Federal Reserve Chairman Alan Greenspan said yesterday he supports changing the U.S. Constitution to make it harder for the government to spend money, but he turned thumbs down on a separate amendment that would require a balanced budget.
Greenspan told the House Judiciary Committee there is a clear "bias" in the American political system toward increased government spending that can be countered in the long run only by a constitutional amendment requiring a three-fifths vote of both the House and Senate for all legislation to authorize spending or appropriate money for that purpose.
The Fed chairman strongly opposed a different amendment pending before the committee that would mandate a balanced federal budget each year unless 60 percent of the members of the House and Senate approve a deficit.
A House vote has been promised for next week on that amendment, which is supported by President Bush.
Greenspan said the pending amendment could produce "a mess" if Congress chose to disregard its terms and the courts became involved in seeking to enforce its provisions.
Passing such an amendment and then not enforcing it, he warned, could undermine confidence in the basic law of the land.
However, an amendment requiring a 60 percent vote to approve spending money would have no such complication and would focus the restraint where it is needed, he argued. "It's on the expenditure side clearly where the problem lies."
In addition, Greenspan said all legislation authorizing spending or appropriating money to fund it should have so-called "sunset" provisions so that Congress would be required periodically to muster support from three-fifths of the members of each house to keep such spending programs on the books.
Greenspan's conclusion about the "bias" toward spending was not reached just on the basis of the big budget deficits of recent years or those now projected for the early 1990s. He first supported an amendment directed at spending restraint in 1979.
Prior to the 1970s, large continuing deficits were not possible, except in time of war, because of limits on government borrowing imposed by the need to maintain a set value for the dollar relative to other nations' currencies. Now that exchange rates can vary widely, most of that earlier restraint has evaporated, he explained.