WASHINGTON -- The House and Senate authors of the proposed balanced budget amendment to the U.S. Constitution agreed yesterday to include a requirement that three-fifths of Congress approve any increase in the public debt limit.
Sen. Paul Simon, D-Ill., accepted the debt limit provision, which previously had been included only in the House version of the amendment sponsored by Rep. Charles Stenholm, D-Tex. The agreement came as House Speaker Thomas Foley, D-Wash., repeated a warning that the provision could lead to a first-ever default on Treasury securities.
Because Congress has historically had difficulty increasing the debt limit by even a simple majority vote, Rep. Foley told reporters, the provision "could create a circumstance where we would push the country into a formal default on its obligations." He added that such a development would "raise interest rates not only on U.S. securities," but on all long-term bonds.
Rep. Stenholm and Sen. Simon said they adopted the debt limit provision to enforce the amendment's proposed requirement that receipts equal outlays unless three-fifths of Congress approves an increase in deficit spending. But the provision is receiving growing criticism from economists and politicians alike.
"The requirement of a three-fifths majority of the whole House for raising the debt limit does indeed strengthen the enforceability of the balanced budget amendment," said Charles L. Schultze, senior fellow at the Brookings Institution, in testimony before the Senate Budget Committee yesterday.
"But that strengthening comes at what someday may be a very steep price," he added. It "could cost the United States government a priceless asset -- the absolute trust of domestic and world financial markets that the credit of the United States government is sacrosanct."
Like Rep. Foley, Mr. Schultze predicted that a minority coalition in some future Congress would succeed in frustrating the majority from raising the debt limit during a recession, envisioned under the amendment. Such a scenario would force the government into default on outstanding securities due to be refunded, according to Mr. Schultze.
"Some might argue that these contingencies are unlikely to occur," Mr. Schultze said. "But a constitutional amendment is for all time. One would have to be rash, indeed, to predict that some particular constellation of forces 20, 50 or 100 years from now might not produce the outcomes I have described."
Concern about the debt limit provision was heating up despite signs that the House would pass some version of the balanced budget amendment as lawmakers began to debate the measure yesterday.
An overwhelming majority of 326 to 91 ushered in the debate, over the objections of some House leaders, and approved a rule calling for a vote today on Rep. Stenholm's amendment as well as three alternatives.
The vote indicated that only a small number of lawmakers are opposed to any constitutional amendment, congressional aides said. A two-thirds majority, or 290 votes, is needed to approve a change in the constitution.
Supporters and opponents alike say the leading proposal is Rep. Stenholm's new unified amendment, worked out overnight with Sen. Simon. Besides the debt limit provision, another major change they made in the amendment was to push back the effective date to 1998, or two years after 39 states have ratified the proposal, whichever is latest.
In another development indicating spreading support for the amendment, Rep. Steny Hoyer, D-Md., chairman of the House Democratic Caucus, announced he would vote for the Stenholm amendment if an alternative sponsored by House Majority Leader Richard Gephardt, D-Mo., fails to garner enough votes. The Gephardt version would soften the balanced budget requirement and exclude Social Security from deficit calculations.
Rep. Hoyer pointed out that because of wayward budget policies in the last decade, the only decreased items in the budget have been federal investment programs.
"The nation's security and economic well-being are at risk. The amendment is the only alternative I see to forcing the President, Congress and the American people to face this," he said. "It's a question of whether one generation has the right to bind another with" more than $4 trillion of debt."
Rep. Hoyer said any problems with the Stenholm amendment could be worked out by congressional leaders in a House-Senate conference committee. Amendment supporters have been trying to avoid such a conference by passing identical versions in both Houses.
But they concede that their chances of doing so are small, especially in the Senate where the measure can be amended easily.
Rep. Foley said early yesterday that the final outcome of the House vote, expected tonight, is too close to call. "I don't think anyone could take an oath today that they know exactly where the votes are," he said.