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.
As Ezra Klein notes, federal spending exceeded 18 percent of GDP every single year of Reagan’s presidency, every single year of George W. Bush’s presidency, and all but two years under Bill Clinton. Not only would the BBA have made Ronald Reagan’s entire economic stewardship unconstitutional, it also would make Paul Ryan’s budget illegal—his plan still forecasts federal spending of 20.75 percent of GDP in 2030.
The only budget proposal that would come close to federal spending at 18 percent of GDP is the ultraconservative plan put forth by the Republican Study Committee. The Center for Budget and Policy Priorities examined that budget, and found that it gets to 18 percent spending with a 70 percent reduction in non-defense discretionary spending by 2021. This is the area of the budget funding everything from “veterans’ medical care, most homeland security activities, border protection, and the FBI…[also] education, environmental protection, protecting the nation’s food and water supply, and medical research, as well as services for disadvantaged or abused children, frail elderly people, and people with severe disabilities.”
Beyond that, the budget raises the Social Security retirement age to 70, makes deeper cuts to Medicare than Ryan’s plan, and cuts $86 billion over ten years from Pell Grants. If the idea is to shrink government “to the size where I can drag it into the bathroom and drown it in the bathtub,” in the words of Grover Norquist, then the BBA is the watery coup-de-grace.
Impossible and unworkable as it sounds, every single Republican Senator co-sponsored the BBA legislation now in the Senate and, as noted, leading GOP negotiators and presidential candidates are demanding it. Calling for a balanced budget makes good politics—a poll released yesterday shows more than seven in ten registered voters support a constitutional amendment to balance the budget.
But the same poll also shows that the support plummets to around 30 percent when the voters are told it would require deep cuts to Social Security and Medicare. This is why the media need to be clear about what the GOP is proposing—the balanced budget amendment is one of the most dangerous soundbites in recent political history.