Balanced Budget Amendment Would Weigh Heavy on Cities

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The nation's cities and towns would realize a devastating blow if Congress and the President actually were to implement spending cuts sufficient to balance the federal budget under a constitutional balanced budget amendment expected to be voted upon in the House as early as next week according to a study released last week by the House Budget Committee.

The study reported that the amendment would require spending cuts and tax increases far greater than any ever attempted in U.S. history, while sharply curtailing federal flexibility to respond to economic, natural, and social crises and disasters.

The report noted that the impact on state and local governments-and especially on public infrastructure-would be staggering. It indicated the administration and Congress would be likely to accelerate the imposition of unfunded mandates on local governments to meet federal goals and objectives.

Unlike city and town, as well as corporate budgets, none of the constitutional balanced budgets up for consideration in the House or Senate make any distinction between federal capital and operating expenditures. Thus, implementation of the amendment would produce far greater disinvestment in public infra-structure-where the U.S. is already ranked 55th in the world, virtually guaranteeing not only significant job losses in communities across the nation, but also further inability for American communities to compete in the global economy.

The House Budget Committee report is similar to a report issued earlier this month by Wharton Econometrics Forecasting Associates projecting passage would bring severe economic distress to all 50 states, but especially severe job losses to California, Texas, Virginia, Pennsylvania, New York, Delaware, and Montana.

The reports came as leaders in both the House and Senate have worked on developing an enforcement mechanism. Such efforts have been strongly opposed by the White House and proponents of the balanced budget amendments in the House and Senate.

The pending proposals simply would set in the U.S. Constitution that the federal budget must be balanced, but they provide no procedures to actually reduce the deficit. Instead, they would make it more difficult for Congress to adopt a budget, and far more difficult for the federal government to respond to a crisis-such as assisting citizens of Los Angeles recover from the riot, or after the hurricane in South Carolina or the earthquake in northern California.

Under the House proposal, Congress would be prohibited from raising the national debt without a three-fifths majority.

House Budget Committee Chairman Leon Panetta (D-Calif. …