National Education Association

• A balanced budget constitutional amendment is unnecessary. A balanced budget is achievable without an amendment. In FY 97, the federal budget deficit declined for the fourth straight year. President Clinton has proposed a plan that will balance the budget by FY 2002 and retain the flexibility Congress needs to respond to domestic and international crises. An amendment would shackle Congress to a budget that could, depending on economic exigencies, be harmful to the needs of our nation.
• A balanced budget amendment ignores the changing needs of our economy. Economic conditions and budget projections are unpredictable at best. There is often a significant time lag from when an economic downturn develops until its impact is known. The Congressional Budget Office (CBO) recently reported that in every year from 1980 to 1992, the federal deficit consistently exceeded the level set in the budget resolution by as much as $119 billion. A constitutional mandate for outlays never to exceed receipts would force huge cuts in spending in the middle of a fiscal year.
• Education and children’s programs would be extremely vulnerable. The overwhelming majority of education programs are in the discretionary portion of the federal budget, which is subject to yearly appropriations by Congress. Any cuts made to accommodate a mandated balanced budget would most likely come from this area, rather than from entitlement programs like Social Security, which are much more difficult to cut. In addition, because education programs are forward funded, meaning the amount appropriated is not spent until the succeeding fiscal year, education funds would be easy targets if additional cuts are needed in the middle of a fiscal year to retain balance.
• A constitutional balanced budget amendment creates a fiscal straitjacket on Congress. An amendment would shackle Congress to a budget that could fail to meet urgent national needs. NEA concurs with the U.S. Department of the Treasury and more than 1,000 economists that a balanced budget amendment could turn economic slowdowns into recessions, mild recessions into worse ones, and bad recessions into depressions. Under current law, for example, if unemployment rises, unemployment insurance payments rise as well, moderating the slowdown or recession. A balanced budget amendment would eliminate these built-in economic stabilizers.
• A balanced budget amendment would grant federal courts unprecedented and dangerous powers over the federal budget. If Congress was unable to agree on budget cuts and tax increases needed to achieve balance, particularly during an economic downturn, the courts would be empowered to either order specific federal spending cuts or approve the President’s unilateral power to withhold spending.
• Federal budget cuts resulting from a balanced budget amendment would negatively impact state and local government spending programs, particularly in education. In FY 95, federal grants to state governments composed almost 27 percent of all state government expenditures. Indeed, Federal funds to state and local governments were larger than revenues derived from state income taxes, and equal to revenues derived from local property taxes. California, for example, derives nearly 36 percent of its state spending from federal funds. At a time when demands for services such as education and criminal justice are expanding, cuts in aid to state and local governments would force states to either raise revenues, eliminate programs, or shift spending within state budgets to make up federal losses. Because elementary and secondary education is generally the largest component of state budgets, it would be especially vulnerable to additional cuts.
• The proposed balanced budget amendment is far more stringent than balanced budget requirements in most states. Almost all states balance only their operating budget, maintaining a separate capital budget to finance long-term investments. The balanced budget amendment makes no such distinctions. Thus, any spending on investments in our nation’s future -- whether for new bridges and roads, or education and science research -- would be required to be paid from current revenues, limiting the government’s ability to improve our nation’s infrastructure, global competitiveness, and long-term economic growth.
• The proposed balanced budget amendment imposes far greater restrictions than the average family experiences balancing its own checkbook. Virtually every family in this country needs the flexibility to borrow money for long-term investments, such as a mortgage to purchase a house, a car loan, student loans for college, etc. Few people pay for such items out of their yearly income. Yet, the balanced budget amendment would force the federal government to do so.