April 12, 2018:
It has become an axiom of political life in Washington that whenever budget deficits get seriously out of control, “budget process reform” proposals proliferate. Administration officials and Members of Congress look to procedural mechanisms to get deficits under control. But as my friend Sid Brown, the first Chief of Budget Review at the Senate Budget Committee, used to say: no procedural reform can substitute for the political will to make hard choices.
To be fair, certain budget process reforms have made a difference—the case in point being the Budget Enforcement Act of 1990 (BEA). The BEA’s caps on discretionary spending and pay-as-you-go requirements (that all new entitlement spending and tax cuts had to be paid for) were an important factor in reaching a surplus in the late 1990s.
Nevertheless, budget process reform proposals are often political diversions from the real work of setting national priorities, assessing program results, and crafting responsible budgets.
Ultimately, the tough policy decisions incorporated in the deficit reduction agreements of 1990, 1993, and 1997 were responsible for achieving surpluses.
The clearest example of a budget process reform that is more political theater than substance is the Balanced Budget Constitutional Amendment (usually referred to as “Balanced Budget Amendment,” or BBA). The latest iteration, H.Res. 2, is to be voted on today by the House of Representatives.
Congressional interest in a constitutional amendment to require a balanced Federal Budget emerged in the early 1980s, when deficits began to soar. In the ensuing years, one or both houses of Congress voted on various forms of the BBA five times: 1982, 1986, 1992, 1995, and 1997.
The BBA nearly passed Congress in 1995, achieving the required two-thirds support in the House, but it fell two votes short of the required two-thirds support in the Senate. (Article V of the U.S. Constitution requires a two-thirds vote of the House and Senate, and ratification by three-fourths of the States to amend the Constitution.)
In the 1980s, the country also came perilously close to a Constitutional Convention (the first since 1787), when nearly two-thirds (32 of the required 34) State legislatures passed resolutions calling for a Constitutional Convention to consider a Balanced Budget Amendment. Fortunately, we have never reached the two-thirds threshold, since this could have opened up a Pandora’s box of additional constitutional mischief. (The danger of a Convention still exists, though, with advocates claiming 28 “active resolutions” according the Congressional Research Service.)
The Balanced Budget Amendments considered by Congress have varied in their respective details, but generally all have included the following common elements:
Directing the President to submit a balanced budget to Congress;
Prohibiting total outlays from exceeding total revenues for a fiscal year unless three-fifths of the House and Senate vote to waive the requirement; and
Allowing Congress to “waive” the balanced budget requirement in the event of a declaration of war.
In addition, HJRes. 2 would:
require a three-fifths vote to increase the debt ceiling;
require a roll-call vote on tax increases; and
expand the declaration of war waiver to “imminent and serious” military threats.
Proponents have, for years, argued that Congress and the President need the authority of a constitutional balanced budget requirement to force Congress and the President to be fiscally responsible. However, the four budget surpluses achieved between FY 1998 and FY 2001 proved that a constitutional amendment is entirely unnecessary.
The surpluses were achieved because Congress and the President passed major deficit reduction legislation in 1990, 1993, and 1997 and enacted the ongoing fiscal restraints of the Budget Enforcement Act of 1990.
In addition to being unnecessary, the Constitutional Amendment the House is voting on today could do serious harm:
The BBA is bad economic policy. It makes no allowance for the reality that government spending goes up and tax revenues go down during a recession. The difficulty of getting a three-fifths vote in both chambers to secure a balanced budget waiver could force spending cuts and tax increases during a recession which, most economists agree, would deepen the recession.
The BBA is bad public policy. The budgetary straitjacket would limit the Federal government’s ability to respond to natural disasters, international crises, and long-term defense needs. In addition, it would prohibit the Federal government from using a capital budget to finance investments with a long-term pay-off such as building infrastructure—a practice available to nearly all State and local governments.
The BBA would damage the Federal Government’s separation of powers. It would involve unelected Federal judges in spending and tax policy, and it could be construed as giving the President constitutional authority to impound appropriations—a dangerous erosion of Congress’ constitutional authority over Federal spending and tax policy.
The BBA would force midyear draconian cuts when earlier budget projections prove overly optimistic.
Requiring a three-fifths vote to increase the debt ceiling would allow a minority of either chamber to hold America’s creditworthiness hostage whenever the nation’s finances require the issuance of additional debt.
The BBA would diminish the public’s respect for the U.S. Constitution by allowing Congress to “waive” the balanced budget requirement (by a three-fifths vote). Consider press reports that Congress is yet again “waiving” the Constitution’s balanced budget requirement. No other provisions of the Constitution can be waived.
In addition to being dangerous, this Amendment is phony. It is intended to create the illusion of having “taken action” to restore fiscal responsibility in the wake of tax cuts and new spending that, according to the Congressional Budget Office, will lead to trillion-dollar-deficits, and within a decade, trillion-dollar interest payments and a debt larger than the entire economy.
Real fiscal responsibility requires a serious, mature, and bipartisan effort that addresses all areas of the budget -- which unfortunately has not occurred since 2010 when two bipartisan commissions proposed real spending and tax reforms.