Raise the Debt Limit, but Only with Conditions

by Mario Loyola

As Andrew Stiles mentioned yesterday, House Speaker John Boehner is insisting that the House will not vote to increase the debt limit unless the Dems agree to (1) no tax increases, (2) spending cuts as great as the proposed debt-limit increase, and (3) budget reforms “that will restrict Washington’s ability to spend in the future.” If by the latter he means a constitutional amendment that would impose a balanced budget and strict limits on spending and taxes, some concession on other fronts would be worth it. It would be especially wrong for the GOP to insist on no new taxes at the expense of a constitutional amendment, considering that current levels of taxation are only about half of current spending, insanely enough. The problem here isn’t taxes — it’s the deficit, the debt, and the spending. 

Speaker Boehner should tie agreement on the debt-limit increase to passage of Senate Joint Resolution 10, a superb proposal for constitutional amendment that would provide long-term, permanent, and sustainable solutions to virtually every fiscal problem we’re facing now. Passing it out of Congress and getting it to the states for ratification as soon as possible should be an overriding priority of the current debt-limit talks. Filed earlier this year by 47 GOP senators, the amendment would require Congress to pass a balanced budget; federal courts could enforce the amendment only through across-the-board spending cuts. The resolution would hold spending to 18 percent of the previous year’s GPD, which would keep federal spending under the historical “revenue-maximizing” point of federal taxation. It would require supermajorities for increases in taxes and the national debt. The exceptions are extremely strict. The resolution calls for ratification by legislatures in three-fourths of the States, in accordance with Article V of the Constitution, and would go into effect five years after ratification. After the last two years of aggressive federal expansion, much of which has come at the expense of the states’ autonomy and fiscal health, there can be little doubt that most states would ratify the amendment quickly.  

The only question is how hard it would be to get from the 30-something easy states to the 38 required for adoption. But if comes down to only a handful of states, millions of fiscally conservative moderates and independents are likely to join conservative in mounting the campaign of the century to ensure the amendment’s adoption. The country has perhaps never been so hungry for some way to stop the relentless expansion of the federal government. 

Though we call it a “balanced-budget amendment,” by far the resolution’s most important feature is its limitation on spending to 18 percent of the prior year’s GDP. One result of this provision is that the major entitlement programs — Medicare, Medicaid, and Social Security, which are projected to eat up all federal revenue in a matter of decades — would have to be replaced with sustainable alternatives sooner rather than later. It would not be question of “if,” but only of “when,” and the answer would be “soon.”  

Last month, I did an analysis of S.J. Res. 10 for the Texas Public Policy Foundation. The survey contains a detailed section-by-section analysis of the proposed constitutional amendment, along with a detailed history of the growth in federal spending over the past 100 years. A constitutional amendment is necessary in part because the federal government has shattered most of the Constitution’s restrictions on its growth and power. S.J. Res. 10 would ensure that the federal government could control at most one-fifth of the economy.  

The national debt is a long-term problem. Let’s focus on a long-term solution.

— Mario Loyola is director of the Center for Tenth Amendment Studies at the Texas Public Policy Foundation

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