Dranias: Balanced-Budget Compact Could Limit Debt | Eastern North Carolina Now

The states could put a stake through the heart of America's "fundamental problem" of unlimited borrowing capacity that has created nearly $18 trillion in national debt by adopting a balanced budget amendment

    Publisher's note: The author of this post is Dan Way, who is an associate editor for the Carolina Journal, John Hood Publisher.

Proposal could be enacted within 12 months, scholar says

    RALEIGH - The states could put a stake through the heart of America's "fundamental problem" of unlimited borrowing capacity that has created nearly $18 trillion in national debt by adopting a balanced budget amendment that could be ratified within 12 months, a constitutional scholar and fiscal reformer says.

    Nick Dranias of Phoenix, Ariz., president and constitutional scholar at the Compact for America Educational Foundation, detailed the balanced budget amendment Dec. 15 at the John Locke Foundation's Shaftesbury Society luncheon.

    Among other functions, the amendment would limit federal debt to 105 percent of its level at the time the amendment passed. Congress would have to gain the approval of a majority of state legislatures to exceed that debt limit. Further, it would require a two-thirds roll call vote of the whole number of each chamber of Congress to approve a new or increased general revenue tax.

    Failure to get spending under control in the next three to seven years would cause the irreversible crash of the U.S. economy, Dranias warned. Compact for America's plan to prevent that differs markedly from other balanced budget amendment proposals in one key respect.

    It would forgo the traditional method requiring a two-thirds vote of the members in each house of Congress to originate an amendment. Instead it would create an interstate compact to leverage Article V of the Constitution. That article grants states the power to call a convention to propose constitutional amendments.

    Congress has originated 27 constitutional amendments, but none in more than 200 years. States never have introduced and ratified a constitutional amendment under Article V.

    "Congress can jam up an Article V amendment in a lot of ways," Dranias said, primarily because the process is perceived to be cumbersome and prolonged.

    Those obstacles could be overcome, Dranias said, by creating a compact of a mandatory 38 states - a compact commission - with a compact administrator to speed and simplify the process. The compact approach could accomplish everything in just one legislative session, Dranias said, rather than the five or more sessions previous state-initiated amendment attempts have entailed.

    The compact approach would require only two pieces of legislation. One would contain all components of the amendment and the convention process for approval by state legislatures. The other would be a congressional resolution consenting to the compact, calling for the convention, and referring the amendment to the states for ratification.

    The convention would meet and have only 24 hours to approve the amendment before the convention ended. This process would prevent a runaway convention that could alter other parts of the Constitution or the national government framework.

    If it works, this approach could be the vehicle to pass other long-sought amendments such as term limits and tax reform.

    Establishing a hard-and-fast debt limit is not unusual. Forty-nine states have some form of debt limit or balanced budget amendment, Dranias said.

    "It's a radically weird thing that the federal government has nothing. ... Did you know we don't even have a debt limit right now?" Dranias said. He likened Congress to an addict, saying, "You don't give an addict control over his supply."

    By empowering politicians with unlimited borrowing capacity, "suddenly there are no limits on what they can promise to get elected," he said.

    Politicians can borrow from the future with no immediate political costs, only political gains, which is "the absolute height of immorality and irresponsibility" in taxing future generations without representation, he said.

    "It is unlimited borrowing capacity that creates the illusion of unlimited resources, which is the source, the prime cause, of unlimited government," Dranias said.

    Every balanced budget amendment from Congress "has secured at least simple majorities of both Houses of Congress," Dranias said, but fell short by just a handful of votes of the two-thirds threshold every time. There have been over a dozen such proposals in the past 25 years.

    A key feature of the balanced budget amendment is impoundment. When 98 percent of borrowing is reached the president would be required to designate what to fund and what to freeze when the debt limit is reached. Congress could override his decision without a presidential sign-on.

    Requiring the president to cite what programs would not be funded months in advance would be much more transparent, and take away his leverage as the debt limit approaches, Dranias said.

    "He puts a gun to grandma's head minutes before the debt limit is going to kick in, and everybody folds" when he threatens to withhold her Social Security or not issue veterans' checks, Dranias said. "There's no way to beat the president when he's got a gun to grandma's head."

    Sara Imhof, director of education and grass-roots advocacy at The Concord Coalition, has reservations about the plan.

    "We have been advocates of balanced budget amendments historically because we saw it could happen 20 years ago. Now we are more of an advocate of working toward a more balanced budget than we are pushing a balanced budget amendment," Imhof said.

    The Concord Coalition is a national, nonpartisan organization advocating fiscally responsible governance founded in 1992 by the late former U.S. Sens. Paul Tsongas, D-Mass., and Warren Rudman, R-N.H., and former U.S. Secretary of Commerce Pete Peterson.

    Shifting debt limit power to the states is not a cure-all, she said.

    "We need to be realistic in not thinking the pressures are going to be less just because we want to take on more on the state level," Imhof said.

    "Even if it were possible mathematically to solve this problem only on the spending side, we believe greatly as an organization that for lasting progress that we need to look both at revenues and at spending. Whatever is the actual mix of those policy changes doesn't have to be half and half," Imhof said.

    "We need to see where we can rein in on the spending and also raise revenues" by reducing the "Swiss cheese" of loopholes, subsidies, and giveaways to special interests in the tax code, which account for about $1 trillion a year, she said.

    "Our tax system is very complicated and imperfect, so looking at comprehensive tax reform would be great," Imhof said.

    Military, defense programs, and homeland security should be scrutinized for the most efficient and effective spending, especially with the rise of ISIS in the Middle East and other global international terror challenges, she said.

    The same should be done with Medicare, Medicaid, the VA system, and other health programs, she said.

    "At the Concord Coalition we don't advocate a large government, or a small government," Imhof said. "We don't care [about the size of government] as long as the people understand they should pay for the government they want."
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