Fellow Economists,
What follows are a cover letter, text of a petition, and list
of initial endorsements. The petition urges the defeat of any
amendment to the U.S. Constitution requiring a balanced budget.
It was written by Professor Robert Eisner of Northwestern University
in consultation with Nobel Laureate Professors Robert M. Solow and
James Tobin.
If you would like to join the list of endorsers,
please send a note indicating agreement that includes your
signature, and the following printed information: full name,
professional affiliation, and title. For verification purposes,
we would also like voice phone number, e-mail address,
and mailing address. The fax number is 202-331-5545.
If you prefer to use e-mail, the address is [EMAIL PROTECTED]
Who Should Sign?
Anyone who has done substantive professional work in the field
of economics and thus feels confident in being described as an
economist. An advanced degree in economics per se is not
required. No graduate students, please--your turn will come!
We welcome endorsements from those working in the field of
economics in trade unions, government, corporations, and
non-profit organizations, as well as academics.
Thank you for your interest and support.
Feel free to repost this message to relevant mailing lists and
newsgroups. DO NOT send endorsements to the orginator
of this e-mail message.
The text of the cover letter follows:
January 2, 1997
Dear Colleague:
We believe that it is generally inappropriate to try to put specific
economic policy into the Constitution. We view proposed balanced
budget amendments, in particular, as contrary to the best current
judgment of most economists. That is why we have drawn up the attached
statement and recruited others to join us.
May we urge you to add your names to the list of initial endorsers of
our statement, Economists Oppose Balanced Budget Amendment.
Please fax back the attached sheet with your signature and those
of your colleagues to 202-331-5545. The deadline for signatures
is January 24. We will accept signatures after the deadline, but
late names may not appear in the official announcement.
Robert Eisner
Northwestern University
Robert M. Solow
Massachusetts Institute of Technology
James Tobin
Yale University
THE TEXT OF THE PETITION FOLLOWS:
We condemn the proposed balanced-budget amendment to the federal
Constitution. It is unsound and unnecessary.
1. The proposed amendment mandates perverse actions in the face
of recessions. In economic downturns, tax revenues fall and some
outlays, such as unemployment benefits, rise. These so-called built-in
stabilizers limit declines of after-tax income and purchasing power.
To keep the budget balanced every year would aggravate recessions.
2. Unlike many state constitutions, which permit borrowing to
finance capital expenditures, the proposed federal amendment
makes no distinction between capital investments and current
outlays. Private businesses and households borrow all the time
to finance capital spending. The amendment would prevent federal
borrowing to finance expenditures for infrastructure, education,
research and development, environmental protection, and other
investment vital to the nation's future well-being.
3. The amendment invites Congress to require states and
localities and private businesses to do what it cannot finance
itself. It also invites more cosmetic accounting, such as
increased sales of public lands and other assets counted as
deficit-reducing revenues. Disputes on the meaning of budget
balance could end up in the courts.
4. The amendment does contain escape hatches, but they
require super-majorities in peacetime, three-fifths of the
whole number (including absentees and non-voters) of each
House to adopt an unbalanced budget or to raise the debt
and a majority of these whole numbers to pass a bill to
raise taxes. These provisions are recipes for gridlock
and opportunities for irresponsible minorities to insist
on their agendas.
5. The amendment is not needed to balance the budget.
The measured deficit has fallen dramatically in recent
years, from $270 billion in 1992 to $107 billion in 1996,
to some 1.3 percent of gross domestic product, a smaller
proportion than that of any other major nation, none of
which hobbles its economy with a balanced-budget mandate.
Congress and the President can reduce the deficit to zero,
that is, balance the budget, or even create budget surpluses,
without a constitutional amendment. There is no need to put
the nation in an economic strait-jacket. Let the President
and Congress make fiscal policies in response to national
needs and priorities as the authors of our Constitution
wisely provided.
Initial Endorsers of Statement
Opposing Balanced Budget Amendment
Henry J. Aaron, Brookings Institution
Moses Abramovitz, Stanford University
Marcus Alexis, Northwestern University
Kenneth J. Arrow, Stanford University
William Baumol, New York University
Barbara R. Bergmann, American University
Peter L. Bernstein, Peter L. Bernstein, Inc.
Rebecca M. Blank, Northwestern University
Alan S. Blinder, Princeton University
Andrew F. Brimmer, University of Massachusetts-
Amherst and Brimmer & Company
Roger E. Brinner, Data Resources
Paul Davidson, University of Tennessee
Robert G. Dederick, Northern Trust Company
Robert Eisner, Northwestern University
Ray C. Fair, Yale University
Jeff Faux, Economic Policy Institute
James K. Galbraith, University of Texas at Austin
John Kenneth Galbraith, Harvard University
Zvi Griliches, Harvard University
Claudia Goldin, Harvard University
John C. Harsanyi, University of California, Berkeley
Robert L. Heilbroner, New School for Social Research
Lawrence Katz, Harvard University
Charles P. Kindleberger, M.I.T.
Alan B. Krueger, Princeton University
Lawrence R. Klein, University of Pennsylvania
Franco Modigliani, M.I.T.
William Nordhaus, Yale University
Janet Norwood, Former Commissioner of Labor Statistics
Rudolph G. Penner, Barents Group
Edmund S. Phelps, Columbia University
Paul A. Samuelson, M.I.T.
Isabel Sawhill, Urban Institute
Thomas C. Schelling, University of Maryland
Charles L. Schultze, Brookings Institution
Herbert A. Simon, Carnegie-Mellon University
Allen L. Sinai, Primark Decision Economics
Robert M. Solow, M.I.T.
James Tobin, Yale University
===================================================
Max B. Sawicky Economic Policy Institute
[EMAIL PROTECTED] 1660 L Street, NW
202-775-8810 (voice) Ste. 1200
202-775-0819 (fax) Washington, DC 20036
Opinions above do not necessarily reflect the views
of anyone associated with the Economic Policy
Institute.
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