America Needs a Balanced-Budget Amendment More Than Ever

Today’s political discord is less durable and dangerous than a consensus, one that unites the political class more than ideology divides it. The consensus is that, year in and year out, in good times and bad, Americans should be given substantially more government goods and services than they should be asked to pay for. Lamentations about the paucity of bipartisanship ignore the permanent, powerful incentive, which both parties share and indulge, to run enormous deficits, thereby making big government cheaper, for the moment. Government borrows part of its costs; the borrowing’s burden falls on future generations. This is a form of expropriation — taxation without representation of the unborn.

The federal debt held by the public was 39 percent of GDP 10 years ago; it is 75 percent today. Before last month’s tax changes, the debt was projected to reach 91 percent in 10 years. No one knows if the tax changes will hasten this; no one should assume that they will not. No one knows at what percentage the debt’s deleterious effect on economic growth becomes severe; no sensible person doubts that there is such a point.

We will discover that point the hard way, unless Congress promptly sends to the states for prompt ratification a constitutional amendment requiring balanced budgets. The amendment proposed by Glenn Hubbard, dean of Columbia University’s business school, and Tim Kane, economist at the Hoover Institution at Stanford University, would limit each year’s total spending to the median annual revenue of the previous seven years, allowing temporary deficits to be authorized in emergencies by congressional supermajorities.

Because reverence for the Constitution is imperiled by tinkering with it, and because the supply of ideas for improving Madison’s document always exceed society’s supply of Madisonian wisdom, the document should be amended rarely and reluctantly. Today, however, a balanced-budget amendment is required to counter two developments: the abandonment of the original understanding of the Constitution, and the death of the political morality that expressed that understanding.

For approximately 140 years, the government was restrained by the Constitution’s enumeration of its powers, which supposedly were “few and defined” (Madison, Federalist 45). Before Congress acted it considered what James Q. Wilson called the “legitimacy barrier”: Did the Constitution empower the government to do this or that? As late as the 1950s, Congress at least feigned fealty to constitutional limits: When it wanted to build the interstate highway system and subsidize college students it referred, if perfunctorily, to the enumerated responsibility for defense in naming the National Interstate and Defense Highways Act (1956) and the National Defense Education Act (1958). Wilson thought the legitimacy barrier’s collapse was complete in 1965 when Congress intruded into the quintessentially state and local responsibility with the Elementary and Secondary Education Act.

Democracy generally, and especially legislative bargaining, is inherently additive: Majorities are assembled by attracting components with particularized benefits. Christopher DeMuth, president emeritus of the American Enterprise Institute, notes that from the Founding to the 1930s-1960s New Deal-Great Society era, this natural tendency of government to grow was inhibited by the bipartisan political ethic: Deficits were neither prudent nor seemly except when “borrowing was limited to wars, other emergencies, and investments such as territorial expansion and transportation; and incurred debts were paid down diligently.”

This tradition of borrowing for the future dissipated as government began routinely borrowing from the future in order to finance current consumption of government goods and services. DeMuth argues that a balanced-budget amendment is required because of the transformation of government from a provider of public goods (defense, infrastructure) to a provider of benefits (money and services) directly to individuals:

Transfer payments are now about 70 percent of federal spending.

A constitutional amendment imposing congressional term limits would not obviate, but would lessen, the need for a balanced-budget amendment by diminishing the incentive to think of the next election rather than the next generation. Unfortunately, the careerism that makes term limits advisable means that Congress will also never vote for this version of Warren Buffett’s instant fix for deficits: When, absent a war or other emergency, the budget is not balanced, all congressional incumbents are ineligible for re-election.

Critics of a balanced-budget amendment warn that Congress will evade it by means of creative bookkeeping, stealthy spending through unfunded mandates on state governments and the private sector, the promiscuous declarations of spurious “emergencies” and other subterfuges. Such critics inadvertently make the case for the amendment by assuming that the political class is untrustworthy. And that the people’s representatives unfortunately are representative of those who elect them.

The Patriot Post® · America Needs a Balanced-Budget Amendment More Than Ever