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Posts Tagged ‘Article V’

Supporters of the Balanced Budget Amendment (BBA) will argue that we need a supermajority voting requirement to authorize deficit spending precisely because it will be much harder to do so than raising the debt limit under current law.   But suppose the BBA had been adopted prior to 9/11.  Does anyone really believe that Congress would have refused to waive the balanced budget requirement by a supermajority? In all likelihood it would have been a unanimous or near unanimous vote.

Similarly, what do you think would happen if the President were to announce that Social Security and Medicare checks have to be delayed or withheld altogether, or that funding for the troops in Afghanistan would have to cease, because the BBA’s 18% (or 20%) GDP spending cap has been breached and any further spending would unconstitutional? Either the President would openly ignore the constitutional mandate (so much for the rule of law), or more likely Congress would grant a waiver in a heartbeat.

It also matters which waiver Congress wants to invoke.  In the current House and Senate versions of the BBA, there are a total of five waivers that would permit Congress to: (1) authorize deficit spending; (2) allow spending above the designated GDP threshold; (3) raise the national debt (or at least debt held by the public); (4) waive all requirements in a time of declared war; and (5) waive all requirements if there is a military conflict declared by Congress to be an “imminent and serious military  threat to national security.” 

The first two waivers are time limited to the current fiscal year.  In other words, Congress must invoke the waiver (by a two-thirds or three-fifths vote) each fiscal year it wants to authorize deficit spending or allow spending over the GDP cap.  The third waiver must be invoked (by a three-fifths vote) each time it becomes necessary to raise the debt ceiling, but Congress can invoke this waiver anytime it wishes.

The “declared war” and “military threat” waivers, however, are what expose the BBA as an illusion with no more enforcement power than the statutory debt ceiling.  First, they have no sunset provision, and thus the resolutions declaring war or a military threat can remain in effect indefinitely.  As a result, and as long as they are in effect, Congress can invoke any of the first three waivers (i.e., deficit spending, GDP threshold, and debt ceiling) not by some supermajority vote, but merely by a simple majority (under the “military threat” waiver or the House version of the “declared war” waiver) or by an absolute majority (under the Senate version of the “declared war” waiver).

The “Authorization for Use of Military Force” Resolution enacted in September 2001 in response to 9/11 is precisely the type of undeclared war, but “imminent and serious military threat” waiver envisioned by the new BBA.  This 9/11 resolution of course was easily passed by a supermajority vote in both Houses of Congress (98-0 in the Senate and 420-1 in the House).  Thus, even if the BBA were now part of the Constitution, its only impact would be to require annual waivers by simple majority votes, which is exactly what Congress is already authorized to do under the Constitution.

To be sure, battles over future BBA waivers could lead to insignificant compromises over spending and taxes similar to what is likely occur in the current debt ceiling debate, but why go to the trouble of amending the Constitution to achieve what we already have?  More importantly, if a constitutional amendment like the BBA is no better than a statutory limit on the national debt, then what is the solution? What exactly would an enforceable balanced budget mandate look like? The answer lies not with another plan for balancing the budget, but rather in how we can create the political will necessary to balance the budget. It is this issue that will be addressed in a future blog post.

Copyright © 2011 Anthony W. Hawks. All rights reserved.

The Balanced Budget Amendment (BBA) last made a serious appearance in 1995, when it was part of the Contract with America during the 1994 campaign and passed by new Republican House majority in January 1995, only to fall one vote short in March 1995 of the requisite two-thirds majority in the Senate.  Despite four years of budget surplus in 1998-2001, the BBA has never gone away, and today is being sponsored in the House by Rep. Bob Goodlatte (R-VA) (House Joint Resolution 1) and in the Senate by Sen. Orrin Hatch (R-UT) (Senate Joint Resolution 10).

Both BBA versions contain the traditional requirement that “total outlays” not exceed “total receipts” and supermajority votes to increase taxes or raise the national debt ceiling, as well as a provision requiring the President to propose a balanced budget each year.  What is new about the BBA is that both the  Goodlatte and Hatch proposals would now prohibit government spending above a certain level of gross domestic product (GDP) for the preceding year (18% in the Senate and 20% in the House).

 Thus, under either version there are now three circumstances where a future White House could be faced with the same situation that President Obama will face on August 2, 2011 (Secretary Geithner’s threatened “drop-dead” date for defaulting on federal obligations) if a deal on raising the current debt ceiling is not reached:

(1)           it becomes apparent, presumably late in the fiscal year, that “total outlays” will exceed “total receipts” before the end of such fiscal year;

(2)          it becomes apparent (as now) that the debt ceiling has to be raised to allow for additional borrowing; and

(3)          it becomes apparent that “total outlays” will exceed the requisite percentage of GDP, presumably 18% or 20%.

If the first situation occurs, then the President will have to delay or withhold payments from the Treasury until tax revenues become available, unless of course they never become available during the fiscal year, in which case any unpaid obligations will be left in default.  To do otherwise, the President would no longer be faithfully executing the constitutional requirement that “total outlays” not exceed “total receipts.”

If the second situation occurs, then the President must deal with the same debt ceiling battle we are seeing now, except that a three-fifths supermajority would be needed to raise the debt limit.  Just as now, the President would be limited to two stark choices: (1) either let defaults occur randomly (following a first owed, first paid payment rule); or (2) assert the unprecedented power to decide what gets paid in what order on a case-by-case priority basis. With no payment priority plan in place, the same fears of fiscal uncertainty being raised in the current debt ceiling debate will occur again and again.

The third situation is worse of all. If it is unconstitutional to spend more than 18% (or 20%) of GDP, what happens when the GDP threshold is reached, say, nine months into the fiscal year? The logic of enforcement would mean that no monies at all could be spent for the rest of the entire fiscal year. This would be the ultimate government shutdown. Not only would all government checks stop going out, but even “essential” personnel would stop being paid to keep the government running, no matter how much money was in the Treasury to pay them!

Of course, no one expects any of these doomsday scenarios to occur for the simple reason that the BBA has a built-in set of waivers.  Thus, Congress can always authorize deficit spending, or an increase in the national debt, or spending above the GDP threshold by a supermajority vote.  Similarly, there are waivers for times of declared war or “imminent and serious military threats.”

 In all these cases, the BBA is converted from a constitutional amendment that is supposed to bind future Congresses into a statutory requirement (like the debt ceiling) that any Congress can waive at anytime. The only difference between these BBA waivers and the current debt ceiling limit is the type of voting majority required to enact the waiver or increase the debt ceiling. Under current law, a simple majority will suffice, while under the BBA some type of supermajority vote (three-fifths or two-thirds) would be needed.  Does this truly make a difference?

Copyright © 2011 Anthony W. Hawks. All rights reserved.

By Anthony W. Hawks

The current national debt ceiling has now survived its first political test, with the House of Representatives rejecting, in a symbolic 318-97 vote on May 31, the President’s request to raise the ceiling, without preconditions, by another $2.4 trillion. Warnings of fiscal Armageddon will continue for another 6-8 weeks, but the smart money still favors a debt ceiling increase tied to modest or perhaps minimal deficit reduction and/or a vote on some type of structural budget reform.

This post, however, is not a prediction of how the current debate will end. Given that neither party can gauge the economic or political fallout of failing to raise the debt ceiling, compromise is still the most likely outcome. But what if the Republicans actually got what they say they want, namely, structural change in the form of a Balanced Budget Amendment? What no one seems to have noticed is that a Balanced Budget Amendment would be virtually identical to the statutory debt limit in terms of imposing fiscal discipline.

The debt ceiling, of course, is no ceiling at all, having been raised 38 times since 1978, much like the ceiling of an elevator whenever you need to go to higher floor. True to form, the Obama Administration has been parading its list of horrible outcomes if the ceiling is not raised and the United States starts default on its financial obligations. This does not answer the critical question, however, of which obligations will not be paid if the current debt ceiling stays in place.

Obviously it makes a huge different if the nation defaults on its AAA Treasury bonds as opposed to, say, its “obligation” to fund ethanol subsidies or National Public Radio (NPR). This is where President Obama has created his own crisis: the reason it is irresponsible not to raise the debt ceiling right now is because there is no plan in place for establishing payment priorities if the debt ceiling is not raised. Either the idea has never occurred to President Obama or he fears that the existence of such a plan would make raising the debt ceiling more difficult.

The Obama Administration claims that it lacks the legal authority to establish payment priorities, asserting instead that all payment obligations stand on an equal footing. Thus, if funding for NPR came due before a Treasury note, NPR would have to be paid first, wreaking havoc in our financial markets. The General Accountability Office has disputed this legal interpretation, but regardless of who is right, the absence of certainty on this point could still cause severe market disruptions.

At least one lawmaker, Senator Pat Toomey (R-PA) has tried to address this problem by proposing legislation titled the “Full Faith and Credit Act” (S. 163, introduced January 25, 2011), which would give payment priority to principal and interest on the debt held by the public.  Until such a law in enacted, or the next President unilaterally established payment priorities for the Treasury Department in the absence of express legislative authority,   President Obama has the upper hand in the current game of “chicken” over raising the debt ceiling.

As a way of enforcing fiscal restraint then, the debt ceiling is no better than earlier statutory “fixes” like the 1985 Gramm-Rudman-Hollings law with “sequestration” rules for across-the-board cuts, or the 1990 Budget Enforcement Act with its caps on discretionary spending and “pay-as-you-go” (PAYGO) rules for mandatory spending. Since these attempts at curbing deficits were all statutory, Congress could and did abandon them at will. This is why, for decades, the conventional wisdom has been that only a constitutional amendment would force Congress to balance the federal budget.

No one argues, however, that the federal budget should be balanced all the time, regardless of national security or economic circumstances.  If the goal were simply to eliminate deficit spending, then the only constitutional change needed is a repeal of the Borrowing Clause (Article I, Section 8, Clause 2), which empowers Congress “To borrow Money on the credit of the United States.”  If the Federal Government could not then pay its bills, it would either have to default or (more likely) debased the currency by printing more money.  This is why every proposed Balanced Budget Amendment has some type of waiver or escape clause to allow for deficits by supermajority vote, particularly in times of declared war, military threat, or national economic distress.

If Congress cannot stand firm on the national debt ceiling, it will be equally spineless in granting waivers under a Balanced Budget Amendment to avoid the same fiscal anarchy that will result from refusing the raise the debt ceiling.  To understand why, one need only examine the actual waiver language in the current version of the Balanced Budget Amendment.  This will be the focus of the next post.

Copyright © 2011 Anthony W. Hawks. All rights reserved.


June 1st, 2011 by ahawks

The premise of this blog is that the Constitution has been amended far more often than the 27 times officially recognized under Article V.  These unofficial amendments are typically ratified by the Supreme Court, sometimes in a single case, but also in incremental steps over time. The process usually begins, however, with an unprecedented assertion of power by Congress or the President or one of the 50 states, which is then affirmatively upheld by the Supreme Court (or implicitly but no less effectively authorized when the Supreme Court refuses to intervene).   

What is most striking about this unofficial amendment process (aside from its highly questionable legitimacy) is the absence of any role for state legislatures.  This is utterly ironic because of all the institutions created or recognized in the Constitution, it is the state legislatures (as opposed to the states) who have the pre-eminent responsibility for amending the document under Article V.  Congress can propose amendments, but only the state legislatures have an official role at both the proposing and ratification stages.

Explaining how and why these “unofficial amendments” have occurred is a long story that this blog will return to time and again.  The point I wish to make at the start of this blog is that Article V is now prisoner to a paradox.  The paradox is that because it is so difficult to amend the Constitution, it has become much too easy to amend the Constitution.  This “paradox” is easily explained, however, once it is made clear who is doing the amending: because it has become so difficult to amend the Constitution under Article V, it has become much too easy to amend the Constitution by judicial decision.

Of course it has always been difficult to gain passage of a constitutional amendment through the “normal” channels of Congress.  What the Framers failed to foresee is that the amendment process would become the exclusive domain of Congress (officially) and the Supreme Court (unofficially).  Having drafted Article V during a general (but not unlimited or “runaway”) constitutional convention at Philadelphia in 1787, it does not appear to have occurred to the Framers that their posterity would fear far more limited conventions on specific types of amendments to the point that they would never be convened.

There will always be problems of a constitutional nature that Congress will refuse to address because the solutions will require Congress or the President to relinquish power.  Indeed it was precisely this concern that caused George Mason at the 1787 Philadelphia Convention to insist that Congress not have the exclusive power to propose amendments; otherwise “no amendments of the proper kind would ever be obtained by the people, if the Government should become oppressive, as he verily believed would be the case.”

What has now become apparent is that the Convention Clause of Article V must be resurrected for another reason, namely, to provide both a disincentive to future judicial amendments and a check on the judicial amendments that have already occurred and will doubtless occur in the future.  The argument that it should be difficult to amend the Constitution has a natural and widespread appeal, but creating too high a bar to formal amendments has created a facile acceptance of informal judicial amendments.

If the process of amendment by constitutional convention were no longer calcified, the Supreme Court would have less justification for stretching the Constitution beyond its original meaning in order to address contemporary problems.  Similarly, when the Supreme Court does rewrite the Constitution by judicial amendment, particularly when the result is greater federal power at the expense of the states, a vibrant Article V convention process will provide the state-based check on federal power that we know was always intended by the Framers.

At the same time, we should not lose sight of the fact that the rest of Article V is hardly devoid of criticism.  Although the process of proposing constitutional amendments through the Congress is not entirely moribund, the inability of Congress to address such important but non-partisan matters as the need to preserve the continuity of the national government following a catastrophic event would suggest that reform is needed here as well.  Invoking the convention clause then would likely rejuvenate the Congressional method of proposing amendments.

It is to the resurrection of Article V then that this blog is dedicated.

Copyright © 2011 Anthony W. Hawks. All rights reserved.