Nonprofit, nonpartisan journalism. Supported by readers.

Donate
Topics

From the people who just brought you a big increase in the federal budget deficit: a balanced budget amendment

The idea of an amendment to require the feds to balance the books every year is one as old as the Constitution itself.

Speaker Paul Ryan, under pressure from the most conservative members of his conference, is expected to put a balanced budget constitutional amendment on the House floor this month.
REUTERS/Joshua Roberts

You’ve probably heard this argument: if hard-working Americans have to balance their checkbooks or else risk bankruptcy, then why should the federal government be allowed to put up trillion-dollar deficits every year without fear of financial ruin?

That’s more or less the logic underlying the idea of amending the Constitution to require the federal government to balance its budget, or ensure that, with few exceptions, Washington’s annual revenues equal its expenses.

The idea has been in vogue at various points since the Constitution itself was written, but in recent years, calls to take up the balanced budget amendment have grown louder: as the federal debt has grown to over $20 trillion — greater than the gross domestic product of the U.S. economy — conservative lawmakers say they believe Washington will never address its spending habits unless forced.

The GOP-held Congress, fresh from passing a sweeping tax cut bill projected to add over $1 trillion to the federal debt, is making its most serious push in years for a balanced budget amendment. Speaker Paul Ryan, under pressure from the most conservative members of his conference, is expected to put one on the House floor this month.

Article continues after advertisement

The vote is guaranteed to be a symbolic one: 20 years ago, a version of a balanced budget amendment passed the House with significant support from both parties. Today, nearly all Democrats slam the balanced budget amendment as a policy that could have disastrous consequences — in particular, the gutting of Social Security, Medicare, and Medicaid, which would face steep cuts under any balanced budget.

That’s a problem for the balanced budget amendment, because a lot of Democratic votes are needed to pass a change to the Constitution, which requires two-thirds majorities in Congress.

Republicans, then, may be taking up a doomed quest for other reasons: ahead of a crucial midterm election, the balanced budget amendment could be a useful way for Republicans to try to reassert their fiscal bona fides on the campaign trail, after a year in power that has called into question their credibility on fiscal responsibility in a big way.

‘We need to force some willpower’

The reemergence of the balanced budget amendment comes at an odd time for lawmakers who push an agenda of “fiscal responsibility:” despite GOP control of the White House and Congress, policymakers have moved to advance legislation that will add, not subtract, from the federal debt.

The so-called Tax Cuts and Jobs Act, signed into law by President Donald Trump in December, permanently slashes corporate tax rates and lowers taxes for the vast majority of taxpayers. Though its backers argued the bill would spur economic growth and boost federal revenue, the Congressional Budget Office found it would grow the federal debt by $1.4 trillion over 10 years. Other estimates put the deficit burden as high as an additional $2.2 trillion over a decade, even when accounting for economic growth.

This year, most Republicans joined with Democrats to approve a two-year budget deal that blew the spending caps put into place under the regime of austerity called the sequester, increasing military and social spending by hundreds of billions of dollars. The CBO found the deal would increase the deficit by as much as $500 billion over a decade.

That a Republican-led Washington added of trillions of dollars to the deficit in about two months is a remarkable turnabout, considering that Republicans spent the Barack Obama era calling for fiscal restraint, and sent dozens of congressmen to the capital who treated deficit hawkishness as a matter of faith.

Approving an amendment to balance the budget could be a way to show to conservative voters — and, importantly, wealthy donors who have rewarded deficit orthodoxy, like the Koch brothers — that attacking the deficit still remains important to the party.

To some Republicans, a constitutional imperative to force belt-tightening might be the only way, at this point, to rein in Washington. Second District Rep. Jason Lewis, who voted against the budget deal but for the tax cuts, said the balanced budget amendment is “a realization on the part of the institution that we need to force some willpower here… I believe the fundamental problem here is there’s not a political penalty for increasing spending, but there’s a severe political penalty for reducing spending.”

Article continues after advertisement

“Until we can get that paradigm shifted, we’re going to have to do something,” Lewis said. The freshman congressman said he’d enthusiastically support an amendment to require the government to balance its budget, if it were accompanied with language requiring reductions in spending, so that lawmakers could not get around spending cuts by instituting tax increases.

To critics, the balanced budget amendment is a cynical ploy to give Republicans some cover on the campaign trail as they try to save the GOP’s branding as the party of fiscal responsibility.

Jared Bernstein, a fellow at the left-leaning Center for Budget and Policy Priorities, wrote in the Daily Beast that a vote on the balanced budget amendment would be a “show vote.”

“It’s a signal to constituents that they truly do long to cease their fiscal recklessness, but simply can’t because those profligate [balanced budget amendment] opponents refuse to provide them with the only thing that will stop their endless deficit spending: the fiscal handcuffs of a BBA,” he said.

Lewis acknowledged there might be some political concerns behind the balanced budget push, but framed it as an important “start of the conversation.”

‘Not a simple matter’

The balanced budget amendment debate has underscored the paltry cachet the policy has outside conservative corners on Capitol Hill.

James Capretta, an expert at the right-leaning American Enterprise Institute, says there’s an intellectual case for the balanced budget amendment, but not much else beyond that.

“It’s predicated on the notion that there’s a tendency in the current electorate to favor consumption today over planning and investment for the future,” he told MinnPost. “Therefore, it wouldn’t be unreasonable to consider ways to get today’s political decisions to be attentive to what the effects would be many years down the road.”

Capretta argued that enforcing a balanced budget would be close to unworkable. “Assume you had a balanced budget amendment that went to effect every two to three years… About one-fourth the size of all total spending is now deficit spending. Do you just have to cut spending 25 percent across the board? Would you raise taxes? On who? It’s not a simple matter.”

Article continues after advertisement

Others are unsparing in their criticism. Richard Kogan, also at the Center for Budget and Policy Priorities, wrote in a paper that the balanced budget amendment is an “unusual and economically dangerous” way to address the U.S. debt problem.

Kogan argues that the balanced budget amendment would handicap the government from making worthy long-term investments, harm programs people rely on, and deprive the government of the ability to run deficits during economic downturns, to soften the economic blow on people and businesses.

Attacking the stump-speech logic of the amendment, Kogan wrote that “If required to operate under the same restrictions as the proposed balanced budget amendments, not only would a family be prohibited from taking out a mortgage to buy a house, it would be prohibited from using years of savings to accumulate enough cash to buy a house.”

Sam Berger, an expert with the liberal Center for American Progress, says what the GOP is doing is clear. “There’s a massive tax cut that got passed, and they want to pay for it by cutting people’s Social Security, Medicare, and Medicaid.”

“That’s not popular,” he said. “So, instead, they’re trying to find other ways to move that forward.”

Many attempts, no success

Republicans have yet to specify exactly what their balanced budget amendment might look like, but the history of the idea offers a few paths they could take.

The purest version is one that prohibits the federal government from spending any more than what it raises in revenues each year. Thomas Jefferson was perhaps the earliest proponent of that idea, writing in 1798 that he favored “an additional article taking from the federal government the power of borrowing,” even in cases of war.

Most balanced budget amendment purists have advocated for providing Congress the authority to grant exceptions, such as in times of war, when Washington would need to run deficits. In 1936, Rep. Harold Knutson, a Minnesota Republican, proposed a per capita limit on federal debt in times of peace, the first such debt-limiting proposal to appear before Congress.

In 1982, Republicans in Congress held the first-ever vote on a balanced budget amendment: a proposal from longtime conservative Sen. Strom Thurmond of South Carolina, which would have required a three-fifths majority from Congress to approve any extension of federal borrowing authority, also known as the debt ceiling.

Article continues after advertisement

Constitutional amendments require two-thirds majorities to pass the House and Senate, and then require ratification by three-quarters of the states within seven years. Thurmond’s legislation failed to pass the House by a sufficient margin.

In 1995, the year the GOP resoundingly took control of Congress on the strength of Newt Gingrich’s “Republican Revolution,” balanced budget amendment advocates fell short again, with the Senate failing to pass a similar resolution — requiring a three-fifths majority to lift the debt ceiling and to authorize expenditures to outweigh revenue — by one vote.

These proposals included exceptions so the federal government would be free to run deficits in times of war. Democrats frequently pushed for concrete provisions exempting Social Security from the balanced budget requirement, too, but they never got one. In the 1995 push, the House passed a resolution stating its “intent” to exempt Social Security from deficit reduction, and Republicans in the chamber defeated a Democratic resolution taking Social Security off the table and requiring Congress to detail where spending cuts would come from.

Democrats abandon the idea

These past efforts to approve a balanced budget amendment got plenty of bipartisan buy-in: 72 Democrats joined Republicans in the House to approve the 1995 version. But those efforts fell short of the high thresholds for passing a constitutional amendment, anyway.

But gone are the days when many Democrats enthusiastically embraced passing a constitutional mechanism to limit federal spending.

The last time the House voted on the balanced budget amendment was in 2011, after tea party-aligned conservatives stormed into the majority in the 2010 midterms. It got 261 votes in favor — not enough to reach the two-thirds threshold — and only 25 of those yes votes came from Democrats. (Rep. Collin Peterson of the 7th District was one of them.)

Seven years later, many of those budget-hawk Democrats are no longer around. A Democratic aide estimated that perhaps a dozen Democrats could vote yes on the balanced budget amendment, while a handful of moderate Republicans would vote no — meaning it’s effectively dead on arrival in the House. The situation is the same in the Senate, where Republicans hold a narrow, two-seat majority. 

Fourth District Rep. Betty McCollum summed up her party’s side, calling the amendment “the worst of election year politics from a Republican Congress that is too busy covering up for President Trump to have a meaningful legislative agenda.”

McCollum said the amendment would force cuts to Medicare and Medicaid. “After exploding annual deficits by giving trillions in tax breaks to big corporations and billionaires, it’s galling that House Republicans are now preaching about fiscal responsibility.”

Even Republicans are throwing some cold water on the amendment. Sen. Bob Corker, a Tennessee Republican, tweeted a reminder that his party controls Congress and the White House. “If we were serious about balancing the budget, we would do it. But instead of doing the real work, some will push this symbolic measure so they can feel good when they go home to face voters,” he said.

Corker’s point gets at the possibility that the GOP push to appear fiscally responsible may fall flat, given what’s taken place in Trump’s Washington.

CAP’s Berger said it’s “laughable to say you want to balance the budget after you’ve done everything in your power to unbalance the budget. I don’t think it’s going to work.”

Some wouldn’t mind if the balanced budget amendment idea fizzled, or gave way to other ideas for tackling the federal debt.

“A more sensible amendment might be the ‘Minimize long-term liability to the federal government amendment,’” AEI’s Capretta said.  “If we’d enacted sensible reforms in the mid-1990s to try to moderate the pressures of entitlement spending in 2020, we’d have been in much better shape.”

The balanced budget amendment, Capretta said, is a “weak play.” “Why are they bringing it up now?” he asked. “It can’t be for any particularly good reason.”