BALANCED-BUDGET AMENDMENT

Since one was first introduced in 1936, various versions of a balanced-budget amendment to the United States Constitution have been proposed in Congress. Such proposals have been introduced regularly since the 1970s. Moreover, since 1975, such an amendment has been the subject of applications (approximately thirty-two by 1990) by state legislatures for a constitutional convention. All such proposals seek to encourage or mandate the adoption of a balanced budget. Some of them have additional goals and would more accurately be denominated "balanced-budget and tax limitation," "deficit limitation," or "federal government limitation" amendments.

The only such proposed amendment to have passed either house is S.J. Res. 58, adopted by the Senate in 1982. It provided that Congress must annually adopt (and may subsequently amend as needed) a prospective statement in which anticipated total outlays (other than principal payments) do not exceed anticipated total receipts (other than borrowing), unless such an anticipated deficit is authorized by three-fifths of the whole number of each house. It charged Congress and the President with assuring that actual outlays do not exceed the anticipated outlays provided in the statement, although they may exceed actual receipts. It limited each year's rate of growth of planned receipts to the previous year's rate of growth in the national income, unless otherwise authorized by a majority of the whole number of each house. It also fixed the deficit as of the date of ratification, subject to enlargement by a vote of three-fifths of the whole number of each house. In wartime these requirements could be suspended by a simple majority.

Enforcement of such an amendment could affect the separation of powers. It could enhance presidential power by justifying the impoundment of funds, for example, or involve the judiciary in overseeing the budget process, an area heretofore at the very center of majoritarian decision making. Whether current doctrines of standing, justiciability, and political question would preclude this judicial supervision is uncertain, and was left uncertain in the congressional debates.

Quoting Justice oliver wendell holmes, jr. 's dissent in lochner v. new york (1905) to the effect that "a constitution is not intended to embody a particular economic theory.… It is made for people of fundamentally differing views," critics argue that the proposed amendment does not belong in the Constitution. That charter can endure the ages by defining structures of power within a regime of ordered liberty, rather than by specifying temporary and highly controversial economic policies, especially amendments, such as this one, with profound distributional effects. Moreover, they fear that such an amendment would weaken constitutional government. If effective, it could create paralyzing supermajority hurdles to daily governance. In contrast, the few other constitutional provisions requiring supermajorities (other than the veto override) do not risk interfering with the ongoing functions of government; even a declaration of war requires only a simple majority. Alternatively, critics argue that if the amendment proved a nullity by being either suspended or ignored, the Constitution's authority as positive law could be undermined. A suspension clause is a rarity in the United States Constitution, in contrast to those of other countries with a lesser tradition of constitutionalism. Even if such an amendment were not formally suspended, Congress might evade the amendment through such devices as off-budget federal agencies and corporations and costly regulation of the private and state sectors in lieu of spending programs. For example, states with a balanced-budget requirement have resorted to splitting their budgets into a balanced operating budget and a capital budget financed by borrowing.

In response, supporters argue that current deficits are economically, politically, and morally ruinous, and are destructive of the country's future. Further, they contend that such proposed amendments seek not only to enact a particular economic theory but also to cure a flaw, identified by public choice theory, in the constitutional structure. Because of the nature of "concentrated benefits and dispersed costs," no effective constituency exists to oppose spending decisions. In the absence of a mandatory balanced budget, Congress has ceased to be a deliberative body that resolves and transcends factions' competing demands, because deficits allow representatives to respond to their constituents' multiple spending demands without regard to taxing decisions. This structural defect did not appear before 1960, the proponents explain, because an unwritten constitutional principle favoring peacetime balanced budgets and the reduction of debt had prevailed since 1789. But in the past few decades, Keynesian theory and theories of the welfare state have undermined this principle; and the institutions that had enforced the principle, political parties with strong local ties and the congressional seniority system, have been weakened. Moreover, Supreme Court decisions broadly interpreting Congress's enumerated powers have eliminated other constitutional restraints that limited spending. It should be noted that this explanation does not account for the President's major role in enlarging and perpetuating deficits.

Robert D. Goldstein
(1992)

Bibliography

Congressional Budget Office 1982 Balancing the Federal Budget and Limiting Federal Spending: Constitutional and Statutory Approaches. Washington, D.C.: Government Printing Office.

Moore, W.S. and Penner, Rudolph G. 1980 The Constitution and the Budget. Washington, D.C.: American Enterprise Institute.

White, Joseph and Wildavsky, Aaron 1989 The Deficit and the Public Interest: The Search for Responsible Budgeting in the 1980's. Berkeley and Los Angeles: University of California Press.