Debt Crises: Opportunity for a Balanced Budget

July 18, 2011

Time sensitive copy; for immediate release (660 words)

In 1995 Congress came within one vote of passing a balanced budget amendment. Dan Coats and Dick Lugar voted in favor of the amendment and to this day lament the missed opportunity.

“If this amendment had passed and been ratified by three-fourths of our states, we would not be faced with the dire financial situation that exists today,” Coats says.

“Since that time, nearly $10 trillion has been added to our national debt,” Lugar notes. “It is critical that we act to cut spending now and passing a balanced budget amendment would go a long way toward improving our long-term economic security.”

Ever since Congress lost fiscal discipline — by most accounts 1932 or so when balanced budgets ceased to be the norm – the country has debated the need for a constitutional spending limit. Polls show strong public support for the idea. Yet only once, in the mid ‘90s, did Congress come close to making it happen. Conventional wisdom, expressed by one legal scholar in 1998, is that “ratification is virtually impossible” due to the economic sacrifice it would entail.

With the debt now at $14.3 trillion, Congress has a historic moment to challenge conventional wisdom. The Obama administration wants lawmakers to raise the debt ceiling so government can pay its bills. Republicans, who control the House, have unprecedented leverage. Coats calls it “aunique opportunity to make it right this time.”

It’s not easy to amend the Constitution. It requires a two-thirds majority in both House and Senate and approval by three-fourths of the states. To move forward, Republicans need to agree it’s a “make-or-break” piece of a debt ceiling deal — and then pursue it at the expense of all else.

Indiana’s congressional delegation heavily favors a balanced budget amendment, though members disagree on the fine points.

Reps. Dan Burton, Mike Pence, Marlin Stutzman, Larry Bucshon, and Todd Rokita are among 103 House Republicans who sent a letter to Speaker John Boehner demanding a balanced budget amendment as part of the debt ceiling deal. The other Hoosier Republican, Todd Young, supports a balanced budget amendment but prefers not to link the two issues in the same vote.

Some Democrats say they’d go along with a balanced budget amendment, too. They include Indiana’s Joe Donnelly, a co-sponsor of H.J. Res. 10, a version that would require the president to propose a balanced budget and a three-fifth vote by Congress to approve deficit spending while prohibiting cuts to Social Security.

More typical is André Carson, who sees Republican rhetoric as “a ploy aimed at protecting tax cuts for millionaires and destroying Medicare.”

As always, the devil is in the details. To prevent “draconian” cuts, Democrats would insist on temporary tax increases on wealthy Americans and assurances that some entitlement programs won’t be touched. Republicans would need long-term assurances, including super majority requirements in order for Congress to raise taxes or debt limits in the future.

Maybe the conventional wisdom is right and ratification is impossible. But if Republicans really want this amendment, now is the moment. The alternative is higher debt ceilings, higher taxes and harder choices for the next generation.

In 1936, Minnesota congressman Harold Knutson proposed the first constitutional amendment to balance the budget. The debt was $33 billion.

In 1986, the Senate fell one vote short of passing a balanced budget amendment. The debt hit $2.1 trillion.

In 1995, the U.S. House voted 300-132 for an amendment to balance the budget by 2002. That was the year the Senate came up short by a single vote. The debt reached $5 trillion.

A few months later, Nobel Laureate economist James M. Buchanan reiterated the warning he’d been sounding for decades: “Adopt the constitutional amendment that requires budget balance now, or face fiscal-economic political disaster in the rapidly approaching day of reckoning. Sooner or later the piper must be paid.”

The piper is calling. Congress has a “unique opportunity” to answer.

Andrea Neal is a teacher at St. Richard’s Episcopal School in Indianapolis and adjunct scholar with the Indiana Policy Review Foundation. Contact her at aneal@inpolicy.org.



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