The debate over balancing the federal budget -- not whether, but how and at whose expense -- flared up in an interesting way Monday at the National Governors' Association. These excerpts are from an ABC-TV News tape. The speakers are Richard Snelling (R-Vt.), Edmund G. Brown Jr. (D-Calif.), Bruce Babbitt (D-Ariz.) and Bill Clinton (D-Ark.)

SNELLING: We now are living under a policy statement... (adopted last summer): "To ensure that the federal government does not become disproportionately large and its costs increasingly burdensome, the National Governors' Association recommends that a balanced federal budget be achieved by the fiscal year ending Sept. 30, 1981."... The motion is to reaffirm that position....

BROWN: I understand the problems... of locking something into the Constitution for generations yet to come, but the fact is that over the last decade we've seen the worst deficits in the history of the country. We've seen the dollar decline at a rate greater than at any time in our history.... We've seen a decline in productivity unparalleled, and we've also seen an inflationary spiral in this decade that has no historical parallel in the history of our republic.

So I'm not very impressed when people come and tell me that deficits are not all that important.... Deficits have an impact. No one can define the precise nature of the relationship, but it's rather clear that if someone looks at the federal budget, as you look at all the red ink over the last several years, and then you juxtapose with it the rising rate of inflation, the utter collapse of increase in our productivity, the loss of public confidence, the decline of participation in elections in this country -- you have to ask yourself, there may be a connection.

And the connection is one of lack of discipline, lack of an ability to make a decision and link what we're going to do with how we're going to pay for it....

If someone gave me the printing press, I don't have the ability in my state to not use it. I'd have to use it. And just as each of us has the constraint of having to meet a general level of revenue, I think the federal government can do the same thing. There ought to be flexibility; there ought to be ways of taking care of severe economic recession; and that ought to be the subject matter of an analysis and study by this group -- not to talk it to death, but to participate in the national debate....

SNELLING: ... The way we have embarked upon that project is to solicit from all of the governors specific suggestions on how the budget may be logically and intelligently reduced.... We would very much welcome the contribution of the state of California to that project. I feel that the larger states, which have over a period of time been the largest recipients of federal grants, probably can contribute more to the intelligent dialogue that we seek than all of the rest of the smaller states put together....

BABBITT: ... The deficit as a percentage of gross national product has actually gone down over the period that [Gov. Brown] talks about. The real villain is federal spending.

BROWN: ... I don't think we should overlook the salutory impact that a limit imposed on the federal government would have.... In our own state, with Proposition 13, we were never told what we were going to cut. But I can tell you that after it passed, we found a billion dollars in our current budget, and we're approximating two billion dollars in our next year's budget. So once the limit or the requirement of a balanced budget is there, Congress will respond.... 29 states are calling for a constitutional convention. And that convention is going to occur if Congress does not take action. That is a given. The only question is when.

I would prefer to see the action come from Congress. I want to work with them....

SNELLING: ... I hope that you would recognize that there are many states, such as my own, where Proposition 13 came as somewhat of a rude awakening because we'd already taken the tax-cutting actions about six months before Proposition 13.

If the state of Vermont had had a surplus of the size the state of California had, on a per capita basis, that would have been about $159 million, which would have been three-quarters of our general-fund appropriations. If the United States of America on a per-capita basis had had a [comparable] surplus in the last fiscal year... that would have indicated a $60 billion or $70 billion dollar surplus.... So I would suggest to you that a great deal of the travail throughout the country may very well be the direct result of the extraordinary situation which led to Proposition 13....

CLINTON: ... I think there has been a great blurring in the minds of the people who have managed the economy at the federal level, and members of Congress, in what I think are the two goals that have led to the deficit spending over the last decade.

Everybody knows the federal government's got to be able to deficit-spend to manage the economy and get us out of recession or to avoid recession. The problem is, for 10 soild years now, in addition to that, the people of this country... have accepted more services than they were willing to pay for, or than the Congress was willing to ask them to pay for. And that goes beyond any attempt to manage the economy....