Drafting a Federal Balanced Budget Amendment That Does What It Is Supposed to Do (and No More)

Article excerpt


I. What Is the Amendment Supposed to Do?

A. Why a Balanced Budget?

1. Institutional Responsibility

2. Intergenerational Equity

3. Economic Prudence

4. Reconciling Competing Values

B. Why a Constitutional Amendment?

C. Other Normative Issues

1. Enforceability

2. Flexibility

3. Political Neutrality

4. Constitutional Nondisruption

II. Defining the Budgetary Target

A. Accounting for Spending and Income

1. Treatment of Unpaid Obligations

2. Treatment of Capital Expenditures and Receipts

3. What is Cash?

4. What is Debt?

5. Constitutional Implications of a Choice of Accounting


B. Scope of the Amendment

C. When to Test

D. Accommodating Fiscal Policy

III. How to Get There

A. Setting Annual Targets and Deciding Whether They Have Been


B. Imposing a Remedy

1. Debt Ceiling Limitations

2. Predefined Default Solutions

3. Process-Based Solutions

4. Incentive-Based Solutions

5. Who Should Decide?

C. Waiving the Amendment: Who, When, and How?

IV. Conclusion


"[I]n constitutional matters, as in others, the devil is in the details."(1)

Efforts to propose and ratify a constitutional amendment to balance the federal budget have been ongoing for almost twenty years,(2) culminating in the repeated narrow defeat of Senate Joint Resolution 1 (the "1995-96 Senate Draft")(3) in March 1995 and June 1996. History suggests that the same draft, or one very similar, will be introduced again. Recent shifts in the makeup of Congress have increased the likelihood of passage.(4) In any event, proposals for a federal balanced budget amendment are likely to remain politically central for the foreseeable future.

Most of the public debate on this issue has centered around whether such an amendment, in the abstract, is a good idea;(5) little has been written about the formidable technical problems involved in drafting a balanced budget amendment that does what it is supposed to do.(6) This is, perhaps, understandable. The scholarly community tends to defer technical analysis until after an amendment clears Congress. Proposals for a federal balanced budget amendment present further problems. First, they implicate two fields not usually linked: constitutional law and accounting. Few constitutional scholars feel comfortable tackling accounting issues;(7) accountants, in turn, do not often write about the Constitution. Second, there is a dearth of satisfactory models from which to work: Amendment proponents perceive the Gramm-Rudman-Hollings Act(8) and other legislative approaches(9) as inadequate,(10) and the experiences of states with similar constitutional provisions remain controversial.(11) Finally, analysis of balanced budget amendment drafts has been hampered by the differing motives of its proponents. For some, the goal is simply to require a balanced federal budget. For others, the goal appears to be to limit the size and power of the federal government -- to enact, in effect, an "antifederalist" amendment to the United States Constitution.(12) These different goals raise different technical problems and invite technical imprecision.

In any event, balanced budget amendment drafts have not evidenced adequate attention to technical detail. The 1995-96 Senate Draft, for example, seems to have been written with primarily political, not technical, considerations in mind. Not surprisingly, close analysis reveals serious technical flaws. Without greater attention to technical detail, future proposals are likely to perpetuate those flaws. …