The House of Representatives plans to vote this Thursday on a constitutional amendment to require a balanced budget. To ensure that a future Congress does not use budgetary gimmicks to avoid balancing the budget, I suggest including two additional provisions: (i) prevent the shifting of costs into future fiscal years and (ii) enshrine the independence of the Congressional Budget Office (CBO). These suggestions would better ensure that a future Congress cannot defeat the spirit of the balanced budget amendment.
History of Balanced Budget Amendments
Since 1995, Congress has twice considered a balanced budget amendment. Republicans proposed a balanced budget amendment in the Contract with America. The proposed amendment would have (i) required the President’s annual proposed budget to not have a deficit and (ii) prevented a deficit unless each House of Congress voted by a 3/5ths majority to approve deficit spending and/or to increase the debt limit. However, the proposed amendment would have allowed a deficit if Congress, by a simple majority, determined that “the United States is engaged in military conflict which causes an imminent and serious military threat to national security.” The proposed amendment enjoyed wide-spread support, even among Democrats, and comfortably passed the House of Representatives. Nevertheless, it failed in the Senate by a single vote.
As a part of a balanced budget effort in 2011, Congress considered a similar balanced budget amendment. This time, the proposed amendment fell short of the 2/3rds requirement in the House of Representatives and failed to get a majority of votes in the Senate.
Current Balanced Budget Amendment
The current balanced budget amendment that the House of Representatives is considering largely mirrors the previous proposals, but additionally specifies that any deficit spending during a military conflict must be limited to the “specific excess or increase for that fiscal year made necessary by the identified military conflict.” This change would prevent a simple majority of Congress from using the military-conflict exception to approve all deficit spending.
I will note that although Democrats have called this vote a messaging ploy so that Republicans can show their fiscal conservatism after passing a deficit increasing tax cut and omnibus bill, the version that Republicans are bringing to the floor is a moderate version designed to have at least some chance of passing. Another proposed balanced budget amendment would have imposed “starve the beast” requirements of needing a super majority in each House to approve (i) a tax increase and/or (ii) spending greater than 20% of GDP. Many Republicans, including Paul Ryan, opposed the 2011 balanced budget amendment because it did not include these requirements.
If Republicans want to use the vote for messaging, they could consider the more conservative proposal. Instead, Republicans are offering a version that at least has some chance of gaining the Democratic votes necessary for a 2/3rds majority.
My Suggested Additions
I have two suggested additions to the proposed constitutional amendment that would prevent a future Congress from avoiding the spirit of the balanced budget amendment:
First, I would suggest including a requirement that “No bill estimated to cause an excess of outlays over receipts in future fiscal years shall become law unless three-fifths of the whole number of each House shall provide by law for a specific excess of outlays over receipts by a rollcall vote.”
Although the balanced budget amendment would prevent current deficits, it would not address future fiscal years. My additional language would prevent Congress from avoiding potentially difficult political decisions by shifting costs to future years. For instance, state governments often avoid balanced budget requirements by under funding state pensions. Although there is no immediate consequence, under funding pensions causes required contributions to increase in future years, leading to a worse fiscal position. As a result of this continued fiscal gimmick, many states are now struggling with large, unfunded pension requirements.
Second, I would suggest including a requirement that “Estimates of outlays and receipts shall be vested in a Congressional Budget Office. The director of the Congressional Budget Office shall be appointed by three-fifths of the whole number of each House for a term of office that shall be 4 years and shall expire on January 3 of the year preceding each Presidential election. Any individual appointed as director to fill a vacancy prior to the expiration of a term shall serve only for the unexpired portion of that term.”
My additional language would ensure the independence of official cost estimates, which would prevent Congress from avoiding the requirements of the balanced budget amendment by using a partisan estimate. For instance, Republicans considered replacing the nonpartisan estimate of tax reform with a partisan estimate from the Department of Treasury.
Specifically, my additional language would change current law to give CBO the official power to estimate costs. Although CBO unofficially has that power now, the official estimate is determined by the Budget Committees (i.e., the majority party in the House and Senate) and they can ignore CBO. Likewise, the proposed requirement would enshrine in the Constitution the four-year term for the CBO director. My additional language would also modify the removal process from a simple majority vote of either House of Congress to impeachment, which would reflect the importance of the director’s independence. Furthermore, my additional language would modify the appointment process from a joint decision of the Speaker of the House and President Pro Tempore of the Senate to a 3/5ths majority of each House. This modification would ensure that both political parties agree on the director and that the majority party does not appoint someone who is inclined to act in a partisan manner.
The goal of a balanced budget amendment is to prevent Congress from avoiding the politically difficult decisions required for fiscal discipline. Thus, I would suggest two additions to the currently proposed balanced budget amendment to (i) prevent the shifting of costs to future fiscal years and (ii) enshrine the independence of CBO.