Senate Battle on Balanced Budget Is a Cliffhanger

TIMES STAFF WRITER

With the outcome of today's historic Senate vote on the balanced-budget amendment hanging by a thread, Senate leaders engaged in a furious last-minute campaign Monday to win over a handful of uncommitted Democrats as well as one straying Republican.

Congressional Republicans claimed that they were within one or two votes of the 67 they need to pass the measure when it comes to a vote and were focusing most of their efforts on one key undecided senator, Sam Nunn (D-Ga.).

In response, the Clinton Administration, which is fiercely opposed to the constitutional amendment, was fighting back with a lobbying campaign of its own to try to keep Nunn and four or five other swing Democrats from voting with the GOP.

The undecided minority members and Sen. Mark O. Hatfield (R-Ore.) were under intense pressure from both sides. Republican leaders made their job tougher because they refused to rewrite the amendment to address issues raised by the undecided lawmakers, fearing that the amendment would lose political momentum if it had to go back to the House for another vote.

"I'm not willing to cast a vote for the constitutional amendment if it's not the right constitutional amendment," Sen. Byron L. Dorgan (D-N.D.), one of the fence-sitters, said Monday.

If the amendment does pass the Senate and is eventually ratified by three-fourths of the state legislatures, however, all the political wrangling may not matter. For just as the congressional rhetoric is at its most heated, the big question quietly being raised in Washington is whether the amendment would lead to a fundamental transformation of the federal government--or whether it would be nothing more than an empty promise. Would it force unprecedented discipline on spending, or would it ultimately be ignored and discarded like the Gramm-Rudman deficit-reduction legislation of the 1980s?

Lawmakers who predict that the amendment would be ineffective already have some ammunition to back up their claims. Indeed, in what may foreshadow the wholesale weakening of the amendment, the Tennessee Valley Authority will have nothing to worry about when the Senate casts its vote.

Thanks to a special provision intended to satisfy Sen. Fred Thompson (R-Tenn.), the TVA would be exempt from the spending caps that Congress would have to impose on the rest of the government to balance the federal budget by the year 2002. The TVA exemption has outraged lawmakers from non-TVA states, who would dearly love such deals for their favorite projects. "It's constitutional pork," fumed Sen. Russell D. Feingold (D-Wis.).

But Feingold and other critics said that the TVA's exemption could offer a glimpse of things to come if the amendment passes the Senate and is ratified by 38 states to become the 27th Amendment. The constitutional requirement to balance spending and revenue would create an enormous incentive for the White House and Congress to come up with new and ever more ingenious loopholes to avoid the painful choices of cutting spending or raising taxes.

White House officials and budget experts already envision, for instance, a gradual shift of government operations to "off-budget"--and thus exempt--status, a form of budgetary sleight-of-hand now widely used by states with balanced-budget amendments. New quasi-government corporations could spring up as lawmakers attempt to shift federal activities out of the federal budget--and out from under the amendment's requirement to win the support of three-fifths of each house of Congress to increase the annual deficit. Amtrak, the U.S. Postal Service and the Federal National Mortgage Assn. are examples of such agencies that are not reflected in the federal budget now.

"I think there will be incredible pressures to use smoke and mirrors and gimmicks," argued Laura D'Andrea Tyson, newly named chairwoman of the National Economic Council at the White House.

And, while the amendment calls for balancing "outlays and revenues," it does not provide specific definitions for either term, meaning that Congress would have plenty of leeway to say what counts as government spending and what does not. "You could have real battles down the road over how to define the budget," noted Robert D. Reischauer, outgoing director of the Congressional Budget Office.

Indeed, as the battle lines hardened Monday, the debate shifted to the issue of whether the amendment would give sweeping new powers over the federal budget to the Supreme Court and whether the amendment would be legally enforceable at all.

With the outcome of today's vote still too close to call, proponents of the measure were scrambling to win over Nunn by dealing with his concerns about the role that the court would play in enforcing the amendment and thus setting budget policy.

House and Senate Republican leaders were focusing on Nunn by promising to pass separate legislation to limit the court's power over the balanced-budget amendment, but Nunn remained unconvinced. And critics of the amendment argued that, without the power of the court behind it, the amendment would have little real legal authority over Congress.

"Is this enforceable by the courts? All the legal scholars I've talked to believe it is unenforceable. . . . We are asking the Supreme Court to determine a fundamental issue of public policy that a democratic government should decide," argued Richard Kogan, a budget analyst at the Center for Budget and Policy Priorities here.

To be sure, plenty of observers on both sides believe that the amendment will have teeth. While Congress could easily skirt the amendment's demands for spending and revenues to balance, some analysts believe that it would be much harder for lawmakers to find loopholes in the amendment's second major provision that prohibits lawmakers from raising the nation's debt ceiling without the approval of three-fifths of both houses of Congress. That requirement means that spending on off-budget agencies ultimately would have to be paid for somewhere down the road.

"If it didn't have the debt-ceiling requirement, I would say the amendment wouldn't have any teeth at all," observed Reischauer.

For those who believe passionately in reducing the role of government in society, the debt ceiling is enough to make the amendment worthwhile.

"The balanced-budget amendment is not perfect and Congress may find ways to get around it in some cases," conceded Daniel Mitchell, a budget analyst at the Heritage Foundation and a supporter of the amendment. "But I think it will limit spending and will lead to a smaller government. It will eliminate the thinking that government spending can solve our problems."

Times staff writers Edwin Chen and Melissa Healy contributed to this story.

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