[Senate Report 105-3]
[From the U.S. Government Publishing Office]
Calendar No. 12
105th Congress Report
SENATE
1st Session 105-3
_______________________________________________________________________
THE BALANCED-BUDGET CONSTITUTIONAL AMENDMENT
_______
February 3, 1997.--Ordered to be printed
Filed under authority of the order of the Senate of January 30, 1997
_______________________________________________________________________
Mr. Hatch, from the Committee on the Judiciary, submitted the following
R E P O R T
together with
ADDITIONAL AND MINORITY VIEWS
[To accompany S.J. Res. 1]
The Committee on the Judiciary, to which was referred the
joint resolution (S.J. Res. 1) to propose an amendment to the
Constitution relating to a Federal balanced budget, having
considered the same, reports favorably thereon and recommends
that the joint resolution do pass.
CONTENTS
Page
I. Purpose..........................................................2
II. Legislative history..............................................3
III. Discussion.......................................................7
IV. Votes of the Committee..........................................16
V. Text of S.J. Res. 1.............................................18
VI. Section-by-section analysis.....................................19
VII. Cost estimate...................................................24
VIII.Regulatory impact statement.....................................26
IX. Additional views of Senator Grassley............................27
X. Additional views of Senator Kyl.................................29
XI. Additional views of Senator Abraham.............................31
XII. Minority views of Senators Leahy, Kennedy, and Feingold.........33
XIII.Additional views of Senator Torricelli..........................76
XIV. Changes in existing law.........................................79
I. PURPOSE
The Balanced-Budget Constitutional Amendment sets forth, in
the Nation's governing document, the basic principle that the
Federal Government must not spend beyond its means. This
precept, Thomas Jefferson once said, is of such importance ``as
to place it among the fundamental principles of government. We
should consider ourselves unauthorized to saddle posterity with
our debts, and morally bound to pay them ourselves.'' Thomas
Jefferson's words ring true today. The discipline imposed by a
balanced-budget amendment may be the only way to avoid leaving
future generations of Americans with an overwhelming legacy of
debt.
The notion of limiting the Government's budgetary authority
by a governing document is deeply rooted in our traditions,
extending as far back as Magna Carta. Our predecessors were
entirely aware of these traditions when they said:
The public debt is the greatest of dangers to be
feared by a republican government.
And
Once the budget is balanced and the debts paid off,
our population will be relieved from a considerable
portion of its present burdens and will find * * *
additional means for the display of individual
enterprise.
The first statement was made by Thomas Jefferson and the second
by Andrew Jackson.
These two quotations illustrate an important truth: No
concept is more a part of traditional American fiscal policy
than that of the balanced budget. In fact, Jefferson himself
wished the Constitution had included a prohibition on
Government borrowing because he thought that one generation
should not be able to obligate the next generation.
James Madison, in explaining the theory undergirding the
Government he helped create, had this to say about governments
and human nature:
Government [is] the greatest of all reflections on
human nature. If men were angels, no government would
be necessary. If angels were to govern men, neither
external or internal controls on government would be
necessary. In framing a government that is to be
administered by men over men, the great difficulty lies
in this: You must first enable the Government to
control the governed; and in the next place oblige it
to control itself. A dependence on the people is no
doubt the primary control on government; but experience
has taught mankind the necessity of auxiliary
precautions.
[Federalist No. 51.]
The Balanced-Budget Amendment is an additional ``auxiliary
precaution'' which helps restore two important elements in the
constitutional structure: limited government and an accountable
deliberative legislative assembly, both of which are vital to a
free and vibrant constitutional democracy.
A deliberative assembly, the essence of whose authority is,
in Alexander Hamilton's words, ``to enact laws, or in other
words to prescribe rules for the regulation of society'' for
the common good, was considered by the Framers of the
Constitution the most important branch of government because it
reflected the will of the people. Yet, as the maker of laws, it
was also considered the most powerful and the one that needed
to be guarded against the most.
Recognizing that ``[in] republican government the
legislative authority, necessarily, predominates'' and to
prevent ``elective despotism,'' James Madison, the ``Father of
the Constitution,'' recommended that the Philadelphia
Convention adopt devices in the Constitution that would
safeguard liberty. These include: bicameralism, separation of
powers and checks and balances, a qualified executive veto,
limiting congressional authority through enumerating its
powers, and, of course, the election of legislators to assure
accountability to the people.
However, in the late twentieth century, these
constitutional processes, what Madison termed ``auxiliary
precautions,'' have failed to limit the voracious appetite of
Congress to legislate into every area of private concern, to
invade the traditional bailiwick of the States, and,
consequently, to spend and spend to fund these measures until
the Federal Government has become functionally insolvent and
the economy placed in jeopardy. As more than 200 economists
told the Congress in an open letter:
We have lost the moral sense of fiscal responsibility
that served to make formal constitutional restraints
unnecessary. We cannot legislate a change in political
morality; we can put formal constitutional constraints
in place.
The Balanced-Budget Amendment will go a long way toward
ameliorating this problem. It will create an additional
constitutional process--an ``auxiliary precaution''--that will
bring back legislative accountability to the constitutional
system. The Balanced-Budget Amendment process accomplishes this
by making Federal deficit spending more difficult.
II. LEGISLATIVE HISTORY
In 1936, Representative Harold Knutson of Minnesota
proposed the first constitutional amendment to balance the
budget (H.J. Res. 579, 74th Cong.). This proposal would have
established a per capita limitation on the Federal public debt.
Since that time, numerous constitutional provisions have been
proposed to require a balanced budget.
S.J. Res. 1 derives from work begun in the Senate Judiciary
Subcommittee on the Constitution in the 96th Congress.
Throughout 1979 and early 1980, the Subcommittee held a series
of hearings across the country--eight in total--on the subject
of a balanced-budget amendment. Senators Hatch, Thurmond,
DeConcini, Heflin, and Simpson introduced S.J. Res. 126, which
was reported by the Subcommittee on December 18, 1979, by a
vote of 5 to 2. On March 15, 1980, the full Committee on the
Judiciary defeated S.J. Res. 126 by a vote of 8 to 9.
The same principal sponsors reintroduced S.J. Res. 126 in
the 97th Congress as S.J. Res. 58. During the early part of
1981, the Subcommittee held 4 additional days of hearings. On
May 6, 1981, the Subcommittee voted 4 to 0 to report out the
amendment, but only after adopting an amendment in the nature
of a substitute offered by Senator Hatch. On May 19, 1981, the
full Committee on the Judiciary favorably reported S.J. Res. 58
by an 11-to-5 vote.
On July 12, 1982, the Senate began consideration of S.J.
Res. 58. On August 4, 1982, following the adoption of a package
of amendments by Senators Domenici and Chiles and the
acceptance of an amendment by Senators Armstrong and Boren, the
Senate passed S.J. Res. 58 by a 69-to-31 vote. This marked the
first time either House of Congress had approved such a
measure.
On October 1, 1982, following a successful discharge
petition effort, the House of Representatives considered H.J.
Res. 350, the House counterpart to S.J. Res. 58. Although a
substantial majority of the House voted in favor of the
amendment, the 236-to-187 margin fell short of the necessary
two-thirds vote.
In the 98th Congress, the Subcommittee on the Constitution
held 2 days of hearings on S.J. Res. 5. On March 15, 1984, the
Subcommittee approved S.J. Res. 5 by a 4-to-1 vote and referred
the measure to the full Committee. On September 13, 1984,
following the adoption of an amendment offered by Senator
DeConcini, the full Committee on the Judiciary approved S.J.
Res. 5 by a vote of 11 to 4. However, the full Senate did not
vote on the measure before the 98th Congress came to a close.
S.J. Res. 13 was introduced by Senator Thurmond on the
first day of the 99th Congress. Following a hearing, the
Subcommittee on the Constitution held a markup of S.J. Res. 13
on May 15, 1985, at which the Subcommittee adopted an amendment
in the nature of a substitute offered by Senator Thurmond, and
then approved S.J. Res. 13, as amended, by a unanimous 5-to-0
vote. After considering S.J. Res. 13 during May, June, and
July, the full Judiciary Committee reported it favorably on
July 11, 1985, by a vote of 11 to 7. At the same time, the
Committee approved S.J. Res. 225, a simplified proposed
amendment introduced by Senators Thurmond, Hatch, DeConcini,
and Simon, by a vote of 14 to 4.
On March 25, 1986, the Senate defeated S.J. Res. 225 by a
vote of 66 to 34, thus failing to achieve the constitutional
requirement of a two-thirds majority by a single vote.
In the 100th Congress, the Subcommittee on the Constitution
held a March 23, 1988, hearing on S.J. Res. 11, S.J. Res. 112,
and S.J. Res. 116. On May 25, 1988, the Subcommittee approved
S.J. Res. 11, with an amendment in the nature of a substitute,
by a vote of 3 to 2, and reported the measure to the full
Committee on the Judiciary. The Committee considered S.J. Res.
11 in a markup session on August 10, 1988, but no action was
taken and the amendment died.
In the 101st Congress, the Subcommittee on the Constitution
held hearings on S.J. Res. 2, S.J. Res. 9, and S.J. Res. 12 on
July 27, 1989. On the same day, Senator Simon introduced, and
the Subcommittee approved, S.J. Res. 183, which incorporated
ideas from each of the other three bills. By a vote of 4 to 2,
the Subcommittee reported S.J. Res. 183 to the full Committee
on the Judiciary.
On June 14, 1990, the Committee accepted an amendment in
the nature of a substitute offered by Senators Simon, Thurmond,
DeConcini, Hatch, and Heflin, and then approved S.J. Res. 183,
as amended, by a vote of 11 to 3.
Shortly thereafter, following a successful discharge
petition effort, the House of Representatives considered H.J.
Res. 268, the House counterpart to S.J. Res. 183, on July 17,
1990. The House fell seven votes short of the two-thirds
majority required to approve the constitutional amendment, with
a vote of 279 to 150. S.J. Res. 183 did not come before the
full Senate for consideration in the 101st Congress.
In the 102d Congress, S.J. Res. 18 was introduced by
Senator Simon on January 14, 1991. The measure, identical to
the bill reported by the full Committee in the previous
Congress, was originally sponsored by Senators Thurmond,
DeConcini, Hatch, Heflin, Simpson, and Grassley. Senator
Specter also became a cosponsor.
The Subcommittee on the Constitution reported S.J. Res. 18
favorably to the full Committee on the Judiciary by a vote of 4
to 2, on March 8, 1991. S.J. Res. 5, a similar measure
introduced by Senator Specter, was also reported out.
On May 23, 1991, the Committee adopted, by a vote of 10 to
4, an amendment to S.J. Res. 18 offered by Senator Heflin
regarding military conflict. The Committee then approved S.J.
Res. 18, as amended, by a vote of 11 to 3. S.J. Res. 5, amended
to include a three-fifths vote requirement for tax increases,
was defeated by a vote of 6 to 8.
On June 9, 1992, after a series of procedural votes, the
House of Representatives took up H.J. Res. 290, a balanced-
budget proposal introduced by Representative Stenholm. After
extensive negotiations among key House and Senate sponsors, a
bicameral, bipartisan, consensus version of the bill was
submitted as a substitute amendment. On final passage, the
House vote in favor of the amendment was 280 to 153, nine votes
short of the two-thirds necessary for adoption. Following this
defeat, Senate leaders stated that they would not call up S.J.
Res. 18 before the full Senate. Accordingly, the Senate did not
vote on S.J. Res. 18 during the 102d Congress.
S.J. Res. 41 was introduced into the 103d Congress by
Senators Simon and Hatch on February 4, 1993. The measure was
virtually identical to the bicameral consensus proposal
hammered out during the summer of 1992. Twenty-one Senators
joined Senator Simon and Senator Hatch as original cosponsors,
including Senators DeConcini, Thurmond, Heflin, Craig, Moseley-
Braun, Grassley, Kohl, Brown, Daschle, Cohen, Bryan, Pressler,
Shelby, Bennett, Mathews, Smith, Campbell, Kempthorne, Graham,
Nickles, and Lugar. In addition, Senators Murkowski, Gregg,
Chafee, Feinstein, Warner, Simpson, Robb, Boren, Bingaman,
Jeffords, and Roth subsequently joined as cosponsors.
On March 16, 1993, hearings were held on S.J. Res. 41
before the Subcommittee on the Constitution. Soon after the
hearing, the Subcommittee reported the measure favorably to the
full Committee by a vote of 4 to 2.
On July 22, 1993, the Senate Committee on the Judiciary
approved S.J. Res. 41 by a vote of 15 to 3.
S.J. Res. 41 was debated on the floor of the Senate from
February 22, 1994, until March 1, 1994. After a resounding
defeat of a substitute amendment offered by Senator Reid, by a
vote of 22 to 78, S.J. Res. 41 failed to be adopted by only
four votes, 63 to 37.
On January 4, 1995, S.J. Res. 1 was introduced in the 104th
Congress as the first joint resolution of the new Congress by
Senate Majority Leader Robert Dole, on behalf of the primary
sponsors Senator Orrin G. Hatch, the new Chairman of the
Judiciary Committee, and Senator Paul Simon. The measure was
again virtually identical to the bicameral consensus proposal
forged during the summer of 1992. Thirty-nine Senators joined
Senators Dole, Hatch, and Simon as original cosponsors.
On January 5, 1995, Senator Hatch convened and chaired the
first full Committee hearings of the Senate Judiciary Committee
in the 104th Congress to consider S.J. Res. 1.
On January 18, 1995, the Senate Committee on the Judiciary
approved S.J. Res. 1 by a vote of 15 to 3.
On January 26, 1995, the U.S. House of Representatives
voted 300 to 132 in favor of H.J. Res. 1, the Balanced-Budget
Amendment. This marked the first time in the history of the
Republic that the House passed the Balanced-Budget Amendment.
On January 30, 1995, the Senate began debate on an
identical measure, S.J. Res. 1, the Balanced-Budget Amendment.
The floor debate lasted until March 2, 1995. On March 2 the
Senate voted 65 to 35, failing to approve the amendment. The
actual support for the amendment was 66 to 34, but Senator Dole
changed his vote to no in order to preserve his right to call
up the Balanced-Budget Amendment for reconsideration. Thus, the
Senate fell a mere one vote short of sending the Balanced-
Budget Amendment to the States for ratification.
On June 4, 1996, Senator Dole exercised his right to call
the amendment up for a reconsideration vote. The vote occurred
on June 6, 1996, and once again the amendment was narrowly
defeated, 64 to 35. The Balanced-Budget Amendment lost two
votes due to the replacement of Senator Packwood by Senator
Wyden and by Senator Exon switching sides. Senator Pell was not
available and thus did not vote on June 6.
In the current Congress, on January 17, 1997, Senator Hatch
convened and chaired the Judiciary Committee for its first
hearing of the 105th Congress to consider the Balanced-Budget
Amendment. Those testifying included Hon. Robert E. Rubin,
Secretary of the Treasury; Hon. James C. Miller III, former
Director of the Office of Management and Budget; Dr. Martin A.
Regalia, U.S. Chamber of Commerce; Martin J. Dannenfelser, Jr.,
Family Research Council; James D. Davidson, National Taxpayers
Union; Robert Greenstein, Center on Budget and Policy
Priorities.
On January 21, 1997, the Balanced-Budget Amendment was
introduced by Senator Hatch in the Senate and once again
designated S.J. Res. 1. Joining Senator Hatch as original
cosponsors were 61 other Senators: Senators Lott, Thurmond,
Craig, Nickles, Domenici, Stevens, Roth, Bryan, Kohl, Grassley,
Graham, Specter, Baucus, Thompson, Breaux, Kyl, Moseley-Braun,
DeWine, Robb, Abraham, Ashcroft, Sessions, D'Amato, Helms,
Lugar, Chafee, McCain, Jeffords, Warner, Coverdell, Cochran,
Hutchison, Mack, Gramm, Snowe, Allard, Brownback, Collins,
Enzi, Hagel, Hutchinson, Roberts, Smith of Oregon, Bennett,
Bond, Burns, Campbell, Coats, Faircloth, Frist, Gorton, Grams,
Gregg, Inhofe, Kempthorne, McConnell, Murkowski, Santorum,
Shelby, Smith of New Hampshire, and Thomas.
On January 22, 1997, Senator Hatch convened and chaired the
Judiciary Committee for a second hearing on the Balanced-Budget
Amendment. In addition to Senators Craig, Lautenberg, Graham,
Conrad, Bryan, and Dorgan those testifying included Hon. Paul
Simon, former U.S. Senator; Hon. Stuart Gerson, former Acting
Attorney General; David Malpass, Bear Stearns & Company; Alan
B. Morrison, Public Citizen, and Gene Lehrmann, American
Association of Retired Persons.
On January 30, 1997, the Judiciary Committee approved S.J.
Res. 1 by a vote of 13 to 5.
III. DISCUSSION
Washington has not balanced the Federal budget since 1969.
As a result, our national debt currently stands at over $5.3
trillion. This debt--which translates into $20,000 for every
American--has contributed to the increased economic pressure
straining older Americans, families, and local communities.
Just as one would do with an out-of-control credit-card
shopper, America needs to limit Washington's access to credit
and force it to confront the budget problems it has disregarded
for too long. Hundreds of economists agree that Washington has
lost its moral sense of fiscal responsibility and, while we
cannot legislate a change in political morality, Congress can
put a formal constitutional restraint into place by passing the
Balanced-Budget Amendment.
Opponents argue that Washington must maintain the budget
flexibility to deficit spend in times of emergency. However,
the Balanced-Budget Amendment recognizes this prospect,
allowing for the approval of deficits in times of real need by
a three-fifths vote of Congress. Furthermore, nothing in the
Balanced-Budget Amendment prevents Washington from maintaining
a rainy day fund for contingencies. Meanwhile, the Balanced-
Budget Amendment will help save worthy programs like Social
Security by strengthening the economy, reducing interest rates
and inflation (which helps those on fixed incomes), and
ensuring the Government will have the money needed to pay
Social Security when its obligations come due.
Still others suggest that since Washington seems interested
in passing a statutory balanced-budget plan for the year 2002,
America does not need a constitutional amendment. Yet, since
1978, Americans have been sold no fewer than five statutory
balanced-budget remedies, including the Gramm-Rudman law. None
have worked. And even if Washington does reach agreement on a
plan, will we really see a balanced budget in 2002, 2003, 2004,
2005, and every year after that without constitutional
pressure?
The fact is that the Balanced-Budget Amendment will force
Washington to do what needs to be done: determine our long-term
spending priorities; address projected deficits in important
programs; shift power back to the States, local communities,
and families; and provide incentives for savings and
investment. By forcing Washington to address these problems and
kick its credit-card shopping addiction, the Balanced-Budget
Amendment will make the economy more stable, in the process,
improve the economic prospects for all Americans--our older
Americans, our families, and our future generations.
Dangers of a budget deficit
Influenced by individuals such as Adam Smith, David Hume,
and David Ricardo, the drafters of the Constitution and their
immediate successors at the helm of the new Government strongly
feared the effects of public debt. The taxing and borrowing
provisions of the new Constitution reflected a need of the new
Republic to establish credit and governmental notes and
negotiable instruments that would spur commerce.
The Founders and early American Presidents were in virtual
unanimous agreement on the dangers of excessive public debt.
Consequently, for approximately 150 years of our history--from
1789 to 1932--balanced budgets or surplus budgets were the
norm.
Indeed, throughout most of the Nation's history, the
requirement of budget balancing under normal economic
circumstances was considered part of what has been called our
``Unwritten Constitution.''
Once that unwritten rule was broken, Pandora's Box was
opened. In 1929, Federal expenditures of $3 billion represented
just 3 percent of GNP. By 1950, the Federal share had risen to
16 percent of GDP or about $43 billion. For fiscal year 1996,
Federal Government spending of about $1.6 trillion commanded
nearly 23 percent of GDP.
To illustrate this growth in another way, the first $100
billion budget in the history of the Nation occurred as
recently as fiscal year 1962, more than 179 years after the
founding of the Republic. The first $200 billion budget,
however, followed only 9 years later in fiscal year 1971. The
first $300 billion budget occurred 4 years later in fiscal year
1975; the first $400 billion budget 2 years later in fiscal
year 1977; the first $500 billion budget in fiscal year 1979;
the first $600 billion budget in fiscal year 1981; the first
$700 billion budget in fiscal year 1982; the first $800 billion
budget in fiscal year 1983; the first $900 billion budget in
fiscal year 1985; and the first $1 trillion budget in fiscal
year 1987. The budget for fiscal year 1996 was about $1.6
trillion.
This tremendous amount of Federal spending does damage to
the economy. By consuming such an overwhelming part of the
capital in the economy, the Government ``crowds out'' private-
sector investment. Thus, when government spending rises
unchecked by fiscal responsibility, it chokes off the primary
engines of economic growth and risks our long-term security.
In spite of these dangers, during the past three decades
the Federal Government has run deficits in all but a single
year. The deficits have come during good times, and they have
come during bad times. They have come from Presidents who have
pledged themselves to balanced budgets, and they have come from
Presidents whose fiscal priorities were elsewhere. They have
come from Presidents of both parties. Once Congress began to
engage in deficit spending it started down the path of
sacrificing the long-term health of the economy for short-term
gain.
The time has come for a solution strong enough that it
cannot be evaded for short-term gain. We need a constitutional
requirement to balance our budget. S.J. Res. 1, the Balanced-
Budget Amendment, is that solution.
Interest on national debt
Gross interest on the national debt is now the second
largest expenditure in the entire budget--higher than defense
spending. Interest payments are the fastest growing item in the
budget. Up from $75 billion in fiscal year 1980, this year the
Federal Government will spend an estimated $248 billion on
interest, an increase of well over 300 percent.
Every day, the Government throws away over $670 million on
interest payments. None of this money goes toward education,
health care, or the battle against drugs and crime. Spending
more and more on interest leaves fewer and fewer resources to
spend on the goods and services needed to address other,
serious problems facing the Nation.
The money for these payments comes out of the pockets of
taxpayers, primarily middle-income families. These same
families are also burdened by the high interest rates that the
deficit sustains. Furthermore, these payments are going
increasingly overseas, to wealthy investors in other countries.
Over 17 percent of the gross Federal debt is now held by
foreign interests. That is a 28-percent increase in our
reliance on foreign creditors since 1992.
Statutory efforts
Critics of the Balanced-Budget Amendment argue that
Congress does not need a constitutional amendment to balance
the budget; they aver that Congress can achieve that goal
statutorily, right now, without waiting to ratify a
constitutional amendment. Technically, these arguments are, of
course, correct. The Balanced-Budget Amendment provides no new
authority to cut spending or raise revenues. However, as
outlined above, recent efforts have shown that Congress simply
does not have the will to balance the budget for 1 year, much
less keep it balanced.
The Federal Government has not run a budget surplus in over
25 years; the last one was in 1969. And that is the only time
in almost 40 years that we have achieved a balanced budget.
Enacting responsible budgets is not easy. While a spending
program often has a particular constituency that strongly
supports it, the general interest in restricting spending is
diffuse.
Previous statutory efforts to balance the budget have
failed because it is too easy for Congress simply to reverse
course and rescind its previous declarations. Since 1979 it has
been amply proven that statutory efforts are vulnerable to a
change of heart or a weakening of resolve. Deficit reduction
targets in such legislation can be continually changed, and the
legislation can be several years in operation before the budget
must be balanced. An amendment to the Constitution forces the
Government to live within its means. S.J. Res. 1 requires a
balanced budget by 2002 or 2 years after the amendment is
ratified by the States, whichever is latest.
Implementation and enforcement
S.J. Res. 1 contains the flexibility that an amendment to
the Constitution must have. It does not prescribe a particular
mechanism that Congress must employ in order to achieve a
balanced budget. Instead it leaves political decisions to the
political system. The amendment is, however, self-enforcing.
Because, historically, it has been easier for Congress to raise
the debt ceiling, rather than reduce spending or raise taxes,
the primary enforcement mechanism of S.J. Res. 1 is section 2,
which requires a three-fifths' vote to increase the debt
ceiling.
The amendment contemplates that Congress will execute its
responsibilities under the amendment through the exercise of
its currently existing authority. The Constitution already
empowers Congress with such authority. Section 8 of article I
grants Congress the power ``[t]o make all Laws which shall be
necessary and proper * * *.'' Furthermore, Members of Congress
are required by article VI generally to ``support this
Constitution'' while the President is required by article II,
section 1, clause 7, to ``preserve, protect, and defend the
Constitution''.
The Committee expects fidelity to the Constitution, as does
the American public. Both the President and Members of Congress
swear an oath to uphold the Constitution, including any
amendments thereto. Honoring this pledge requires respecting
the provisions of the proposed amendment. Flagrant disregard of
the proposed amendment's clear and simple provisions would
constitute nothing less than a betrayal of the public trust. In
their campaigns for reelection, elected officials who flout
their responsibilities under this amendment will find that the
political process will provide the ultimate enforcement
mechanism.
It is the Committee's view that: (1) the language and the
intent of S.J. Res. 1 are clear; (2) Congress and the President
are to abide by this language and intent; and (3) when
necessary, Congress must enact legislation that will better
enable the Congress and the President to comply with the
language and intent of the amendment.
Judicial enforcement and Presidential impoundment
The Committee believes that S.J. Res. 1 strikes the right
balance in terms of judicial review. By remaining silent about
judicial review in the amendment itself, its authors have
refused to establish congressional sanction for the Federal
courts to involve themselves in fundamental macroeconomic and
budgetary questions, while not undermining their equally
fundamental obligation to ``say what the law is,'' Marbury v.
Madison, 1 Cranch 137, 177 (1803). The Committee agrees with
former Attorney General William P. Barr who stated that there
is:
[L]ittle risk that the amendment will become the basis
for judicial micromanagement or superintendence of the
Federal budget process. Furthermore, to the extent such
judicial intrusion does arise, the amendment itself
equips Congress to correct the problem by statute. On
balance, moreover, whatever remote risk there may be
that courts will play an overly intrusive role in
enforcing the amendment, that risk is, in my opinion,
vastly outweighed by the benefits of such an amendment.
There exist three basic constraints that prevent the courts
from becoming unduly involved in the budgetary process: (1)
limitations on Federal courts contained in article III of the
Constitution, primarily the doctrine of ``standing''; (2) the
deference courts owe to Congress under both the ``political
question'' doctrine and section 6 of the amendment itself,
which confers enforcement authority in Congress; and (3) the
limits on judicial remedies to be imposed on a coordinate
branch of government--limitations on remedies that are self-
imposed by courts and that, in appropriate circumstances, may
be imposed on the courts by Congress.
To succeed in any lawsuit, a litigant must demonstrate
standing to sue. To demonstrate article III standing, a
litigant at a minimum must meet three requirements: (1)
``injury in fact''--that the litigant suffered some concrete
and particularized injury; (2) ``traceability''--that the
concrete injury was both caused by and is traceable to the
unlawful conduct; and (3) ``redressibility''--that the relief
sought will redress the alleged injury. For example, Lujan v.
Defenders of Wildlife, 112 S.Ct. 2130, 2136 (1992); Valley
Forge Christian College v. Americans United for Separation of
Church & State, Inc., 454 U.S. 464, 482-83 (1982). In
challenging measures enacted by Congress under a balanced-
budget regime, it would be an extremely difficult hurdle for a
litigant to demonstrate something more concrete than a
``generalized grievance'' and burden shared by all citizens and
taxpayers, the ``injury in fact'' requirement. See Frothingham
v. Mellon, 262 U.S. 447, 487 (1923).
Even in the vastly improbable case in which an ``injury in
fact'' was established, a litigant would find it near
impossible to establish the ``traceability'' and
``redressibility'' requirements of the article III standing
test. Litigants would have a difficult time in showing that any
alleged unlawful conduct--the unbalancing of the budget or the
shattering of the debt ceiling--``caused'' or is ``traceable''
to a particular spending measure that harmed them. Furthermore,
because the Congress would have numerous options to achieve
balanced-budget compliance, there would be no legitimate basis
for a court to nullify the specific spending measure objected
to by the litigant.
As to the ``redressibility'' prong, this requirement would
be difficult to meet simply because courts are wary of becoming
involved in the budget process--which is legislative in
nature--and separation of power concerns will prevent courts
from specifying adjustments to any Federal program or
expenditures. Thus, for this reason, Missouri v. Jenkins, 495
U.S. 33 (1990), where the Supreme Court upheld the district
court's power to order a local school district to levy taxes,
is inapposite because it is a 14th amendment case not involving
``an instance of one branch of the Federal Government invading
the province of another.'' Id. at 67. Courts simply will not
have the authority to order Congress to raise taxes.
Furthermore, the well-established ``political question'' and
``justiciability'' doctrines will mandate that courts give the
greatest deference to congressional budgetary measures,
particularly since section 6 of S.J. Res. 1 explicitly confers
on Congress the responsibility of enforcing the amendment, and
the amendment allows Congress to ``rely on estimates of outlays
and receipts.'' See Baker v. Carr, 369 U.S. 186, 217 (1962).
Under these circumstances, it is unlikely that a court would
substitute its judgment for that of Congress.
The Committee believes that the ``taxpayer'' standing case,
Flast v. Cohen, 392 U.S. 83 (1968), also is not applicable to
enforcement of the Balanced-Budget Amendment. First, the Flast
case has been limited by the Supreme Court to establishment-
clause cases. See Valley Forge Christian College, 454 U.S. at
480. Second, by its terms, Flast is limited to cases
challenging legislation promulgated under Congress'
constitutional ``tax and spend'' powers when the expenditure of
the tax was made for an illicit purpose. Sections 1 and 2 of
S.J. Res. 1, limit Congress' borrowing power and the amendment
contains no restriction on the purposes of the expenditures.
Finally, in subsequent cases, the Supreme Court has reaffirmed
the need for a litigant to demonstrate particularized injury,
thus casting doubt on the vitality of Flast. See Lujan, 112 S.
Ct. at 2136. The Committee also believes that there would be no
so-called ``congressional'' standing because Members of
Congress would not be able to demonstrate that they were harmed
by any dilution or nullification of their vote and that under
the doctrine of ``equitable discretion,'' Members would not be
able to show that substantial relief could not otherwise be
obtained from fellow legislators through the enactment, repeal,
or amendment of a statute. See Melcher v. Open Market Comm.,
836 F.2d 561, 563 (D.C. Cir. 1987).
A further limitation on judicial interference is section 6
of S.J. Res. 1. Under this section, Congress must adopt
statutory remedies and mechanisms for any purported budgetary
shortfall, such as sequestration, rescission, or the
establishment of a contingency fund. Pursuant to section 6, the
Committee believes that Congress, if it finds it necessary,
could limit the type of remedies a court may grant or limit the
court's jurisdiction in some other manner to proscribe judicial
overreaching. Congress has adopted such limitations in under
circumstances pursuant to its article III authority. See, for
example, Norris-LaGuardia Act, 29 U.S.C. 101-115; Federal Tax
Injunction Act, 28 U.S.C. 2283; Tax Injunction Act, 26 U.S.C.
7421(a).
Finally, it is not the intent of the Committee to grant the
President any impoundment authority under S.J. Res. 1. In fact,
up to the end of the fiscal year, the President has nothing to
impound because Congress in the amendment has the power to
ratify or to specify the amount of deficit spending that may
occur in that fiscal year. In any event, under section 6 of the
amendment, Congress can specify exactly what type of
enforcement mechanism it wants and the President, as Chief
Executive, is dutybound to enforce that particular
congressional scheme to the exclusion of impoundment. See
Kendall v. United States ex rel. Stokes, 37 U.S. (12 Pet.) 542
(1838) (The President must enforce any mandated--as opposed to
discretionary--congressional spending measure pursuant to his
duty to faithfully execute the law pursuant to article II,
section 3 of the Constitution). The Kendall case was given new
vitality in the 1970's, when lower Federal courts, as a matter
of statutory construction, rejected attempts by President Nixon
to impound funds where Congress did not give the President
discretion to withhold funding. For example, State Highway
Commission v. Volpe, 479 F.2d 1099 (8th Cir. 1973).
Under section 6 of the amendment, as stated, Congress must
mandate exactly what type of enforcement mechanism it wants,
whether it be sequestration, rescission, the establishment of a
contingency (or rainy day) fund, or some other mechanism. The
President, as Chief Executive, is dutybound under the
Constitution to faithfully enforce a particular requisite
congressional scheme to the exclusion of any hypothetical
impoundment power.
Currently, the only explicit delegated budgetary power the
President now possesses is the line-item veto. Unless Congress
grants the President further powers, the limited line-item veto
authority, which is subject to congressional override, is the
only power the President has to assure a balanced budget in a
hypothetical situation where Congress refuses to balance the
budget. The Committee believes that the President is dutybound
by his oath to faithfully execute the laws to enforce the
congressional scheme or powers delegated to him. Consequently,
unless Congress grants the President impoundment power, the
President, as a practical matter, will not be able to impound
funds under this amendment.
Social Security and the Balanced-Budget Amendment
Opponents of S.J. Res. 1 have raised the specter that the
Balanced-Budget Amendment may cause the Federal Old-Age and
Survivors Insurance and Disability Insurance Trust Funds
(Social Security Trust Funds or Trust Funds) to be ``raided''
because the amounts of the present-day surplus will be included
in budget calculations. They therefore argue that the Social
Security Program should be exempted from the requirements of
the Balanced-Budget Amendment. The Committee believes that
these contentions are erroneous for various reasons.
Simply counting the surplus does necessarily not mean that
the actual surplus will be used to balance the budget. Nor does
it mean that benefits will be cut. Indeed, the United States
has a unified budget, and obligations such as Social Security
benefits by law are paid out of general Treasury, regardless of
whether the trust fund runs a surplus or not. Furthermore,
Congress by statute has created ``firewalls'' that protect the
trust funds from budgetary congressional rescission or
Presidential sequestration. Additional protection is not
necessary. In fact, not including or exempting the present day
surplus in budgetary calculations, the Committee believes, will
both harm the future viability of the trust funds and require
more cuts than necessary in other Federal programs. Finally,
contrary to the critics contention that passage of the
Balanced-Budget Amendment will harm social security, the
Committee believes that passage and implementation of S.J. Res.
1, with the Social Security Program subject to its
requirements, are necessary for the feasibility of Social
Security and for a balanced budget and a healthy economy.
Why the Balanced-Budget Amendment is good for Social
Security
Indeed, those worried about the future of the Social
Security Trust Funds should support the Balanced-Budget
Amendment. This is no better illustrated than by the testimony
the Committee received from Robert J. Myers, who has worked for
the Social Security Administration in many capacities over the
last four decades, including as Chief Actuary and Deputy
Commissioner. Testifying on behalf of the proposed Balanced-
Budget Amendment in 1995, Mr. Myers told the Committee that,
``the most serious threat to Social Security is the
Government's fiscal irresponsibility.'' Mr. Myers suggested our
current profligacy will result either in the Government raiding
the trust fund or printing money, either of which will reduce
the real value of the trust funds.
If the country should ever decide to monetize the debt,
that is, simply print more money to cover its interest
payments, the resulting inflation would hit hardest those
living on fixed incomes. Although the Federal Reserve Board
would probably attempt to avoid this result, seniors would bear
a large part of the burden if this option is chosen. If
inflation returns in any other form because of our debt burden,
seniors would again be hit.
Additionally, the money in the Social Security Trust Funds
is invested in Government bonds. The trust funds' reserves are
in large degree only a claim on the general Treasury funds,
with no capital to back up that claim. If the country ever
defaults on its debts, the Social Security Trust Funds would
suffer.
For this reason alone, Social Security recipients, both
current and future, and those who are concerned about them,
should strongly support the Balanced-Budget Amendment. The
Committee believes that this Nation must get our entire fiscal
house in order for the sake of older Americans, families,
children, and grandchildren.
An exemption will not prevent cuts to Social Security and
would create a ``loophole'' to any balanced budget
The motivation for exempting Social Security from the
Balanced-Budget Amendment is to ensure that Social Security
benefits will not be cut. The Committee understands this
concern, but believes it to be misplaced. Passage of S.J. Res.
1 does not in any way mean Social Security benefits will be
reduced. It only requires Congress to choose among competing
programs in allocating budget cuts. There is every reason to
believe the power of the electorate will continue to ensure
that Social Security will compete very well.
The Committee feels compelled to note that, ironically, the
proposed exemption from the Balanced-Budget Amendment does
nothing to respond to the concern that benefits will be
reduced. Nothing in the exemption would protect Social Security
recipients from either benefit cuts or tax increases.
Exempting Social Security would create an emphatic
incentive either: (1) to run a deficit in the Social Security
Trust Funds to offset revenue increases elsewhere in the
budget, or (2) to redefine spending programs as ``Social
Security'' and pay for them through what could become a giant
loophole in any attempt to balance the budget.
With the constitutional loophole proposed by this exemption
in place, there would be an almost irresistible inducement for
future Congresses to redefine unrelated programs as Social
Security. Exempting Social Security would in essence create two
budgets. One budget would be under the aegis of the Balanced-
Budget Amendment, and would be required to be balanced. The
other, containing Social Security, would be allowed to run
deficits.
This is almost certainly to create a powerful incentive for
Congress to include high cost welfare programs as part of
Social Security. The inclusion of these programs into Social
Security could deny the trust funds of its surplus and leave it
insolvent. The Committee maintains that the argument for
exempting Social Security from the Balanced-Budget Amendment
must be rejected.
The experience in the States
In contrast to Federal fiscal policies, continued deficit
spending by the States has been a rarity. More States incur
general surpluses than incur general deficits. Forty-eight
States have constitutional provisions limiting their ability to
incur budget deficits. While there are significant differences
in the problems and resources that the State and Federal
Governments face, the State experience is nonetheless
instructive. The constitutional constraints have proven to be
workable in the States and have not inhibited their ability to
perform their most widely accepted functions. Because it has
been required in many States, legislatures there have learned
to operate effectively within the external limitation of their
constitutions.
Response to President Clinton
President Clinton's letter to Senator Daschle, dated
January 28, 1997, concerning opposition to the balanced-budget
constitutional amendment, contained misconceptions that the
Committee feels are necessary to address.
The primary thrust of the letter is the contention that the
Social Security Program will be harmed if it is included within
the scope of S.J. Res. 1. The Committee believes that the
contents of the letter supporting that position will unduly
frighten our senior citizens. There is nothing to suggest that
Social Security will be harmed by its inclusion within the
Balanced-Budget Amendment. In fact, proposals to exclude Social
Security from S.J. Res. 1 would have a far greater chance of
harming Social Security.
The President states in his letter that in the event of a
budget impasse, he could stop disbursements of Social Security
checks and that the courts would reduce benefits. He also
alleges that no statutory program could protect Social Security
because a balanced-budget amendment would override such
statutes.
However, case law and sound jurisprudence support the view
that the President may not impound any entitlement funds or any
mandatory disbursements. This has been settled as a matter of
law since the 19th century Supreme Court decision in Kendall v.
United States. The Balanced-Budget Amendment does not grant the
President any new enforcement powers. Indeed section 6 of S.J.
Res. 1 confers upon Congress plenary power to enforce the
amendment. Once implementing legislation is passed that
remedies situations where a budget is not balanced at the end
of the year, the President is dutybound by his oath of office
to enforce the congressional procedure to the exclusion of all
others.
Moreover, the existing statutes which protect Social
Security Trust Funds through the procedures known as
``firewalls,'' will still be in place. While it is of course
true that constitutional provisions trump conflicting statutory
provisions, the Committee sees nothing in the text of S.J. Res.
1 inconsistent with such firewall protections. Thus, the
Committee believes they would remain in force.
With regard to the issue of judicial review, the Committee
notes that courts will be bound by past precedent and the
political question, standing, justiciability, and separation-
of-powers doctrines from interfering in the budget process.
Thus, the claim that the courts will stop Social Security
checks from flowing lacks legal support.
The Committee also notes that the President's budgets have
consistently included the Social Security surpluses. Indeed,
Treasury Secretary Rubin's testimony before the Committee
indicated that he agreed with this practice and would continue
it in the future.
The Committee recognizes that in the coming decades Social
Security will go into debt. Since the trust fund contains
Government securities, the key question for the future health
of the Social Security Program is whether the Federal
Government will be able to honor the notes held by the trust
fund. The Committee firmly believes that the fiscal
responsibility that will come as a result of passing the
Balanced-Budget Amendment is the most important step that can
be taken toward guaranteeing the ability of the Government to
repay those debts.
The best protection for Social Security is passing and
ratifying S.J. Res. 1. This would create the needed discipline
to balance the budget. Payments on debt interest will be
substantially reduced. The chance for Government default will
be significantly diminished. The economy will grow at a brisker
pace. And repayment of Social Security obligations will be
assured.
Conclusion
A balanced-budget amendment steers a disciplined course
which protects our future economic strength and national
standard of living. Both flexibility and a strong mandate are
needed for a fiscally responsible path for our Nation. Senate
Joint Resolution 1 provides both these elements. A
constitutional balanced-budget amendment can serve as a moral
and legal beacon to guide the Nation in the fundamental choices
of governance.\1\
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\1\ Senator Kohl does not necessarily agree with all statements in
the majority views.
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IV. VOTES OF THE COMMITTEE
Pursuant to paragraph 7 of rule XXVI of the Standing Rules
of the Senate, each committee is to announce the results of
rollcall votes taken in any meeting of the Committee on any
measure or amendment. The Senate Judiciary Committee, with a
quorum present, met on Thursday, January 30, 1997, at 10 a.m.,
to mark up S.J. Res. 1. The following rollcall votes occurred
on amendments proposed thereto:
(1) The Feinstein substitute amendment to exempt Social
Security and capital budgets, and suspend the balanced-budget
rule during recession. The amendment was rejected: 8 yeas to 9
nays.
Yeas Nays
Leahy Thurmond (proxy)
Kennedy Grassley (proxy)
Biden (proxy) Thompson (proxy)
Kohl (proxy) Kyl (proxy)
Feinstein DeWine
Feingold (proxy) Ashcroft
Durbin Abraham
Torricelli Sessions
Hatch
(2) The Torricelli amendment to exempt capital expenditures
and Social Security and suspend the balanced-budget rule during
recession. The amendment was rejected: 8 yeas to 9 nays.
Yeas Nays
Leahy Thurmond (proxy)
Kennedy Grassley
Biden (proxy) Thompson (proxy)
Kohl (proxy) Kyl (proxy)
Feinstein (proxy) DeWine
Feingold Ashcroft
Durbin Abraham
Torricelli Sessions (proxy)
Hatch
(3) The Leahy amendment on the debt limit. The amendment
was rejected: 8 yeas to 9 nays.
Yeas Nays
Leahy Thurmond (proxy)
Kennedy Grassley
Biden (proxy) Thompson (proxy)
Kohl (proxy) Kyl
Feinstein (proxy) DeWine (proxy)
Feingold Ashcroft
Durbin Abraham
Torricelli (proxy) Sessions
Hatch
(4) The Kennedy amendment to exempt Social Security. The
amendment was rejected: 9 yeas to 9 nays.
Yeas Nays
Specter (proxy) Thurmond (proxy)
Leahy Grassley
Kennedy Thompson (proxy)
Biden (proxy) Kyl
Kohl (proxy) DeWine (proxy)
Feinstein (proxy) Ashcroft
Feingold Abraham
Durbin Sessions
Torricelli (proxy) Hatch
(5) The Durbin amendment on taxes. The amendment was
rejected: 8 yeas to 9 nays.
Yeas Nays
Leahy (proxy) Thurmond (proxy)
Kennedy Grassley
Biden (proxy) Thompson
Kohl (proxy) Kyl (proxy)
Feinstein (proxy) DeWine
Feingold Ashcroft
Durbin Abraham
Torricelli (proxy) Sessions
Hatch
(6) The Feingold amendment on ratification. The amendment
was rejected: 6 yeas to 9 nays.
Yeas Nays
Leahy (proxy) Thurmond (proxy)
Kennedy Grassley
Kohl (proxy) Thompson
Feingold Kyl
Durbin DeWine
Torricelli Ashcroft
Abraham
Sessions
Hatch
(7) Motion to favorably report S.J. Res. 1. The motion was
adopted: 13 yeas to 5 nays.
Yeas Nays
Thurmond (proxy) Leahy
Grassley Kennedy
Specter (proxy) Feinstein
Thompson Feingold
Kyl Durbin
DeWine
Ashcroft
Abraham
Sessions
Biden (proxy)
Kohl (proxy)
Torricelli
Hatch
V. TEXT OF S.J. RES. 1
JOINT RESOLUTION proposing an amendment to the Constitution of the
United States to require a balanced budget
Resolved by the Senate and House of Representatives of the
United States of America in Congress assembled, (two-thirds of
each House concurring therein), That the following article is
proposed as an amendment to the Constitution of the United
States, which shall be valid to all intents and purposes as
part of the Constitution if ratified by the legislatures of
three-fourths of the several States within 7 years after its
submission to the States for ratification:
``Article--
``Section 1. Total outlays for any fiscal year shall not
exceed total receipts for that fiscal year, unless three-fifths
of the whole number of each House of Congress shall provide by
law for a specific excess of outlays over receipts by a
rollcall vote.
``Section 2. The limit on the debt of the United States
held by the public shall not be increased, unless three-fifths
of the whole number of each House shall provide by law for such
an increase by a rollcall vote.
``Section 3. Prior to each fiscal year, the President shall
transmit to the Congress a proposed budget for the United
States Government for that fiscal year, in which total outlays
do not exceed total receipts.
``Section 4. No bill to increase revenue shall become law
unless approved by a majority of the whole number of each House
by a rollcall vote.
``Section 5. The Congress may waive the provisions of this
article for any fiscal year in which a declaration of war is in
effect. The provisions of this article may be waived for any
fiscal year in which the United States is engaged in military
conflict which causes an imminent and serious military threat
to national security and is so declared by a joint resolution,
adopted by a majority of the whole number of each House, which
becomes law.
``Section 6. The Congress shall enforce and implement this
article by appropriate legislation, which may rely on estimates
of outlays and receipts.
``Section 7. Total receipts shall include all receipts of
the United States Government except those derived from
borrowing. Total outlays shall include all outlays of the
United States Government except for those for repayment of debt
principal.
``Section 8. This article shall take effect beginning with
fiscal year 2002 or with the second fiscal year beginning after
its ratification, whichever is later.''
VI. SECTION-BY-SECTION ANALYSIS
Section 1
The core provision of Senate Joint Resolution 1 is
contained in section 1, which establishes as a fiscal norm the
concept of a balanced Federal budget. This section mandates
that ``Total outlays for any fiscal year shall not exceed total
receipts for that year, * * *.''
The section does not specify the process that Congress must
follow in order to achieve a balanced budget. The Committee
recognizes that there may be many equitable means of reaching
that goal; it is therefore not the Committee's intent to
dictate any particular fiscal strategy upon the Congress.
Rather, the Committee expects the Congress to use its full
range of legislative powers in order to comply with the
amendment.
Section 1 also contains an exception; the balanced budget
requirement applies ``* * * unless three-fifths of the whole
number of each House of Congress shall provide by law for a
specific excess of outlays over receipts by a rollcall vote.''
This provision preserves Congress' flexibility and capacity to
respond to economic crises without sacrificing accountability.
Nothing in this section either anticipates nor requires any
alteration in the balance of powers between the legislative and
executive branches.
``* * * fiscal year * * *'' is intended as a term defined
by statute and, as such, is to have no constitutional standing
independent from its statutory definition. The amendment does
not require an immutable definition; other fiscal years could
be defined without necessarily straining the intent of the
amendment.
``* * * shall not exceed * * *'' is a clear mandate: a
command. It means that outlays may not be greater than receipts
for any given fiscal year. Receipts may exceed outlays.
``* * * unless three-fifths * * *'' identifies the minimum
proportion of the total membership of each House needed for
action by the Congress. Under current law, three-fifths of the
Senate membership is 60, and three-fifths of the House of
Representatives is 261. [Vacancies would reduce the minimum
majorities.]
``* * * the whole number of each House * * *'' is intended
to be consistent with the phrase ``the whole number of
Senators'' in the 12th amendment to the Constitution, denoting
the entire membership of each individual House of Congress in
turn.
``* * * for a specific excess of outlays over receipts * *
*'' means that the maximum amount of deficit spending to be
allowed must be clearly identified. The Committee intends that
the vote to permit deficit spending be limited to the issue of
such a deficit. By forcing Congress to identify and confront
any particular deficit, this clause will promote
accountability.
``* * * by a rollcall vote.'' specifies what is already
implicit. A rollcall vote will be required to ensure that the
required three-fifths vote has been recorded. The Committee
makes this provision explicit in order to emphasize
accountability in the approval of any deficit.
Section 2
Section 2 provides that ``The limit on the debt of the
United States held by the public shall not be increased, unless
three-fifths of the whole number of each House shall provide by
law for such an increase by a rollcall vote.'' Section 2 works
in tandem with section 1 to enforce the balanced-budget
requirement.
Section 2 focuses public attention on the magnitude of
Government indebtedness. To run a deficit, the Federal
Government must borrow funds to cover its obligations. Section
2 removes the borrowing power from the Government, unless
three-fifths of the total membership of both Houses votes to
raise the debt limit. As a result, whenever the Government
exceeds the debt ceiling, it runs a theoretical risk of
default, a powerful incentive for balancing the budget. The
Committee expects that the three-fifths vote to increase
borrowing will be the exception, not the norm.
Votes to suspend the balanced-budget requirement under
section 1 and to raise the debt-ceiling under section 2 need
not be made separately. [The Committee recognizes that, in
certain cases, both decisions could be approved together, in
one piece of legislation, by the same, three-fifths vote.]
``* * * the limit on the debt * * *'' assumes the
establishment of a new statutory limit on the measure of
Government indebtedness. This limit may be established in
addition to, or as a replacement for, any present statutory
limit on the debt held by the public.
``* * * debt of the United States held by the public * *
*'' is a widely used and understood measurement tool. The
General Accounting Office, in its ``Glossary of Terms Used in
the Federal Budget Process'' [Exposure Draft, January 1993]
defines ``Debt Held by the Public'' as ``That part of the gross
federal debt held outside the federal government. This includes
any federal debt held by individuals, corporations, state or
local governments, the Federal Reserve System, and foreign
governments and central banks. Debt held by government trust
funds, revolving funds, and special funds is excluded from debt
held by the public.'' The current, accepted meaning of ``debt *
* * held by the public'' is intended to be the controlling
definition under this article.
Section 3
Section 3 requires that ``Prior to each fiscal year, the
President shall transmit to the Congress a proposed budget for
the United States Government for that fiscal year, in which
total outlays do not exceed total receipts.''
This section reflects the Committee's belief that sound
fiscal planning should be a shared governmental responsibility.
The section is not intended to grant the President formal
authority or power over budget legislation or spending. It is
the Committee's expectation that, charged with like
responsibilities, the President and the Congress will more
readily collaborate in fiscal planning.
``Prior to each fiscal year * * *'' is intended to ensure
that the President transmits a budget proposal before the first
day of the statutory fiscal year.
``* * * the President shall transmit to the Congress * *
*'' is intended to impose on the President a constitutional
duty to communicate to the Congress a proposed budget that is
balanced. Article II enumerates several duties currently
required of the President, including delivering the State of
the Union address, receiving foreign Ambassadors, and
commissioning officers of the United States. It is the
Committee's belief that this new duty similarly merits
constitutional status.
``* * * a proposed budget * * * in which total outlays do
not exceed total receipts.'' is intended to require a
responsible proposal that should anticipate a level of outlays
no greater than the level of receipts. Such a proposal
necessarily requires a projection of future events. The
Committee anticipates good faith on the part of the President
with respect to projected economic factors.
Section 4
By requiring approval ``* * * by a majority of the whole
number of each House by a rollcall vote'' for any ``bill to
increase revenue * * *'', section 4 provides a responsible and
balanced amount of tax limitation and improves congressional
accountability for revenue measures.
``* * * bill to increase revenue * * *'' is intended to
include those measures whose intended and anticipated effect
will be to increase revenues to the Federal Government.
``* * * by a majority of the whole number of each House by
a rollcall vote.'' is intended, like similar provisions in
section 1, to identify the minimum proportion necessary to
approve the relevant measure. Here the requirement is a
majority. The terms relating to ``the whole number of each
House'' and ``rollcall vote'' are intended to have the same
meaning as in section 1.
Section 5
This section, as amended, guarantees that Congress will
retain maximum flexibility in responding to clear national
security crises such as a declared war or imminent military
threat to national security.
``* * * may waive * * *'' is intended to provide Congress
with discretionary authority to operate outside of the
provisions of this article in the event of declarations of war.
The waiver specified in the first sentence of this section
would require a concurrent resolution of Congress, but would
not have to be submitted to the President for approval.
``* * * the provisions of this article * * *'' is intended
to refer primarily to sections 1, 2, 3, and 4 of the amendment.
The Congress may waive any or all of these provisions.
``* * * declaration of war * * *'' is intended to be
construed in the context of the powers of the Congress to
declare war under article 1, section 8. The Committee intends
that ordinary and prudent preparations for a war perceived by
Congress to be imminent would be funded fully within the
limitations imposed by the amendment, although Congress could
establish higher levels of spending or deficits for these or
any other purposes under section 1.
``* * * for any fiscal year * * * is in effect.'' is
intended, in the first sentence of this section, to require a
separate waiver of the provisions of the amendment each year.
Congress may not adopt a waiver resolution which applies to
more than one fiscal year. Rather, Congress must annually adopt
a separate waiver for the fiscal year at issue.
``The provisions of this article * * *'' in the second
sentence has the same meaning as in the first sentence of this
section. See above.
``* * * may be waived * * *'' is intended to provide
Congress with discretionary authority to operate outside of the
provisions of this article in the event the United States is
engaged in certain kinds of military conflict. The waiver
specified in the second sentence of this section would require
a joint resolution rather than a simple concurrent resolution
of Congress.
``* * * for any fiscal year * * *'' in the second sentence
has the same meaning as in the first sentence of this section.
See above.
``* * * is engaged in military conflict * * *'' is intended
to limit the applicability of this waiver to situations
involving the actual use of military force, which nonetheless
do not rise to the level of a formal declaration of war.
``* * * imminent and serious military threat to national
security * * *'' is intended to define those situations in
which Congress, in order to respond to urgent national security
crises with additional outlays for the defense of the Nation,
needs more flexibility than the three-fifths vote requirement
in section 1 would provide.
``* * * so declared by a joint resolution * * * which
becomes law.'' is intended to require Congress to pass a joint
resolution, rather than a simple or concurrent resolution, and
to specify that the resolution must be enacted into law before
it can be effective for the purposes of this section.
``* * * a majority of the whole number of each House of
Congress * * *'' has the same meaning as the similar provision
in section 4. See above.
Section 6
Section 6 states that ``[t]he Congress shall enforce and
implement this article by appropriate legislation, which may
rely on estimates of outlays and receipts.'' This section makes
explicit what is implicit, that Congress has a positive
obligation to fashion legislation to enforce this article.
Section 6 underscores Congress' continuing role in
implementing the balanced-budget requirement. The provision
precludes any interpretation of the amendment that would result
in a shift in the balance of powers among the branches of
government.
``The Congress shall enforce and implement * * *'' creates
a positive obligation on the part of Congress to enact
appropriate legislation to implement and enforce the article.
This section recognizes that an amendment dealing with subject
matter as complicated as the Federal budget process must be
supplemented with implementing legislation.
``* * * which may rely on estimates of outlays and
receipts.'' confirms that Congress has the authority to use
reasonable estimates, where appropriate, as a means of
achieving the normative result required in section 1.
``Estimates'' means good faith, responsible, and reasonable
estimates made with honest intent to implement section 1, and
not evade it.
This provision gives Congress an appropriate degree of
flexibility in fashioning necessary implementing legislation.
For example, Congress could use estimates of receipts or
outlays at the beginning of the fiscal year to determine
whether the balanced-budget requirement of section 1 would be
satisfied, so long as the estimates were reasonable and made in
good faith. In addition, Congress could decide that a deficit
caused by a temporary, self-correcting drop in receipts or
increase in outlays during the fiscal year would not violate
the article. Similarly, Congress could state that very small or
negligible deviations from a balanced budget would not
represent a violation of section 1. If an excess of outlays
over receipts were to occur, Congress can require that any
shortfall must be made up during the following fiscal year.
Section 7
Section 7 is intended to clarify further the relevant
amounts that must be balanced.
``* * * total receipts * * *'' is intended to include all
moneys received by the Treasury of the United States, either
directly or indirectly through Federal or quasi-Federal
agencies created under the authority of acts of Congress,
except those derived from borrowing. In present usage,
``receipts'' is intended to be synonymous with the definition
of ``budget receipts'', which are not meant to include off-
setting collections or refunds.
``* * * except those derived from borrowing * * *'' is
intended to exclude from receipts the proceeds of debt
issuance. To borrow is to receive with the intention of
returning the same or equivalent. It is intended that those
obligations the title to which can be transferred by the
present owner to others, like Treasury notes and bonds, be
excluded from receipts. Contributions to social insurance
programs, though also carrying an implied obligation, are not
transferable and should be included in receipts.
``* * * total outlays * * *'' is intended to include all
disbursements from the Treasury of the United States, either
directly or indirectly through Federal or quasi-Federal
agencies created under the authority of acts of Congress, and
either ``on-budget'' or ``off-budget'', except those for
repayment of debt principal.
``* * * except for those for repayment of debt principal.''
is intended to exclude from outlays the repurchase or
retirement of Federal debt. Debt principal is intended to be
distinguished from interest payments, which are not excluded
from outlays, and refers to a capital sum due as a debt.
Section 8
This section states that the amendment will take effect
some specified time after it is adopted, so as to allow
Congress a period to consider and adopt the necessary
procedures to implement the amendment, and to begin the process
of balancing the budget.
``* * * beginning with fiscal year 2002 * * *'' states
that, once ratified, the amendment will go into effect no
earlier than fiscal year 2002.
``* * * or with the second fiscal year * * *'' provides
that the amendment will go into effect 2 years after
ratification by the States, so long as that period is later
than 2002.
``* * * its ratification.'' is intended to be construed as
ratification of this article under article V of the
Constitution.
VII. COST ESTIMATE
U.S. Congress,
Congressional Budget Office,
Washington, DC, January 30, 1997.
Hon. Orrin G. Hatch,
Chairman, Committee on the Judiciary,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S.J. Res. 1, a joint
resolution proposing an amendment to the Constitution of the
United States to require a balanced budget.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is James Horney.
Sincerely,
June E. O'Neill, Director.
Enclosure.
s.j. res. 1--a joint resolution proposing an amendment to the
constitution of the united states to require a balanced budget
As ordered reported without amendment by the Senate Committee on the
Judiciary on January 30, 1997
S.J. Res. 1 would propose an amendment to the Constitution
to require that the Congress, each year, adopt a budget in
which total outlays of the United States do not exceed total
receipts, unless the Congress approves a specific excess of
outlays over receipts by a three-fifths vote in each House. The
proposed budget submitted by the President would have to be
balanced as well. The amendment also would require a three-
fifths vote in each House to raise the limit on Federal debt
held by the public and a simple majority on a rollcall vote in
each House to increase revenue. Such provisions could be waived
for any fiscal year in which a declaration of war is in effect
or in which the United States is engaged in military conflict
that causes an imminent and serious military threat to national
security. The amendment would have to be ratified by three-
fourths of the States within 7 years of its submission for
ratification, and would take effect beginning with fiscal year
2002 or the second fiscal year after its ratification,
whichever is later.
The budgetary impact of this amendment is very uncertain,
because it depends on when it takes effect and the extent to
which the Congress would exercise the discretion provided by
the amendment to approve budget deficits. The earliest the
amendment could take effect would be for fiscal year 2002.
CBO projects that the deficit will be $188 billion in
fiscal year 2002 if there are no changes in current policies
(and assuming that discretionary spending grows at the rate of
inflation after 1988). CBO estimates, however, that policy
savings totalling $154 billion in 2002 (including associated
debt service effects) would balance the budget in that year.
The additional $34 billion in deficit reduction--the so-called
fiscal dividend--would come from favorable changes in the
economy induced by balancing the budget.
This resolution would not directly affect spending or
receipts, so there would be no pay-as-you-go scoring under
section 252 of the Balanced Budget and Emergency Deficit
Control Act of 1985.
S.J. Res. 1 contains no intergovernmental or private sector
mandates as defined in the Unfunded Mandates Reform Act of 1995
(Public Law 104-4) and would not directly affect the budgets of
State, local, or tribal governments. However, steps to reduce
the deficit to meet the requirements of this amendment could
include cuts in Federal grants to these governments, a smaller
Federal contribution for shared programs or projects, and/or
increased demands on State, local, and tribal governments to
compensate for reductions in Federal programs.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are James
Horney (for Federal costs), who can be reached at 226-2880, Leo
Lex (for State and local costs), who can be reached at 225-
3220, and Matthew Eyles (for the private-sector costs), who can
be reached at 226-2649. This estimate was approved by Paul N.
Van de Water, Assistant Director for Budget Analysis.
VIII. REGULATORY IMPACT STATEMENT
Pursuant to paragraph 11(b), rule XXVI of the Standing
Rules of the Senate, the Committee, after due consideration,
concludes that Senate Joint Resolution 1 will not have direct
regulatory impact.
IX. ADDITIONAL VIEWS OF SENATOR CHARLES E. GRASSLEY
I am submitting additional views to the Committee Report on
S.J. Res. 1 because I want to highlight the significant flaws
of the amendments offered in Committee to abandon the unified
budget by taking social security ``off budget.'' In my view,
these amendments would harm the social security program and
force unconscionably deep cuts in many of America's most vital
social programs.
For many years, under Democratic and Republican Presidents
and with Republicans or Democrats in control of Congress,
social security has been included in a unified budget. The
unified budget has historically served to protect social
security as well as many other important government programs.
Now, however, Congress is being asked to abandon this
tried-and-true approach to the federal budget. I can see no
reason for this radical change, although there are many reasons
to believe that abandoning the protective shield of the unified
budget would have devastating consequences. It is beyond
dispute that should Congress scrap the unified budget and
exempt social security, truly draconian cuts in important
social programs would be absolutely necessary to balance the
budget. In fact, according to the most recent figures, 295
billion dollars in cuts would have to occur in order to achieve
balance.
In the spirit of ``truth in budgeting,'' I challenge the
supporters of scrapping the unified budget to identify what
programs will be cut and how large those cuts will be. Prior to
the 104th Congress, those who supported a balanced budget were
repeatedly asked to provide details of how a balanced budget
would be achieved. I believe the same standard should apply to
those who propose exempting social security.
When it comes to facing up to the difficult issue of
suggesting such deep cuts, it may be some of those who support
abandoning the unified budget will also abandon a balanced
budget.
Importantly, scrapping the unified budget will harm the
social security program. While the social security program is
currently generating surpluses, that situation will not
continue. By 2018, the Social Security trust fund will be in
deficit-spending mode. By 2029, the trust fund will be
insolvent. In that year, the deficit attributable to Social
Security will be $647 billion.
In the spirit of ``truth in budgeting,'' I believe that the
proponents of abandoning the unified budget should explain to
the American people how they would save social security once
the protective shield of the unified budget has been removed.
In 1986 and 1990, Congress passed two pieces of legislation
which moved social security off-budget. I supported this
legislation because we were creating broad, general categories
for programs to fit into. Social Security would have been
included in the category of mandatory spending. Automatic cuts
would have been triggered in the program if our spending plans
were not achieving the goals set. As has been pointed out,
social security has earmarked revenues and is intended to pay
for itself. I believed then, and I believe now, that automatic
cuts should not be made to social security as long as it is
paying for itself.
Under the umbrella of a constitutional amendment, it is
unwise and potentially dangerous to exempt social security. How
programs like Social Security, with a dedicated revenue stream,
are treated in a unified budget is an issue which will be the
subject of implementing legislation.
In conclusion, I agree with Mr. Robert Myers, the former
Chief Actuary for the Social Security program. He testified
before the Judiciary Committee on January 5, 1995 that a
balanced federal budget is the best way to protect social
security. There are too many unanswered questions associated
with exempting social security from the unified budget through
a constitutional amendment. Until Congress and the American
people have real answers to those questions, Congress should
not cavalierly move to scrap the unified budget which has
worked so well for so long.
Chuck Grassley.
X. ADDITIONAL VIEWS OF MR. KYL
Each Member of the U.S. Senate has a different idea of what
the ideal balanced-budget amendment should look like. Some may
not want any constitutional constraint at all.
Some of us who support S.J. Res. 1 believe a better version
of the amendment would not only require a balanced budget, it
would limit Federal spending or Congress' ability to raise
taxes. I sponsored alternatives to S.J. Res. 1 that include
such limits: the Balanced Budget/Spending-Limitation Amendment
(S.J. Res. 8), and the Tax Limitation Amendment (S.J. Res. 9).
A balanced budget is critically important. But it is also
important how balance is achieved and at what level of taxing
and spending. Congress could conceivably double Federal
spending to $3 trillion and try to raise taxes to match in
order to achieve a balanced budget. But that is not what
American families, whose budgets are already stretched to the
limit because of high taxes, expect out of a balanced-budget
amendment. Such an oppressive tax burden would certainly push
the economy into severe recession which, in turn, would
eliminate the revenues necessary to fund the Government and
maintain a balanced budget.
The Balanced-Budget Amendment should not become anyone's
excuse for raising taxes. But neither should a spending or tax
limit become anyone's excuse for opposing a constitutional
requirement for a balanced budget. The mountain of debt our
Government is passing on to future generations is growing too
large to miss yet another opportunity to send a balanced-budget
amendment--with or without a tax or spending limit--to the
States for ratification. I will support S.J. Res. 1, but I also
intend to press for the prompt consideration of a tax or
spending limit as the essential next step after the Senate has
completed action on the Balanced-Budget Amendment.
I have long advocated a spending limit as the best
approach. Modeled after an initiative that won the support of
78 percent of Arizona voters in 1978, the Balanced Budget/
Spending-Limitation Amendment would require a balanced budget
and limit spending to 19 percent of Gross Domestic Product
(GDP), which is roughly the level of revenue the Federal
Government has collected for the last 40 years. That is,
revenues have remained relatively constant at 19 percent of GDP
despite tax rate increases and tax cuts, despite recessions and
expansions, and despite fiscal policies pursued by Presidents
of both political parties. This suggests that the economy has
already established an effective limit on how great a tax
burden it will bear.
The benefit of writing a spending limitation into the
Balanced-Budget Amendment is that it will preclude futile
attempts by Congress to balance the budget by raising taxes.
Raising taxes will merely impede economic growth and harm the
Nation's standard of living. A spending limitation provides
Congress with the guiding principle that there is really only
one way to balance the budget: by limiting spending to no more
than the level of tax revenues that the economy has
historically been willing to bear.
Limit spending, and there is no need to consider tax
increases. Congress would not be allowed to spend additional
revenue that might be raised. Link Federal spending to economic
growth, as measured by GDP, and an incentive is created for
Congress to promote pro-growth economic policies. The more the
economy grows, the more spending Congress is allowed to
propose, but always proportionate to the size of the economy.
A tax limit is the next best approach. Like the BBSLA, the
Tax-Limitation Amendment (TLA) has its roots in initiatives
started at the State level. A tax limit was approved by 72
percent of Arizona voters in 1992. Nevadans approved a similar
limit last year with 70 percent of the vote, as did 69 percent
of Florida voters. In all, 14 States have imposed some form of
tax limitation on their State governments. The Federal TLA
would require a two-thirds vote of each House of Congress to
approve tax increases. It would make an important addition to
the Constitution, whether or not the Balanced-Budget Amendment
is approved. But, it is particularly important if the Balanced-
Budget Amendment does become part of the Constitution so that a
constitutional requirement for a balanced budget does not
become an excuse to raise taxes.
Although a balanced-budget amendment with a spending or tax
limitation is preferable, the time has come to ensure that we
at least have a constitutional requirement for a balanced
budget. I support S.J. Res. 1.
Jon Kyl.
XI. ADDITIONAL VIEWS OF MR. ABRAHAM
No issue is more important to the health of this Nation and
the security of future generations than passing a
Constitutional amendment requiring balanced Federal budgets.
The Federal budget has been in deficit for 28 straight years,
while total Federal borrowing is now over $5 trillion. A child
born today faces almost $200,000 in additional taxes just to
service the interest on this debt. Nevertheless, the Balanced-
Budget Amendment remains extremely contentious in the Senate,
as evidenced by a number of amendments offered in the Judiciary
Committee which would either undermine the enforcement
provisions of the amendment or make it impossible for future
Congresses to comply with its provisions. While I had the
opportunity to address several of these amendments during the
markup, I wanted to take this opportunity to focus on the issue
of exempting Social Security from the Balanced-Budget
Amendment.
Of the six amendments offered during markup, three
contained provisions designed to exempt the Social Security
System from calculations of Federal revenues and outlays. And
while these amendments differed slightly in detail, they had in
common two devastating flaws. First, they each would mandate
massive spending cuts to education, health care, and the
environment and/or major tax increases on hard-working American
families. Second, none of these amendments does anything to
protect future Social Security benefits or help ensure that
Federal debt obligations to Social Security will be repaid. In
fact, by mandating draconian spending cuts and tax increases,
these amendments may actually harm future generations of
seniors and damage the Social Security System they supposedly
protect.
First, consider the massive spending cuts and tax increases
made necessary by these various amendments. In 2002 alone,
Congress would have to first balance the unified budget, and
then save an additional $104 billion to balance the budget
exempting Social Security. Over the years 2002 to 2007, these
amendments would require that Congress either cut spending,
raise taxes, or both, by an additional $706 billion.
To put that in perspective, the discretionary spending
savings from last year's budget resolution--which were
described as draconian--were only $291 billion. The Medicare
savings from last year's budget resolution were only $158
billion. And the projected revenues from the 1993 Clinton tax
increase were only $241 billion. The Torricelli and Kennedy
amendments would require that Congress cut spending and raise
taxes more than all three combined!
On the other hand, by delaying the exemption of the Social
Security System from budget calculations by 1 year, the
Feinstein amendment will require Congress to balance the
unified budget in 2002, and then save an additional $109
billion to offset the Social Security surplus in 2003. In
total, the Feinstein amendment will require additional savings
of $602 billion between 2003 and 2007.
What does this mean to Federal spending? Between 2003 and
2007, Congress is projected to spend $118 billion on veterans
benefits, $160 billion on food stamps, $59 billion on child
nutrition, $25 billion on farm supports, $140 billion on the
earned income credit, $21 billion on student loans, and $16
billion on veterans' pensions--all told, $539 billion. We would
have to eliminate all those programs and more to comply with
the Feinstein amendment.
If Congress chooses to raise taxes instead of cutting
spending, then income taxes would have to be raised by 12
percent higher than they are today. That means raising the 15
percent bracket to 17 percent, the 28 percent bracket to 31
percent, and the 39.6 percent bracket to 44 percent. For the
average taxpayer in Michigan, that means an additional $672 per
year in income taxes.
These levels of spending cuts and tax increases are clearly
unworkable, which means the adoption of any of these three
amendments would kill any chance the Balanced-Budget Amendment
has to be ratified.
Second, none of these amendments does anything to protect
Social Security benefits from future Congresses or ensure that
the treasury bonds held by Social Security will be repurchased.
Under Federal law, assets of the Social Security trust funds
are required to be invested in special bonds issued by the
Treasury Department. Neither the Kennedy, the Feinstein, nor
the Torricelli amendments change this law or make Social
Security payments a priority over other Federal accounts.
Nor do any of these amendments protect Social Security
benefits for future retirees. These benefits are established
under law, and are subject to change by future Congresses.
These amendments do nothing to ensure that these benefits will
not be altered in future years.
Finally, as was pointed out during the markup, the Social
Security System is currently under funded and, beginning around
the year 2029, will be able to fund only 75 percent of the
benefits promised to future retirees. Neither the Kennedy, the
Feinstein, nor the Torricelli amendments will do anything to
relieve this imbalance. In fact, by making Social Security a
constitutional issue, these amendments may impede reforms to
the Social Security System that would help protect future
benefits.
For these reasons and others, I opposed the Feinstein,
Torricelli, and Kennedy amendments.
Spencer Abraham.
XII. MINORITY VIEWS OF MESSRS. LEAHY, KENNEDY, AND FEINGOLD
i. this proposed constitutional amendment is neither necessary nor
justified
The real question this year is not whether to reduce the
deficit, but by how much and what cuts to make in order to
bring the budget into balance. That is the real work that lies
before us.
While ``enacting responsible budgets is not easy,'' that is
the task in which this Congress should be engaged. This
proposed constitutional amendment does not reduce the deficit
by a single dollar or move us one inch closer to achieving
those goals. Rather, it is a political exercise.
Congress working with the President can do the job. Hard
choices and bipartisan cooperation are what are needed. The
majority's report admits: ``Congress has the ability to balance
the federal budget.'' The majority report concedes:
Critics of the balanced budget amendment argue that
Congress does not need a constitutional amendment to
balance the budget; Congress can achieve that goal
statutorily, right now, without waiting to ratify a
constitutional amendment. Technically, these arguments
are, of course, correct. The balanced budget amendment
provides no new authority to cut spending or raise
revenues. (Emphasis added.)
Thus, this proposed constitutional amendment fails the standard
contained in article V of the Constitution: It is not
``necessary''.
We cannot legislate political courage and responsibility.
No amendment to the Constitution can supply the people's
representatives with these essential attributes. Indeed, the
majority report concludes that the ultimate enforcement
mechanism that will lead to balancing the budget is the
electorate's power to vote. This proposed constitutional
amendment would undercut, rather than enhance, our democratic
principles of majority rule and separation of powers. It would
lead to a loss of political accountability to the electorate.
Political courage has been an essential ingredient that has
helped us achieve remarkable deficit reduction over the past
four years--recent history that the majority report ignores. We
have succeeded in reducing the deficit every year of the past
four. We have cut the deficit by more than 60 percent while
pursuing sound economic and strong fiscal policies. Now we need
to stay the course and work in a bipartisan way to make further
progress. We should now be focusing our energies on the
strenuous tasks of building a working consensus on budget
priorities and achieving agreement on how to balance the
budget.
This crusade for an illusory quick-fix by constitutional
amendment only makes that job more difficult. Reconsideration
of a constitutional amendment on the budget distracts from the
real task at hand. That is one of the lessons of the past
decade.
The first time the Senate passed a constitutional amendment
on budgeting was in 1982. It was no coincidence that
simultaneously the Reagan Administration was in the process of
creating record deficits. Presidents Reagan and Bush, and many
who supported their budgets and fiscal policies, talked about
the need for a constitutional amendment to balance the budget
while voting for Reaganomics that tripled our national debt and
quadrupled the deficit. Their legacy is record deficits of over
$221 billion in 1986, $269 billion in 1991 and $290 billion in
1992--all from an inherited deficit of less than $74 billion in
1980. The 12 years of Reagan-Bush budgets--with a Republican-
controlled Senate for much of that time--ballooned the nation's
debt by amounts exceeding those attributable to all prior
Presidents combined.
Without the annual interest on the Reagan-Bush debt, our
budgets over the last few years would already be in balance.
The burden of Reagan-Bush deficits inflicted on the decade of
the 90's will not be lessened by more talk about a
constitutional amendment.
Historically, the Federal Government has run surpluses and
deficits. The last surplus was recorded, ironically, in 1969
and arose from the budget of the outgoing Johnson
Administration, even with its expansive Great Society programs.
The only year in our more than 200-year history in which the
federal budget ``balanced'' in the way that this proposed
constitutional amendment would require--in which a year's
expenditures matched that year's receipts--was 1952.
The majority report confuses our nation's history and
ignores our current progress toward balance. It mixes concern
about the expansion of federal spending and the national debt
with the annual budget process and our common desire to reduce
the deficit.
Our Constitution has served as a charter for freedom and
allowed economic and fiscal policies that have contributed to
our economic prosperity. Let us not through this proposed
constitutional amendment turn that fundamental charter of our
free, democratic government into a mandate requiring adherence
to the disastrous economic theories of the 1930's.
This proposed constitutional amendment is opposed by 1,060
economists, including 11 Nobel Laureates in economics, because,
in their words: ``It is unsound and unnecessary.'' These
economists advise that the proposed amendment, ``mandates
perverse actions in the face of recessions,'' ``would prevent
federal borrowing to finance expenditures for infrastructure,
education, research and development, environmental protection,
and other investment vital to the nation's future well-being,''
and that it ``is not needed to balance the budget.''
According to these economists: ``The measured deficit has
fallen dramatically in recent years, from $290 billion in 1992
to $107 billion in 1996, to some 1.3 percent of gross domestic
product, a smaller proportion than that of any other major
nation.'' They ``condemn'' the proposed constitutional
amendment and warn against putting the nation ``in an economic
strait-jacket.'' 1
---------------------------------------------------------------------------
\1\ Letter from 1,060 economists, including 11 Nobel Laureates,
titled ``Economists Oppose A Balanced Budget Amendment,'' released
January 30, 1997.
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Let us not be distracted from the true means to deficit
reduction: Let us proceed to consider and adopt a budget and
deficit reduction package consistent with the progress made
since 1993. As Treasury Secretary Robert Rubin testified before
the Committee on January 17, 1997: ``[P]olitically,
historically, and economically, the forces are in place to
balance the budget. We are not far apart. Now we need to get
the job done.''
Let us not sacrifice the Constitution or our nation's
fiscal policies to a siren song but turn to the work needed to
continue reducing the deficit without sacrificing our nation's
commitments to seniors, veterans, education, the environment,
public infrastructure and our fundamental constitutional
principles. There is no need for a constitutional amendment to
achieve our goals.
A. The last four years establish a remarkable record of deficit
reduction
The President and Congress have shown over the past four
years that we can make progress undoing the mistakes of the
deficit-building 1980's without this proposed amendment to the
Constitution. We succeeded in reducing the deficit each of the
last four years, for the first time since the Truman
Administration. Over the last four years we have cut the
deficit while pursuing sound economic and strong fiscal
policies.
In 1993, we started down this road to concerted, consistent
deficit reduction without a single Republican vote in the
Congress for the President's budget. Over the last four years
we have succeeded in reducing the deficit by 63 percent. When
President Clinton took office, the deficit was at its highest
point ever--$290 billion. Today, the deficit is at its lowest
dollar figure since 1981--$107 billion--and at its lowest point
as a percentage of the economy since 1974.
In his testimony to the Committee, Robert Greenstein of the
Center on Budget and Policy Priorities notes that over the past
10 years the deficit has actually declined 70 percent as a
percentage of Gross Domestic Product--from 5.1 percent in 1986
to 1.4 percent in 1996.2 As a percentage of Gross Domestic
Product our deficit is now at the lowest level of any major
industrialized nation in the world.3
---------------------------------------------------------------------------
\2\ January 17, 1997 Judiciary Committee Hearing, written statement
of Robert Greenstein, at 13.
\3\ ``The important measure of the debt, however, is not its
absolute size, but its size relative to the country's Gross Domestic
Product, just as the size of a mortgage that a family can safely carry
is determined by that family's income.'' John Steele Gordon, Hamilton's
Blessing, Walker Publishing 1997, p.197.
---------------------------------------------------------------------------
This remarkable record of deficit reduction is an
accomplishment of Clinton Administration policies that have
restored fiscal sanity while keeping the economy strong. The
results of the recent election are testimony to the American
people's recognition of these facts.
In 1980, the annual interest on the national debt was $75
billion. This year's interest on the national debt is more than
three times that amount--$248 billion. We are still paying the
price for the failed fiscal and economic policies of the last
decade. Were it not for the interest on the $2.462 trillion
debt rung up in the Reagan-Bush years, our budgets over the
last several years would already have been in balance. The rest
of the budget, including entitlements, is already balanced.
The majority report regrettably ignores our progress over
the last several years. It should acknowledge that the daily
amount paid by the Federal Government on interest payments has
declined by $130 million a day--from $800 million a day in the
1995 report to $670 million a day in this year's version. That
reference is as close as the majority report comes to
recognizing the deficit reduction progress that has been
achieved over the last four years while keeping the economy
strong. These interest payments and the national debt remain
too high and must be reduced further, of course, but the
proposed constitutional amendment is likely to delay actions
that can make a real difference.
B. A balanced budget can be enacted this year
Treasury Secretary Robert E. Rubin testified as the first
witness at this year's Judiciary Committee hearings. He
described the irrefutable progress that has been made in
reducing deficits over the last several years--progress that
even James C. Miller, former Reagan OMB Director, and David R.
Malpass, former Republican staff of the Senate Budget
Committee, had to acknowledge.4 Secretary Rubin observed:
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\4\ ``The deficit has been going down pretty quickly right now and
that's impressive and it has been noted in the financial markets.''
January 22, 1997 Judiciary Committee Hearing Transcript, testimony of
David R. Malpass, at 105.
Last year, both the Administration and the Congress
proposed budgets that would eliminate the deficit by
2002 and both are expected to do so again this year.
Not only has the atmosphere in Washington changed,
but there is also a new enforcing factor at work which
is the emergence of global markets that are highly
sensitive to a nation's degree of fiscal
responsibility. A nation that does not address fiscal
matters will be severely punished by markets with high
interests rates that could impair or even severely
impair its economy.
The sum total is that politically, historically and
economically, the forces are in place to balance the
budget. We are not far apart. Now we need to get the
job done. * * *
[I] have a deep commitment to the importance of
deficit reduction and fiscal discipline to our nation's
economic health, and I believe that we can put in place
balanced budget legislation this year.5
---------------------------------------------------------------------------
\5\ January 17, 1997 Judiciary Committee Hearing, written statement
of Robert E. Rubin, Secretary of the Treasury, at 1,6.
In his recent letter to Minority Leader Daschle, the
---------------------------------------------------------------------------
President of the United States wrote:
Like you, I am profoundly committed to balancing the
budget. With your help and that of the bipartisan
leadership, I believe that a historic budget agreement
that achieves balance by 2002 is within reach this
year.6
---------------------------------------------------------------------------
\6\ Letter from President Clinton to Hon. Thomas Daschle, January
28, 1997.
The measure of our changed circumstances from two and four
years ago is that together Congress and the President can and
should enact balanced budget legislation this year. In light of
all we have experienced and accomplished in the last four
years, there is no basis today for seriously contending that a
constitutional amendment is needed as the only way to achieve a
balanced budget.
C. The proposed constitutional amendment does not reduce the debt or
affect the deficit.
The proposed constitutional amendment will not cut a single
penny from the federal budget or deficit. By its terms, S.J.
Res. 1 cannot, even if passed and ratified, become effective
before 2002--five years and at least two federal election
cycles from now. The Congressional Budget Office cannot
estimate the budgetary impact of the amendment because that
``depends on when it takes effect and the extent to which the
Congress would exercise the discretion provided by the
amendment to approve deficits.'' 7
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\7\ January 30, 1997 Cost Estimate of S.J. Res. 1 by The
Congressional Budget Office.
---------------------------------------------------------------------------
Two years ago Senator Mark Hatfield's decisive vote against
a constitutional amendment on budgeting was a contemporary
profile in courage. Senator Hatfield had wisdom gained from his
years as a public servant, invaluable insights gained during
the seminal set of hearings on this matter held by the
Appropriations Committee under Senator Byrd in 1994 and
extraordinary personal fortitude. He was put to the test and
not only survived, but emerged as a powerful example for us
all.
In May 1995, after being attacked for his vote of
conscience, Senator Hatfield offered the following observations
about balancing the federal budget:
I believe that a balanced budget can come only
through leadership and compromise. This compromise must
come from each one of us. More importantly, it must
come from those we represent. In the end, there is no
easy answer. If there is a political will to create a
balanced budget, we will create one, and if there is
will to avoid one, we will avoid it.8
---------------------------------------------------------------------------
\8\ 141 Cong. Rec. S6878 (May 18, 1995).
---------------------------------------------------------------------------
In June 1995, he elaborated:
Mr. President, I support balancing the Federal
budget, and I will do all that I can as the chairman of
the Appropriations Committee during my last year in the
Senate to see that it is done. What I cannot do is
support a constitutional promise to the people of this
country that its elected representatives will balance
the Federal budget. Congress and the President can and
should, with the support of the public, balance the
budget.9
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\9\ 142 Cong. Rec. S5888 (June 6, 1995).
By our Senate oath of office we each commit to ``support
and defend the Constitution of the United States.'' We owe to
our constituents our best judgment on matters of this
importance. We owe to our children and future generations the
protections of separation of powers and checks and balances
from our Constitution that have served us so well. These
foundations of our democracy ought not be diminished for
political expediency.
There is no secret about how to reduce the budget deficit.
The majority report acknowledges that Congress already has all
the constitutional power necessary to take the necessary steps.
A vote for a constitutional amendment on budgeting is no
substitute for making the tough decisions necessary to balance
the budget.
Too often in the past, those who have voted for such
constitutional amendments have used those votes as an excuse to
push the hard decisions off into the future. Having voted for
such a constitutional amendment, representatives may be tempted
to say that they did what they could: They ``assured'' a
balanced budget--of course, it will then be up to the
Constitution and future Congresses to take the actions
necessary to achieve the balance.
Moreover, there will be some who will want to wait to see
whether the necessary number of States ratify the proposed
amendment over a seven-year period. There will be some who will
wait to consider implementing legislation until after that
ratification process has concluded, just as proponents have
refused to propose implementing legislation in conjunction with
the constitutional amendment. When will Congress finally turn
back to the funding questions that will be required to achieve
balance?
Let Congress abandon this high-profile, high-risk sideshow
and get right to the main event. We can continue to lower the
deficit now and achieve a balanced budget. On January 30, 1997,
the day of the Judiciary Committee markup, the Washington
Post's lead editorial was titled ``No to a Bad Amendment.'' The
editorial observes:
The right way to get the deficit down is to cast the
votes to do so now, not lay the burden on some future
Congress that may not be able to meet it. Members know
that. This is a fake show of strength and abuse of the
Constitution whose effect would be to harm the system
of government it purports to help.
The time and resources devoted to reconsidering a
constitutional amendment on the budget each year distract from
the real task at hand. That is one of the lessons of the past
decade, let us not repeat those mistakes and pursue what the
Los Angeles Times correctly calls ``irresponsible governance,
fiscally reckless and a false political star.'' 10
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\10\ January 31, 1997, Los Angeles Times Editorial, titled
``Balanced Budget Plan: Looks, 10; Workability, 0.''
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Far from establishing ``legislative accountability,'' this
proposed constitutional amendment is a prescription for
unaccountability. It leaves to future Congresses the hard
decisions we should be making now. It provides a framework for
continuing the burdens of the fiscal irresponsibility of the
1980's on our children and grandchildren. It is precisely the
bumper sticker politics that has been used too often by those
willing to settle for short-term, short-sighted political gain
at the expense of sound fiscal and economic policy making.
II. Social Security and Medicare Are Threatened Under This Proposed
Constitutional Amendment
The Social Security program is America's contract with its
senior citizens. If S.J. Res. 1 is adopted as part of the
Constitution of the United States, that contract may be broken
irrevocably.
Despite the good intentions of the proponents of S.J. Res.
1 to keep Social Security solvent, once it is part of a
constitutionally-mandated budget balancing act, Social Security
becomes just another government program and is on the chopping
block with everything else. When asked directly whether the
proposed constitutional amendment would protect Social
Security, the Chairman of the Judiciary Committee responded
that under the proposed constitutional amendment: ``Social
Security would have to fight its way, just like every other
program and it has the easiest of all arguments to fight its
way.'' 11
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\11\ January 30, 1997 Judiciary Committee Transcript, at 107
(emphasis added).
---------------------------------------------------------------------------
The majority views assert that this proposed constitutional
amendment on budgeting reported by the Committee will protect
Social Security. At least half the members of the Judiciary
Committee disagree. When Senator Kennedy's amendment to protect
Social Security was accorded an up or down vote at the
Committee's January 30 markup it failed on a 9-9 tie vote. On
this one vote a member of the majority party was willing to
buck Republican discipline and vote to preserve, protect and
defend our longstanding commitment to those entitled to Social
Security. Further, four members of the Committee who support
and voted for S.J. Res. 1 on final passage joined Senator
Kennedy in his effort to protect seniors and honor our
commitments to them and future generations.
A. Congress's actions since 1983 to protect Social Security from
overall budget cuts would be cast aside by S.J. Res. 1
The Social Security Amendments of 1983 required Social
Security to be placed off-budget within 10 years. That
protective legislation passed the Senate 58-14 with a strong
bipartisan majority. In fact, Congress accelerated this
process. Rather than wait 10 years, the Balanced Budget and
Emergency Deficit Control Act of 1985, commonly known as
``Gramm-Rudman-Hollings,'' placed Social Security ``off
budget'' beginning in 1986. This means that the congressional
budget resolution in 1985 was the last time that Social
Security was included in the federal budgets that Congress
approves each year.
Gramm-Rudman-Hollings permitted across-the-board spending
cuts (``sequestration'') when budgetary goals are not achieved.
By its actions placing Social Security off budget, Congress
explicitly and intentionally exempted Social Security from the
sequestration process. Gramm-Rudman-Hollings--with its
protections for Social Security--passed the Senate 61-31 with a
strong bipartisan majority.
The Budget Enforcement Act of 1990 reinforced earlier
protections by placing Social Security even more clearly off
budget. Section 13301 of that Act is unequivocal on this point
and deserves reading in full. It states:
SEC. 13301. OFF-BUDGET STATUS OF OASDI TRUST FUNDS.
(a) Exclusion of Social Security From All Budgets.--
Notwithstanding any other provision of law, the receipts and
disbursements of the Federal Old-Age and Survivors Insurance
Trust Fund and the Federal Disability Insurance Trust Fund
shall not be counted as new budget authority, outlays,
receipts, or deficit or surplus for purposes of--
(1) the budget of the United States Government as
submitted by the President,
(2) the congressional budget, or
(3) the Balanced Budget and Emergency Deficit Control
Act of 1985.
(b) Exclusion of Social Security From Congressional
Budget.--Section 301(a) of the Congressional Budget Act of 1974
is amended by adding at the end the following: ``The concurrent
resolution shall not include the outlays and revenue totals of
the old age, survivors, and disability insurance program
established under title II of the Social Security Act of the
related provisions of the Internal Revenue Code of 1986 in the
surplus or deficit totals required by this subsection or in any
other surplus or deficit totals required by this title.''.
This bill, too, passed the Senate 54-45 with the bipartisan
support of 35 Democrats and 19 Republicans.
The proposed constitutional amendment turns its back on
these many years of bipartisan progress in protecting Social
Security from the ebb and flow of efforts to eliminate the
deficit. We believe that our senior citizens deserve better.
B. Under this proposed constitutional amendment, Social Security and
Medicare checks could be stopped
When the government overestimates revenues for an upcoming
year, or underestimates expenses, or something changes in the
course of the year to influence either, the budget goes out of
balance and, under S.J. Res. 1, the government is out of money.
The amendment's mandates would turn continued expenditures into
constitutional violations of law. If this proposed
constitutional amendment were enshrined in the Constitution, it
could force the federal government to stop making payments for
any number of obligations, including payment of Social Security
checks, until the budget imbalance can be corrected.
Treasury Secretary Rubin warned the Committee of this great
risk, when he testified:
``[T]he amendment poses immense enforcement problems
that might well lead to the involvement of the courts
in budget decisions, unprecedented impoundment powers
for the President or the temporary cessation of all
federal payments. Any of these options could disrupt
Social Security and Medicare payments.'' 12
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\12\ January 17, 1997 Judiciary Committee Hearing, written
statement of Hon. Robert E. Rubin, at 2.
Further, if the President and Congress reached a budget
impasse under the proposed constitutional amendment, Secretary
---------------------------------------------------------------------------
Rubin cautioned that:
Some proponents have suggested that under these
circumstances, the President would stop issuing checks,
including those for Social Security benefits.
Alternatively, judges might become deeply involved in
determining whether Social Security or Medicare checks
would be stopped. 13
---------------------------------------------------------------------------
\13\ January 17, 1997 Judiciary Committee Hearing, written
testimony of Hon. Robert E. Rubin, at 5. See also Reps. Dan Schaefer
and Charles Stenholm, materials titled ``Cosponsor the Balanced Budget
Amendment,'' November 18, 1996.
This would be a disaster for senior citizens on fixed
incomes who live on Social Security and Medicare from check to
check. When they miss a check, they will not have the funds to
pay the rent or meet the mortgage, buy groceries, pay their
utility bills, heat their homes, pay for medical care or needed
pharmaceutical drugs or meet other expenses.
C. Assertions that current law and court precedent will protect Social
Security and Medicare under this proposed constitutional
amendment are pure fiction
Former Reagan Administration budget official James C.
Miller III, argued before the Judiciary Committee on January
17, 1997, that Social Security would be protected from the same
cuts as other programs, even if Social Security is not exempted
from this proposed constitutional amendment.
Dr. Miller asserted:
[T]he courts have concluded that up front are the
debt-holders and second in line are entitlements,
specifically those for which there are trust funds--
Social Security, et al. 14
---------------------------------------------------------------------------
\14\ January 17, 1997 Judiciary Committee Hearing Transcript, at
94.
However, when members of the Judiciary Committee queried
the Congressional Research Service, the Social Security
Administration, and the Treasury Department, they got a
different answer. None of those offices could identify an
established hierarchy of payment such as Dr. Miller described.
In fact, the Treasury Department believes that while the
President has some discretion to set such priorities,
establishing a hierarchy of priorities among various federal
payment obligations or simply preferring one obligation over
another would inevitably result in legal challenges the outcome
of which is at best uncertain.
In other words, there is no legal assurance that Social
Security would be protected under the proposed constitutional
amendment. Even if a particular President sought to protect
Social Security as an exercise of presidential discretion,
there would be no assurance that the next President or the
President in 2008 or beyond would continue that policy. The
same is true for the Medicare Trust Fund.
President Clinton understands the dilemma that the Social
Security system would face if Social Security is not protected
under this proposed constitutional amendment. In his recent
letter to Senator Daschle, he stated:
I am very concerned that Senate Joint Resolution 1,
the constitutional amendment to balance the budget,
could pose grave risks to the Social Security System.
In the event of an impasse in which the budget
requirements can neither be waived nor met,
disbursements or unelected judges could reduce benefits
to comply with this constitutional mandate. No
subsequent implementing legislation could protect
Social Security with certainty because a constitutional
amendment overrides statutory law. 15
---------------------------------------------------------------------------
\15\ Letter from President Clinton to Hon. Thomas Daschle, January
28, 1997.
---------------------------------------------------------------------------
D. Congress can balance the budget while protecting Social Security--
but not under this proposed constitutional amendment
The 1983 bipartisan Social Security Commission headed by
Alan Greenspan recommending converting the Social Security
system from a pure ``pay-as-you-go'' program to one that builds
up surpluses to pay for the future retirement of the baby boom
generation. The Greenspan Commission recommended taking Social
Security off budget in order to meet this goal without
subjecting the program to the vicissitudes of federal budgeting
for other programs.
Congress concurred with the Greenspan Commission's
recommendations in passing the Social Security Amendments of
1983. Just as families save for their retirements, the Social
Security program currently is building up surpluses while baby
boomers are still working in order to be able to afford their
retirements in the next century.
This proposed constitutional amendment, however, enshrines
forever in the Constitution the use of Social Security
surpluses to mask deficits in other programs. Passing this
proposed constitutional amendment, which does not exempt the
Social Security trust fund, does more. It encourages, even
necessitates, Congress, the President and the courts using
Social Security as a way to comply with the amendment. When the
trust fund begins to shrink after the year 2020, this proposed
constitutional amendment would add pressure on the government
to cut Social Security rather than risk constitutional
violation. Instead, we ought to be working on ways to honor our
commitments and ensure the long-term solvency of Social
Security.
A recent analysis from the Center for Budget and Policy
Priorities is telling. It says:
The Leadership version [of S.J. Res. 1] would be
virtually certain to precipitate a massive crisis in
Social Security about 20 years from now, even if
legislation has been passed in the meantime putting
Social Security in long-term actuarial balance. To help
pay the benefits of the baby boom generation, the
nation would face an excruciating choice at that time
between much deeper cuts in Social Security benefits
than were needed to make Social Security solvent and
much larger increase in payroll taxes than would
otherwise be required. There would be only one other
alternative--to finance Social Security deficits in
those years not by drawing down the Social Security
surplus but by raising other taxes substantially or
slashing the rest of government severely. As a result,
the government might fail to provide adequately for
other basic services, potentially including the
national defense. 16
---------------------------------------------------------------------------
\16\ Center on Budget and Policy Priorities, ``The Balanced Budget
Amendment and Social Security,'' January 28, 1997, p. 2.
We all know that steps must be taken--and will be taken--to
ensure the solvency of the Social Security system. However, the
measures undertaken must make sense for Social Security and
America's seniors without interference from the rest of the
budget. Our commitments to our seniors should not become just
another negotiable piece of an overall federal budget, along
with every other activity of our federal government.
E. This proposed constitutional amendment would imperil the Medicare
System
The Medicare Trust Funds were created to ensure the basic
health needs of our nation's elderly while reducing the
financial hardship that medical expenses impose. One cannot
overstate the importance of this system to elderly Americans,
particularly those who are poor. For over 30 years, Medicare
has been a lifeline to senior citizens, sustained public and
non-profit hospitals that serve our poorest communities,
pioneered incentive methods of paying health care providers,
and served as a model of administrative efficiency.
In 1997, 38 million Americans will rely on Medicare for a
range of services including, hospital, hospice, nursing
facility, home health care and physician services. The vast
majority of Medicare funds will go to older Americans with
annual incomes below $25,000, two-thirds for those with incomes
below $15,000.
Yet, despite the basic protections that Medicare provides,
the average Medicare beneficiary must spend 21 percent of his
or her income on out-of-pocket medical expenses. Without
Medicare, many of these elderly Americans would not be able to
afford health care, but working in partnership with the Social
Security Trust Fund, Medicare ensures a basic standard of
living.
Clearly, the benefits of the Medicare System are numerous
and too important to be unprotected should Congress, a
President, or the courts implement cuts to balance the budget
as required by this proposed constitutional amendment. Without
any protection, Medicare will have to compete with other
programs to maintain appropriate Federal government support.
The Medicare System should not have to fend for itself in a
Darwinian survival-of-the-fittest contest, particularly because
history indicates that Medicare may be the loser.
The debate during the 104th Congress is instructive. During
the 104th Congress, the Republican leadership proposed cutting
$270 billion from the Medicare System. If those cuts had become
law, Medicare premiums would have doubled from $553 annually in
1995 to $1,068 annually in 2002. Deductibles would have doubled
from $100 to $210, the eligibility age would have been raised
to 67 years of age, and every elderly couple would have paid an
additional $2,400 over the seven years of the proposed
Republican budget plan.
If this proposed constitutional amendment becomes law,
similar proposals might become law in the name of balancing the
budget, with its supporters professing that ``the Constitution
made me do it.''
It should also be noted that while the Republican-led
Congress proposed these cuts in the Medicare System--the
equivalent of a $900 benefit cut for senior citizens--they also
proposed a $20,000 tax cut for people making $350,000 annually.
This is what could happen if this proposed constitutional
amendment is adopted. As the measure threatens arbitrary cuts
in the Medicare System, section 4 of S.J. Res. 1 protects
corporate welfare and tax loopholes for the wealthy. During
debate on S.J. Res. 1 before the Judiciary Committee, Senator
Durbin offered an amendment that would have made it more
difficult to create tax loopholes. The Durbin amendment was
defeated by one vote.
The Senate continues to show a propensity for cutting
benefits for the elderly poor and preserving benefits for the
wealthy. That is not a track record on which senior citizens
can rely if S. J. Res. 1 becomes law. In the event of an
impasse on the budget, Members of Congress who want to reduce
the Medicare system could withhold the votes necessary to waive
the balanced budget requirement or raise the debt ceiling
unless cuts were made in the Medicare Trust Funds.
In the circumstances of a budget stalemate, if both Houses
of Congress have failed to waive the balanced budget
requirement or raise the debt limit, the proposed
constitutional amendment may allow unelected judges to order
across-the-board cuts to programs, including the Medicare Trust
Funds.
If the President and Congress reached such a budget
impasse, Treasury Secretary Rubin warned:
Some proponents have suggested that under these
circumstances, the President would stop issuing checks,
including those for Social Security benefits.
Alternatively, judges might become deeply involved in
determining whether Social Security or Medicare checks
would be stopped.17
---------------------------------------------------------------------------
\17\ January 17, 1997 Judiciary Committee Hearing, written
testimony of Hon. Robert E. Rubin, at 5. See also Reps. Dan Schaefer
and Charles Stenholm, materials titled ``Cosponsor the Balanced Budget
Amendment,'' November 18, 1996.
Enactment of the proposed constitutional amendment poses a
clear and present danger to the very lifeline that so many
senior citizens depend for health care. Year after year,
Americans pay into the Medicare System, trusting that those
benefits will provide for their health care in their senior
years. The promise of those benefits cannot be breached.
III. The Proposed Constitutional Amendment Prohibits Capital Budgeting
As Senator Torricelli so forcefully pointed out during the
Judiciary Committee deliberations on S.J. Res. 1, we as a
nation are suffering from a capital investment crisis. 18
In 1965, more than 6 percent of our federal expenditures were
invested in infrastructure such as roads, bridges, ports and
mass transit systems. By 1992, that share of capital investment
had fallen by more than half to about 3 percent of our federal
budget and this year it will approach barely 2 percent.
---------------------------------------------------------------------------
18 January 30, 1997 Judiciary Committee Markup of S.J. Res.
1 Transcript at 79-83.
---------------------------------------------------------------------------
At the same time as our infrastructure funding has been
shrinking, our nation's needs have continued to grow. The
result is that we are becoming a nation in disrepair. For
instance, more than a quarter of a million miles of roads need
repair and more than 25 percent of our bridges have exceeded
their life span.
This failure to maintain adequate infrastructure is hurting
our competitiveness in the global economy. We are competing
against other countries with the foresight to repair their
roads and bridges, modernize their transit systems, maintain
their ports, build new schools and make the investments in
telecommunications infrastructure that are the keys to success
in today's global competition. The United States is dead last
among the G-7 nations in public infrastructure investment as a
percentage of Gross Domestic Product.
We must reverse this trend and make the long-term
investments needed to support a strong economy.
A. The proposed constitutional amendment prohibits exempting capital
expenditures from the balanced-budget calculations
As was true with regard to the Social Security Trust Fund,
sections 1 and 7 of the proposed constitutional amendment
prohibit capital budgeting. All expenditures, whether the
equivalent of operating expenses or capital investments, are
tallied the same for purposes of this proposed constitutional
amendment. The sponsors and proponents of this measure refuse
to permit any exception and future Congresses will be forever
barred from solving our infrastructure crisis by creating a
capital budget for long-term investments.
The majority report is silent on this important subject.
The Committee's hearings in 1995 established an extensive
record in support of maintaining a separate capital budget.
Herbert Stein, of the American Enterprise Institute and former
economic adviser to President Nixon, Edward V. Regan, of the
Jerome Levy Economics Institute and former New York State
Controller, and Dr. Fred Bergsten, on behalf of the bipartisan
Competitiveness Policy Council and former Assistant Secretary
of the Treasury during the Carter Administration, differed on
the wisdom of enacting a constitutional amendment on the budget
but all agreed on one thing: if such an amendment were to be
considered it should separate capital investments for any
annual balance requirement. 19
---------------------------------------------------------------------------
19 In their testimony before the Judiciary Committee on January 5,
1995 and in response to written questions from Senator Biden, they each
strongly supported a separate capital budget.
---------------------------------------------------------------------------
Nonetheless, when the Committee had the opportunity to
consider amendments that would have allowed for a separate
budget for capital investments, it rejected them. This was a
principal thrust of the Torricelli substitute and an important
aspect of the Feinstein substitute.
Senator Torricelli offered a substitute constitutional
amendment to establish a federal capital budget for ``only
investments in physical infrastructure that provide long-term
economic benefits.'' Senator Feinstein offered a substitute
that permitted Congress to ``enact and implement a separate
capital budget for those major capital improvements which
require multi-year funding.'' She would have left further
definition to implementing legislation, in the ``spirit'' of
S.J. Res. 1. Even that possibility was flatly rejected by the
majority and their ``no amendments'' approach to consideration
of this proposed constitutional amendment. By a mere one-vote
margin the Committee defeated both the Torricelli and Feinstein
amendments--both were rejected by 8 to 9 votes with all
Republican members who voted, voting against capital budgeting.
This inflexibility is one of the principal objections of
the more than 1,000 economists who oppose S.J. Res. 1. 20
It is also one of the reasons President Clinton opposes this
constitutional amendment on budgeting. As the President so
clearly stated:
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20 Letter from 1,060 economists, including 11 Nobel
Laureates, titled ``Economists Oppose A Balanced Budget Amendment,''
released January 30, 1997.
We must give future generations the freedom to
formulate the federal budget in ways they deem most
appropriate. For example, some believe that the federal
government should do what many state governments do:
adopt a balanced operating budget and a separate
capital budget. Under this constitutional balanced
budget proposal, the government would be precluded from
doing so. 21
---------------------------------------------------------------------------
21 Letter from President Clinton to Hon. Thomas Daschle, January
28, 1997.
During the Committee's January 17 hearing, Robert
Greenstein of the Center on Budget and Policy Priorities
---------------------------------------------------------------------------
explained:
What families do when they balance their budget is
families say that all of their income, including money
they borrow, equals all the cash they pay out. Families
borrow money when they purchase a house through a
mortgage, when they buy a car, and especially when they
send a child to college. If families had to operate on
the basis that this amendment does, they would have to
pay for all of college education out of the current
year's income, all of the entire cost of a home, not
the down payment, the whole thing, out of the current
year's income. Nobody operates that way. 22
---------------------------------------------------------------------------
22 January 17, 1997 Judiciary Committee Hearing Transcript at 152.
The actions of Thomas Jefferson as President, as opposed to
his oft-quoted ruminations about the evils of public debt, are
also instructive but ignored by the majority. In 1803,
President Jefferson had the United States borrow $15 million,
in 1803 dollars, by selling bonds to finance the Louisiana
Purchase. That amount approximates more than $225 billion in
1993 dollars and exceeds every federal budget deficit except
for the final two years of the Bush Administration. 23
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23 See Dear Colleague Letter from Hon. Larry Craig, Hon. Paul
Simon, Hon. Robert Smith and Hon. Charles Stenholm, titled ``What did
Thomas Jefferson get for $225 billion?'', March 15, 1994.
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Was President Jefferson wrong to invest in the Louisiana
Territory that provided this country with 15 States? Of course
not. But had the provisions of S.J. Res. 1 been included in the
Constitution, our nation's westward expansion might well have
ended at the Mississippi River.
Under this proposed constitutional amendment, the failure
to permit a capital budget would have severe consequences by
discouraging long-term investment and ignoring our
infrastructure crisis. Just as a budget deficit unfairly harms
future generations so, too, does the failure to differentiate
capital investments from operating and consumption
expenditures. The inevitable result will be less investment in
our country's future, pressure to operate through inefficient
leasing practices and gimmickry.
B. The experience in the States supports a capital budget for long-term
investments
Sound accounting practices like capital budgeting appear to
the majority only as loopholes and gimmicks. Thus, the majority
supporting S.J. Res. 1 reject the experience of the States. The
majority report refuses even to acknowledge in its abbreviated
allusion to the experience in the States that State balanced
budget provisions ``have proven to be workable'' precisely
because so many States differentiate between operating and
capital expenditures.
The majority ignores the fact that 42 States, most cities
and businesses exclude from their balanced budget requirements
capital, enterprise or trust funds that are financed primarily
by borrowing rather than by current revenue.24 Moreover,
most States with balanced-budget requirements use capital funds
that finance major capital projects by issuing long-term debt.
25
---------------------------------------------------------------------------
\24\ National Association of State Budget Officers, Budget Process
in the States, 1992, p.16.
\25\ General Accounting Office Report, ``Balanced Budget
Requirements: State Experiences and Implications for the Federal
Government,'' March 1993, p. 19.
---------------------------------------------------------------------------
The nation's leading economists agree that a capital budget
is an essential part of the State experience with balanced-
budget requirements and that the omission of a capital budget
in this proposed constitutional amendment is a major flaw.
These economists note:
Unlike many state constitutions, which permit
borrowing to finance capital expenditures, the proposed
federal amendment makes no distinction between capital
investments and current outlays. * * * The amendment
would prevent federal borrowing to finance expenditures
for infrastructure, education, research and
development, environmental protection, and other
investments vital to the nation's future well-being.''
26
---------------------------------------------------------------------------
\26\ Letter from 1,060 economists, including 11 Nobel Laureates,
titled ``Economists Oppose A Balanced Budget Amendment,'' released
January 30, 1997.
The majority wishes to have it both ways when it comes to
the experience in the States. Either the States' balanced
budget constitutional experiences are instructive for the
Federal Government or they are not. If instructive, then the
lesson is that any balanced budget constitutional requirement
should include a provision to allow for long-term investments.
State and local governments spread the cost of long-term
capital investments over time. By contrast, this proposed
constitutional amendment prohibits this kind of common sense
accounting.
C. The proposed constitutional amendment prohibits the use of a ``rainy
day'' fund
Section 6 of this constitutional measure states: ``The
Congress shall enforce and implement this article by
appropriate legislation, which may rely on estimates of outlays
and receipts.'' (emphasis added).
What happens when these estimates of outlays and receipts
fail to come true during the fiscal year? As is usually the
case each year, Congress is wrong on its economic forecasts.
For example, in June 1995 the Congress adopted a budget
resolution that anticipated a deficit of $170 billion in the
1996 fiscal year. In August 1995, the Congressional Budget
Office anticipated a deficit of $189 billion for the 1996
fiscal year. But the deficit for the 1996 fiscal year was
actually $107 billion.
In response to the usual budget forecast corrections,
several of the majority's witnesses recommended to the
Committee that S.J. Res. 1, should be amended to allow the
Federal Government to establish a ``rainy day'' fund or
stabilization fund. This fund would adjust to budget shortfalls
or overruns during the fiscal year.
For example, James Miller, the former Director of the
Office of Management and Budget during the Reagan
Administration, testified:
I would urge you to consider incorporating a ``rainy
day fund.'' Thus, if one year revenues fell short (or
outlays ran over), you could dip into this fund without
violating the balanced budget requirement.27
---------------------------------------------------------------------------
27 January 17, 1997 Judiciary Committee Hearing, written statement
of Dr. James Miller, III, p.3. See also Response by Dr. Martin Regalia,
Vice President for Economic Policy and the Chief Economist for the U.S.
Chamber of Commerce, to written questions from Senator Leahy, where he
testified: ``The government could build in a cushion by budgeting a so-
called `rainy-day' fund into the budget process each year.''
If the experience in the states is instructive, which the
majority seems to believe is the case in their report, then a
rainy day fund is a necessity for any balanced-budget
requirement. According to the American Legislative Exchange
Council, 45 states have budget stabilization funds or ``rainy
day funds'' to respond to unanticipated shortfalls in revenue
or over runs in outlays.28
---------------------------------------------------------------------------
\28\ See Response of Dr. James Miller, III, to written questions
with attached chart on State Budget Stabilization Funds by the American
Legislative Exchange Council, January 22, 1997.
---------------------------------------------------------------------------
The majority, however, ignores the advice of its own
witnesses and the experience in the States, and prohibits the
use of a ``rainy day fund'' under this proposed constitutional
amendment.
IV. The Proposed Constitutional Amendment Would Increase The Risks Of
Government Shutdown And Default
Section 2 of the proposed constitutional amendment
provides: ``The limit on the debt of the United States held by
the public shall not be increased, unless three-fifths of the
whole number of each House shall provide by law for such an
increase by rollcall vote.''
We believe this supermajority vote requirement would
recklessly endanger our economy and our democracy. The
supermajority vote requirement vastly raises the stakes and
risks to taxpayers and all citizens of a government shutdown
and default. Instead of a simple majority in the House and
Senate, this proposed constitutional amendment would raise the
bar to a supermajority vote in both legislative bodies.
We do not need to theorize or speculate about the costs and
risks. The nation got a reminder just a year ago. After the
longest government shutdown in history and a debt limit crisis
that went on for months as part of a planned, partisan ``train
wreck'' intended to extort policy changes from the President,
we now know just how great these default risks would be to our
economy and the public interest.
The House-led effort was ultimately unsuccessful as the
President held his ground and the American people rallied to
his defense of their interests and values. But it was only
through the extraordinary efforts of our Secretary of the
Treasury that this country avoided falling into default and
forever tarnishing our nation's creditworthiness and
reputation. The Committee was fortunate to have him appear and
testify regarding the dangers of default and the deepening
danger of placing a supermajority requirement on future
increases to the statutory debt ceiling.
It was in light of these very real dangers that the
Secretary testified in characteristically calm, thoughtful and
measured phrases that this proposed constitutional amendment on
the budget ``is a threat to our economic health'' and ``would
subject the nation to unacceptable economic risks in
perpetuity.''
A. The supermajority vote requirement to raise the debt limit raises
risks for the nation's financial stability and creditworthiness
Treasury Secretary Rubin, based on his 26 years of
financial experience on Wall Street and his 4 years in the
Administration, warned the Committee in his testimony that
default could throw our economy into chaos. His testimony
should be a sobering reminder to us about the implications of
taking such a precipitous step. He noted:
Our creditworthiness is an invaluable national asset
that should not be subject to question for any reason.
Default on payment of our debt would undermine our
credibility with respect to meeting financial
commitments, and that in turn, in my judgment, would
have adverse effects for decades to come, especially
when our reputation is not healthy. Moreover, a failure
to pay interest on our debt could raise the cost of
borrowing not only for the Government, but for private
sector borrowers, from companies to homeowners making
payments on an adjustable mortgage.
Furthermore, if we are not able to meet our
obligations, the issue does not stop simply with
failure to meet the obligations of our debt, but could
also prevent us from providing military pay, from
making payments to recipients of Social Security, or to
those who depend on Medicare and Medicaid. The risk of
any of these events happening must not be increased.
Finally, the history of debt limits shows that
raising the statutory debt limit is never an easy
process. We all remember the enormous difficulties that
surrounded this issue in 1995 and 1996, when it took us
roughly 8 or 9 months to get from the beginning of the
process to final resolution of the debt limit issue
that we were then dealing with. A requirement for a
supermajority vote in both Houses could make this far
harder and increase the leverage of a minority.29
---------------------------------------------------------------------------
\29\ January 17, 1997 Judiciary Committee Hearing Transcript at 18-
19.
The Secretary went on to note the following in response to
---------------------------------------------------------------------------
questions from Senator Leahy:
Standard and Poors and Moody's, at the time of the
difficulties with respect to the debt limit in 1995 and
1996 issued reports in which they expressed great
concern about the possibility that some in responsible
positions were even countenancing the possibility of
default. I think it is a very, very serious issue and I
think the risk of default is increased measurably under
the balanced budget amendment.30
---------------------------------------------------------------------------
\30\ January 17, 1997 Judiciary Committee Hearing Transcript at 68.
Alan Greenspan, Chairman of the Federal Reserve, similarly
had warned in 1995 that ``a failure to make timely payment of
interest and principal on our obligations for the first time
would put a cloud over our securities that would not dissipate
for many years.'' And he warned, ``Breaking our word would have
serious long-term consequences .'' 31
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\31\ Letter from Hon. Alan Greenspan to Hon. Alfonse D'Amato,
November 8, 1995.
---------------------------------------------------------------------------
Moreover, a default would waste billions of taxpayer
dollars and devastate the lives of millions of Americans. The
nonpartisan Congressional Budget Office has concluded:
The government has never defaulted on its principal
and interest payments, nor has it failed to honor its
other checks. However, even a temporary default--that
is, a few days' delay in the government's ability to
meet its obligations--could have serious repercussions
in the financial markets. Those repercussions include a
permanent increase in federal borrowing costs.* * *
32
---------------------------------------------------------------------------
\32\ Congressional Budget Office, The Economic and Budget Outlook:
An Update, August 1995, p. 48.
It is irresponsible to risk permanently increasing our
federal borrowing costs through political brinkmanship.33
---------------------------------------------------------------------------
\33\ Nonetheless, some have made a practice out of such standoffs.
``While we were shepherding Gramm-Rudman-Hollings through Congress, we
were also drawn into a crisis created by Congress' refusal to increase
the legal ceiling on the national debt. * * * Toward the middle of
November, however, all avenues were exhausted except the sale of gold
at Fort Know, which President Reagan adamantly opposed. Thus, a default
on U.S. government securities--the first ever in two hundred years--
seemed not only feasible but, to many high officials, likely. The
results would have been tragic.'' Dr. James C. Miller III, ``Fix the
U.S. Budget!'' Hoover Institution Press 1994, p. 36-37
---------------------------------------------------------------------------
Just as the government shutdowns over the last two years
cost money, so too an ideological, political, regional or other
minority of only 175 House members or 41 Senators could,
pursuant to the proposed constitutional amendment, overreach in
a manner that would permanently mar the creditworthiness of the
United States, raise its borrowing costs and complicate the
chances of reaching balance.
Moreover, the repercussions of a default would reach far
beyond the government's borrowing costs. A default would raise
mortgage rates for homeowners, car loan rates for consumers and
capital costs for businesses borrowing to expand and create new
jobs.
B. The amendment's supermajority vote requirements invite political
blackmail and gridlock
The three-fifths supermajority votes to raise the debt
limit and to have outlays exceed receipts in a given year
invite political blackmail and brinkmanship. Forty percent plus
one in either the House or the Senate could hold the debt
ceiling or the budget hostage to their demands.
The House sponsors of this proposed constitutional
amendment have acknowledged this folly. In a November 1996
paper on the balanced budget amendment, Representatives
Schaefer and Stenholm wrote that their amendment would have the
effect of ``lowering the `blackmail threshold * * * from 50
percent plus one in either body to 40 percent plus one. * * *''
34
---------------------------------------------------------------------------
\34\ Reps. Dan Schaefer and Charles Stenholm, materials titled
``Cosponsor the Balanced Budget Amendment,'' November 18, 1996.
---------------------------------------------------------------------------
As Robert Greenstein of The Center on Budget and Policy
Priorities testified, the amendment's supermajority
requirements would permit minority factions to extort pork
barrel projects or extreme legislation as their price for
avoiding a government shutdown and default and such demands
would not have to be limited to budgetary matters.
In light of the increased risks of a government default,
shutdown and political blackmail, inherent in the use of these
supermajority requirements as ``the primary enforcement
mechanism of S.J. Res. 1,'' the majority meekly suggests only
``that Congress will execute its responsibilities under the
amendment.'' Thus proponents are in the position of arguing
that every minority faction in both Houses should be trusted
with increased power and the ability to shutdown the government
or force a default. They are willing to ignore history at our
peril.
Senator Sarbanes instructed the Senate two years ago with
respect to an historic example that demonstrates the folly of
supermajority vote requirements on tough issues.35
---------------------------------------------------------------------------
\35\ 141 Cong. Rec. S2778-2785 (February 16, 1995).
---------------------------------------------------------------------------
In the summer of 1941, the Congress was confronted with
extending the time of service for members of the armed services
who had been drafted the year before. With the prospect of war
increasing, President Roosevelt, in a special message to
Capitol Hill, asked Congress to declare a national emergency
that would allow the Army to extend the service of these
draftees. With Speaker Sam Rayburn twisting arms in the well of
the House of Representatives, the House passed the measure
regarding the draft for World War II by just one vote, 203 to
202. It then passed the Senate by a vote of 45 to 30.
The nation was a few short months away from its entry into
World War II, but neither the House nor the Senate vote would
have met the supermajority requirement in this amendment. Even
after the President has declared a national emergency, Congress
could not muster a supermajority vote in either body.
Actual declarations of war, matters on which unanimity of
purpose would seem essential, have hardly been matters on which
a supermajority was attainable.
In 1812 Congress declared war on Great Britain by margins
of 79 to 49 in the House and only 19 to 13 in the Senate. New
England was strongly opposed. Then Congress adjourned without
raising taxes or other revenue to pay for the war effort and
the results were disastrous. Efforts to finance the efforts
through the sale of $16 million of loan certificates to the
public in March 1813 were unsuccessful and the Government of
the United States, in the midst of a declared war with Great
Britain, was virtually broke until the intervention of Stephen
Girard and John Jacob Astor.36
---------------------------------------------------------------------------
\36\ John Steele Gordon, ``Hamilton's Blessing,'' Walker Publishing
1997, p.47-53.
---------------------------------------------------------------------------
Nor should we forget the history of the repeal of the Civil
War tax in 1872. Representatives of seven northeastern states,
plus California, who collectively paid 70 percent of the income
tax, voted 61-14 not to renew the tax. Meanwhile fourteen
mostly southern and western states, which had paid only 11
percent of the tax, voted 61-5 in favor. Support of the income
tax, in other words, was almost perfectly inversely correlated
with its local impact.37 It surely could not have been
repealed if a 40 percent minority could have blocked that
action.
---------------------------------------------------------------------------
\37\ Id. at 83.
---------------------------------------------------------------------------
The Congress has been less than successful on numerous
occasions in developing even a simple majority in support of a
budget plan. In 1947 and 1949 the Congress failed to reach
agreement and produce a resolution.38 Likewise, in the
last several years the Republican majority controlling Congress
has shown itself unwilling to do the work necessary to reach
agreement on appropriations bills and left the Government to
continuing resolutions.
---------------------------------------------------------------------------
\38\ Id. at 51-52.
---------------------------------------------------------------------------
Also on point is Congress's long history of problems
passing any debt limit increase. Since 1983, the Treasury
Department has been forced to take some action, such as
delaying Treasury bill auctions or investments in trust funds,
15 times in the last 15 years because Congress failed to
increase the debt limit in a timely manner.
Raising the debt limit is a tough vote. Raising the bar for
congressional action serves to ``lower the blackmail
threshold'' and recklessly endangers our democratic process and
our economy.
Just two years ago, 165 Republican Members of the House of
Representatives pledged to refuse to vote for raising the debt
limit, unless President Clinton accepted their balanced budget
plan. The Speaker of the House, Newt Gingrich, went along with
this ultimatum, by declaring ``I am with them * * * I do not
care what the price is.'' As a result of this blackmail
politics, the American people suffered through two government
shutdowns for a total of 27 days. Fortunately, the President
stood up to this blackmail and the American public convinced a
majority in Congress to act responsibly.
Supermajority requirements only increase the leverage and
embolden those factions that would use these tactics, again. A
consequence under this proposed constitutional amendment would
be to permanently empower minority factions to insist on their
agenda or no agenda to the detriment of democratic principles,
effective government and the nation's economic well-being. As
Treasury Secretary Rubin, Robert Greenstein and Alan Morrison
all observed during their testimony before the Committee, this
is one of the most dangerous features of the proposed
constitutional amendment.
On January 24, 1997, the New York Times published a column
by Anthony Lewis, entitled ``Gingrich's Revenge,'' in which he
discusses the proposed constitutional amendment, its
supermajority requirements and its risks to the nation:
The possibility of a crisis over the debt ceiling is
only one provision of many in the proposed amendment
that alarm [economists] and other critics. The
amendment would effectively end majority rule in
Congress, giving minorities new blocking powers and
assuring stalemate again and again.
The Republican leaders who are pushing the amendment
must be aware of those dangers. They have to be going
ahead, then, either because they are in the iron grip
of ideology or because they see a chance for partisan
point-scoring. Neither reason justifies endangering the
system that has enabled this country to survive and
prosper over 200 years.
During the Judiciary Committee's markup, Senators Leahy,
Feinstein and Torricelli each offered amendments to S.J. Res. 1
that would have deleted the supermajority requirement in the
proposed constitutional amendment for raising the debt limit.
Each of these amendments were defeated on identical 8 to 9
votes, with all Republican members who voted voting against.
The consequences of a government default and shutdown are
too serious to risk a supermajority vote requirement. We should
honor the fundamental principle of majority rule, a principal
that has been enshrined in our Constitution for more than 200
years.
C. The proposed constitutional amendment undermines majority rule
The proposed constitutional amendment's supermajority
voting requirements are inconsistent with the principle of
majority rule upon which our constitutional democracy rests.
Requiring a supermajority to enact ordinary legislation is
unprecedented, dangerous and in the words of Charles Fried,
former Solicitor General in the Reagan Administration,
``profoundly undemocratic.'' 39
---------------------------------------------------------------------------
\39\ Balanced Budget Amendment--S.J. Res. 41: Hearings Before the
Senate Comm. on Appropriations, 103rd Cong., 2d Sess. At 85 (1994)
(hereinafter ``1994 Appropriations Committee Hearings'').
---------------------------------------------------------------------------
In essence, we are being asked to subject our ability to
govern ourselves as a nation to the tyranny of a minority on
economic and other policy matters. Rather than setting the
stage for the consensus and cooperation we need to confront our
fiscal problems, the proposed amendment would direct us toward
institutional gridlock and increased opportunities for
brinkmanship.
Charles Fried cautioned that these requirements would give
each recalcitrant member of Congress a potent lever to extract
advantages from the majority, with the perverse result that
spending, and perhaps deficits, would be increased rather than
decreased.40 Walter Dellinger, the current Solicitor
General, as well as other eminent constitutional scholars, have
concurred in this assessment.41
---------------------------------------------------------------------------
\40\ Id. at 85, 88.
\41\ Id. at 134.
---------------------------------------------------------------------------
For small States, the supermajority voting requirements in
the balanced budget amendment could be particularly
devastating. In the House, only 175 votes would be necessary to
defeat any appropriations bill that might result in a fiscal
year deficit. This means that concerted action by the
representatives of as few as six States--California, New York,
Texas, Florida, Illinois and Pennsylvania, with a total of 177
representatives--could thwart the requirement of a three-fifths
vote to waive the requirement of a balanced budget or increase
the debt ceiling. This results in a virtual veto power to a
very small number of populous States.42
---------------------------------------------------------------------------
\42\ Id. at 202 (testimony of Professor Burke Marshall, Yale
University).
---------------------------------------------------------------------------
We should not hold our policy making hostage to House or
Senate minorities.43 Instead of hamstringing Congress with
supermajority requirements, we should be seeking ways to
increase our ability to take action to reduce the deficit and
to deal with a fast-changing and increasingly global economy.
To require economic policy making to be subject to minority
rule pursuant to constitutional mandate is to proceed in
precisely the wrong direction.
---------------------------------------------------------------------------
\43\ Alternatively, in the Senate the combination of
representatives from 21 of the smallest States representing
approximately only 11.2% of the nation's population could block any
action. Thus, it would encourage unholy alliances and splintering
regional combination in order to exact tribute on parochial matters.
---------------------------------------------------------------------------
Our Founders wisely rejected requiring supermajorities to
enact legislation. The constitutional exceptions to majority
rule can be counted on one hand. Each is justified by the need
to protect our democracy, not to weaken it.44
---------------------------------------------------------------------------
\44\ The exceptions, each of which requires a two-thirds vote are
to override a Presidential veto (Art. I, sect. 3); impeach a federal
officeholder (Art. I, sect. 3); approve treaties made by the President
(Art. II, sect. 2); expel a Member from either House (Art. I, sect. 5);
and amend the Constitution. Only the first and last require a two-
thirds vote of each House.
---------------------------------------------------------------------------
In matters of substantive policy making within the
jurisdiction of Congress, our constitutional democracy has from
its inception been predicated upon the concept of majority
rule. Federal legislative power is nowhere in the Constitution
subjected to a supermajority requirement.
As Professor Kathleen Sullivan of Stanford University has
pointed out:
In Federalist 58 * * * James Madison argued that if
``more than a majority'' were required for legislative
decision, then ``in all cases where justice or the
general good might require new laws to be passed, or
active measures to be pursued, the fundamental
principles of free government would be reversed. It
would be no longer the majority that would rule: the
power would be transferred to the minority.'' In other
words, according to Madison, requiring a supermajority
to pass ordinary legislation turns democracy on its
head.45
---------------------------------------------------------------------------
\45\ 1994 Appropriations Committee Hearings at 184-85 (emphasis
added).
---------------------------------------------------------------------------
Charles Fried recognized that the proposed supermajority
requirements are ``against the spirit and genius of our
Constitution, which is a charter for democracy; that is, for
majority rule.'' 46
---------------------------------------------------------------------------
\46\ Id. at 84.
---------------------------------------------------------------------------
Professor Sullivan recognized another important respect in
which the proposed amendment undermines our democracy. It
reflects a profound lack of faith in the ability of voters to
hold responsible those Members of Congress who irresponsibly
drive up the deficit:
What this amendment is saying to the coal miner, the
domestic worker, the office worker, the person on the
street is we do not trust you enough to impose fiscal
responsibility on your elected officials at the ballot
box. * * *
We do not trust you to be as prudent with respect to
your children and the deficit burdens that you might
impose on them. We think that you are likely to support
all this taxing and spending, taxing and spending, and
we do not trust politics to cure that.
Now, I think the American people are a good deal
smarter than that and capable of taking serious
consideration of the issues posed by the deficit,
debating them in the crucible of politics, which is the
normal forum for fiscal debates to take place, and to
fight the tendencies to leave to tomorrow burdens of
debt because everyone can understand that concept. * *
* 47
---------------------------------------------------------------------------
47 Id. at 187-88.
Nowhere in this year's proceedings, in the Judiciary
Committee's hearing, its deliberations, or the Committee
majority's report do the supporters of the amendment
satisfactorily explain this unprecedented departure from the
underlying principle of our constitutional democracy. Nowhere
does the majority acknowledge the radical damage this proposal
will do to the fundamental principles of our democratic form of
government.
This proposal for constitutional supermajority requirements
has already spawned a series of look-alike proposals for
constitutional amendments addressing revenue measures and there
will undoubtedly be more. Indeed, even within the proposed
constitutional amendment there is in section 4 an additional
extra-majority provision.
It was this provision that Senator Durbin sought to amend
before the Committee in order to ensure that its provisions
looked both ways. The thrust of his amendment was that if these
requirements are to govern revenue increase, let them also
govern corporate welfare and revenue loss due to tax breaks.
The Republican majority defeated the Durbin amendment 8 to 9
with every Republican who voted, voted against it.
Political accountability to the public at the polls has
powered our representative democracy for over two centuries.
Even the majority must concede that is the ultimate mechanism
to lead to a balanced budget. Let us overcome the narrow
partisan barriers to deficit reduction rather than enact
constitutional impediments that will irretrievably alter
cherished principles of our democracy.
Majority rule, in Congress and at the ballot box, has been
the central rule of our representative democracy for over two
centuries. It should not be tossed aside because some Members
of Congress would rather engage in the bumper sticker politics
of supporting a constitutional amendment than make the tough
decisions and cast the tough votes needed to balance the
budget.
The fault is not in the Constitution. Let us rededicate
ourselves to achieving lasting economic prosperity for the
nation in ways that count, and spend no more time debating
gimmicks that have no place in the Constitution.
V. The Proposed Constitutional Amendment Is Unsound Economic Policy
That this proposed constitutional amendment on budgeting is
unsound economic policy is a view shared by more than 1,000 of
the nation's most respected economists, including at least 11
Nobel Laureates, as well as present and former government
officials, including the former Chair of President Nixon's
Council of Economic Advisors, the current and former Federal
Reserve Board Chairmen, former Democrat and Republican
Directors of the Congressional Budget Office, the former
Republican Governor and Senator from Connecticut and the former
Republican Senator from Oregon, just retired.
A. The proposed amendment would hamper the government's ability to cope
with economic downturns.
Economists and financial experts agree that this proposed
balanced budget constitutional amendment will strait-jacket the
economy in hard times. It will hamstring the adjustment
mechanisms that have been developed since the Great Depression
to preserve jobs and restore the economy after a downturn.
If the economy takes a downturn and Americans are losing
their jobs--as happened in the early 1990's--this proposed
constitutional amendment makes it more difficult for our
government to respond to the needs of working families.
As Treasury Secretary Rubin testified before this
Committee:
A balanced budget amendment would subject the Nation
to unacceptable economic risks in perpetuity * * * A
balanced budget amendment could turn slowdowns into
recessions, and recessions into more severe recessions
or even depressions.48
---------------------------------------------------------------------------
\48\ January 17, 1997 Judiciary Committee Hearing Transcript at p.
15.
His judgment was reinforced by the testimony of Robert
Greenstein of The Center for Budget and Policy Priorities who
---------------------------------------------------------------------------
testified:
In years when growth is sluggish, revenues rise more
slowly while costs for programs like unemployment
insurance increase. As a result, the deficit widens.
Under a balanced budget amendment, more deficit
reduction thus would be required in periods of slow
growth than in times or rapid growth.
This is precisely the opposite of what should be done
to stabilize the economy and avert recessions. The
constitutional amendment consequently risks making
recessions more frequent and deeper. In the period from
1930 to 1933, for example, Congress repeatedly cut
federal spending and raised taxes, trying to offset the
decline in revenues that occurred after the great crash
of 1929. Yet those spending cuts and tax increases
removed purchasing power from the economy and helped
make the downturn deeper; they occurred at exactly the
wrong time in the business cycle.
This is why a balanced budget requirement is called
``pro-cyclical.'' It exacerbates the natural business
cycle or growth and recession. It also is why most
economists who favor tough deficit reduction measures
strongly oppose a constitutional balanced budget
amendment.
Thus, the 1,060 economists and 11 Nobel Laureates who are
opposing the proposed constitutional amendment condemn it
because the amendment ``mandates perverse actions in the face
of recessions.''
We are deeply concerned about the impact that a balanced
budget amendment will have on jobs for working families during
times of recession. The following exchange between Senator
Kennedy and Secretary Rubin may help illustrate the danger:
Senator Kennedy. [W]e have not been very effective
over the period of certainly this century in
understanding when a recession was going to take place
or when we were going to get downturns. We have not had
that capacity or capability under Republicans or
Democrats.
As I understand it, what you are saying is that if
you put this measure into effect as a constitutional
amendment, what its impact would be, again, in terms of
working families--the cycle that might be developed--is
that it would put a straightjacket on the economy. What
may be a small tip in terms of a temporary recision may
become something that would be much more serious. Could
you just elaborate on that point, please?
Secretary Rubin. Senator, I spent 26 years on Wall
Street with a major investment banking firm and during
that entire time I was responsible for major trading
operations, global trading operations, and a lot of
what I did was to work with other people to try to make
judgments about what economic conditions were likely to
be.
I think what you said is exactly right. You recognize
recessions quite a bit after they have started.
Predicting economic circumstances is well nigh
impossible, in my judgment, at least with any degree of
reliability. And under those circumstances, you can be
well into an economic downturn before you realize you
have to deal with it, and I think that is one of the
very serious problems that the balanced budget
amendment creates, as you have suggested.
Senator Kennedy. That you, Mr. Secretary, and that,
translated, for most Americans would mean a loss of
jobs, increasing unemployment.
As Secretary Rubin explained, the so-called automatic
stabilizers in our economy would be ineffective under this
proposed constitutional amendment. These are mechanisms that
have been developed over the last 50 years to reduce the
extremes of the ``boom-and-bust'' cycles. They are intended to
prevent another Great Depression and have proven effective over
time.
Secretary Rubin testified that: ``[W]ithout automatic
stabilizers, the Treasury Department has estimated that
unemployment in 1992 that resulted from the 1990 recession
might have hit 9 percent instead of 7.7 percent, which would
have been in excess of 1 million jobs lost.'' 49
---------------------------------------------------------------------------
\49\ Judiciary Committee Hearing, written statement of Hon. Robert
E. Rubin, January 17, 1997, p. 3 (emphasis added).
---------------------------------------------------------------------------
The preamble to the Constitution and its stated purpose to
``promote the general Welfare, and secure the Blessings of
Liberty to ourselves and our Posterity'' ought not be
overridden by a constitutional amendment that would deny jobs
to hundreds of thousands--if not millions--of working families
in hard times.
Federal Reserve Chairman Alan Greenspan recently reiterated
his opposition to the proposed constitutional amendment during
questioning by Senator Lautenberg during his testimony before
the Senate Budget Committee. He urged the Senate Budget
Committee continue to eliminate the deficit, but he joined
Secretary Rubin and our nation's leading economists in the
conclusion that this proposed constitutional amendment places
too many constraints on our economy. 50
---------------------------------------------------------------------------
\50\ Testimony of Hon. Alan Greenspan, Senate Committee on the
Budget, Hearing on the State of the U.S. Economy and Economic Outlook,
January 21, 1997.
---------------------------------------------------------------------------
The escape hatch allowing a waiver of its provisions by a
supermajority vote of three-fifths of both Houses of Congress
is small comfort to America's working families. Many national
recessions start out in different regions of the country. For
example, the most recent recession hit New England first. What
if citizens of New England, who have fewer Members of the House
of Representatives than other regions of the country, needed
help, but could not get Senators and Representatives from other
States, which were still experiencing good times, to waive a
constitutional balanced budget requirement to help protect
their livelihoods?
Professor Robert Eisner of Northwestern University and past
president of the American Economic Association understood the
economic problems under this proposed constitutional amendment
when he recently wrote:
One need only recall the near-collapses, in recent
years, of the economies in New England, California and
Texas. Who would bail them out if their own tax
revenues again declined and there were surges of claims
for unemployment benefits, food stamps and general
assistance? 51
---------------------------------------------------------------------------
\51\ Editorial by Robert Eisner, titled ``Balanced Budget: Bad
Economics,'' the Wall Street Journal, January 22, 1997.
Although the Committee majority outlines the dangers of a
budget deficit, their report fails to address how the proposed
amendment will provide for the flexibility needed in economic
downturns without holding working families and hard hit regions
hostage to a supermajority vote in Congress.
B. The proposed constitutional amendment would hamper the government's
ability to respond to emergencies and natural disasters
The proposed constitutional amendment can no more prevent a
recession than it can an earthquake, but it will restrict our
ability to deal with the effects of both.
A natural disaster, such as a large-scale flood, earthquake
or fire, could require the Federal Government to expend large
sums to assist the victims and begin to rebuild the ravaged
area. The proposed constitutional amendment would make these
kinds of sudden emergency expenditures impossible because they
would cause an unauthorized increase in the deficit.
Humanitarian efforts could and would be held hostage while the
requisite supermajorities were rounded up in each House of
Congress. A minority in either House could block such efforts
altogether or extort other pay backs.
In recent years, the Federal Government has been called on
to give critical aid to supplement State and local efforts to
protect the public health and safety in response to major
disasters and emergencies. Much of this aid has been paid for
by supplemental appropriations because of the unexpected nature
of major disasters and emergencies.
From fiscal years 1989 to 1995 Congress had to appropriate
supplemental major disaster and emergency relief in every year
but one. For example, in 1992, Congress passed an emergency
supplemental appropriation over $4 billion to help victims of
the Los Angeles riots, the Chicago floods and Hurricane Andrew.
In 1993, Congress passed an emergency supplemental
appropriation of $2 billion to help victims of the Midwest
floods. In 1994, Congress passed an emergency supplemental
appropriation of more than $4 billion to help victims of the
Los Angeles earthquake.
Relief for major disasters and emergencies must be
flexible. Usually, a swift response from the Federal Government
is needed to aid local relief efforts. Disaster and emergency
relief by constitutional mandate is a prescription for
gridlock, not swift action. When your state is hit by a major
disaster or emergency, do you want critical federal assistance
to hang on the whims of 41 Senators or 175 Representatives?
Our Founders rejected requirements of supermajorities. We
should look to their sound reasons for rejecting supermajority
requirements before we impose on our most vulnerable and
neediest citizens a three-fifths supermajority requirement to
provide them federal relief from major disasters and
emergencies.
Alexander Hamilton painted an alarming picture in
Federalist Paper Number 22 of the consequences of the
``poison'' of supermajority requirements. Hamilton said that
supermajority requirements serve ``to destroy the energy of the
government, and to substitute the pleasure, caprice, or
artifices of an insignificant, turbulent, or corrupt junto to
the regular deliberations and decisions of a respectable
majority.''
These supermajority requirements are a recipe for increased
gridlock, not more efficient action. As Hamilton noted long
ago: ``Hence, tedious delays; continual negotiation and
intrigue; contemptible compromises of the public good.''
Such supermajority requirements reflect a basic distrust
not just of Congress, but of the electorate itself. We reject
that notion.
We fear that a supermajority requirement will lead to some
in Congress playing politics with critical relief from
disasters and emergencies. Even with today's simple majority
requirement for supplemental appropriations for disaster and
emergency relief, we see the potential for partisan politics.
In the last Congress a multi-billion dollar disaster aid
package for California was caught in the budget wars between
President Clinton and House Republicans. The House Republican
leadership delayed action on a request from the President for
supplemental appropriations for emergency relief for victims of
the California floods and Los Angeles earthquake.52
Fortunately, public outcry forced the House Republicans to
relent. That political gamesmanship happened with only a simple
majority requirement for supplemental appropriations for
disaster and emergency relief. Think what would happen if
Congress had to clear a supermajority hurdle to pass disaster
and emergency relief.
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\52\ See Wall Street Journal, ``Budget Wars Pose Threat to Disaster
Aid for California,'' Feb. 10, 1995, at A 10.
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VI. The Proposed Constitutional Amendment Will Result in Shifting
Burdens onto State and Local Governments
The proposed constitutional amendment, in the form of S.J.
Res. 1, is a prescription for shifting financial burdens to
State and local governments. Cost shifting to State and local
governments will be an irresistible impulse--the easy way out
of our Federal deficit. Consequently, State and local leaders
rightfully fear that ratification of the proposed
constitutional amendment would result in a massive shift of the
Federal Government's responsibilities and financial
requirements to the shoulders of State and local governments
and the pocketbooks of State and local taxpayers.
Governor Michael O. Leavitt, of Utah, testified in 1995
that consideration of the proposed amendment and of its likely
effect on the States are linked, that ``the two topics cannot
be separated.'' 53 Nevertheless, the Committee majority
simply ignore this important dimension of the debate. State and
local governments should not be left holding the bag and having
to raise their taxes so that the Federal Government can appear
to pare its deficit.
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\53\ 1995 Judiciary Committee Hearings at 3 (statement of Honorable
Michael O. Leavitt).
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Efforts to reduce the federal deficit over the last several
years have not been without significant impact on State and
local government. We are just beginning to sort out the impact
of welfare and immigration law changes passed in the 104th
Congress. State and local officials are petitioning for changes
in order to better be able to absorb the impact of the
diminished federal role and contribution towards shared
responsibilities.
Can anyone honestly contend that this proposed
constitutional amendment on budgeting will not likely shift
burdens to State and local government? We need only remember
our recent history: In the 1980's, tax reductions for the
wealthy and a bloated defense budget resulted in burgeoning
deficits and massive reductions in the amounts of Federal
grants and assistance to the States. The Senate Committee on
Governmental Affairs has reported that Federal aid to State and
local governments fell sharply in the 1980's. Indeed, during
those years, Federal funds went from 18.6% of State and local
revenues to only 13.2%, a drop of almost one-third. 54
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\54\ S. Rep. No. 104-1, at 7-8.
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In order to meet the critical needs that were left unmet by
these Federal reductions, local and State property and other
taxes had to be increased in many States across the country. If
the proposed constitutional amendment were ratified, we would
likely enter another period in which State and local taxes were
significantly increased to pay for the shifts in the cost
burdens. State and local government would be left to catch
those who fall through a shredded Federal ``safety net'' of
nutrition, housing, education and medical care programs.
As Governor Roy Romer, of Colorado, cautioned in his
testimony before the Constitution Subcommittee in 1995:
``Before we take on that kind of burden [from the proposed
constitutional amendment], the people of Colorado need to
understand the impact such a burden will have on their daily
lives.'' \55\
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\55\ Hearings on Balanced Budget/Unfunded Mandates before the
Senate Judiciary Subcommittee on the Constitution, 103rd Cong., 2nd
Sess. (January 3, 1995) (Statement of Honorable Roy Romer at 2).
---------------------------------------------------------------------------
This is the ultimate budget gimmick--passing the buck to
the States. Reduction of the Federal deficit should not be
financed by unfairly increasing the burdens on other
jurisdictions and requiring our partners in State and local
government to pay for the profligate budgetary practices of the
Federal government. Most importantly, working people can afford
tax increases no more easily because they are imposed by State
and local authorities, rather than by the Federal government.
Governors, local authorities and the people of every State
are correctly concerned about the potential ``double whammy''
of S.J. Res. 1: increased shifting of responsibility from the
Federal Government to State and local governments, at the same
time that direct Federal assistance is being reduced or
terminated. Mayor Jeffrey N. Wennberg, of Rutland, Vermont,
testifying in 1995 on behalf of the National League of Cities,
warned that ``[a]ny balanced budget amendment would almost
certainly increase unfunded mandates on cities and towns as
well as decrease what little Federal assistance currently
remains to fund existing mandates.'' \56\
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\56\ H.J. Res. 1: Hearings before the House Judiciary Subcommittee
on the Constitution, 104th Cong., 1st Sess. (1995) (statement of
Honorable Jeffrey N. Wennberg at 5) (hereinafter ``House Judiciary
Hearings'').
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To the extent the proposed constitutional amendment did not
shift unfunded mandates to the States, it could well result in
the emergency of unmet needs were the Federal Government to
abandon involvement or responsibility for certain aspects of
education, housing, home heating, medical care and nutrition.
The needs will still exist, but they will simply not be
addressed by federal efforts. As Governor Roy Romer testified:
[T]he Governors are concerned that attempts to
balance the Federal budget will come at the cost of
states and localities. I appreciate that we may see a
Federal provision protecting state and local
governments from new unfunded mandates. But this will
not protect us from having to pick up the cost of
programs, such as child care, mass transit and
education, that were previously supported with Federal
funds.'' \57\
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\57\ Senate Judiciary Subcommittee Hearings (statement of Honorable
Roy Romer at 2).
During his testimony this year before the Judiciary
Committee, Jim Miller, a former OMB Director, raised another
---------------------------------------------------------------------------
specter for State and local government. He testified:
[A Balanced Budget Constitutional Amendment] would
lead to increased efforts by Congress and the President
to seek other means of expanding government. I'm
particularly concerned about the tendency to substitute
regulation and mandates for direct spending programs. *
* * [I] believe other safeguards should be enacted--in
particular a ``regulatory budget.'' \58\
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\58\ January 17, 1997 Judiciary Committee Hearing, written
statement of Dr. James Miller, III, at 3.
Thus, Dr. Miller foresees the possibility that the proposed
constitutional amendment will lead to expanding federal
regulatory efforts to achieve the essential purposes of
programs that the Federal Government is unable to fund directly
or even indirectly.
Mayor Wennberg predicted in 1995 that ``[t]he pressure to
order state and local spending will grow geometrically under a
balanced budget amendment unless an equally powerful
restriction on [unfunded Federal] mandates is enacted.'' \59\
In the absence of constitutional protection against unfunded
Federal mandates, Governor Howard Dean of Vermont, then the
Chairman of the National Governors Association, described ``a
vote for such a balanced budget amendment as a vote to raise
state and local taxes.'' \60\
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\59\ House Judiciary Hearings, (statement of Honorable Jeffrey N.
Wennberg at 1).
\60\ Governor Howard Dean, ``Trickle-Down Tax Increase,''
Washington Post, January 19, 1995, at A 25.
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In light of these concerns, it would be irresponsible for
Congress to propose a constitutional amendment before it has
determined how the requirements of the amendment will be
implemented, how the States will be affected, how our
partnership with State and local government will be altered,
and what kinds of additional responsibilities and financial
burdens State and local governments will be called upon to
meet.
We will serve our State and local governments, and
ultimately our constituents, by not considering and not
assembling the information necessary for them to consider the
likely impact at the State and local level of ratification of
the proposed constitutional amendment.
Before they consider such an amendment, they have a right
to know how we in the Congress intend to meet our obligations
to eliminate Federal deficits under this constitutional
amendment, given that the manner by which we do so will likely
affect their responsibilities and increase their burdens for
many years to come. And they have a right to know what
additional responsibilities ratification of this constitutional
amendment would likely impose on them.
VII. THE PROPOSED AMENDMENT WOULD UNDERMINE THE SEPARATION OF POWERS
UNDER OUR CONSTITUTION
As James Madison wrote in The Federalist No. 48, ``the
legislative department alone has access to the pockets of the
people.'' Our Constitution now gives Congress the primary
authority, and responsibility, with regard to the raising and
expenditure of outlays. The proposed amendment would
dramatically alter the allocation of powers set forth in
article I, sections 7, 8 and 9.
It risks casting the federal and state courts in the role
of federal budget czars deciding in myriad cases whether the
Federal budget is impermissibly out of balance, and where it
is, forbidding spending and ordering what remedies it deems
appropriate for the constitutional violations occasioned by
circumstances in which outlays exceeding revenues in any year
without supermajority approval of the Congress.
A. The amendment would result in budgetary issues being taken to the
courts
Although the proponents of the proposed constitutional
amendment have left it silent with regard to the role of the
courts in its interpretation, implementation and enforcement,
that silence is deafening.
Section 1 of the amendment contains a flat prohibition on
``total outlays'' exceeding ``total receipts'' in any fiscal
year, except as expressly authorized by a supermajority in each
House of Congress. Having embedded this mandate in the
Constitution, this proposed constitutional amendment invites
the courts to become actively involved in determining when this
constitutional command is being violated and how such
violations are to be remedied.
In the memorable words of Chief Justice Marshall: ``It is,
emphatically, the province and duty of the judicial department,
to say what the law is.'' Marbury v. Madison, 5 U.S. (1 Cranch)
137, 176 (1803). Since that historic decision, the Supreme
Court has had the preeminent role in articulating the scope and
meaning of our Constitution. The majority report concedes the
``fundamental obligation'' of the courts to ``say what the law
is.''
If the proposed constitutional amendment on budgeting were
ratified, the fulfillment of this role by the Supreme Court,
and other courts, could require them to address complex
budgetary issues that courts are ill-suited to resolve. As de
Tocqueville wrote more than 148 years ago: ``Scarcely any
political question arises in the United States that is not
resolved, sooner or later, into a judicial question.'' \61\ If
the proposed constitutional amendment were ratified, several of
its provisions would give rise to cases and controversies that
the courts would be called upon to resolve.
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\61\ Alexis de Tocqueville, ``Democracy in America,'' pt. I, ch. 16
(1848).
---------------------------------------------------------------------------
Supporters of the proposed constitutional amendment, in
fact, desire judicial involvement and enforcement of its terms.
The representative from the U.S. Chamber of Commerce testified
before the Judiciary Committee:
[T]here is a legitimate and necessary role for the
courts in ensuring compliance with the amendment.
Congress could potentially circumvent balanced budget
amendment requirements through unrealistic revenue
estimates, emergency designations, off-budget accounts,
unfunded mandates, and other gimmickry. It is our view
that the need to proscribe judicial policy making can
be reconciled with a constructive role for the courts
in maintaining the integrity of the balanced budget
requirement. \62\
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\62\ January 17, 1997 Judiciary Committee Hearing, written
statement of Dr. Martin A. Regalia, at 12-13.
In response to questions from Senator Leahy, the
representative of the National Taxpayers Union, another
advocate for the proposed constitutional amendment on budgeting
in spite of its potential to lead to tax increases in order to
achieve balance, observed: ``We oppose denying judicial review
authority, and believe that it would be more difficult to
enforce the provisions of S.J. Res. 1 if Congress were to add
such language to the Balanced Budget Amendment.'' \63\
---------------------------------------------------------------------------
\63\ Response of James D. Davidson to written questions from
Senator Leahy, January 22, 1997.
---------------------------------------------------------------------------
The representative of the Family Research Council opposed
adding express language on the role of the courts, noting that
they ``would not object to language that would prevent judges
from raising taxes'' and observed:
Under our system of government, each branch has
certain limited means to require legal compliance by
one of the other branches. The use of this legal
authority is somewhat dependent on the political will
of each branch to exercise their proper authority. Each
branch of government will have its prerogatives to
enforce the amendment, subject to appropriate checks
and balances. \64\
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\64\ Response of Martin J. Dannenfelser, Jr. to written questions
from Senator Leahy, January 22, 1997.
Similarly, in 1995, in response to questions from Senator
Leahy, the U.S. Chamber of Commerce noted: ``The BBA would be
policed by the same balance of powers that the Framers so
carefully crafted in the Constitution. Thus, excesses by the
Congress would be controlled by both the executive and judicial
branches.'' \65\
---------------------------------------------------------------------------
\65\ Response of Dr. Martin A. Regalia to written questions from
Senator Leahy, January 9, 1995.
---------------------------------------------------------------------------
The former government attorneys who support the proposed
constitutional amendment and have been called to testify before
the Committee over the last several years on the problem of
defining the judicial role have been unanimous about only one
thing: Court involvement is not prohibited by the amendment.
Stuart M. Gerson, a former Acting Attorney General, and
William Barr, the official he replaced at the end of the Bush
Administration, differed in what they regarded as the principal
dangers posed by judicial intervention and in how they would
seek to reduce the risks of courts involvement, but they did
not say and could not say that the courts would not be involved
in interpreting, implementing and enforcing the proposed
constitutional amendment were it to be ratified.
Mr. Gerson testified he thought judicial intervention would
be ``limited in scope'' but conceded that our constitutional
law ``does not remove the courts from the picture entirely
where there is manifest abuse or disregard of unequivocal legal
pronouncements.'' He noted, in his written statement, that
``there is a category of case--that involving whether objective
statutory terms have been satisfied--which always has been
cognizable and will remain so under the Balanced Budget
Amendment'' and, in his oral presentation, that ``in those few
cases where a cognizable departure from the specific terms of
the amendment can be shown, courts, indeed, must intervene.''
He went on, in response to questioning from Senator
Torricelli, to concede that standing for certain individuals
and members of Congress is possible under this amendment:
So, the answer to your question is that I think that
the standing of individuals and members of Congress is
very limited. I do concede--that there is a category of
cases as to which I would not deny jurisdiction to the
courts to make certain that the Constitution was being
enforced.\66\
---------------------------------------------------------------------------
\66\ January 22, 1997 Judiciary Committee Hearing Transcript, at
98.
When asked by Senator Torricelli, as a example, whether the
Senate sponsors of the proposed constitutional amendment on
budgeting would have standing before a federal court to bring a
---------------------------------------------------------------------------
suit to compel compliance with its terms, Mr. Gerson said:
In fact, I think that situation is the most likely
situation in which Congressional standing, which has
never before been recognized, might be recognized and I
say so in my prepared testimony. * * * That is the one
situation that even Judge Bork in the D.C. Circuit
recognized might allow Congressional standing.\67\
---------------------------------------------------------------------------
\67\ January 22, 1997 Judiciary Committee Hearing Transcript, at
99. See, e.g., Burke v. Barnes, 479 U.S. 361 (1987); Coleman v. Miller,
307 U.S. 433, 438 (1939)(Kansas state senators had standing to protest
lack of effect of votes for ratification of proposed Child Labor
Amendment, which ratification had been rescinded by subsequent act of
the legislature); Kennedy v. Sampson, 511 F.2d 430 (D.C. Cir. 1974);
cf. Spence v. Clinton, 942 F. Supp. 32, 37 (D.D.C. 1996)(``it is
foreseeable that the congressional plaintiffs might yet be able to
climb the requisite high wall of congressional standing''). A prominent
House sponsor of the amendment was quoted by Senator Nunn last Congress
as saying that ``a member of Congress or an appropriate administration
official probably would have standing to file suit challenging
legislation that subverted the amendment'' and that ``courts * * *
could invalidate an individual appropriation or tax Act: and could
``rule as to whether a given Act of Congress or action by the Executive
violated the requirements of the amendment.'' 140 Cong. Rec. S1823-34
(Feb. 24, 1995)(Senator Nunn quoting Representative Schaefer).
The other expert witness who testified before the Judiciary
Committee on questions of law and judicial review was Alan B.
---------------------------------------------------------------------------
Morrison of the Public Citizen Litigation Group. He observed:
[I]n the absence of a clear statement of the contrary
in the Amendment itself, it is likely that parties who
claimed that, for example, the requirements for revenue
increases in Section 4 had not been satisfied, could
show sufficient injury to meet the case or controversy
requirement in Article III of the Constitution. The
same is true for those objecting to a Presidential
impoundment.\68\
---------------------------------------------------------------------------
\68\ January 22, 1997 Judiciary Committee Hearing, written
statement of Alan B. Morrison, at 7-8.
In his written testimony, Mr. Morrison proceeds over the
course of 10 pages to sketch a few of the many questions raised
by the proposed constitutional amendment that could find their
way before a court for interpretation, implementation or
enforcement. His testimony concluded with the following
---------------------------------------------------------------------------
exchange:
Mr. Morrison: Senator, you will note that Section 1
of S.J. Res. 1 is not put in terms of the Congress
shall enact and the President shall sign into law. It's
put in absolute terms--total outlays for any fiscal
year shall not exceed.
It seems to me that is a very unusual kind of
constitutional command and that despite what the courts
have done in other cases, no person sitting at this
table or any place else in this country can accurately
predict what the courts will do, which is the reason
why I say it is so important that the Congress, in the
first instance, assume responsibility, take it on, of
saying what they want about judicial review and that
would be enforced in the courts.
Senator Leahy: I think what you are going to end up
with, the way it is now, it's going to be glory days
for constitutional lawyers and courts under this. I
mean they would have a field day.\69\
---------------------------------------------------------------------------
\69\ January 22, 1997 Judiciary Committee Hearing Transcript, at
127-128.
Written testimony was received by the Judiciary Committee
from the Department of Justice. In that statement, the current
head of the Office of Legal Counsel indicated that ``primary
concern of the Department of Justice is how a balanced budget
amendment would be enforced--an issue that none of the proposed
amendments thus far has adequately addressed.'' The statement
---------------------------------------------------------------------------
continues:
If a balanced budget amendment were to be enforced by
the courts, it could restructure the balance of power
between the branches of government and could empower
unelected judges to raise taxes or cut spending--
fundamental policy decisions that judges are ill-
equipped to make.\70\
---------------------------------------------------------------------------
\70\ January 22, 1997 Judiciary Committee Hearing, written
statement of Dawn E. Johnsen, Acting Assistant Attorney General, at 2.
The Department of Justice testimony on judicial enforcement
included citation to court decisions in which judicial
doctrines regarding standing and political questions were no
barrier to court involvement.\71\
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\71\ Recent cases suggest a narrowing of the political question
doctrine. See, e.g., United States v. Munoz-Flores, 495 U.S. 385
(1990); Department of Commerce v. Montana, 503 U.S. 442 (1992); see
also Bruneau v. Edward, 517 So. 2d 818, 824 (La. Ct. App. 1987)(refusal
of state court to stay out of question arising under balanced budget
amendment on political question grounds because ``determination of
whether the Legislature has acted within, rather than outside, its
constitutional authority must rest with the judicial branch of
government'').
---------------------------------------------------------------------------
The Department of Justice testimony also referred to prior
statements by a former Solicitor General for President Nixon
and federal judge, Robert H. Bork, and another former Solicitor
General for President Bush and Harvard law professor, Charles
Fried. Both men have observed that judicial self-restraint,
based on doctrines of standing and political questions, did not
overcome the possibilities of significant litigation over
interpretation, implementation and enforcement of the proposed
constitutional amendment on budgeting.
The Department of Justice has not varied much from that of
Robert H. Bork, 10 years ago:
In the end, there is a range of views about the
extent to which courts would involve themselves in
issues arising under the balanced budget amendment.
Former Solicitor General Bork believes that there
``would likely be hundreds, if not thousands, of
lawsuits around the country'' challenging various
aspects of the amendment. Similarly, Professor
Archibald Cox of Harvard Law School believes that
``there is a substantial chance, even a strong
probability, that * * * federal courts all over the
country would be drawn into its interpretation and
enforcement,'' and former Solicitor General Charles
Fried has testified that, ``the amendment would surely
precipitate us into subtle and intricate legal
questions, and the litigation that would ensue would be
gruesome, intrusive, and not at all edifying.'' Other
commentators, such as former Attorney General William
Barr, believe that the political question and standing
doctrines likely would persuade courts to intervene in
relatively few situations, but that ``[w]here the
judicial power can properly be invoked, it will most
likely be reserved to address serious and clear cut
violations.''
Former Attorney General Barr may well be right that
courts would be reluctant to get involved in most
balanced budget cases. However, none of the
commentators, included General Barr himself, believes
that the amendment would bar courts from at least
occasional intrusion into the budget process.
Accordingly, whether we would face an ``avalanche'' of
litigation or fewer cases alleging ``serious and clear
cut violations,'' a broad consensus exists that the
amendment creates the potential for the involvement of
courts in questions that are inappropriate for judicial
resolution.\72\
---------------------------------------------------------------------------
\72\ January 22, 1997 Judiciary Committee Hearing, written
statement of Dawn E. Johnsen, Acting Assistant. Attorney General, at 9-
10.
The majority report does nothing to resolve this problem.
It concedes that the text of the proposed constitutional
amendment on budgeting is silent with respect to judicial
review, contending that silence ``strikes the right balance.''
Mr. Morrison is correct to challenge the Congress to say
what it intends and what it means in the text of the proposed
constitutional amendment itself. Instead, the majority is
leaving to the courts themselves the determination of the
challenges arising under the proposed amendment and its
implementation and what they will hear and determine. They are
to be guided by the vagaries of general, judicially-created
doctrines of justiciability.
The majority report also suggest that Congress may revisit
this issue later through implementing legislation. Not only
would such subsequent implementing legislation require
agreement in both Houses and signature by the President or a
supermajority override of a presidential veto, but even if
ultimately enacted, it may not be able to restrict
constitutionally-derived judicial power and responsibility and
may itself be overridden by the commands of Article III and
this proposed 28th amendment. Former Solicitor General Charles
Fried has testified that a subsequent legislative effort to
limit judicial power, ``itself might very well be
unconstitutional.'' \73\
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\73\ 1994 Appropriations Committee Hearings at 84.
---------------------------------------------------------------------------
Further, as Mr. Barr pointed out in 1995, the state courts
are not limited by the federal requirement of ``case or
controversy'' and its attendant justiciability doctrines:
Before moving on, I should point out for the
Committee one area that I believe does hold some
potential for mischief and that Congress may wish to
address. That is the area of state court review. The
constraints of Article III do not, of course, apply to
state courts, which are courts of general jurisdiction.
State courts are not bound by the `case or controversy'
requirement or the other justiciability principles,
even when deciding issues of federal law, including the
interpretation of the Federal Constitution. Asarco,
Inc., 490 U.S. at 617. Accordingly, it is possible that
a state court could entertain a challenge to a federal
statute under the Balanced Budget Amendment despite the
fact that the plaintiff would not satisfy the
requirements for standing in federal court.\74\
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\74\ January 5, 1995 Judiciary Committee Hearings, S. Hrg. 104-506,
at 127.
Although Mr. Gerson's written statement included the same
point, almost verbatim, the proposed constitutional amendment
and majority report are conveniently silent on this significant
dimension of the judicial review problem. Nowhere do the
proponents of this constitutional amendment confront the
problem of uncontrolled judicial review by states courts that
has been articulated by their own witnesses on judicial review,
who conclude that ``the state court in such a circumstance
would have the authority to render a binding legal judgment.''
The majority's dilemma may mirror that admitted by Mr. Barr
at the 1995 hearings: Having acknowledged the concern that
courts might order taxes raised as in Missouri v. Jenkins, Mr.
Barr was asked by Senator Biden whether the proposed
constitutional amendment ought not be revised to include an
express limitation on court power and their authority to order
certain types of remedies, Mr. Barr responded:
If I were a Senator, I would put it in the amendment.
But if I felt that would mean the amendment would not
pass because it would generate these arguments, oh,
gee, this is sort of like Eastern Europe, then I would
without hesitation support the amendment as written * *
* 75
---------------------------------------------------------------------------
\75\ January 5, 1995 Judiciary Committee Hearings, S. Hrg. 104-506,
at 131.
The majority is refusing to confront the possibility of
state court involvement and the possibility that courts in
different states might reach inconsistent determinations or
order contradictory remedies because it is difficult, its
discussion solution might offend, its solution might cost them
a vote or two. This is no way to amend the Constitution. Such
ambiguity and conscious disregard of potential problems
deserves the process, the proposed amendment, the American
people and, possibly, the generations to come who will suffer
under its unintended consequences.
In court challenges in which a constitutional violation was
found by the court to exist, the question of appropriate remedy
will loom large. Indeed, it is the possibility of judicially-
imposed remedies to ensure compliance with the proposed
constitutional amendment's command for balance each fiscal year
that has raised the most concern historically as Congress
considers this matter.
In 1994, Senator Danforth of Missouri successfully modified
the proposed constitutional amendment on budgeting. He sought
to restrict judicial involvement to issuing declaratory
judgments unless Congress specifically authorized another form
of relief through implementing legislation and his amendment
was accepted by the floor manager.
In 1995, the Senate likewise modified the proposed
constitutional amendment when the floor manager adopted an
amendment proffered by Senator Nunn of Georgia on judicial
review. The Nunn amendment called for restricting the judicial
power of the United States to matters specifically authorized
by implementing legislation.
Neither the Danforth nor the Nunn language nor anything
like them was included in S.J. Res. 1. Indeed, in spite of
these past attempts to limit judicial remedial authority in the
proposed constitutional amendment and the only successful floor
modifications to its text since 1993, the majority now rejects
all such efforts. Instead, the majority chooses to remain
silent on the many important issues surrounding judicial
involvement in the interpretation, implementation and
enforcement of the proposed constitutional amendment.
The majority report tries to dismiss Missouri v. Jenkins,
496 U.S. 33 (1990), and the dangers it portends for this
proposed constitutional amendment in a single sentence. In that
case, the United States Supreme Court upheld the power of a
Federal District Court Judge in Kansas City, Missouri, to order
tax increases in order to improve the public schools. The
Supreme Court upheld a District Court order that a local school
district levy taxes to raise funds to comply with the Court's
order to remedy unconstitutional school segregation.
This case has spawned concern about what is sometimes
referred to as ``judicial taxation'' and the Judiciary
Committee has held hearings on the issue and on suggested
legislation in the area in the last several years. Senator
Danforth cited this case in the course of offering his
amendment in 1994:
So after the case of Missouri versus Jenkins, decided
by the Supreme Court, it is clear that under certain
circumstances, the Federal courts have assumed the
power to impose taxes. And my concern was that Missouri
versus Jenkins could be the model for some future
action by the Federal courts. 76
---------------------------------------------------------------------------
\76\ Proposed Constitutional Amendments to Balance the Federal
Budget--103rd Congress, Budget Committee Print, S. Prt. 103-112, at
1511 (February 28, 1994).
The authority of the Federal courts to remedy
constitutional violations is broad, as was demonstrated in
Missouri v. Jenkins, 495 U.S. 33 (1990). In suits where a
constitutional violation of the proposed budgeting amendment
were found, courts would be left to make similar remedial
decisions.
In light of the deliberate omission of limiting language
like that previously included by Senator Danforth and Senator
Nunn, the proposed constitutional amendment is more likely to
be construed to authorize courts to enjoin spending, order
taxes or issue a negative injunction maintaining the status.
That will appear to be the intention of Congress. The absence
of any limitations on the power of the judiciary to review and
remedy violations supports the interpretation that S.J. Res. 1
is intended to authorize the courts to engage in judicial
review without the limitations those amendments included.
In The Federalist No. 78, Alexander Hamilton described the
judiciary as ``the least dangerous branch'' because it ``has no
influence over either the sword or the purse, no direction
either of the strength or the wealth of the society.'' He then
qualified his description, quoting Montesquieu as warning
``that `there is no liberty, if the power of judging be not
separated from the legislative and executive powers.' ''
Adopting this proposed constitutional amendment would
create precisely the peril warned against by Hamilton, because
it would invite unelected judges to decide funding policy
questions and exercise powers heretofore largely reserved to
the legislative and executive branches. It would be a mistake
of historic proportions.
This is a constitutional amendment that is being proposed.
In other settings in which constitutional rights are being
vindicated, when legislation enacted by Congress did not
provide an effective remedy, the courts have created judicial
ones. See, e.g., Bivens v. Six Unknown Named Agents of Federal
Bureau of Narcotics, 403 U.S. 388 (1971); Davis v. Passman, 442
U.S. 228 (1979); Carlson v. Green, 446 U.S. 14 (1980). Thus, if
Congress were to adopt enforcement legislation that failed to
provide an effective remedy for violations, the courts might
proceed on their own authority as required to fulfil their
constitutional duties.
These questions will not go away and cannot be ignored.
They point to another fatal flaw in proposing to conduct our
nation's economic and budgetary functions by means of a simply-
sounding constitutional declaration. A recent editorial in the
Burlington Free Press said it more succinctly: ``Amending the
Constitution to require a balanced budget would be like using a
sledgehammer to nail a picket in a fence.''
B. The proposed constitutional amendment would allow the President
broad powers to prevent outlays from exceeding receipts in a
fiscal year
The proposed constitutional amendment on budgeting would
allow the President vast authority to deal with, and possibly
even to impound, funds obligated by Congress. The circumstances
that would prevail after ratification of the proposed
constitutional amendment on budgeting will not have previously
existed. The President will have a lot to do with determining
how the President's constitutional duties under Article II,
section 3, to ``take care that the Laws be faithfully
executed,'' and Article II, section 7, to ``preserve, protect
and defend the Constitution'' will be fulfilled.
Section 1 of the proposed constitutional amendment commands
that ``[t]otal outlays for any fiscal year shall not exceed
total receipts for that fiscal year, unless three-fifths of the
whole number of each House of Congress shall provide by law for
a specific excess of outlays over receipts by a rollcall
vote.'' In any fiscal year in which it becomes apparent that in
the absence of congressional action, ``total outlays'' will
exceed ``total receipts,'' the President would determine how
best to proceed and might well proceed as if required by the
Constitution and the oath of office it prescribes to act to
prevent the unauthorized deficit.
This common sense reading of the proposed constitutional
amendment is shared by a broad range of highly-regarded legal
scholars. Then Assistant Attorney General (now Solicitor
General) Walter Dellinger testified in 1995 before the
Judiciary Committee that the proposed constitutional amendment
would authorize the President to impound funds to insure that
outlays do not exceed receipts.
Similarly, Harvard University Law School Professor Charles
Fried, who served as Solicitor General during the Reagan
Administration, testified that in a year when actual revenues
fell below projections and a bigger-than-authorized deficit
occurred, section 1 ``would offer a President ample warrant to
impound appropriated funds.'' 77 Others who share this
view include former Attorney General Nicholas deB.
Katzenbach,78 Stanford University Law School Professor
Kathleen Sullivan,79 Yale University Law School Professor
Burke Marshall,80 and Harvard University Law School
Professor Laurence H. Tribe.
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\77\ 1994 Appropriations Committee Hearings at 86.
\78\ 1994 Appropriations Committee Hearings at 166 (``the proposed
amendment provides a powerful constitutional argument for a
Presidential right to impound grounded in the language of section 1 * *
* '').
\79\ 1994 Appropriations Committee Hearings at 182.
\80\ 1994 Appropriations Committee Hearings at 204-05.
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This year the Secretary of the Treasury reenforced this
prospect when he noted in his testimony before the Committee:
Some proponents have suggested that under these
circumstances, the President would stop issuing checks,
including those for Social Security benefits. * * * The
President might also impound funds of his choosing. * *
* All of these potential outcomes are extremely
undesirable.81
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\81\ January 17, 1997 Judiciary Committee Hearing Transcript,
written statement of Hon. Robert E. Rubin, at 5.
The impoundment power that would be conferred on the
President by the proposed constitutional amendment is far
broader than the presidential line-item veto authority granted
to the President last year. As Assistant Attorney General
Dellinger testified in 1995, the impoundment authority implied
within the proposed constitutional amendment might allow a
President to order across- the-board cuts in all Federal
programs, target specific programs for abolition, or target
expenditures intended for particular States or regions for
impoundment.82 He testified that he would advise the
President that he not only had the right, but the
``constitutional obligation'' to prevent the violation of a
constitutional mandate against budgetary imbalance.
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\82\ 1995 Judiciary Committee Hearings at 100.
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The text of the proposed constitutional amendment does not
address these matters. The majority report says that is not the
intent of the Committee to grant the President any impoundment
authority and suggests that ``up to the end of the fiscal year,
the President has nothing to impound because Congress in the
amendment has the power to ratify or to specify the amount of
deficit spending that may occur in that fiscal year.'' The
majority report, thus, assumes there can never be an
unauthorized deficit, because Congress always has a theoretical
possibility of stepping in before the last minute ending the
fiscal year and ratify whatever deficit has occurred. Under
this construction, the proposed constitutional amendment is a
cruel joke.
Moreover, nothing in the proposed constitutional amendment
prevents the Executive from acting to implement its terms. A
President may not be willing to withhold based on a theoretical
possibility of what the President knows or has reason to
believe will not occur. Indeed, a President may choose not to
risk having all of the expenditures undertaken by the Federal
government for a portion of a fiscal year declared to have been
expended in violation of the Constitution. It is more likely
that a President, sworn to preserve, protect and defend the
Constitution, would not view the Executive as powerless to
prevent such a result.
Key House sponsors of the proposed constitutional amendment
circulated materials on the role of the Executive that add
context to the majority report's isolated declaration of intent
and are consistent with this view of continuing involvement by
the Executive in the implementation of the proscriptions
contained within the proposed constitutional amendment.
Representatives Schaefer and Stenholm acknowledge that the
proposed constitutional amendment is intended to create ``an
ongoing obligation to monitor outlays and receipts'' and to
require the President ``at the point at which the government
`runs out of money,' to stop issuing checks.'' 83
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\83\ Reps. Dan Schaefer and Charles Stenholm, materials titled
``Cosponsor the Balanced Budget Amendment,'' November 18, 1996.
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We also have experience to instruct us. This
Administration's senior advisers have testified both in 1995
and in 1997 that their advice would be to terminate or delay
expenditures if the proposed constitutional amendment is
ratified and a budget impasse arose.84
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\84\ See testimony and written statement of Hon. Robert E. Rubin at
January 17, 1997 Judiciary Committee Hearing.
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James Miller, former OMB Director under President Reagan,
echoed that advice. He revealed legal advice from the Office of
Legal Counsel of the Department of Justice that without
congressional mandated spending priorities, the President could
apply across-the-board reductions in outlays. Finally, he
furnished a legal memorandum on presidential authority to
forestall default on the public debt that was coauthored by a
former Assistant Attorney General and head of the Office of
Legal Counsel during the Reagan Administration that asserts
``the President has inherent constitutional authority to choose
which nondeferrable obligations to pay in the absence of a
statute specifying a priority.'' 85
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\85\ Response from Dr. James C. Miller, III, to written questions
with attached legal memorandum from Charles J. Cooper and Michael A.
Carvin (dated October 18, 1995), January 22, 1997.
---------------------------------------------------------------------------
A Memorandum to the Attorney General dated October 21,
1995, that is now publicly available, reinforces these lines of
reasoning:
Although this Office has consistently taken the
position that as a general matter the President does
not possess inherent authority to impound funds, we
have carved out an exception to the general rule for
the situation in which the President faces a debt
ceiling and does not have any other feasible method of
raising funds. We have said that in such a situation,
because the President would be faced with conflicting
statutory demands, to comply with the direction to
spend yet not exceed the debt limit, he would be
justified in refusing to spend obligated funds. See
Memorandum from William H. Rehnquist, Assistant
Attorney General, Re: Presidential Authority to Impound
Funds Appropriated for Assistance to Federally Impacted
Schools (December 1, 1969). We believe that the
President's power to reconcile conflicting laws
according to his best judgment could be derived from
his ultimate power as Chief Executive ``to take Care
that the Laws be faithfully executed.''
The OLC Memorandum concludes:
Finally, at some point, after all other options have
been considered, consideration should be given to a
program of deferral of obligations and expenditures by
the President. Such a program would provoke
considerable public controversy, perhaps a
constitutional confrontation with Congress, and most
certainly would be subjected to legal challenge. On the
last point, although we have not had an opportunity to
arrive at a definitive conclusion, we believe a strong
argument can be made both on statutory grounds and on
the basis of his inherent authority, that the President
would have the power to engage in such a program.
Similar analysis and reliance on inherent Executive
authority could be expected to arise should the proposed
constitutional amendment be ratified and the President faced
with circumstances in which the legislative and executive
branches are in gridlock over budgetary or spending matters or
it appears to the President that the prediction for a balance
between expenditures and revenues in any fiscal year is tilting
toward deficit.
The majority report alternatively comments that Congress
could specify in implementing legislation how it wanted the
President to proceed in a budgetary or debt limit crisis.
Reliance of subsequent implementing legislation is risky, at
best. Such legislation would be subject to Presidential veto
and the need for a supermajority override in both Houses.
Moreover, such legislation would have to be comprehensive
enough to foresee and control all possible future contingencies
to be effective.
Further, the President's obligation to faithfully execute
the laws is independent of Congress's. That duty is not
``limited to the enforcement of acts of Congress * * *
according to their express terms, * * * it include[s] the
rights, duties and obligations growing out of the Constitution
itself, * * * and all the protection implied by the nature of
the government under the Constitution[.]'' In re Neagle, 135
U.S. 1, 64 (1890). If an unconstitutional deficit were
occurring, Congress could not constitutionally stop the
President from seeking to prevent it.86
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\86\ See 1994 Appropriations Committee Hearings at 182 (testimony
of Professor Kathleen Sullivan) (``this amendment if enacted would, of
course, be constitutional law, fundamental law. It would trump [the
Impoundment Control Act of 1974] or any other statute designed to
umpire disputes between the President and Congress * * *'').
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Finally, the majority places substantial reliance on the
159-year old case of Kendall v. United States ex rel. Stokes,
37 U.S. (12 Pet.) 542 (1838). Unfortunately, that case can as
easily be read to support presidential impoundment authority
under the proposed constitutional amendment on budgeting as
against. In that case, Congress had ordered the Postmaster
General to pay the claimant whatever sum an outside arbitrator
determined was the appropriate settlement. When the Postmaster
General paid a smaller amount, the Supreme Court held that the
Postmaster General could be ordered to comply with the
congressional directive. The Court ruled that the President,
and those under his supervision, did not possess inherent
authority to impound funds that Congress had ordered to be
spent: ``To contend that the obligation imposed on the
President to see the laws faithfully executed, implies a power
to forbid their execution, is a novel construction of the
Constitution and entirely inadmissible.'' Id. at 611.
If the proposed constitutional amendment were ratified and
became a part of the Constitution, the President's obligation
to execute the laws would arguably have a constitutional
fulcrum from which to leverage. The President could argue that
when the constitutional duty to ensure fiscal year balance came
into conflict with a statutory obligation to expend authorized,
appropriated or obligated funds, the constitutional
responsibility had to be given priority as predicated on
superior authority.
The proposed constitutional amendment's mandate to ensure
budget balance for each fiscal year specifies no role or
limitation on the power of the President. The majority report
concedes that implementation and enforcement will necessarily
involve the Executive Branch beyond the President's obligation
pursuant to section 3 to have transmitted to the Congress a
proposed budget prior to each fiscal year in which total
outlays do not exceed total revenues. It notes:
Both the President and Members of Congress swear an
oath to uphold the Constitution, including any
amendments thereto. Honoring this pledge requires
respecting the provisions of the proposed amendment.
Flagrant disregard of the proposed amendment's clear
and simple provisions would constitute nothing less
than a betrayal of public trust. In their campaigns for
reelection, elected officials who flout their
responsibilities under this amendment will find that
the political process will provide the ultimate
enforcement mechanism. (Emphasis added.)
If this proposed constitutional amendment were to become
the supreme law of the land, some future President may well
choose to enforce its terms, in the absence of binding
limitations in implementing authority, to make greater use of
Executive Branch discretion and authority than this Congress
has taken the time to consider.
This fundamental shift in the allocation of power and
authority among the federal branches is neither wise nor
necessary. It risks despotism at the very times when despots
are most likely to arise and in which our fundamental
guarantees of liberty and individual freedoms has been the
checks and balances that the branches of our federal government
exert over each other.
CONCLUSION
Our constitutional protections of separation of powers and
majority rule should not be sacrificed to enact this
unnecessary and unworkable proposed constitutional amendment on
budgeting.
Patrick J. Leahy.
Edward M. Kennedy.
Russell D. Feingold.
XIII. ADDITIONAL VIEWS OF MR. TORRICELLI
I have no inherent opposition to the concept of amending
the constitution of the United States to require a balanced
budget. Indeed, I have voted for the resolution that this
Committee reported on three other occasions. The Majority of
States require a balanced budget and indeed the continental
Congress of the United States considered a similar requirement
over 200 years ago. I do however believe that it is incumbent
upon all of us to make every effort possible to seek to ensure
that what is enshrined in the Constitution is a feasible,
effective document that will accomplish the goals we have
established.
Although I believe the Amendment that was reported by this
Committee could be improved upon, I nonetheless voted to
favorably report it so that the full Senate may have the
opportunity to consider and vote on this important issue. I
will, however, continue to seek and to work with all Senators
to improve it.
In committee I offered a substitute to address what I
consider to be several flaws within the legislation. While the
Balanced Budget Amendment before this committee would address
the debt crisis we are in, it seems to operate in the belief
that we have no other principal problems. Nothing could be
further from the truth. The United States does find itself with
a considerable and mounting national debt. After some two-
hundred years, the compact among the generations has been
broken. There was an informal, but never the less, almost
certain understanding, the United States Government would
borrow in times of war and depression to overcome those
national ills but return almost immediately to a surplus status
and begin paying the principal on the accumulated debt.
Succeeding generations kept this promise. It is almost now
certainly been broken. It is however important to put in
context, that as we deal with amending the constitution of the
United States, the deficit crisis has at least subsided. The
United States Government has had a declining annual national
deficit for four successive years. The debt of the United
States government as a percent of national revenues has fallen
considerably so that it now is the smallest among each of the
major western democracies. Indeed the debt of the United States
government is a percentage both of our economy and government
revenues is the smallest in nearly forty years. Over the last
four years we have reduced the deficit by 63% so that today it
stands at its lowest point since 1981. Due simply because of
the leadership of the Clinton Administration the debt crisis is
subsiding, does not mean that it is not important. We must
continue our progress, but we must do so in a manner that
ensures that we will make the necessary investments in capital
infrastructure and that will protect the integrity of the
Social Security Trust Funds.
My difficulty is that this Amendment does not deal with the
debt crisis of the United States Government in context of other
national problems. As I suggested, while the United States does
have a debt crisis it also has several other important economic
crises.
First among them in my judgement is the mounting investment
crisis in the United States. This perils our quality of life
and our national economic strength. It is best illustrated by
the failure of the United States government itself to maintain
current investment levels. In 1965, the United States
government invested 6.3 percent of its revenues in the
development of infrastructure. By 1992, that investment had
declined to 3 percent of federal revenues, the lowest of any
industrialized democracy in the world. The United States
currently has one quarter million miles of highway systems in
gross disrepair. 25 percent of all the bridges in the nation
need to be rebuilt. The ports of our nation that provided for
our national security and upon which our standard of living and
dominance in international trade were built are total
disrepair. Indeed, in the port of New York, once the worlds
most mighty source of international trade cargo now off loads
in the ocean onto garbage floats, as if the United States was a
third world nation, unable to have our exports or our imports
enter our own greatest city. The estimated costs of repair
total over $1 billion. The economic cost if we don't is
estimated at 43,000 jobs and $7.6 billion in lost commerce.
This year the United States will spend less than 1% of its
GDP on investment in our national infrastructure. While Japan,
genuinely dealing in the midst of an economic crisis, will be
able to invest six percent of their revenues for maintaining an
infrastructure for the future. The United States is dead last
among the G-7 nations in public infrastructure investment as a
percentage of GDP.
Germany has now approved 130 billion dollar expenditure for
the high speed rails. France this year has announced a $4
billion project for a single high-speed rail line. As our
competitors prepare their infrastructure for the 21st century
we are failing to meet that challenge.
Under our current system of budgeting and under the
balanced budget amendment, that you have proposed and I have
voted for on other occasions, the adding of an employee at the
Department of Commerce and the adding of a mile of new railroad
or road are all considered of equal economic value. The General
Accounting Office through the years has urged us to change this
system. Capital expenditures cannot be equated with simple
consumption by the United States government.
The alternative I have offered provides for a capital
budget. This would allow the United States government to do
what at least 34 other states, almost all of our major economic
competitors and virtually every major business enterprise in
the United States does--distinguish between investments and
consumption. In my own state of New Jersey, each and every year
a capital planning commission meets to receive the budget of
our governor and determine whether or not budget items deal
with long term investments or constitute simply consumption. In
the long history of the constitution of my state, and to my
knowledge that of every other state in the nation there has not
been a case where any governor, Democrat or Republican, has
been found to have abused that power.
The alternative I have offered would additionally address
several other matters I am concerned about mainly, the
integrity of the Social Security Trust Fund and the requirement
of a three-fifths supermajority to raise the debt ceiling. The
arguments surrounding these points have been persuasively
presented in the Minority report.
One additional concern is in ensuring that this Amendment
provides the Congress the flexibility to deal with military and
economic emergencies in a timely and sufficient manner. I
believe not simply bad judgement but even dangerous to provide
in the United States Constitution that there is a chance of
misinterpretation or delay in the United States dealing with an
international military emergency or a domestic economic
emergency. It is known to us all that in 1941 this government
by a single vote reauthorized the draft provision to the
selective service of the United States government. That success
but evident lack of will was almost certainly factored by the
Axis powers in gauging how the United States would respond to
international aggression. It would be an extraordinary
disservice to this country if any future adversaries
contemplating aggression against us or one of our allies were
able to factor our response on the ability of the United States
government to borrow funds to meet the crisis and whether this
Congress would in a timely fashion or indeed eventually under
any scenario be potentially unable to borrow or conduct
expenditure to deal with that emergency. Indeed, I remind the
Committee that in the years proceeding the second world war
massive expenditures were made without a national emergency or
without a declaration of war and which the United States was
not egaged in hostilities.
The United States must have the budget flexibility that if
we are threatened by international circumstances and certainly
if their is a declaration of war, that we have the full power
to defend these United States. Additionally, I believe if we
have learned anything from our economic experience in the 20th
century, we have come to learn much about the business cycle
and about the occasional recessions and even depressions of our
capitalist systems. We have also learned about the need to
utilize the full resources of this government to reverse these
cycles through both the fiscal and monetary powers of the
United States government.
This outlines my concerns regarding S.J. Res. 1. I have
voted to report this bill simply because I believe it is
incumbent that the Senate take up and address this issue. I
also believe it is incumbent upon the majority to work with us
in the minority and not to pass a balanced budget amendment
simply because it can be passed but to pass one that is in the
best interest of this nation and those who have elected us to
represent them.
As this bill goes to the floor of the Senate, I will
continue to work with Senators from both sides of the aisle to
address the concerns I have raised and to improve upon the
legislation that has been reported by this Committee.
XIV. CHANGES IN EXISTING LAW
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, the Committee finds no changes in
existing law caused by passage of Senate Joint Resolution 1.