This week, as the federal debt ceiling battle churns closer to Treasury Secretary Timothy Geithner’s August 2 deadline, there’s increasing talk about an amendment to the Constitution that would require balanced budgets. Senate minority leader Mitch McConnell, a key negotiator in the debt ceiling talks, spoke this weekend about the need to “save our entitlements and our country from bankruptcy by requiring the nation to balance its budget.” Senator Rand Paul now insists a balanced budget amendment must be part of any debt ceiling deal, and said Sunday that he will filibuster any agreement that doesn’t include it. Leading presidential candidate Mitt Romney also said recently that the United States should default on its debt unless Congress passes a balanced budget amendment.
Several media outlets dutifully noted the new turn in negotiations but few actually describe the fundamental, radical shifts in American government required by the proposed balanced budget amendment. It’s crucially important to understand what the new GOP demand actually requires.
The most important thing to know is that if enacted, the balanced budget amendment would actually make a balanced budget impossible. Both the House and Senate versions of the legislation not only mandate a balanced budget starting in 2018 but also mandate how it must be done. Federal spending cannot exceed 18 percent of the national Gross Domestic Product, and there would be a super-majority requirement for any new revenue: in other words, two-thirds of Congress would have to vote to approve any tax increase.
It is not hard to imagine that under a sixty-seven-vote threshold, Congress will simply never raise taxes again. Republicans have made it clear they will not support tax increases in virtually any situation, and most GOP Senators have signed Grover Norquist’s no-new-taxes pledge. So if the government permanently handicaps revenue, how can it possibly achieve a balanced budget, especially as healthcare costs are certain to increase as baby boomers become senior citizens?
It simply might not be possible, which then raises basic questions of enforceability. Say the amendment was enacted, but one year Congress passes a budget where spending exceeds revenues. Would the federal courts rule the budget unconstitutional? And if they did, what then? As Bruce Bartlett wonders, would Americans have to send back their Medicare checks or federal salaries? (Bartlett, a former official in George W. Bush’s Treasury Department, has called the BBA idea “idiocy” and “especially dimwitted.”)
Then there’s the 18 percent spending cap. First of all, given that taxes are basically frozen by the supermajority provision, it’s quite possible that the government won’t even be able to raise revenue equal to 18 percent of GDP, meaning that Congress would have to spend even less than that in order to have a balanced budget. But putting that aside, even spending at 18 percent of GDP would be practically impossible and would require unimaginable reductions in government services.