[Congressional Record Volume 157, Number 119 (Monday, August 1, 2011)]
[Extensions of Remarks]
[Pages E1474-E1476]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




FIVE FAULTS OF A BALANCED BUDGET AMENDMENT OUTLINED BY CENTER ON BUDGET 
           AND POLICY PRIORITIES AND CITIZENS FOR TAX JUSTICE

                                 ______
                                 

                       HON. JESSE L. JACKSON, JR.

                              of illinois

                    in the house of representatives

                         Monday, August 1, 2011

  Mr. JACKSON of Illinois. Mr. Speaker, the First Fault: a Balanced 
Budget Amendment would damage the economy and make recessions deeper 
and more frequent.
  Under a Balanced Budget Amendment, Congress would be forced to adopt 
a rigid fiscal policy, requiring the budget to be balanced or in 
surplus every year, regardless of the current economic situation, or 
threat to the nation's security.
  A sluggish economy with less revenue and more outgoing expenditures 
creates a deficit. As we've seen from recent events, a deficit 
necessitates economic stimulation to reverse negative growth.
  That is why in the last session of Congress, the American Recovery 
and Reinvestment Act invested in roads, bridges, mass transit, and 
other infrastructure, provided 95% of working Americans with an 
immediate tax cut and extended unemployment insurance and COBRA for 
Americans hurt by the economic downturn through no fault of their own.
  If Congress were forced to function under a Balanced Budget 
Amendment, deficit reduction would be mandated, even more so during 
periods of slow or stalled economic growth, which is the opposite of 
what is needed in such a situation.
  This consistently proposed constitutional amendment risks making 
recessions more common and more catastrophic for middle class families, 
seniors, veterans and the poor. Under such an amendment, Congress is 
stripped of any power to adequately respond.
  The Second Fault: A BBA would risk default and jeopardize the full 
faith and credit of the U.S. government while simultaneously 
challenging the Separation of Powers.
  A BBA would bar the government from borrowing funds unless a three-
fifths vote in both houses of Congress permitted a raise in the debt 
limit. Under such a scenario, a budget crisis in which a default 
becomes a threat is more likely, and because of the limits placed on 
the fluidity of the debt ceiling, that default becomes more likely to 
occur.

[[Page E1475]]

  After a default of only a few days, long term impacts would quickly 
appear. Confidence in ability of the U.S. to meet binding financial 
obligations would erode almost immediately. The government pays 
relatively low interest rates on its loans because it pays its debts 
back in full and on time. A default would mimic an earthquake, shaking 
confidence in the U.S. on a global scale, resulting in exploding 
interest rates and aftershocks felt in our national economy.
  The international economy would also succumb to the rumbling of this 
potential disaster, and our deep connection to it would cause even 
further chaos here at home.
  Other BBA proponents argue that since states have to balance their 
budgets, so should the federal government. Indeed, many states are 
required to balance their operating budgets, but not their total 
budgets. No such distinction is made by a BBA.
  ``Rainy-day'' or reserve funds, which states can draw on to balance 
their budgets, are prohibited by a BBA. Many states operating under a 
BBA require the governor to submit a balanced budget, but do not 
require actual achievement of it. Some states allow governors to act 
unilaterally to cut spending in the middle of a fiscal year. This 
condition of the BBA would violate the federal Constitution's 
separation of powers.
  The Founding Fathers were deliberate in their construction of 
government, and the separation of powers serves as a cornerstone in our 
democracy. Each branch has certain powers and limitations. Congress, 
the Courts, and the President work together, but in distinct ways, to 
move America forward. The threat of judicial involvement in matters of 
the budget, is real and present under the BBA.
  The BBA would threaten the balance of power. It diminishes the 
authority of Congress, as the elected Representatives of the people, to 
have the final say on taxes and spending. Mr. Speaker, what purpose 
does this body serve if this amendment passes? Should we broaden the 
scope of Judicial Review granted to our federal courts?
  By subverting the balance of power between the branches, this body 
steps on to a slippery slope of reassigning authority and moving away 
from the values inherent in our constitution.
  The Third Fault: A BBA would lead to reductions in needed investments 
for the future.
  Since the 1930's our nation has consistently made public investments 
that improve long-term productivity growth: in education, 
infrastructure, research and development. These efforts encourage 
increased private sector investment, leading to budget surplus, and a 
thriving economy. A Balanced Budget Amendment, which requires a 
balanced budget each and every year, would limit the government's 
ability to make public investments thereby hindering future growth.
  For years, conservatives have abused the debt and the deficit as a 
springboard from which to argue for smaller government and cuts to 
programs that serve as social safety nets to American families. 
Although we must consider the debt and deficit, the larger and more 
significant issue is the nature of the debt--what created it.
  If you invest fifty thousand dollars in a business, a house, or an 
education, you can expect future returns on your investment. If you 
``invest'' the same fifty thousand dollars in a gun collection and 
ammunition, what are the future investment returns? Both investments 
result in a fifty-thousand-dollar debt, but only one results in returns 
that can transform that debt into a long term gain.
  Social investments provide the potential for greater returns in the 
long run, in the same fashion as personal investments. Even small 
expenditures on social programs lay a foundation for great wealth in 
the long term.
  If the nation chose to invest over a five-year period, $1.5 trillion 
in the building of roads, bridges, airports, railroads, mass transit, 
schools, housing, and health care, we would create a debt.
  But the increased ability of companies to interact and ship their 
goods over well paved and planned roads, the new businesses that would 
sprout around a freshly built or newly expanded airport, the higher 
wages of a student who was well educated and a le to attend college 
resulting in more tax revenue, the improved productivity of employees 
at their healthiest, would eventually result in greater returns for our 
country.
  The extension of Bush era tax cuts for corporations and the rich, 
brought about some short-term stimulus of consumer spending. But, 
similar to Reagan's tax cuts which resulted in record government 
deficits and debt, the long term damage outweighs the immediate 
effects.
  Reagan's tax cuts for the rich came at the expense of investing in 
our nation's need for long-term balanced economic growth. The Reagan 
administration neglected and cut back on our nation's investment in 
infrastructure, education, health care, housing, job training, 
transportation, energy conservation, and much more.
  The inclination of most conservatives in both parties, is to cut the 
debt by cutting programs for the most vulnerable among us--our poor, 
our children, our elderly, and minorities. This approach, however, has 
been proven false too many times. A Balanced Budget Amendment would 
take us back to this archaic and ineffective system, permanently.
  The Fourth Fault: A Balanced Budget Amendment favors wealthy 
Americans over middle- and low-income Americans by making it harder to 
raise revenues and easier to cut programs.
  Again, a BBA ultimately favors wealthy Americans over middle- and 
lower-income Americans. Under current law, legislation can pass by a 
majority of those present and voting by a recorded vote. The BBA 
however requires that legislation raising taxes be approved on a roll 
call vote by a majority of the full membership of both houses.
  Thus, the BBA would make it harder to cut the deficit by curbing the 
special interest tax breaks of the oil and gas industries and make it 
easier to reduce programs such as Medicare, Medicaid, Social Security, 
veterans benefits, education, environmental programs, and assistance 
for poor children.
  Wealthy individuals and corporations receive most of their government 
benefits in the form of tax entitlements while low income, and middle 
income Americans receive most of their government benefits through 
programs.
  As evidenced by the cuts that both parties agreed upon recently, its 
far easier to cut social welfare programs than to cut spending on our 
military, or to increase taxes. As long as spending is a political 
issue, cuts to those programs that assist those with the smallest voice 
in government, will always happen first.
  Raising taxes, the only option to address a budget deficit aside from 
cutting programs, is already a burdensome political issue. The 
additional requirements of a BBA further complicate the process of 
raising taxes. This means that the richest Americans will likely keep 
the benefits they receive from our government via tax cuts.
  Meanwhile, the poor lose the programs that provide them with housing, 
food, job training, health care, and the means to survive. This will 
further reinforce the growing gap between the rich, and the rest of our 
society: middle class, working poor, and destitute alike.
  Aside from this already distressing point, when the baby boom 
generation retires, the ratio of workers to retirees will fall to low 
levels. This poses difficulties for Social Security, since Social 
Security has been a pure ``pay-as-you-go'' system, with the payroll 
taxes of current workers paying for the benefits of current retirees.
  This was acceptable as long as today's workers could pay for today's 
retirees. But, in the future, when there are fewer workers to pay for 
more retirees, the system will be out of balance. So in 1977 and 1983, 
the Social Security Administration took important and prudent steps 
toward addressing this issue. It allowed the accumulation of reserves 
to be used later when needed. These changes were akin to what families 
do by saving for retirement during their working years, and then 
drawing down on their savings after they reach retirement.
  The BBA insists that the total government expenditures in any year, 
including those for Social Security benefits, not exceed total revenues 
collected in that same year, including revenues from Social Security 
payroll taxes. Thus, the benefits of the baby boomers would have to be 
financed in full by the taxes of those working and paying into the 
system then. This undercuts the central reforms of 1983.
  Drawing down on any part of accumulated reserves, required under 
present law, under a BBA would mean the trust funds were spending more 
in benefits in those years than they were receiving in taxes. Under a 
BBA, that would be impermissible deficit spending.
  The Fifth Fault: A BBA weakens the principle of majority rule and 
makes balancing the budget more difficult.
  Most Balanced Budget Amendments require that unless three-fifths of 
the members of Congress agree to raise the debt ceiling, the budget 
must be balanced at all times. They also require that legislation 
raising taxes must be approved on a roll call vote by a majority of the 
full membership of both houses, not just those present and voting.
  Clearly this provision weakens the current principle of majority 
rule. A three-fifths requirement empowers a minority (40 percent, plus 
one). It creates a small group, willing to threaten economic turmoil 
and disruption unless they get their way, with the ability to extort 
concessions or exercise unprecedented leverage over our national 
economic and fiscal policy.
  Mr. Speaker, haven't the last few weeks demonstrated how difficult it 
already is to reach consensus on a budget? This provision will make it 
simply impossible.
  Ezra Klein Argument: There is a final fault, which is not on my list, 
but is significant

[[Page E1476]]

enough to mention: Ezra Klein, of the Washington Post, cleverly points 
out in a recent article titled, ``The Worst Idea in Washington'' that 
under a BBA, not a single budget of the Bush or Reagan Administrations 
would qualify as Constitutional. In fact, the only recent 
Administration which would not violate the requirements of the Balanced 
Budget Amendment would be President Clinton for only two of his 
budgets.
  Mr. Speaker, if President Reagan's budget wouldn't qualify, is this 
really something we should even be considering?
  Conclusion: I've listed a few, and certainly not an exhaustive list, 
of arguments against the Balanced Budget Amendment. The truth is the 
federal budget is quite unlike the fiscal practices of businesses, 
families, and states. Contrary to popular myth, except in times of war 
and recessions, the country has a conservative record of keeping 
deficits in line.
  Our government needs the flexibility to respond in times of economic 
downturn or war, in a way that businesses, families and states never 
have to consider.
  I've been in the House long enough to know, that when my colleagues 
on the other side of the aisle came into the majority with large 
deficits and debt, I knew their first response would be to cut social 
spending, weaken government regulation, and underfund protection of 
workers' rights, civil rights, environmental protections, you name it.
  I wish I could say I didn't see this coming. But, conservative 
politicians want to get the government ``off the backs'' of business, 
finance and industry. They are willing and ready to use the current 
economic situation to do it and they intend to place the burden on the 
backs of middle class families, seniors, children, veterans and the 
poor.
  The Republican budget we voted on today does just that. The Balanced 
Budget Amendment aims to make it a permanent fixture.
  Mr. Speaker, I know we can do better. We cannot balance the budget on 
the backs of middle class Americans. We need to achieve the America of 
everyone's dreams. The burden of that dream must rest squarely on the 
shoulders of every American that can carry it.
  I find it offensive that some of the most profitable corporations in 
this country pay no taxes and some even get a refund. I find it 
offensive that the richest 400 people in the country who have more 
wealth than half of all Americans combined have an effective tax rate 
of only 16.6%.
  In the words of William Jennings Bryan, ``When I find a man who is 
not willing to bear his share of the burdens of the government which 
protects him, I find a man who is unworthy to enjoy the blessings of a 
government like ours.'' With those wise words, I yield back the balance 
of my time.

                          ____________________