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55 IRET Policy Bulletin 1 (1992)

handle is hein.taxfoundation/iretpbul0014 and id is 1 raw text is: June 10, 1992 No. 55 FOR REAL BALANCE, A BALANCED BUDGET CONSTITUTIONAL AMENDMENT SHOULD ALSO MAKE IT HARDER TO RAISE TAXES This may be the year that Congress finally passes a balanced budget amendment. The House almost approved one in 1990, and support has increased since then. This month, the House and Senate will vote on several proposed amendments. Grass-roots and Congressional sentiment for an amendment are largely born out of frustration. Although policy makers frequently condemn budget deficits, they have not managed to balance the federal budget even once in nearly a quarter century. These seemingly perpetual deficits have occurred despite official assurances in most years that deficits were on a downward path and would soon disappear. Moreover, past attempts to reform the Congressional budget process have either been ineffectual or made matters worse. For instance, although Congress and the Bush Administration promised that the 1990 budget agreement would staunch the red ink, the 1992 deficit has ballooned to almost $400 billion, largely because generous spending increases were built into the 1990 budget deal and because the deal's large tax hikes have deepened the economic slowdown. Although policy maker-s fr-equently condemin bud~get deficits, they have not managed to balance thefederal budget even once in nearl a quarter century. Although people have lost patience with the budget deficit and are extremely concerned about its effects, there is enormous confusion about exactly how the deficit harms the economy. The widely held fear that Americans are living beyond their means when the government runs a budget deficit is largely unfounded. So, too, is the position expounded at length by Democrats in the 1980s that budget deficits elevate real interest rates and choke off investment. Instead, the greatest danger of deficits may be that they conceal the true costs of government spending programs. Because government programs financed by borrowing appear to be less expensive than they really are, people Institute for IRET is a non-profit, tax exempt 501(c)3 economic policy research and educational Research organization devoted to informing the public about policies that will promote on the economic growth and efficient operation of the market economy. Economics of 1730 K Street, N.W., Suite 910 * Washington, D.C. 20006 Taxation (202) 463-1400 . Fax (202) 463-6199 e Internet www.iret.org

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