July
16, 2003, 7:00 a.m.
Out
of Balance
Here’s a very bad idea that should be rejected.
ith federal budget deficits rising, pressure is on once again to enact
a balanced-budget amendment to the Constitution. On June 25, a discharge
petition was initiated to force a vote in the House on H.
J. Res. 22, the latest in a long line of legislative efforts to bring
this about. Such an amendment has always been a bad idea. A recent Supreme
Court case in Nevada shows more clearly than ever before why this is the
case.
Congress
has within its power the ability to enact a balanced budget any time it
so chooses. And the Budget Act of 1974 provides mechanisms and procedures
that make such a result relatively easy as long as the will exists to
accomplish it.
So what purpose is
served by a constitutional amendment? The theory is that it would stiffen
Congress’s spine and encourage it to stand up to the myriad of those who
benefit from the government’s largess.
The beneficiaries of
spending or special tax breaks are well organized and deeply determined,
whereas those who favor a balanced budget are disorganized and less committed.
This allows special interests to get spending or tax breaks on their behalf
year after year, even though a majority of voters probably oppose them.
After all, the cost to any individual taxpayer of a particular tax or spending
provision is trivial, whereas the benefit to those on the receiving end
can be very high.
Thus, as in war, discipline
and motivation by a smaller force can often overcome the superior numbers
of an opposing force. In part, that is what allowed Robert E. Lee to hold
a much larger Union army at bay for several years during the Civil War.
So, too, in politics.
The idea is that if
the constituencies favoring more spending were forced to compete against
each other because the spending pie is capped by a constitutional amendment
— rather than all working together to raise overall spending —
then the forces of restraint would be strengthened, offsetting the inherent
advantage of the spenders.
This is a good theory,
but one that has always fallen apart on the rocks of actual practice. Congress
has enacted any number of laws and rules over the years to control its own
behavior in this area, such as the Gramm-Rudman law. But since such restraints
require only a majority vote to implement, they need only a majority vote
to abolish. Whenever push has come to shove, Congress has always given in
to the spenders — although it has often required amazing dexterity
and skill to jump through the budgetary hoops. But, where there is a will,
there is always a way.
Since Congress cannot
be forced to do something against its will, the only solution is to have
some way whereby the courts can intervene. But how is a court to decide
which spending goes above the limit and what does not? If it only looked
at the last spending to be approved before the start of a fiscal year, Congress
would simply wait until the last minute to pass the most necessary and politically
popular bills.
This is exactly what
happened in Nevada recently, where the education bill was deliberately held
until the very end of the session. Like most states, it operates under a
constitutional balanced-budget requirement. But it also has a provision
in its constitution requiring that there be a two-thirds majority in
the legislature to raise taxes. When these came into conflict, the
state Supreme Court decided last week that the balanced-budget provision
superceded the two-thirds requirement and ordered that the legislature raise
taxes.
A tax increase endorsed
only by a simple majority can now become law even though it lacks the requisite
two-thirds vote, the court decided. Indeed, it is possible that the court
itself could impose new or higher taxes on its own, as happened in Kansas
City a few years ago, should the legislature fail to act. Apparently, the
option of having the court invalidate spending was not seriously considered.
Does anyone think the
U.S. Supreme Court would act differently? After all, even with a majority
of Republican appointees, the current court has thrown the Constitution
out the window whenever some “higher purpose” demanded it. No doubt, the
same majority that just found constitutional protection for racial preferences
in college admissions, in blatant violation of the 14th Amendment, would
also see the need for higher taxes if a balanced budget is not achieved
after enactment of an amendment requiring it.
In my view, a balanced-budget
amendment will mainly lead to higher taxes — whether imposed by Congress
or possibly by the courts. The negative effects of the higher taxes will
overwhelm whatever conceivable benefits might be achieved by eliminating
deficits. A federal balanced-budget amendment is a very bad idea that should
be rejected.
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ith federal budget deficits rising, pressure is on once again to enact
a balanced-budget amendment to the Constitution. On June 25, a discharge
petition was initiated to force a vote in the House on 
