America dreams of a future without debt

IT SOUNDS like a dream: an amendment to the US Consti tution no less, requiring a balanced budget. No more federal deficits, just fiscal rectitude for life: a country, for once, living within its means. To the considerable alarm of President Bill Clinton, both the houses of Congress may soon approve a bill demanding exactly that.

On Tuesday, the Senate begins a debate on what would be the first change in the Constitution since 1971. No matter that Congress has not balanced a budget in 20 years. Senate supporters of the measure say they are within a whisker of the required two-thirds majority of 67 votes. If they succeed, approval by the House of Representatives is thought to be a certainty. The measure would take effect in 1999 or 2000. But the battle already is in full swing.

All this week, Capitol Hill has offered the extraordinary spectacle of rival hearings on the issue. Illinois Democrat Paul Simon, of the Senate Judiciary Committee, has been pressing the case for virtue. Among his witnesses is the former Massachusetts senator and 1992 Democratic presidential contender, Paul Tsongas. The dollars 4 trillion ( pounds 2.7 trillion) of national debt run up since 1980 was 'generationally immoral', said Mr Tsongas, the country had 'mortgaged its future'.

Or not, if you believed what you heard in a nearby committee room where Robert Byrd of West Virginia, chairman of the Senate Appropriations Committee - or less politely, Keeper of the Congressional Porkbarrel - presided.

Mr Byrd passionately opposes the amendment. With the White House's complicity, he called five cabinet members to testify about 'Apocalypse Tomorrow'. To balance the budget by 2000 would require dollars 600bn of spending cuts that would ruin America's defences and slash health and welfare spending. Or every American would have to pay an extra dollars 728 in tax each year.

Amid the hyperbole and statistics, serious arguments have been drowned out. For most economists a mandated balanced budget would deprive the government of the classic Keynesian tool of deficit spending to counter an economic slowdown. It would also be an invitation to even more dishonest national accounting than currently practised.

In fact, the bill's title is a slight misnomer; it does not outlaw deficits, but stipulates they must be approved by three-fifths of the Senate. But that would be hard: two-fifths, or 40 votes, is the minority required to sustain a filibuster. A filibuster, however, may be the President's best hope of stalling the Senate's unlikely rush to virtue.