Lateefah Simon: “The positive elements of balancing the budget become clear in the longer run. The elimination of the deficit would…”

“The positive elements of balancing the budget become clear in the longer run. The elimination of the deficit would relieve strain on financial markets, allowing lower interest rates and bond yields. The lower interest rates and reduced borrowing would cut interest costs for the federal government; in fact, by 2002 half the savings [that we are talking about we need] in our budget simulations come from lower interest costs. And in addition, you would have, according to their projections, 2 rac{1}{2} million more people working. You are going to have more housing starts, more industrial investment, and everything else. Alan Greenspan, again, testifying the other day, said: But the influence of a fiscal imbalance of the federal government on capital formation is broader than inflation. The federal deficit drains off a large share of a regrettably small pool of domestic private saving, thus contributing further to the elevation of real rates of interest in this economy. It is very clear. I have to acknowledge that Dr. Reischauer has testified against the balanced budget amendment. But in his testimony of June 17 of last year, I will quote a few things: * * * we and other economists can see clearly that national saving is too low, no matter how it is measured, and that federal deficits contribute significantly to low saving.”