PERSPECTIVE ON A BALANCED BUDGET : Jefferson Would Have Voted ‘Aye’ : For economic, moral and prudential reasons, the constitutional amendment is a discipline long overdue.

Passage of a constitutional amendment requiring a balanced federal budget is the first of the 10 elements of the Republicans’ “contract with America.” It is the key to the contract because it represents a binding commitment to fiscal responsibility and to limiting the growth of government.

Elected officials should not merely do right things, but also do them for the right reasons. There are three compelling reasons for Congress to pass a balanced-budget amendment.

The first is economic. There is an urgent need to increase the low U.S. national savings rate, which has fallen significantly in recent years. The decline reflects too little private saving and too much public borrowing. Reversing both is important. Since 1990, public borrowing has consumed 3.4% of our gross domestic product, leaving only 1.7% of GDP for net private investment.

Increasing productivity--and hence higher living standards--requires investing in our future--making investments in physical (plant and equipment), intellectual (research and development) and human (education and training) capital--investments that are crucial if we are to maintain the most productive private sector in the world.

It is highly unlikely that increased private saving alone, even using the most optimistic assumptions, will solve our national savings problem. In short, we must reduce public borrowing.

The second reason for passing the balanced-budget amendment is moral. Persistent public borrowing, largely for the purpose of current consumption, is analogous to one generation throwing a party and saddling the next generation with the bill. We view such behavior on the part of individuals with disdain and contempt. One is hard-pressed to find moral justification for such behavior, whether individual or collective.

Historically, much of our debt was accumulated during times of war, when the generation incurring the debt was passing along peace and freedom to the next generation.

Another justification offered for public borrowing has been the need to stimulate the economy. But with economic growth running at a 4% annual rate for the last six months, and the economy now in the fourth year of a recovery, it is difficult to sustain an argument that borrowing is needed now to provide economic stimulus.

Thomas Jefferson summarized well the moral argument for a balanced-budget amendment. In his second inaugural address, Jefferson claimed credit for “the suppression of unnecessary offices, (and) of useless establishments and expenses.” His objective, he said, was to eliminate the modest federal debt of his time so that federal revenues during times of peace could be applied to “rivers, canals, roads, arts . . . education, and other great objects within each state.” He acknowledged that during times of war, revenues would have to increase so that they might “meet within the year all the expenses of the year without encroaching on the rights of future generations by (burdening) them with the debts of the past.”

The third reason for the amendment is prudential. Despite deficit reduction efforts in 1982, 1984, 1987, 1990 and 1993, a structural budget deficit remains. Clearly, attacking the structural deficit through ordinary legislation has not worked. The sensible efforts of the 1980s, such as the Gramm-Rudman legislation establishing deficit reduction targets by statute, have been routinely circumvented or extended. The time has come for the discipline imposed by a constitutional solution.

The balanced-budget constitutional amendment on which Congress is voting, and which, if successful, will be sent to the states for ratification, provides adequate safeguards in the event of war or national emergencies, economic or otherwise.

But the central point of the exercise is to bring a discipline to our budgeting process that is desperately needed for our long-term economic success. Persistent, large budget deficits have enabled policy-makers to avoid what is at the heart of all sound public policy: making hard but wise choices between competing values.

The discipline of a balanced-budget amendment will force policy-makers to establish priorities so that the things that matter most will not be at the mercy of the things that matter least. For economic, moral and prudential reasons, the balanced-budget constitutional amendment is an idea whose time has come. Our children and their children deserve no less.