Unbalanced Budget Amendment
As part of the deal that raised the debt ceiling and created the deficit supercommittee, Congress must vote on a Balanced Budget Amendment. The House is scheduled to do so on Friday. The Senate will take up the bill within the next two weeks.
The text of the bill before the House, S.J.Res.10, can be found here. The Amendment it proposes (the text of which is included in the bill), is a stunningly bad idea. The concepts it embodies are based on economic theories already proven false. It has no viable enforcement mechanism. It imposes impossible requirements. It contains limits on the budget that cannot be realistically determined. It makes possible (and even likely) some catastrophic situations. It is a dangerous piece of destructive propaganda.
To show you what I mean, let’s examine some of its more obvious failings by going through its provisions, one at a time.
Section 1 of the proposed Amendment limits federal outlays (not proposed spending in a budget, but the actual outlays) to the “total receipts” for that fiscal year. This isn’t quite the same as a “balanced budget,” but maybe that’s nitpickey; regardless of the budget, if something unexpected comes up, or if there are cost overruns in any given program, spending stops when the money runs out. I suppose people get laid off, or go without Social Security checks, or something.
This section does allow Congress to exceed this limit with a two-thirds roll call vote of the full membership of both Houses, but we’ve seen how often that happens.
Section 2 limits the size of a year’s total outlays (note: not the budget, but the actual spending) to 18 percent of the previous year’s GDP. It does not, however, define GDP. This is a real problem. GDP is actually a constantly-evolving concept, and every year, the factors used and the way they are calculated changes. There is no reliable way to determine what “GDP” actually means, with the accuracy that this Section demands. This provision alone is likely to create a constant stream of federal lawsuits.
Note also that this Section is intended, not to enforce a “balanced budget”, but to write into the Constitution a favorite Republican policy — a limit on the size of government. It is a policy provision, nothing more, intended to enshrine in stone a specific conservative talking point. (Like Section 1, this Section can also be overridden in a particular year by a two-thirds roll call vote from the House and Senate.)
Section 3 requires the President to annually submit to Congress a proposed budget that meets the criteria of Sections 1 and 2. Note that in its entirety, this proposed Amendment effectively repeals Article 1 Section 8 of the U.S. Constitution, which specifies that spending and taxation is controlled by Congress.
I’ll skip Section 4 for a moment. We’ll come back to it.
Section 5 disallows any increase in the Federal debt limit, without a three-fifths roll call vote from both Houses of Congress. (Note that this repeating insistence on “roll call votes” is intended to create talking points for the opposition in reëlection campaigns.) On Logarchism, we have previously discussed the disaster that would ensue from a Federal default. This year, we have seen America come close to default, and have seen how difficult it can be to overcome ideological blindness on this issue; consideration of this very Amendment, as absurd as it is, was mandated by the deal struck to raise the debt limit. This Section alone could cause economic disaster the likes of which America has never seen.
Note that lowering the debt limit still only requires a simple majority vote. Congress could simply declare all its debts null and void, lower the debt limit to zero, and be disallowed from ever borrowing more money.
Section 6 allows Congress to set aside Sections 1, 2, 3, and 5 (in other words, anything described above this) on a simple majority roll call vote of both Houses, in any year in which a “declaration of war against a nation-state is in effect.” Section 7 allows a similar loophole in years when there is “a military conflict that causes an imminent and serious military threat to national security” (in other words, something like America being attacked, but no war has been declared), provided three-fifths of both Houses, on a roll call vote, agree this situation exists. Both Sections require Congress to specifically state the specific amount of extra spending. There can be no immediate emergency response to an emergency situation.
Notice that Sections 6 and 7 make no allowance for natural disaster. In responding to anything like that, America is limited to what has already been budgeted, or what can be stolen from elsewhere. America is left with no source of emergency funds for a Katrina or a major west-coast earthquake. (Let them die.)
Let’s now go back to Section 4. It states that any attempt to increase tax rates, or to increase the amount of tax revenue by any means, will require a two-thirds roll call vote of both Houses. Reducing rates or revenue, however, still requires only a simple majority. This nearly insures that the Federal government will be forced, over the years, to shrink without limit. Within a few decades, social programs will evaporate. The ability of the United States to respond to natural emergencies will vanish. Domestic spending of any sort will be choked out of existence. Entitlement programs, support programs, education, food inspections — gone. We’ll be back to pre-1930s America with old people starving, yet with medical costs still unchecked, and increasing numbers of Americans will die of preventable and treatable diseases.
Section 4 does allow revenue increases “resulting from the lowering of the statutory rate of any tax” — in other words, it writes into the Constitution the disproved idea that reducing tax rates will perceptibly increase tax revenue. Even if this idea is true, Sections 1 and 2 already limit government spending to 18 percent of GDP, so America would be unable to take advantage of such windfalls; Congress would be required, by this provision, to reduce tax revenues in later years, to prevent spending from exceeding the limits of Section 2.
Temporarily skipping Section 8, Section 9 says that paying off principal on the federal debt is exempt from the spending limit in Section 2 (in other words, we can pay off some of the federal debt if we happen to find money laying around, though we can’t raise taxes to do it); and money that is borrowed isn’t counted as “revenue” for the purposes of Sections 1 and 4 (so we can borrow money, so long as that doesn’t result in spending of over 18% of GDP, and doesn’t require raising the debt ceiling).
There is some hope for escape from this nonsense, even if, through a collective national insanity, the Amendment garners a two-thirds vote in both Houses and is ratified by three quarters of the States, as is necessary for it to be enacted. First, Section 11 allows five years before the Balanced Budget Amendment’s provisions go into effect, giving us time to repeal it, after seeing what shredding it does to the nation to even begin preparing for it to take effect. Better still, there is a total escape clause.
Section 8 says, “No court of the United States or of any State shall order any increase in revenue to enforce this article.” Section 10 states, “The Congress shall have power to enforce and implement this article by appropriate legislation, which may rely on estimates of outlays, receipts, and gross domestic product.” In other words, Congress is fully in charge of enforcement, and no court may do anything to enforce this Amendment if doing so costs any money that hasn’t already been budgeted for enforcement.
Furthermore, since Congress may rely on “estimates” of “outlays, receipts, and gross domestic product,” it can set those “estimates” to any arbitrary number it wants, whether absurdly high or ridiculously low, and no court can say anything about that.
It would seem that if Congress decides to ignore the Balanced Budget Amendment, and allocates no money to prevent it from ignoring the Amendment, then Congress may freely pretend the Amendment doesn’t exist. All it has to do, for example, is to “estimate” that last year’s GDP was twice what it really was, and under Sections 1 and 2, it may set taxes and spending to 36 percent (twice 18) of last year’s actual GDP. Since this Amendment doesn’t specify how Congress is to come up with these “estimates,” it may be simply a matter of the Speaker of the House (for example) declaring it so.
The Amendment is an absurd and dangerous bit of unenforceable propaganda, and would do untold damage to our nation if it actually was followed. It is nonsense of the worst kind.
For a revealing discussion of the philosophical basis for this nuttiness — from Bruce Bartlett, someone who was in the room when the underlying crazy ideas were being discussed back in the 1980s — see here.
- Balanced Budget Nonsense (Part II) (outsidethebeltway.com)
- White House opposes balanced-budget amendment (seattletimes.nwsource.com)
- Blue Dog Democrats Break With Obama, Back Balanced Budget Amendment (businessinsider.com)
- Balanced-Budget Amendment Fails Fiscal Test: Stephen L. Carter (businessweek.com)
- Economix Blog: Bruce Bartlett: The Balanced Budget Amendment Delusion (economix.blogs.nytimes.com)
About dcpetterson (187 posts)
D. C. Petterson is a novelist and a software consultant in Minnesota who has been writing science fiction since the age of six. He is the author of A Melancholy Humour, Rune Song and Still Life. He lives with his wife, two dogs, two cats, and a lizard, and insists that grandchildren are the reward for having survived teenagers. When not writing stories or software, he plays guitar and piano, engages in political debate, and reads a lot of history and physics texts—for fun. Follow on Twitter @dcpetterson