What will a balanced federal budget cost the states?

• Author: Snell, Ronald K.
• Position: Implications of amendment requiring Congress to balance federal budget annually

IF STATES ARE ASKED TO RATIFY THE PROPOSED AMENDMENT TO BALANCE THE FEDERAL BUDGET, LAWMAKERS WILL HAVE LITTLE TO WORK WITH - JUST A LIST OF ABSTRACT ADVANTAGE AND SOME VERY ROUGH COST ESTIMATES.

It will move through this legislature with the speed of a boat under full sail on smooth water," predicts Indiana Senate President Pro Tem Robert Garton.

"It's the first step in the process toward greater fiscal responsibility," says former NCSL president Congresswoman Karen McCarthy.

They're talking about the constitutional amendment to require Congress to balance the federal budget every year. Congress was poised to send it to the states for ratification when this was written at the end of January.

But the speeding sailboat Senator Garton envisions should take note of a few storm warnings. "If enacted," warns Richard Tofel of The Wall Street Journal, "it is destined to become the amendment that launched a thousand litigations." The language passed in the House of Representatives, he says, is ambiguous and its reasoning circular; it will be a "boon to constitutional lawyers." And The New York Times editorializes - like some state officials - that the amendment fails "as a matter of politics, as social justice, as economics." It warns that "easy, simplistic votes in Washington lead to hard decisions and higher taxes at the state and local levels."

When the proposed amendment comes to statehouses, legislators will have to weigh the benefits of a balanced federal budget against what it will cost their states. That might be easier to do if the consequences of a balanced budget were clearer. But somewhat abstract, distant advantages - a stronger national economy, a higher savings rate, lower interest costs, smaller government - have to be placed against very rough cost estimates.

If Congress sends the states a balanced budget amendment, it will need to turn its attention to implementing the provisions immediately on the assumption that states are likely to adopt the amendment. Failure to do so would imply that Congress did not expect the amendment to be ratified. And failing to begin budget cuts at once could mean extreme difficulty in bringing the budget into balance later on.

The current proposal requires a balanced budget in FY 2002 (or in the second fiscal year after ratification, whichever is later), providing at least seven years for transition (FY 1996 through FY 2002). On the basis of current estimates of revenues and expenditures, the budget...