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Mr. Chairman, and Members of the Budget Committee, I appreciate the opportunity to discuss with you the possible effects of a balanced budget amendment to the Constitution.

Opinion polls indicate that the American public strongly favors a balanced budget amendment. And for good reason. People sense that continued deficits have contributed to sluggish economic growth and will undermine their children's standards of living. They also realize that concern over deficits has hampered our ability to address pressing national problems. Enactment of a balanced budget amendment is seen as a way to break out of the economic doldrums and to reenergize and redirect our governmental institutions.

If only it were so simple. The problem has never been that the nation could not agree on the goal--a greatly reduced deficit. Rather it has been that we could not summon up the will to achieve this objective because it requires sacrificing other desirable objectives--namely, keeping taxes low and maintaining government services.

Under certain circumstances, a balanced budget amendment could strengthen our resolve and ability to address the deficit problem. But under other circumstances, it could be little more than another empty promise, one that further erodes public confidence in our political institutions. Even in the best of circumstances, a balanced budget amendment could limit the government's flexibility and distort its policies.

In the remainder of my remarks, I will elaborate on these points and will put forth the following three propositions:

• A large reduction in government borrowing is highly desirable over the long term;
  
  
• A balanced budget amendment, on its own, does not advance the chances for lowering federal borrowing, and if it worked it would undermine the stabilizing role of the federal government; and
  
  
• The only way to make a balanced budget amendment work is to take actions that achieve fiscal discipline during the ratification period.

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