Three well-known economists warned the Senate Budget Committee yesterday that Congress should not try to balance the fiscal 1980 budget.
"This budget before you already shows a sharp move toward budgetary retraint," said Walter Heller of the University of Minnesota, a former chairman of the Council of Economic Advisers. "Pushing all the way to balance would worsen the (coming) recession."
Another former CEA chairman, Alan Greenspan of Townsend-Greenspan & Co., declared, "I don't think you could balance the budget in 1980 unless there was a huge increase in taxes." But he added, "You could do great things for 1982, possibly for 1981."
And Michael Evans, who has his own economic consulting firm, balancing the budget in 1980... That would mean a much more severe recession than our model runs now predict."
The trio testified at a hearing on various proposals to require a balanced budget, such as the constitutional amendment that has been backed by 26 or so state legislatures. All three opposed the amendment.
However, Greenspan and Evans argued that there should be a better balance between federal revenues and spending.
"Wrong-headed as the move for a rigidly balanced budget may be, it reflects a mood that demands a response," Heller said. "... given that the constitutional approach is unwise, unworkable and unworthy of democratic self-government, one hope that Congress will work out a statutory solution that will be responsive to the public will without imposing destructive shackles on itself."