The drive to pass a constitutional amendment to balance the federal budget comes up for a critical vote this week, and measure had better be defeated. It's a bad idea.
We oppose the budget-balancing constitutional amendment because it will be bad for the municipal bond market.
If Congress approves the amendment, two things will happen. The federal government will continue to procrastinate for a year or two, awaiting state ratification and believing wrongly that the new proposal will somehow magically bring its revenues and spending into better balance. Incumbents will have political cover, enough to tell voters in November that they are fiscally responsible.
The federal government, meanwhile, will shove the costs of more and more programs onto the shoulders of the states, making their already strained finances even more shaky. This consequence of the budget-balance amendment will hurt the investment status of municipal bonds as swelling budget gaps make their creditworthiness deteriorate.
Proponents of the amendment are pushing full-force the pass the legislation very soon. President Bush held a televised press conference last Thursday evening, and he devoted his opening statement to the balanced budget amendment and then mentioned the amendment in answer to seven questions, even one on abortion.
The outlook apparently is close. Charles Stenholm, the Texas Democrat who is leading the effort in the House to enact the amendment, predicted on Thursday that he had the votes he needed. On Tuesday, however, Sen. Robert C. Byrd, chairman of the Senate Appropriations Committee and a man who knows how to influence and count votes, predicted that the Senate would kill the amendment.
As we've said before, we dislike what Sen. Bill Bradley of New Jersey calls "process solutions." Instead of attacking the problem itself, you attack the way the problem is solved. You don't consider ways to reduce spending or raise revenues to achieve a balanced budget; you first enact an amendment to the Constitution that requires you to do what you already have the power to do.
If Congress hides behind a budget-balance amendment when it should be working to control mushrooming entitlement programs and reduce military spending, it should be sent home, defeated in November. The amendment is a piety, a crutch, a dodge. Tell your congressman to stop procrastinating and get on with it.