By Teresa Welsh |
The United States needs constitutional rules to bring discipline to the federal budget process. Congress has repeatedly attempted to create binding limits on its tendency to overspend. In the 1980s, it was Gramm-Rudman-Hollings legislation to reduce deficits. In the 1990s, it was caps on discretionary spending and limits on new government programs. In 2011, it is the specter of 1.2 trillion in cuts (or more accurately, reductions in spending increases) due to the failure of the super committee. These controls all have a common element: They were undone or evaded (or soon will be) by a Congress unwilling to hold itself accountable. For instance, even before the super committee had failed, Sen. John McCain and others discussed undoing the "automatic" cuts that were to be the consequence of failure.
Constitutional rules are credible and durable in ways that internal controls or even statutes are not. They cannot easily be changed, and if properly designed, cannot easily be evaded. The phrase "properly designed" is crucial. Critics of constitutional budget rules often point to a poorly designed proposal and say, in effect, "Proposal A is bad, so all constitutional rules are bad." This just isn't true.
My research on balanced budget rules in the U.S. states shows that well-designed rules lead to lower spending. Moreover, a constitutional budget rule that (a) applies to the entire federal budget—no exceptions, (b) is difficult to waive, except in true emergencies, and (c) is constructed to limit loopholes or gimmicks will be effective at forcing Congress to make hard spending decisions.
Considering Congress' track record, there is perhaps only one other way to achieve fiscal discipline, and that is a debt crisis. But is America really destined to become like Greece or Italy? Right now that scenario seems far-fetched. But consider this: A recent report by the U.S.-China Economic and Security Review Commission notes that the Chinese renminbi could pose a threat to the dominance of the U.S. dollar in as little as five to 10 years. And when that happens, we will be much more vulnerable to a debt crisis. We need to act now to prevent a crisis, and constitutional budget reform is an important place to start.
About David Primo Senior Scholar at George Mason University's Mercatus Center
Orrin Hatch Senior U.S. Senator from Utah
Steve Wamhoff Policy Analyst for ITEP and the Legislative Director of Citizens for Tax Justice