I. The Need for Fiscal Responsibility and Education Investment

The Committee for Education Funding (the Committee), a nonpartisan coalition of over 80 major organizations reflecting the entire spectrum of the education community, strongly believes that Congress must act responsibly both to reduce deficits and to invest necessary federal resources to meet the national priority of quality education for our children, youth and adults. The Committee cannot support a Constitutional amendment to balance the budget because it is harmful to investment in education.

For more than a decade, the federal budget came out of balance with aggregated deficits increasing; the drain of federal interest costs skyrocketing; and the burden to be carried by our children made heavier. Fortunately, over the last five years we have learned that this trend is not irreversible and will yield to responsible decisions to control spending and prioritize investments. From FY93-96, the annual deficit has declined 60% from $266 billion to $107 billion. The deficit is now 1.4% of the gross domestic product, the lowest level since 1974. Bipartisan discussions to balance the budget by 2002 are underway.

American voters clearly expect their government to make responsible decisions about revenues and expenditures. But currently Congress is debating a constitutional amendment to explicitly compel their successors to make balanced budgets and discipline the budget process.

The Committee for Education Funding believes that seeking to amend the Constitution to eliminate deficit spending is unnecessary and a distraction from the serious work needed to responsibly manage our federal budget and ensure quality education for all.

II. Consequences of the Constitutional Amendment to Balance the Budget

S/H. J. Res. 1 -- a constitutional amendment to balance the budget -- is harmful to investment in education.

• Fiscal straitjacket. A balanced budget constitutional amendment puts the federal government in a fiscal straightjacket severely limiting its ability to respond to fast changing world events or unanticipated economic, social, and political conditions.
• Minority rule. In particular S/H. J. Res. 1 calls for an absolute majority to raise revenues and supermajorities (three-fifths) to approve a deficit or raise the limit on the national debt. These provisions stack the deck in favor of spending cuts and create a situation in which important budget decisions about future investments of federal resources for our country’s well being are left to a minority of members of Congress.
• Investment disincentive. By making no distinction between public consumption and public investment , the amendment would act as a significant disincentive to invest in the nation’s long term economic growth. By focusing only on balancing total receipts against total expenditures for a given year, the proposal fails to allow for long term planning and for investments in America’s future that have long term payoffs, such as education.
• Arbitrary cuts. In recent years legislative mechanisms enacted to enforce hard fiscal choices such as the Gramm-Rudman-Hollings deficit reduction act and several budget summits produced new budget rules and gamesmanship and few promised results. Across the board spending cuts increasingly took the place of decisions based on sound economic and education policy. A constitutional balanced budget amendment will force even more arbitrary decisions.
• Power shift. Amending the Constitution as proposed in S/H. J. Res. 1 does nothing to guarantee the political will needed to get our fiscal house in order. Passage of the amendment would shift the power of the purse and the public responsibility away from elected officials and potentially force the courts to uphold the constitutional mandate and decide the nation’s fiscal matters.

• Error-prone. The amendment attempts to create a system of budget control based on the faulty premise that bureaucrats and politicians can predict and control deficits regardless of real world conditions. Even small errors in predicting deficits could require major cuts in federal spending, particularly in the form of program rescissions, in order to bring the budget back into balance. Such rescissions especially jeopardize the quality of education programs where program resources for our children and youth are planned and committed in advance.

S/H. J. Res. 1 lacks important criteria for responsible deficit control legislation.

• Long-term investment strategy to enable continuing federal investment in education to meet national needs and goals;
• Phased-in methods for adjusting revenues and expenditures to protect needed federal investment in education;
• Identical rules for congressional voting to cut federal programs and for voting to raise federal taxes and revenues namely, a simple majority of those voting;
• Protection against cost shifting so that the steps leading to a balanced federal budget do not withdraw federal support for the education of children and youth and transfer the obligations to the states and localities whose budgets for education can ill afford more demands.

The Committee for Education Funding asks all members of Congress to recall a basic promise that American voters believe their government has made to them: They and their children will have the opportunity to attain a quality education giving them access to the fruits of our democracy and our national economy. They will look to you, as an elected leader, for assurance that this promise will not be jeopardized. Evidence of this implicit promise is clear in recent public opinion polls which show that Americans give high levels of support (90%) for allocating the same or increased federal resources to education. (Times Mirror, December 8, 1994). Also when directly asked if they would support a balanced budget constitutional amendment that reduces funds for education, nearly 70% disagreed. (Washington Post/CBS, January 6, 1995)

We understand and support the need to reduce the federal deficit. The increasing percentage of the federal budget now dedicated to interest payments on the federal debt is already limiting investment in education when all evidence points to the necessity of a more educated workforce for the success of our economy. The debt, if not addressed, will burden future generations and undermine the fiscal base needed for further educational investments. We must not burden future generations with either debt or inadequate educational preparation.

The Committee for Education Funding urges Congress and the Administration to adopt a responsible budget plan that both reduces deficits and invests in education to protect the promise of quality education for all Americans.

For further information contact Edward R. Kealy, Executive Director, at 202/383-0083.