Milton Friedman 1982 NBC transcript in which he discusses Balanced Budget Amendment

My favorite economist Milton Friedman was great with the media.

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Meet the Press
Bill Monroe/Marvin Kalb/Irving R. Levine
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Video News Report
NBCUniversal Media, LLC.
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During this appearance on “Meet the Press,” economist Milton Friedman cites his support for a constitutional amendment to balance the federal budget. Friedman says that if such an amendment had been passed, the economy would not be undergoing a shake up.



Bill Monroe/Marvin Kalb/Irving R. Levine. “Economist Milton Friedman Supports Constitutional Amendment to Balance Budget”. Meet the Press. NBCUniversal Media, LLC. 03/21/1982. Accessed Wed Nov 16 2011 from NBC Learn:


Bill Monroe/Marvin Kalb/Irving R. Levine (Author). Meet the Press (Publisher). (03/21/1982). Economist Milton Friedman Supports Constitutional Amendment to Balance Budget. [Streaming video]. Accessed Wed Nov 16 2011 from NBC Learn:


“Economist Milton Friedman Supports Constitutional Amendment to Balance Budget” Meet the Press, New York, NY: NBC Universal, 03/21/1982. Accessed Wed Nov 16 2011 from NBC Learn:


Economist Milton Friedman Supports Constitutional Amendment to Balance Budget


Our reporters on Meet the Press today are Hobart Rowen of the Washington Post, Irving R. Levine of NBC News, and regular panelist Marvin Kalb of NBC News.

MARVIN KALB, reporting:

Other people sitting in that same seat who are also economists have given us– including Secretary of the Treasury, have given us the same kind of estimates based on the same kind of evidence and it hasn’t really happened.

Dr. MILTON FRIEDMAN (Economist): How do—excuse me, how do you know it hasn’t happened?

KALB: The projections keep getting pushed further and further back?

Dr. FRIEDMAN: How do you know, on what basis are you in a position to say that January is not the trough of the business age?

KALB: I was asking you the question, you’re the economist.

Dr. FRIEDMAN: I know but you say it hasn’t happened, there’s no evidence that it hasn’t happened.

KALB: Well the evidence is in the unemployed is it not?

Dr. FRIEDMAN: No, unemployment, as Bart Rowen will be glad to tell you, is a lagging indicator. The economy almost always turns around first and unemployment turns around some months later. So the contemporaneous evidence of unemployment is not evidence.

But at any event, there is no major issue involved in here. There would be a major issue if you were to say to me, well, is the economy going to collapse as it did in 1930-31? The answer to that is clearly not and I can give you the reasons why not. But there is no major issue involved in here; this economy is basically a strong healthy economy. It is going through a temporary period of adjustment and shake up primarily as a result of one of the great successes, which is that inflation is coming down. And the process of adjusting to a decline in inflation is difficult to many enterprises and groups, just as a rise in inflation is and we’re going through those adjustment problems. Basically we are a strong healthy economy.

MONROE: Dr. Friedman if the balanced budget constitutional amendment, which you favor, had gone into affect several years ago, would that have blocked president Reagan from pursuing his present policies allowing large deficits for the sake of military spending and tax cuts?

Dr. FRIEDMAN: Well in the first place you would’ve never been in the present situation if that amendment had been in affect, because if that amendment had been in effect government spending could not have risen as rapidly as it did. That amendment effectively limits the government spending to the same percentage as the rise in the income in the people. That amendment would therefore hold total government spending to a more or less fixed percentage of our income. What has actually been happening is that government spending has been rising above our income. So if that amendment had been in effect you wouldn’t have the problem at all.

MONROE: The amendment has got to start at a certain time just for the sake of argument to find out how the amendment would work, suppose it took effect just as president Reagan was taking office, would he have been unable then to run up these deficits.

Dr. FRIEDMAN: Well the amendment is written provides for a two-year period before it takes effect. So if it was going to start taking effect when he was taking office and it would’ve had to be in effect two years earlier.

MONROE: That’s my hypothesis.

Dr. FRIEDMAN: And there would’ve been that two-year intervening period in which the budget would have to be brought into a situation; no it would’ve assisted him and not the opposite.

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