Proposing a Balanced Budget Amendment to the Constitution
Floor Speech
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Mr. NADLER. I thank the gentleman for yielding.
Mr. Speaker, I rise in opposition to this misguided attempt to amend our constitution. It is both bad economic policy and bad constitutional policy.
Let's start with the basics. While balancing your budget and paying down your debts is important--and we did that under President Clinton--a balanced budget every year, regardless of the circumstances, even when facing economic crisis, a natural disaster or a terrorist threat, is economically dangerous. We would be risking economic ruin if we enshrined this unyielding rule in the Constitution and shackled future generations to one particular economic policy preference that does not work at all times and in all situations.
In general, the economists tell us, in good times, you should have a balanced budget and pay down the debt. In bad times, when a recession increases demands on government and tax revenues fall, or in emergencies, you need to be able to run a deficit.
The nonpartisan economists at Macroeconomics Advisers, for example, tell us that if this amendment were in effect next year, in fiscal year 2012, it would eliminate 15 million jobs and double the unemployment rate. And this amendment would shackle future generations in such situations.
One thing we can be sure of, this amendment will devastate the economy; destroy Medicaid, Medicare, and Social Security; cripple our government's ability to deal with national emergencies, maintain our vital infrastructure, or deal with new challenges as they emerge.
Let's be clear on what this amendment does not do. It does not require us to balance the budget the way States or businesses or families do. They're not required to spend no more than that year's income. Families borrow money. If they were told you must pay cash--you want to buy a house, pay cash; you want to buy a car, pay cash--they wouldn't have the house, they wouldn't have the car, the standard of living would be much lower.
States borrow money. States have balanced budget amendments generally, but those amendments refer to their operating budgets. They borrow money for their capital budgets to build bridges and roads and highways. The budget of the United States does not make such a distinction, and this balanced budget amendment would say you can never borrow money. You cannot borrow money to build highways, to make investments, to deal with the economy in a recession. It doesn't make sense.
Similarly, we collect payroll taxes to pay for Social Security benefits. We collect gasoline taxes to pay for transportation infrastructure, and we carry over unexpended funds in those trust funds from prior years. Because they were paid in prior years, those revenues would not count, only the expenditures. If you paid $100 in Social Security taxes in 1960 and drew $100 of benefits in 2011, the budget would show a deficit of $100 because the tax was paid in a different year, even though it's the same money. No matter how much money we had put away for a rainy day, we would still be limited to spending no more than that year's tax revenues. No one in this room balances their budget that way.
What happens when you retire and your income drops? Do you not touch your savings because it didn't come in during that year? Of course not. You're not running a deficit when your expenses equals that year's income plus savings.
I know we have a lot of millionaires here, but did anyone pay cash for their home?
But this amendment enshrines crazy bookkeeping and distorted policies into our Constitution. So all the chatter about States and businesses and families balancing their budgets is true, but it's irrelevant to what this amendment actually says.
Because this is a constitutional amendment, it would give Federal judges, those same unelected, life-tenured Federal judges my Republican friends always complain about, the power to cut spending and raise taxes. Anyone could bring a lawsuit if the budget doesn't balance, if the estimated receipts, in his opinion, didn't match the estimated tax revenues, and a judge would have to decide whose revenue and expenditure estimates were correct. And if they didn't match in the judge's opinion, the judge would have to decide to increase taxes or to cut expenditures and which expenditures it cut, an unelected judge.
How is that possible? It's possible because, as a constitutional amendment, the courts will have to have the power to enforce it, just as they do the rest of the Constitution.
The Constitution now gives the power to tax in the first instance to the House. All revenue measures must originate here. That's because we are closest to the people--the people's House. This would go as far away from that wise decision as you possibly can by giving that power ultimately to the only part of government that is not elected by the people and that is not accountable at the ballot box--the judiciary.
The courts could also order reduction in spending to enforce a balanced budget. They could slash military spending or Social Security or eliminate disaster relief. The voters and Congress would be powerless to stop such decisions.
Is this really someone's idea of constitutional conservatism?
This amendment isn't limited to a requirement that we balance the budget. It imposes a three-fifths supermajority requirement to raise the debt ceiling. When we considered that in 1995, it never occurred to anyone that any Member of Congress, much less a majority, would consider allowing the United States to default on its debt. It wasn't just considered crazy; it was considered impossible.
Today, unfortunately, we live in a different world. This year, for the first time in American history, we nearly defaulted on the full faith and credit of the United States and, for the first time in our history, saw our top credit rating downgraded, and that was for difficulty in getting a simple majority. A three-fifths majority would make it much more difficult.
Is this balanced budget amendment necessary?
We have been told it's the only way to impose the necessary discipline to force Congress to balance the budget. We know that's not true because we balanced the budget under President Clinton. We turned in four balanced budgets and ran a surplus. In fact, in 2001, Alan Greenspan, testifying in favor of President Bush's proposed tax cuts, said we had to reduce taxes because we were going to eliminate, pay down the entire national debt in 10 years, and that would be a bad thing, he thought, for various reasons. But that was the danger--we'd pay down and eliminate the national debt.
But President Bush and a Republican Congress succeeded in turning that record surplus into record deficits in record time. They did it with two huge tax cuts, two unfunded wars, a prescription drug benefit that wasn't paid for, and the rejection of the Democratic Congress' pay-as-you-go rule. It was all done off the books.
And I have heard the calumny that it was wild spending by the Obama administration that has brought about our $15 trillion national debt. Well, the truth of the matter is, if you look at non-defense discretionary spending, everything we do, other than defense and Social Security and Medicare and veterans benefits and interest on the debt, adjusted for population and for inflation, it hasn't gone up by a nickel since 2001.
The fault, dear colleagues, is not in our Constitution; it's in an irresponsible Republican President and an irresponsible Republican Congress. Many of those same Republican Members who saw nothing wrong with busting the budget, who sat quietly when Vice President Cheney said that deficits don't matter, now demand this assault on our founding document instead of delivering the votes for sound fiscal policy.
We should do our jobs, not wreck the Constitution and the economy with snake oil cures like this. I urge a ``no'' vote.
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Mr. NADLER. Mr. Speaker, I have to correct what the distinguished gentleman from Virginia said a moment ago when he said that this amendment would not affect Social Security because Social Security would be paid for by the trust fund. This amendment says the total outlays cannot exceed receipts. Total outlays should include all outlays of the United States Government except for those for repayment of debt principle. That includes Social Security, which the courts have held is not a debt. Therefore, Social Security would have to be paid out of the same amounts, and they would be counted against the overall outlays when calculating whether the budget is in balance, something that's not the case today. It would throw the budget further out of balance and would require deeper cuts.
If this amendment were in effect today, Medicare would have to be cut by $750 billion, Social Security by $1.2 trillion, and veterans benefits by $85 billion through 2021. Despite anything anyone may say on this floor, that's the simple truth about this amendment.
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Mr. NADLER. Just two comments.
First of all, going back to what you were discussing a moment ago, the answer to your question is that under this amendment, 40 percent of either House could hold the entire country hostage against the other 60 percent. Sixty percent could want a balanced budget and there may be a necessity for an increase in the debt ceiling, but 40 percent could say no. Forty percent could hold the country hostage as we saw the country was held hostage this year. With this, it would be much easier to hold the country hostage because the minority, not a small minority, but 40 percent could do it.
Secondly, if the gentleman's answer is correct that the courts would exercise judicial restraint and not make decisions on tax increases or revenue or spending cuts, then there's no point to this whole amendment because you're saying it's unenforceable. Either the amendment is enforced by action of the court or it's not enforced.
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Mr. NADLER. The amendment is silent. All it says is ``this will happen.'' ``This must happen.'' When this must happen in our system of government, if it doesn't, or if someone thinks it's not going to, they go to court and they ask for a court order to make sure it happens.
The court either will--there are two possibilities and only two. One, the court will say, Here's how we'll make an order. We'll raise this tax, we'll lower that expenditure; or the court will say, in which case you have unelected judges making those decisions--and this amendment gives no guidance on how to make those decisions--or the court will say as the gentleman from Virginia just suggested the court would do, the court will exercise judicial restraint and will say this is a political question. We decline to make any order, in which case this amendment is not worth the paper it's written on because it's not enforceable at all.
Either it's enforceable by the court saying increase this tax, decrease that expenditure, or it's not enforceable and it's a total joke. One way or the other.
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