Washington has a spending problem. A big one.
Indeed, the federal government now borrows more than 40 cents of every dollar it spends, and our $15 trillion debt — now larger than our entire economy — only continues to grow. Our fiscal position is clearly unsustainable; unless we do something about it, the rising tide of debt will overwhelm our economy, destroy jobs, and ruin the American dream for future generations.
Yet, even with the clear need for action, Congress has proven historically unreliable when it comes to making the tough choices necessary to control spending and balance the budget. Here’s a little history: When the Senate passed a balanced budget amendment (BBA) in 1982, the national debt was $1.1 trillion. In 1986, when the Senate failed by one vote to pass a BBA, the national debt topped $2.1 trillion dollars. By 1997, when the Senate again failed by one vote to pass a balanced budget amendment, the national debt was more than $5 trillion. And,
as we now know, today’s debt has galloped past the $15 trillion mark! So, there’s no evidence that Congress has been willing or able to reduce the debt without constitutional restraints.
That’s why, in legislation approved earlier this year, congressional Republicans mandated that Congress must vote on an amendment to the U.S. Constitution that would force Congress to live within its means. The amendment they proposed included real reforms that would help the government get control of spending — for instance, by requiring that the president submit a balanced budget to Congress each year.
It also contained two key enforcement mechanisms.
First, Congress would have to limit spending to 18 percent of our country’s total gross domestic product (GDP). The BBA would also prohibit spending from exceeding total revenues in a given year. Why 18 percent? If the goal is to balance the budget, the only way to succeed is to limit federal spending to the level of revenue the economy is actually able to bear. And, according to the nonpartisan Congressional Budget Office, revenues averaged 18 percent of GDP over the past three decades.
The second key mechanism in the Republican BBA is a prohibition on any bill that increases taxes from becoming law unless it is approved by a two-thirds majority in both chambers. When Congress can’t get its hands on enough money for its spending priorities, the temptation is always to increase taxes. I believe there should be a much greater threshold for Congress to meet before it is allowed to take more money out of the pockets of American workers and families. Moreover, when it comes to closing budget deficits, raising taxes is one of the least productive solutions. Not only does projected revenue typically fail to materialize, but higher taxes also discourage work, production, savings, and investment, resulting in lower revenues in future years.
Critics of this BBA plan painted a doomsday scenario — intimating that its passage would result in immediate changes and draconian cuts. That’s just not accurate. Congress cannot amend the Constitution. Congress can only propose an amendment for the states to consider ratifying. If it passed, the balanced budget amendment would not become effective until five years after ratification by three-fourths of the states.
Unfortunately, when this Republican BBA was voted on in the Senate in December, it was rejected, with every Democratic senator voting against it. All Republicans supported it.
During this time of economic uncertainty, American families are tightening their belts, cutting spending and doing their best to live within their means. Congress and the president should too.