlarged appropriation...

...lightning would strike us dead if "principles" like these were violated...

...In three years the cumulative pay climb will exceed total government outlays...

...My own view has been that inflation is attributable to a doomed assault on the laws of arithmetic: We have been trying to raise money incomes by 8,10,12 per cent or more per annum, while our productivity inches up at the snail's pace of about 1 per cent...

...The message that emerges from the caper of Jerry Brown and his BB cohorts is that more dubious schemes, capable of damaging our national folkways and democracy itself, are likely to unfurl from the social tensions of inflation...

...The baby is born nine months after the announcement, often with an elephant giving birth to a rhino: What is proposed is not necessarily what Congress is disposed to approve over the intervening months...

...As for the other route to budget balance, that via raising taxes, no visible constituency for it exists...

...craze...

...but it would destroy jobs by contributing to a direct recessionary trend...

...All of us know we would be better off with lower taxes...

...If adopted, this too would make for a recession outturn as private expenditures dwindle...

...On this Governor Brown and President Carter are espousing confusion...

...Balancing the budget, ergo, would mean less government spending and lower taxes...

...But what are we to make of Governor Jerry Brown of California, who hopes to ride the sentiment to victory as the Democratic presidential candidate in 1980...

...Moreover, Representative Jack F. Kemp (R.-N.Y...

...A not uncommon conservative response to any constitutional amendment is adamant opposition, with some unctuous words against tampering with our democracy and the private enterprise system that has served us so well for 200 years...

...But if all of us tried to execute Ben Franklin's adage, and saved our full income, the economy would wither...

...Today, Republicans are calling the Democrats Me-Tooers, claiming that Carter and Brown are stealing GOP lines when they deliver the BB chani...

...The liberals, it was charged, were parroting Democratic Programs, alleging merely that they would implement them more efficiently...

...Eliminate them and the budget might show a sizeable surplus...

...Congress has been getting a bad rap on this: Its first act on the passage of an amendment, if so be our fate, should be to eliminate the grants and expedite a truce in the war between the pot and the kettle...

...The saner BB proponents have come to recognize—some belatedly—that a constitutional amendment could handcuff the Federal government in an emergency, and consequently make an exception for war...

...our country was founded on the protest...

...revenues can never be equal to the outlays, except by some fluke...

...At bottom was a search for a tactic to iron out business fluctuations...

...The Federal budget is unbalanced in large part because of Federal grants to states and municipalities...

...Raymond Moley, an original Roosevelt Brain Truster, broke with the President over the spending issue...

...Although it is less mischievous than the BB cult's reliance on false accounting, it is in nature antidemocratic...

...In the future we may want government to grow smaller or larger...

...And what of Jimmy Carter, whose position—except on the amendment—fundamentally parallels Brown's...

...Why produce if nobody wants to buy any goods...

...Yet language to shade off from a Cool to a Cold to a Hot war becomes hard to spell out, and other emergencies are also conceivable—dire floods, earthquakes, plagues, to conjure past evils...

...Until about 1920 an annual BB was taken as an article of faith...

...And any discussion of money incomes must necessarily emphasize wage and salary incomes, which comprise 75 per cent of the aggregate...

...What is true for the family need not be valid for the nation...

...It is good for an individual to increase savings...

...Since additional money means inflation, to this sophisticated group the amendment is a brake on the spiral...

...For example, one person alone can say, in a crowded bus or train, that there is room for one more...

...John W. Davis, the Democratic compromise candidate in 1924, believed in it as some kind of natural law...

...Senator Harry Byrd (D.-Va...

...That is, even conservative economists declared that government expenditure could properly rise in a recession so as to replace private expenditure, and contract in the prosperity phase...

...In other moments he is not above denouncing deficits...

...I have long expressed urgency on the inflation issue, deploring liberal opaqueness in supposing that, like street crime, it is merely a reactionary code name...

...Economic sanction for the BB religion sprang from the venerable preaching of Adam Smith, who wrote in the Wealth ofNations'm 1776: "What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom...

...Since 1929, for instance, the budget has never been balanced...

...Ultimately, this is a device to trim government down to scale...

...Budget cutting would thus not prevent a price rise...

...Liberals have been derelict in not advancing a serious program to curb the disorder...