Friday Interview: Relying on States to Help Curb National Debt | Eastern North Carolina Now

    Publisher's note: This post waas created by the staff for the Carolina Journal, John Hood Publisher.

Compact for America's Dranias explains approach to budget amendment

    RALEIGH - The federal government spends more money each year than it collects in taxes and other revenue. That means annual spending deficits. Each deficit drives up the federal debt. Nick Dranias, president and executive director of the Compact for America Educational Foundation, has an interesting idea for addressing that problem. He discussed his proposal with Mitch Kokai for Carolina Journal Radio. (Click here to find a station near you or to learn about the weekly CJ Radio podcast.)

    Kokai: The Compact for America is invoking what has, at least for many years, been a little-known piece of the U.S. Constitution to help deal with this issue of federal debt. Tell us what you're working on.

    Dranias: The idea is to get a federal balanced budget amendment in place that is powerful and plausible as soon as we possibly can. And it turns out that we don't have to wait for Congress to act. The Constitution, in Article V, gives states the ability to originate constitutional amendments. And what we're doing is making it plausible to actually get through that huge and heavy lift, using an agreement among the states.

    Kokai: People who are familiar with the Constitution know that Article I and Article II and Article III, they set up the various pieces of the federal government and explain how they work. Tell us more about Article V and what it says.

    Dranias: Article V is the part of the Constitution that defines the amendment power. You know, most folks are aware that we have a few dozen, a couple dozen amendments already - 27 to be exact. Each one of those has been proposed by Congress, with two-thirds of each house behind it, in voting for it. But a lot of folks aren't aware that the states also have the power to originate amendments, so there is a process in the same paragraph that authorizes two-thirds of state legislatures to apply to Congress for a convention for proposing amendments.

    And the states control that process through their application. They can specify the amendments they want. And the latest research shows that the founders really intended for the states to have complete control over the convention as well. It's a myth that the convention for proposing amendments was supposed to be some sort of reset button.

    And so, with Compact for America's approach, what we are using is a formal agreement between the states, setting up in advance all of the process that the convention would follow, as well as the amendment.

    And in this case, our first move is for a federal balanced budget amendment because, frankly, we don't have a whole lot of time to fix that problem. I mean, if we don't get a balanced budget amendment in place, now that we have rocketed past $18 trillion in national debt, if we don't have one in place in the next three to seven years, we're going to be looking at a national bankruptcy amendment. So, let's try to get the low-hanging fruit, the urgent reform, done first. And that's what we're focusing on.

    Kokai: So the idea is to get the states involved in putting together a constitutional convention to deal with this amendment on the balanced budget. What's the process? What's going on right now that would lead to that outcome?

    Dranias: It's important to distinguish between a constitutional convention and a convention for proposing amendments. Article V does not authorize a ground-up "rewrite the Constitution" convention. All it is is another way for us to get amendments. And amendments, by definition, are not total rewrites of everything.

    That being said, what we have right now [December 2014] are two states out of the 36 that we need, already agreeing to the compact for a balanced budget. This is an effort to advance a federal balanced budget amendment as soon as we have 38 states on board. Now, we have a congressional component that Paul Gosar, a congressman from Arizona, is leading the charge on that will activate the compact, make it effective. And we only have to pass one resolution in Congress to do that with simple majorities, with the president not necessary to the process.

    So what we're looking at for the Compact approach is a grand total of 36 more states to get on board with this formal agreement to advance a balanced budget amendment, and then one resolution to be passed by simple majorities in Congress.

    Now, folks may say that's a heavy lift, but look, we've got no other choice. Congress is showing no inclination whatsoever to restrain its debt spending. This is the only option that's realistic for restraining the federal debt. And, quite frankly, the states are starting to become aware of the power they have. ...

    Kokai: We've talked a lot about the process of trying to get this in place. If we actually got the process moving forward and got to talk about the amendment itself, what is it that this compact would lead to in terms of a balanced budget amendment? How would that work?

    Dranias: What it would be is a very basic concept. You could only spend what taxes bring in, at any point in time. We don't rely on budget estimates that can be gamed. We have a simple starting limit on spending. You can only spend what cash brings in, and that's it.

    Now, there is one exception, because the problem with having that hard and fast limit is that sometimes the taxes are flowing and they're not flowing and you have spending obligations that come and go, so you can't line up taxes with spending, even for legitimate things. What you need is then a line of credit, a revolving line of credit - some degree of borrowing capacity to handle the volatility in the incoming cash.

    And so, our amendment does allow for the federal government to borrow, but we set a limit, a debt limit, on how much the federal government can borrow. It's a big debt limit, but the important thing is it's not going to be unlimited.

    Right now, under the Constitution, the federal government has unlimited borrowing capacity. And when the federal government thinks that it can borrow anything it wants, there is no reality behind any of its decisions. It's like having magic. And as a result, we don't see budgets, we don't see prioritization, we don't see any kind of rational spending or efficiency in government.

    I mean, think about it. If you, in your own life, didn't have to worry about where your money was coming from, if you had an unlimited credit card that you could tap for anything under the sun, how would you even know what it would mean to be rational or efficient in any budgeting? Wouldn't you just buy every trinket that came in front of you? I mean, why would you not?

    Now, imagine the situation with the government. That is exactly what the federal government is facing. The federal government has, under its control, unlimited borrowing authority, and they're buying anything that looks shiny, anything that can buy votes, anything that can keep the politicians that are controlling that power in office.

    And so the key, the key to restraining government and, more importantly, having any degree of efficiency out of government, is to limit the debt. So that's the first thing that this amendment would do, is first, you limit spending to taxes with the exception of borrowing under a limited debt cap.

    Now, you're probably going to say, "Hey, what if there's a war? What if there's an emergency? How do we know that that cap is enough?" Well, you don't want the debtor, the addict, to be deciding for himself how much borrowing capacity he should get. We've seen what happens in Congress. ... So what you need is outside, external discipline in any flexibility that you give to this process of borrowing.

    And what we propose is having a simple majority of states approve, in a referendum, any further increase in borrowing capacity. That way, we re-engage the states, which are closer to the people, in national policymaking, and we also know that Congress cannot count on the states just rubber-stamping anything they do.

    Kokai: In the brief time that we have remaining, if people want to know more about this process, especially if they'd like to get their own state involved, where can they find the information?

    Dranias: Go to www.compactforamerica.org.