Statement of
                     Senator Larry E. Craig
                         on S.J.Res. 41
                to the Balanced Budget Amendment
                          March 1, 1994


     Mr. President, I rise in support of S.J.Res. 41, the
bipartisan, bicameral, consensus Balanced Budget Amendment to the
Constitution.

     I want to begin by commending the leadership on this issue of
the Chairman of the Judiciary Subcommittee on the Constitution, the
Senior Senator from Illinois [Mr. Simon].  He has been determined,
hardworking, and thorough.  The Ranking Republican Member of the
Judiciary Committee [Senator Hatch of Utah], the Former Ranking
Member [Senator Thurmond of South Carolina], and the Senator from
Arizona [Senator DeConcini] all have been leaders in this movement
for many years.  They deserve recognition and appreciation.

      This is the Vote That Counts; Do We Trust the People?

     We now have one Balanced Budget Amendment before us.  No
matter how any of my colleagues may have voted on the Reid
amendment earlier, your constituents will understand, and I know
you will understand:

     Vote no, and you kill the only chance for an amendment, here
and now.

     Vote yes, and you will begin one of the great debates of our
age.  This amendment will go to the House of Representatives, and
from there to every state capital.  That's what this vote is
really about -- engaging the American people in the most sweeping
public debate about the appropriate size, scope, and role of the
federal government since the original Bill of Rights was sent to
the states by the First Congress.

     The question is clear:  Do we trust the people with that
debate?  This Senator does.  That's why we have this process of
amending the Constitution -- because the Constitution is the
people's law, not the government's law, and because the people
have a right to take part in such a momentous debate.

            Fundamental Rights, Limits on Government

     Before I start responding to points made in debate over the
last few days, I want to refocus us on why we are here
considering this amendment, in the first place.


     A constitution is a document that enumerates and limits the
powers of the government to protect the basic rights of the
people.  Within that framework, it sets forth just enough
procedures to safeguard its essential operations.  It deals with
the most fundamental responsibilities of the government and the
broadest principles of governance.

     Our Balanced Budget Amendment, S.J.Res. 41, fits squarely
within that constitutional tradition.

     The case for the Balanced Budget Amendment can be summed up
as follows:

     The ability of the federal government to borrow money from
     future generations involves decisions of such magnitude that
     they should not be left to the judgements of transient
     majorities.

     The right at stake is the right of the people -- today and
in future generations -- to be protected from the burdens and
harms created when a profligate government amasses an intolerable
debt.

     The Framers of the Constitution recognized that fundamental
right.  I return once more to the words of Thomas Jefferson, who
explicitly elevated balanced budgets to this level of morality
and fundamental rights when he said:

     "The question whether one generation has the right to bind
     another by the deficit it imposes is a question of such
     consequence as to place it among the fundamental principles
     of government.  We should consider ourselves unauthorized to
     saddle posterity with our debts, and morally bound to pay
     them ourselves."

     Woodrow Wilson said, "Money being spent without new taxation
... is as bad as taxation without representation."

     Mr. President, deficit spending is taxation without
representation.  Americans are told that deficits are Uncle Sam's
way of giving them a free lunch, providing $1.18 worth of
government for just $1.00 in taxes.  In reality, taking gross
interest into account, the government has to spend $1.19 for
every $1.00 of benefits, goods, services, and overhead in the
budget.


       Economic, Intergenerational Harms of Deficits, Debt

     Deficits are really the cruellest tax of all, since they
never stop taking the taxpayers' money. Americans are paying now,
with a sluggish economy, for the government's past addiction to
debt.  According to the Federal Reserve Bank of New York, the
deficits of the 1980s already have depressed our standard of
living by 5%.  Unless things change, the next generation will pay
even more dearly.

     In 1992, the nonpartisan General Accounting Office issued
its report, Budget Policy:  Prompt Action Necessary to Avert
Long-Term Damage to the Economy.  At that time, GAO projected
that failure to take action on the deficit and the growing debt
would produce a stagnant -- even slightly declining -- standard
of living for Americans in the year 2020.  In contrast, GAO said
that simply balancing the federal budget by 2001, and keeping it
balanced, would raise our children's standard of living by 36%.

     GAO and the Congressional Budget Office now project lower
deficits, as a result of their scoring of last year's budget
plan.  However, the intermediate- and long-term deficit outlook
has done no better than decline from cataclysmic to intolerable.

     The current CBO baseline looks a great deal like the
"muddling through" scenario in GAO's report, in which the deficit
is held to 3% of Gross Domestic Product.  CBO projects deficits
declining some -- to $166 BILLION in FY 1996.  Then they shoot
back up.

     Under this "muddling through" scenario, our children's
standard of living in 2020 would be 7% lower and the federal debt
would be 3 times larger than if the budget is balanced by 2001.

     Our national economic policy should not be one of "muddling
through."

     Even that scenario is based on somewhat optimistic
assumptions.

     Interest rates are now at a 30-year low.  If they bounce
back upward just a little, the cost of interest payments on the
debt will explode.  Also, CBO does not include any possibility of
a recession in its next 10 years of projections.  However, the
average length of postwar economic expansions has been 14 months.

We are currently in the 11th month of this expansion.

     So, we must keep in mind that small changes for the worse in
our economic picture over the next few years will make the deficit
picture far worse.

     The President's own FY 1995 Budget, in its Analytical
Perspectives volume, projects that future generations will pay as
much as 82% of their lifetime incomes in taxes, under the current
policies of borrow-and-spend.

     Today, federal budget deficits are the single biggest threat to
our economic security.  The federal debt now totals $4.5 trillion,
or about $18,000 for every man, woman, and child in America, and is
growing.




     As deficits grow, as the national debt mounts, so do the
interest payments made to service that debt.  Besides crowding
out other fiscal priorities, these amount to a highly regressive
transfer of wealth.  At least 17 percent of these payments go
overseas.

     In fact, interest payments to wealthy foreigners make up the
largest foreign aid program in history.  According to the
President's Budget, in 1993, the U.S. Government sent $41 BILLION
overseas in interest payments.  That's almost exactly twice as much
as all spending on actual international programs, including foreign
aid and operating our embassies abroad, which totalled $20.6
BILLION.

     Annual gross interest on the debt now runs about $300 billion,
making it now the second largest item of federal spending, and equal
to almost 60% of all personal income taxes.

     In fact, if no federal debt ever had been accumulated in the
first place, the government would run a $286 billion surplus over
the 1995-1999 period.

                    The Framers' Assumptions

     The framers thought that the limited size and enumerated powers
of government, the limits on the money supply created by a gold
standard, the moral imperative of the "unwritten constitution," and
the House's exclusive power to originate bills raising revenue all
would protect this right.  Jefferson would have preferred to put
this protection in the Constitution.  But others at the time viewed
the idea that a restraint on indebtedness would be needed as being
beyond belief.

     Times have changed, as have the nature of government, monetary
policy, and politics.  The original constraints that protected the
people from a profligate government, all of which had
"constitutional" status, have all but dissolved.  It's now about 60
years past time to replace them.

                         Political Will

     Critics of the Balanced Budget Amendment argue that all we need
is the political will, the leadership to balance the budget.

That argument ignores the reality that the way the federal
government makes its economic and political decisions has changed
fundamentally over the last two generations.

     The system is broken.  The government has spent more than it
has taken in for 55 of the last 63 years.  The budget was last
balanced in 1969, and in 1960 before that.  We are not talking
here about some short-term failure of will that was cured with
the last election or will be cured with the next one.


     The impetus to borrow and spend has become a structural one
in our system of government.  It is a constitution-class crisis
that demands a constitution-class solution.


           Not Narrow Policy, but Perfecting Democracy

     The Balanced Budget is not  "narrow" economic or fiscal
policy.  It is a structural, systemic change that would help
perfect representative democracy.

     Over the last two generations, the political and budget
processes have evolved in such a way that virtually all of the
political rewards are for spending more and borrowing more.
Narrow, highly organized, interest groups mobilize to reward
spending increases for specific constituencies.  The more
general, public interest in restraining the size and fiscal
appetite of government has been put at a systematic disadvantage.

     The only way to put the general public interest back on a level
playing field with the special interests is to make it harder to
borrow and spend.

     That's what our amendment does.  For the first time, it
creates accountability by requiring that deficits occur only when
Members of Congress cast an identifiable vote to run a deficit.

     By providing for accountability and by restoring the general
public interest to a stronger representative voice, our amendment
actually perfects our democratic process.

     The essence of this reform is that we finally restore the
principle that the government should grow no larger than the people
are willing to pay for and we should pay for all the government we
demand.

     A new public opinion survey, just taken, is consistent with all
past polls.  This Penn + Schoen survey found that 67% of Americans
favor our amendment, while 18% oppose.  That's almost a 4-to-1
margin.

     When asked, How likely would you be to support a candidate
for Congress who supports a balanced budget amendment, registered
voters responded positively by 72% to 13% -- more than a 5-to-1
margin.

     It's often said that Congress underestimates the wisdom of
the people.  Well, the people have spoken once again, and it's
time for Senators to realize that, today, as is usually the case,
good policy is good politics.  The American people understand the
Balanced Budget Amendment, they want Congress to pass it, and
they are right.

     A few days ago, the distinguished Majority Leader questioned
whether putting a fiscal year 2001 effective date in the
amendment was designed to put it outside the terms of service of
many of the amendment's supporters.  On the contrary, Senators
who vote YES today are more likely, in this Senator's estimation,
to be still serving in the Senate when its time to follow through
on the heavy lifting that our amendment would require.

                          Majority Rule

     One of the curious objections raised against the Balanced
Budget Amendment is that it would threaten majority rule.

     Those that dwell on the difficulty of getting 3/5 majorities
to unbalance the budget or raise the debt limit are missing the
point:  They are still thinking, "What do we need to do in order
to keep deficit spending?"

     That's why we put super-majorities in the amendment -- not
just to make it harder to deficit spend and increase the debt,
but to deter Congress from deficit spending in all but legitimate
and extraordinary circumstances.  Under our amendment, when you
balance the budget, you don't have to worry about mustering a
super-majority.

     Such a requirement is consistent with other provisions in
the Constitution.  Freedom of speech is protected by a super-
majority requirement.  So is freedom of religion.  So is the
right to keep and bear arms and every other right in the
Constitution.

     Because it takes super-majorities to amend the Constitution,
every right protected in the Constitution by limiting the power
of government is protected by super-majorities.

     In addition, as has been noted by both sides in this debate,
specific super-majorities are written into several procedures in
the Constitution, including treaty ratification and overriding
vetoes.

     In our amendment, we create procedural restraints on the
federal government to protect the right of the people to be free
from excessive government debt.  We use 60% super-majorities
instead of 2/3 or absolute prohibitions because we foresee that
the process will need to be flexible on occasion.

     The Framers wanted to protect majority rule for the transaction
of most of the government's business.  But sometimes, to protect
fundamental rights or the integrity of specific processes, they
employed super-majority requirements to protect against, in the
words of the Federalist Papers, a "tyranny of the majority."


     Let's look at the will of the majority from one more angle.

     Two-thirds to 3/4 of the American people want the Balanced
Budget Amendment.  Clear majorities of Congress want it.  If it
doesn't pass today, if it doesn't go the American people for a
full public debate, it will be because a minority has gridlocked
it here.

                       Disaster Assistance

     Some are concerned about whether requiring a 3/5 vote to
deficit spend would thwart efforts to deal with natural disasters.
My staff and Senator DeConcini's staff did some research in this
area.  From 1978-1993, supplemental disaster appropriations topped
$7 BILLION in only one year, 1992.  We generally are talking about a
very small portion of the federal budget.

     As Senator Simon and others have suggested, creating a small
disaster revolving fund, or for that matter, just planning to run
small surpluses, would be sufficient to meet such needs.

     On the other hand, Congress also has a history of dealing
promptly and compassionately in such situations.  Only one time over
the last 15 years did a disaster bill fail to clear either body with
less than a 60% majority.  That was in 1992, in the House, amid much
contention over the Budget Enforcement Act firewalls, the Balanced
Budget Amendment and other issues.  And that bill fell only one vote
short of 60%.

     Congress is not going to turn its back on natural disaster
victims under this amendment.  To suggest it will is to ignore
reality and history.

                      Separation of Powers

     Perhaps the most curious concern I have heard raised about
the Simon-Hatch-Craig amendment is that it would transfer powers
from the Legislative Branch to the Executive or the Courts.

     Let's look at the amendment.  That doesn't occur in Section
6, which begins with the words, "The Congress shall enforce and
implement this article ...."

     This transfer doesn't appear later in Section 6, which
recognizes the need of Congress to use estimates in implementing
legislation, obviously foreclosing some of the more inventive
scenarios that might tempt Executive or Court action.

     It certainly doesn't appear in the clarifying language that
the amendment's authors have added to Section 6 to make sure that
no one thinks the courts can raise taxes or construct equitable
remedies.

     There's no line item veto in here.  There's no delegation of
Congress' legislative power, implied or explicit, to anyone else.

     In the same way that the First Amendment begins with the
words, "Congress shall make no law ...," this amendment restricts
the power of the entire government by making it harder to enact
something into law.

     The Balanced Budget Amendment does not change in any way the
balance of power among the branches of government.  It is
absolutely consistent with the spirit, the style, and the
operations of the rest of the Constitution.

       Doomsday Scenarios for Critical Programs;  Defense

     A couple weeks ago, the Administration and other groups did a
disservice to serious public debate by releasing so-called "studies"
that they tried to make look legitimate by attaching tables of
numbers.

     In reality, they were scare tactics, using dubious assumptions,
and filled with manufactured numbers.

     I ask unanimous consent to insert into the Record a more
complete critique of such alarmist attacks that several of us
circulated previously among our colleagues.  I will address them
here only briefly, and focus on one program.

     Such "studies" relied on sometimes questionable, sometimes
sound economic assumptions.  But in every case, they did not look
to the long-range benefits of balanced budgets.  And in every
case, they assumed a mindless, across-the-board, meat-ax approach
to budget changes.

     One of the chief benefits of the Balanced Budget Amendment
is that it will make Congress and the President set priorities.
You don't have to set priorities when you don't have a credit
limit.  In an effort to scare as many people as possible, and
attract as much attention as possible, these studies, including
one issued by the Treasury Department, imply that the President
and Congress have no priorities and would not select or change
priorities under the amendment.

     One of the more disingenuous attacks has been, ostensibly,
on behalf of the defense budget.  I find it especially curious,
coming from an Administration and a host of special interest
groups that have shown every inclination to dismantle the Defense
Department.

     To this Senator, what their arguments really say is, these
opponents are afraid that the amendment will work and that, when
the government must set priorities, the American people may not
agree with their priorities.

     I want to note once again a letter I received earlier today
from former Secretary of Defense Dick Cheney.  He endorses the
Balanced Budget Amendment, as he has for many years.  He doubts
that there would be unwise cuts in defense because, he notes,
"Obviously, ... Congress will still be free to set priorities.
And clearly providing for our national security must continue to
be an urgent priority."

     Suggesting that our national security could be imperilled by
the Balanced Budget Amendment suggests two assumptions:  (1) That
defense would be threatened by balanced budgets themselves, not
this amendment;  and (2) That representative democracy doesn't
work and that, once the government is forced to spend within its
means, the people are willing to sacrifice their national self-
defense in favor of less wise priorities.

     I reject both of those assumptions.  Balanced budgets will
produce a stronger economy, better able to sustain its defense
capabilities while meeting its other needs.  And I am confident
that the people will demand, and willing to risk that Congress
will deliver, an adequate defense budget.

     I repeat with respect to defense, as we have said about
other programs, that growing levels of debt and interest payments
represent a bigger threat than anything else to our true national
priorities.

                  Thomas Jefferson -- Revisited

     I turn one more time to the words and works of Thomas
Jefferson.

     Jefferson balanced the budget in all 8 of his years in the
White House.  He reduced the national debt by half during his
first term and set policies in motion that resulted in a national
debt of a mere $38,000 -- that's 38 thousand -- in 1834 and 1835.

     Jefferson's Louisiana Purchase has been tossed about as an
example of how going into debt can be beneficial.  But let's look
at what we can learn from his experience.

     I ask unanimous consent to include in the Record a copy of
An Economic Analysis of the Jefferson Administration and the
Louisiana Purchase, prepared for me by Dr. William Duncan, PhD.,
of the National Taxpayers Union Foundation.  To summarize his
findings:

     It's true that the Louisiana Purchase was twice the size of
the federal budget in 1803, as noted by the Senator from West
Virginia [Mr. Byrd].  But the federal budget was only 1.63% of
gross national product at the time.

     Relative to the size of the gross domestic product, the
Louisiana Purchase would translate into just under $225 BILLION
in today's dollars.

     $225 BILLION.  If that number sounds familiar, it is probably
because the federal deficit this year is projected to be $223
BILLION.

     Jefferson and his successors sold the land acquired from France
and made a profit for the federal government.

     Every year the federal government is borrowing the equivalent
of a Louisiana Purchase.  And what are we getting for it?  Nothing
except a higher bill for interest costs and a legacy of crushing
debt to leave behind for our children.

                    Other Issues, Conclusion

     There are many other issues relating to this amendment, too
numerous to discuss in the time allotted.  To address those as a
matter of legislative history, I ask unanimous consent to insert
various other materials in the Record.

     As for those additional facets of the debate, I want to note
that, with our 3,000-plus pages of legislative history over the
last 14 years, every question has been answered, every objection
has been dealt with.

     This amendment has a history, it has a pedigree.  It is the
bipartisan, bicameral, consensus that has been looked at by
constitutional scholars, economists, public interest groups, and
members of both bodies.

     This is our one chance to vote, up or down, to send a balanced
budget amendment to the House and then to the people.

     I'll turn one last time to the words of Thomas Jefferson, when
he wrote, in a 1798 letter to John Taylor:

          I wish it were possible to obtain a single amendment to
     our constitution.  I would be willing to depend on that alone
     for the reduction of the administration of our government to
     the genuine principles of its constitution;  I mean an
     additional article, taking from the federal government the
     power of borrowing.

     And again, in 1798, he wrote:

          If there is one omission I fear in the document called
     the Constitution, it is that we did not restrict the power
     of government to borrow money.



     Just two years ago, 38 states ratified the 27th Amendment,
concerning variations in Congressional pay, as proposed by James
Madison 200 years ago.

     It just goes to prove that occasionally it's time to turn to
a new idea, and sometimes the answer is to turn to a classic.

     Today, Mr. President, my colleagues, it's time to add Mr.
Jefferson's amendment to the Constitution, right behind that of
his friend, Mr. Madison.  We could hardly be in better company,
we could hardly seek wiser guidance, in contemplating this
addition to our Constitution.