5/1/96
Dear Oregon Colleagues;
Senator Wyden has recently declared that he is undecided on the
Balanced Budget Amendment. If you would like to sign the following
letter urging him to oppose the amendment please let me know via e-mail,
phone or fax; also, please pass on this letter to any other professional
economists from Oregon who might be interested in signing.
Thanks.
Sincerely,
Eban Goodstein
Assistant Professor
e-mail: [EMAIL PROTECTED]
Ph. (503) 768-7626
(503) 697-4015
Fax: (503) 768-7611
Department of Economics
Lewis and Clark College
Portland, OR 97219
Date
Dear Senator Wyden,
We the undersigned Oregon economists hold a variety of views
regarding national economic policies. Nevertheless, we are united in
opposing enactment of a balanced budget amendment to the US Constitution.
The major defects of the prroposed balanced budget amendment are
enumerated below. We are not equally impressed by every criticism leveled
here, and some of have additional reasons for opposing such an amendment.
But we are unanimous in our conviction that such an amendment would be
contrary to the national interest.
1. Achieving the purpose of such an amendment -- i.e., avoiding
deficits -- depends on the capacity of the Congress and the
Administration to project the state of the economy more than a year in
advance. This implies an impossible degree of accuracy in forecasting.
In the recent past, the uncertainty inherent in making such projections
has given policymakers an excuse to produce budgets based on unrealistic
scenarios. Such devious procedures would clearly be encouraged by a
rigid constitutional requirement.
2. Even if economic forecasting could be done with pinpoint
accuracy, requiring balanced budgets in each fiscal year regardless of
prevailing economic circumstances is bad public policy. The federal
government, unlike state and local governments or individual households,
has a special responsibility to finance its operations in a way that
helps balance economic activity in the entire economy. When the private
economy is in recession, a constitutional requirements that would force
cuts in public spending or tax increases could worsen the economic
downturn, causing greater loss of jobs, production, and income.
3. The ensuing instability would add to investor uncertainty and
promote shorter time horizons in business planning -- the opposite of
what the nation needs.
4. The amendment would preclude the development of capital budgeting
procedures, which have been shown to be constructive tools of public
finance.
5. The amendment would give rise to inappropriate uses of government
mandates, regulations, tax breaks, and new forms of Poff-budgetH spending
designed to evade the amendment.s rigid Constitutional restrictions on
taxing and spending.
6. The amendment would make it virtually impossible for the United
States to engage in the already difficult task of coordinating our
economic policies with those of other nations. Putting the US government
in such a policy straight-jacket could have serious negative consequences
for global economic stability.
7. If the amendment were passed by Congress it would be subject to
ratification by three-quarters of the state legislators, a process which
could take several years. Such a delay would permit the Congress and the
President to evade responsibility for dealing with the federal budget
now, with the excuse that the Constitution would force a solution at some
unspecified time in the future. It would also foster an extended period
of uncertainty about the economy.
8. Passage of the amendment would involve the courts, whose function
it is to interpret the Constitution, in the setting of economic policy.
The slow, complex, and deliberate nature of the judicial process would
severely undermine the need for economic policy to be flexible and rapid
in response to changing conditions.
Frustration with the reckless fiscal policies of the last decade
is understandable. Indeed, many of the signatories to this letter have
been critics of policies that have contributed to high budget deficits
and large increases in the national debt. But the proposed balanced
budget amendment is not a solution. Indeed, it would worsen the nation.s
economic prospects. We urge you to oppose this amendment.
Signers (Organizations listed for identification only)
For more information, please contact:
Professor Eban Goodstein
Department of Economics
Lewis and Clark College
Portland, OR 97219
e-mail: [EMAIL PROTECTED]
Ph. (503) 768-7626
(503) 697-4015
Fax: (503) 768-7611
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Eban Goodstein email: [EMAIL PROTECTED]
Department of Economics phone: 503-768-7626
Lewis and Clark College fax: 503-768-7379
Portland, OR 97219
