For the first 170 years of the Republic, the government usually squared its books, except in time of war and economic depression. But in the last 35 years, the United States has run deficits 34 times, even when the economy was booming. This year we’re spending $200 billion more than we’re taking in. And there’s more debt on the way. The deficit will grow as the population ages, forcing the Treasury to lay out more for social security, pensions and medical care.
In theory, nations can borrow indefinitely because there’s always another generation to shoulder the burden. But society has a limited pool of savings that form the basis of investment in expanding factories, businesses and housing. By taking more and more of those savings to finance the debt, the government would “crowd out” more productive investments. Also, the government now spends $234 billion just to pay interest on the debt, money that could be used for other things. In 1961, our bill for interest was only $6.7 billion.
Because American voters have become hooked on more benefits from government than they are willing to pay for in taxes. Excluding interest and national defense, three fifths of government spending goes to middle-class benefits.
It would at least restore the principle of pay-as-you-go. Public opinion would likely turn against a Congress that openly flouted the Constitution.
Dozens of accounting games can be played. Congress might, for instance, move education, job training and highway outlays from spending to “investment” and exempt it from the target. Governors fear that Washington lawmakers will shift more burden to the states – one reason sponsors may have a hard time finding the requisite 38 legislatures to ratify the amendment.
The Supreme Court might take on this role, but, again, public opinion would be the ultimate enforcer.
Because even Congress may not be clever enough to circumvent the amendment. In fact, the Clinton administration and other critics oppose it because it may actually force cuts in programs like social security and Medicare. Some conservatives oppose the amendment for the opposite reason. They think it will force tax increases.
Let’s hope so. We can’t balance the budget unless we trim these big entitlements and raise taxes.
During such emergencies, Congress can waive the rules with a three-fifths vote in each chamber. Democrats say this gives too much power to the minority. Forty percent of the legislators, plus one, could hold the government and the economy “hostage,” says Laura Tyson, the president’s chief economic adviser. House Speaker Newt Gingrich responds, “There has never been a problem persuading Congress to spend more or tax less in U.S. history.”
Probably less important than either the ardent advocates or proponents claim. It might help a little; it might hurt a little. The really important votes are the ones on spending and taxes. We’ll know well before 2002 if Congress or the president is now serious about deficit reduction.
