A Constitutional amendment could check runaway federal spending.
By Fergus Hodgson | July 7, 2011
Thomas Jefferson once wrote that he wished for a single additional amendment to the U.S. Constitution, one that removed the federal government’s power to borrow. That wish is yet to come to fruition, but bipartisan financial impotence at the federal level makes a constitutional constraint more necessary than ever.
The official $14.5 trillion debt roughly equals the nation’s annual economic output, but contrary to claims, federal politicians have failed to cut a billion dollars in spending. Forget the $1.4 trillion dollar cut necessary to balance the books in 2011, as the Congressional Budget Office projects. And even that wouldn’t address the $211 trillion of unfunded liabilities, as estimated by Larry Kotlikoff, a Boston University economics professor and author of The Coming Generational Storm.
In fact, 2011 spending may exceed 2010 spending. So the notion that federal politicians are going to tie their own hands and address their fiscal malfeasance, even as they posture to do so, is out of the question. They’ll raise the debt ceiling this year, as they’ve done 74 times since 1962.
Partisan battles cannot overcome this. Those in power want to continue deficit spending—even the Gipper raised the debt ceiling 18 times—while those out of power publicly oppose it. In 2006, for example, Sen.Barack Obama (D-Ill.) described the repeated ceiling increases as “a sign of leadership failure,” while in the 1990s, Sen. Joseph Biden (D-Del.) supported a failed proposal for a balanced budget amendment.
Politicians face perverse incentives to buy off voter blocks on the backs of future generations, but the accumulated pain has arrived and structural change is necessary. 49 of the 50 states already have constitutional constraints on deficit spending, so why not the federal government?
While state finances are far from rosy, the magnitude of their debts pales in comparison to those of the federal government. Further, Mercatus Center research indicates that the 17 states with strict balanced budget requirements have faced 35 to 45 percent smaller budget gaps in the latest recession. Leaders of these states anticipate balanced books, and compliance becomes less onerous.
State leaders have Article V authority to amend the Constitution; but even after 222 years, they have yet to do so. Congress has approved all 27 amendments prior to ratification by three quarters of the states.
Unfortunately, state leaders have neglected their balance-of-power role and naïvely given the federal government free reign in financial matters. They’ve also become accustomed to an ever-growing flow of debt-enabled federal aid.
But as people look across the Atlantic and see where sustained fiscal malfeasance leads, constituent and political will is building for the first ever state-initiated amendments convention since original ratification.
Following supportive research from the Goldwater Institute, the American Legislative Exchange Council, the nation’s largest nonpartisan association of state legislators, has endorsed the National Debt Relief Amendment (NDRA) as model legislation. And last week, Louisiana joined North Dakota to pass a resolution supporting the NDRA, insisting that “An increase in the federal debt requires approval from a majority of the legislatures of the separate States.”
No longer would federal officials be able to raise the nation’s credit limit unilaterally, and the NDRA’s 18-word simplicity overcomes many of the loopholes normally associated with balanced budget amendments. The supposed surpluses of the 1990s that still managed to generate debt, for example, would not escape this restraint. Rather than built-in exceptions, discretion would be with the state legislatures, and the 26-state approval requirement would enable deficit spending during national emergencies.
Some economists might question a cap on so-called stimulus spending—although states could approve that as well—but they ignore the post-World War II counterexample. Despite a dramatic cut in spending, civilian production expanded rapidly. Even after the return from war of 10 million men, unemployment did not surpass 4 percent until 1949. 34 state resolutions are necessary to trigger an amending convention, and then 38 states need to ratify the proposed amendment. Despite the high burden of approval, however, fears of a runaway convention continue to hamper these initiatives.
This fear seems strangely confined, since Congress can propose an amendment every time it meets. Unfortunately, it also stifles productive action as we watch the status quo–a potential fiscal train wreck–continue to roll down the tracks.
Curtis Olafson, a North Dakota state senator and NDRA spokesman, counters this best. “Unless and until 38 states ratify a proposed amendment, the Constitution is untouched and nothing changes,” he says. “An Article V runaway convention is a myth; a $14 trillion national debt is reality.”
The founders gave the states the same authority as the federal government to amend the Constitution. It’s time to use it.
Fergus Hodgson is a policy advisor with the Future of Freedom Foundation.