The Senate Judiciary Subcommittee on the Constitution, Civil Rights and Human Rights held a hearing on November 30 entitled “The Perils of Constitutionalizing the Budget Debate.” Witnesses offered a full spectrum of opinions on the economic and governmental impacts of amending the U.S. Constitution to require that Congress balance the budget annually.
Senator Richard Durbin (D-IL) opened the hearing by noting that the Constitution has only been amended 17 times in 220 years. He said that these few amendments addressed issues of major national significance, such as ending slavery, providing equal protection and allowing women to vote.
An amendment to the Constitution requiring a balanced budget amendment, said Senator Durbin, would create a problem just as challenging as the economic crisis the nation currently faces. The Senator said that a balanced budget amendment would make economic conditions worse, increase fiscal burdens on states and force federal judges to make decisions assigned by the Constitution to Congress. Senator Durbin said Congress shouldn’t try to change the Constitution to avoid this difficult task.
Bob Greenstein, president of the Center on Budget and Policy Priorities, testified against amending the Constitution to require a balanced budget. Mr. Greenstein said that, although Congress would be using this tool to address the country’s long term fiscal stability, such an amendment would actually require tax increases when the economy is weakest. Mr. Greenstein explained that currently, when economy is weak, people spend less, revenue decreases, and reliance on government resources increases. These stabilizing resources would be not be possible with a Constitutional requirement for a balanced budget, said Mr. Greenstein. He cited statements from both a former and the current director of the Congressional Budget Office (CBO) that a balanced budget amendment would undermine the stabilizing role of the federal government.
Mr. Greenstein also cited a report by an economic forecasting organization predicting that if a balanced budget amendment were in effect currently, 15 million additional people would be unemployed and the economy would contract by 17%.
Mr. Greenstein discussed two joint resolutions that the Senate may vote on during the week of December 5, S.J. Res. 10 and S.J. Res. 23. These resolutions also require a two-thirds majority vote in Congress to allow additional government spending and cap federal spending at 18% of the prior year’s revenue. If Congress operated under the 18% rule, all programs would have to be cut by an average of 25% by 2018 if cuts were distributed equally.
Instead of amending the Constitution, Mr. Greenstein said one possible method to address current fiscal challenges would be to take action to stabilize debt as a share of the economy.
Robert Romasco, president-elect of AARP, also testified against amending the Constitution to require a balanced budget. A balanced budget amendment would diminish resources for Americans “too frail or poor” to obtain the basics without government support, said Mr. Romasco. He testified that Social Security Income (SSI) is the principle income of two out of every three households receiving it. For one out of every three, SSI is their sole income. The average monthly payment to retired workers was $1,200 in 2010. According to a report prepared for AARP, if a balanced budget amendment were in place now, the average benefit would be cut by 27%. This would mean that a household receiving $17,000 annually would have its benefit cut to $12,300 a year and a household receiving $10,300 annually would have its benefit cut to $700 a month, said Mr. Romasco.
Alan Morrison of the George Washington University Law School testified on legal complications of a constitutional balanced budget requirement. Mr. Morrison raised several concerns including that raised earlier by Senator Durbin, that a balanced budget amendment would shift budgetary decision making from Congress to federal judges. Mr. Morrison then detailed the challenges involved in court enforcement of a balanced budget.
Only Congress would have standing to allege that a budget it passed was not balanced and the federal courts would be the only remedy to address this violation. If a member of Congress brought this allegation to the courts, there would be an extensive discovery process, a long series of witnesses, and a lengthy trial. The courts would have to examine numerous spending and revenue figures and assumptions that went into constructing the budget, along with other possible budget scenarios, said Mr. Morrison. If Congress was found in violation of a balanced budget amendment, then the court would have to decide how to correct the budget. A federal judge would then be making decisions about cutting spending or raising revenue, which is currently the responsibility of Congress. Mr. Morrison raised concerns that federal judges are not suited to make such decisions.
Mr. Morrison also expressed concern that this court process could not be completed in a timeframe that works for the annual appropriations process. If Congress passed a budget before the start of the fiscal year, lengthy court proceedings would result in spending adjustments being made well into the fiscal year. A balanced budget amendment, Mr. Morrison said, is not enforceable and is a false promise that will only deter Congress from engaging the hard work of addressing the deficit.
Diana Furchtgott-Roth of the Manhattan Institute for Policy Research and Douglas Holtz-Eakin, president of the American Action Forum, both testified in favor of a balanced budget amendment to the Constitution. Ms. Furchtgott-Roth said that if a balanced budget had been put in place decades ago, the nation’s economy would be in a much better place today. She suggested that Congress should consider making all expenditures subject to an annual appropriations process. Mr. Holtz-Eakin suggested that requiring a balanced budget would bring order to a currently uncoordinated set of discretionary and mandatory expenses and that it is a simple and transparent tool.
The House of Representatives voted to reject H.J. Res. 2, which would have amended the Constitution to require Congress to pass a balanced budget (see Memo, 11/18).