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AJCONGRESS LEADER URGES CONGRESS TO OPPOSE BALANCED BUDGET AMENDMENT

 AJCONGRESS LEADER URGES CONGRESS TO OPPOSE
 BALANCED BUDGET AMENDMENT
 NEW YORK, June 1 /PRNewswire/ -- American Jewish Congress President Robert K. Lifton today urged members of the U.S. Congress to oppose current legislation which would amend the Constitution and mandate a balanced federal budget.
 In a letter sent to all members of the U.S. Senate and selected members of the House of Representatives, Lifton noted that the Constitution "establishes the broad structure of our government and our basic rights" and therefore "should not be amended to incorporate a particular fiscal policy."
 Lifton, rejecting claims that a balanced budget would necessarily promote a healthy economy, asserted that "(a) balanced budget would have devastating consequences for the United States, likely resulting in sharply lower economic output and a rise in the unemployment rate."
 Acknowledging that America is in need of a more fiscally responsible government, Lifton concludes his letter by stating that "(a) balanced budget amendment is no substitute for the political courage needed to make the tough policy decisions necessary to reduce the budget deficit."
 The full text of the letter is as follows:
 On behalf of the American Jewish Congress and its nationwide membership, I urge you to oppose S.J. Res. 18, which proposes an Amendment to the U.S. Constitution mandating a balanced federal budget.
 The Constitution is the fundamental law of the nation and establishes the broad structure of our government and our basic rights. It should not be amended to incorporate a particular fiscal policy, especially one that would make it extremely difficult for the federal government to respond to our nation's changing economic needs. A balanced budget amendment would result in inflexible federal economic policy-making when, in fact, flexibility is precisely what is required.
 While we agree that reducing today's large budget deficit and high level of federal debt would enhance the nation's long-term economic growth, an absolutely balanced budget is not necessarily the ultimate fiscal goal of the federal government. Surely promoting a healthy economy is an overriding goal.


Yet a balanced budget amendment could have the opposite effect, tipping a sluggish economy into a recession by requiring government spending cuts and/or tax increases that would in turn reduce aggregate demand.
 A balanced budget amendment would have devastating consequences for the United States, likely resulting in sharply lower economic output and a rise in the unemployment rate. In addition, certain programs in areas that need more investment -- such as infrastructure, education and training, early intervention programs for children, and research and development -- would likely face cuts under a balanced budget amendment, since programs that lack powerful constituencies would be especially vulnerable.
 Supporters of a balanced budget amendment often argue that, just as states balance their budgets, so too should the federal government balance its budget. This is in fact a faulty comparison. States are required to balance their operating budgets, but often float bonds or otherwise borrow in order to finance programs -- such as roads, education, sewerage, housing and urban renewal -- under their capital budget. In fact, states have often resorted to establishing entities with borrowing authority to create the appearance of a balanced state budget. The experience with state balanced budget requirements presages the kinds of off-budget techniques the federal government is likely to employ to avoid the mandate of a balanced budget amendment.
 There is currently nothing preventing Congress and the President from balancing the federal budget, other than the fact that they do not have the political will to do so. A balanced budget amendment is no substitute for the political courage needed to make the tough policy decisions necessary to reduce the budget deficit. While we are concerned with the large portion of the federal budget devoted to interest payments on the debt, we strongly believe that deficit reduction should be achieved through the legislative process, and not by enshrining one particular economic policy in the Constitution.
 -0- 6/1/92
 /CONTACT: Craig Sumberg of AJCongress, 212-360-1540/ CO: American Jewish Congress ST: New York IN: SU:


PS -- NY091 -- 5943 06/01/92 17:42 EDT
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Date:Jun 1, 1992
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