Supporters of the balanced-budget constitutional amendment pending in the Senate call it an attempt to reduce a "fundamental bias" in the United States toward government budget deficits.
What they mean is that members of Congress routinely seek to please a host of special-interest groups--and in the process earn immediate political benefits--without arousing the wrath of the nation's taxpayers. Congress does that by putting off tax increases and simply running the government in the red.
Now members are groping desperately for a way to defuse the ticking political bomb they created last year by favoring the taxpayers, rather than the beneficiaries of many spending programs.
But the balanced-budget amendment probably would not take effect, its backers say, until 1986 or 1987, after the lengthy state-by-state ratification process. Not only that, it would not absolutely require a balanced budget--Congress could approve a deficit with a 60 percent majority in each house.
In short, the balanced-budget amendment is a perfect political vehicle for a year of massive deficits. It allows the political costs of actually balancing the budget to be deferred, while the political benefits of voting to do so can be enjoyed immediately.
Under the amendment, no action by Congress would be required if revenues fell short of the expected level in a fiscal year. However, if outlays were to rise above the intended level--perhaps because a recession required more spending than expected for unemployment benefits--the 60 percent majority would have to be mustered, or ways to economize found.
But the amendment goes far beyond the question of making it more difficult to have a budget with a deficit. It would also limit the growth of federal revenues to the percentage figure by which the gross national product, or some other measure of national income, grew roughly two years earlier.
Another provision, which has gotten almost no attention so far in the debate over the amendment, would prohibit Congress from requiring that states "engage in additional activities without compensation equal to the additional costs" unless the states volunteer to do so.
Since "compensation" is defined in the Senate Judiciary Committee report as "a flow of funds for the federal treasury," some critics suggest that if the amendment were in effect today it might bar implementation of President Reagan's "New Federalism" initiative.
Under the amendment, the critics say, every state legislature would have to give advance approval to Reagan's proposals to reshuffle among various levels of government the reponsibilities for food stamps, Medicaid and some other programs.
The most serious questions about the amendment, however, center on whether it would produce not balanced budgets but a flood of dishonest economic forecasts, new ways to hide spending and policy impasses at critical economic junctures.
As in most of the Constitution's amendments, there is no detailed prescription of how the balanced-budget amendment's strictures should be carried out. Its supporters, such as William Craig Stubblebine, professor of political economy at Claremont College, argue that the terms of the amendment are flexible enough that Congress and the president could meet its requirements without serious difficulty.
For instance, Stubblebine suggested last month during a debate with Rudolph Penner, director of fiscal policy studies at the American Enterprise Institute, that in the case of so-called entitlement programs, such as Social Security, Congress might put a "cap" on total spending. Eligibility standards and benefit levels now are set by such programs, but there is no limit on total spending. News Analysis News Analysis
Penner, a conservative economist who is an outspoken opponent of the amendment, replied: "Would anyone conceive putting a cap on Social Security and telling recipients at the end of July, 'Sorry, we've exhausted the cap. We are eliminating your checks for August and September until the new fiscal year starts'?
"If that's what this amendment means, then it's going to go down in flames almost instantaneously."
There would be a variety of detours around such a problem, including getting together that 60 percent majority needed to increase the permitted level of outlays. Another, which undoubtedly would be used, is to build in a cushion on the outlay side of the budget. Stubblebine suggests that currently a $40 billion contingency fund would be about right.
But outlays and receipts would have to be balanced in the annual budget "statement" adopted before the fiscal year began. If not, the 60 percent congressional majority would have to approve a deficit. A large contingency fund, therefore, would require tax increases or spending cuts equal to the size of the fund.
Given the experience of the past few years, during which Congress has had great difficulty finding a simple majority to pass its annual budget resolutions, Penner and other critics fear such arithmetic would not wash politically. The requirement for a 60 percent "super" majority would raise substantially the chances of an impasse, they say.
The amendment's backers claim that its wording gives the president no new powers to control spending, such as the right to impound funds or rescind the authority to spend appropriated funds. A favorable report last year from the Senate Judiciary Committee explicitly says the same thing.
The opponents, however, point to one sentence in the amendment that they say would constitute a grant of sweeping power. It reads, "The Congress and the president shall ensure that actual outlays do not exceed the outlays set forth in the annual budget statement."
If Congress could not manage to put the budget back into compliance, the critics argue, then the president would be required to do so. That constitutional mandate would override other legal restrictions on impoundments or rescissions, they believe.
Another uncertainty about how the amendment would work in practice is whether it would increase the likelihood that Congress would try to achieve its objectives increasingly through regulation of individual and business activities instead of spending money.
For example, employers could be required to provide health insurance for all workers. That would undoubtedly cut Medicaid and Medicare costs, which are in the budget. Similarly, quasi-governmental bodies could be created to carry out other programs. The latter has happened, with some unfortunate consequences, in New York and other states that are required to have balanced budgets.
Uniquely, the amendment would key the legality of governmental actions to an economic forecast. "Under this amendment, a set of laws that are constitutional under one economic forecast may be quite unconstitutional under another," Penner said in that debate. "Think of the power it gives us economists. Maybe it's not such a bad idea after all."
Keying to a forecast would provide every incentive, the critics say, to use predictions that were just rosy enough to generate the maximum level of revenues permitted by whatever growth in national income occurred nearly two years before. That would maximize the permitted level of outlays, whether one wanted to spend the money or create a large contingency fund.
No problems would arise if the forecast proved too optimistic and revenues were less. Only when outlays appear to be exceeding the "statement" level must someone act.
The amendment's supporters say this feature retains most of the "automatic stabilizer" effect of the budget during recessions. As economic activity contracts, tax revenues fall but spending does not, adding support to the economy.
However, while the amendment apparently would retain some of the current countercyclical force of the budget in a recession, it would reinforce the cycle during an expansion phase. That would happen because receipts must be adjusted according to the changes in national income in the last calendar year ending before the fiscal year in question.
For instance, the small increase in national income this year, including inflation, would severely limit the increase in revenues permitted in fiscal 1984, when probably everyone hopes a strong economic recovery will be under way.