Electoral Reform- Part 3: Balanced Budgets and Term Limits

One rather consistent mantra of the GOP has been a call for a balanced budget amendment to the Constitution. It would seem rather sad that such a measure would even be proposed, but such is the state of a Congress and a President who cannot seem to do what every family does. In effect, such a proposal, proponents argue, would force fiscal discipline upon the government. However, one needs to ask the necessary question: Would it really?

There is no denying the $15 trillion in debt this country currently faces. The two main drivers of this calamity is the growth of entitlements and, to a significant extent, other discretionary spending items. Pledges to cut spending or to root out waste and fraud or relying on so-called peace dividends have done nothing to change this. Obama has used the so-called peace dividend from the wind down of hostilities in Afghanistan on several occasions not to decrease the debt, but towards other programs. The blame game can be played by both sides, but blame solves little at this point.

The conservative solution is to force the issue upon Congress and the President by passing a constitutional obligation to have a balanced budget. Of course, some of the problem begins with having a budget in the first place. Under normal budgeting scenarios, one does not pay out more than one takes in. When we did have a budget, when passed, it was for the upcoming fiscal year. That relied on anticipated revenue streams from a variety of sources. It is somewhat amusing that Obama can claim fiscal victory because the deficit is only $1.1 trillion in a single year. That right there should be grounds for a balanced budget requirement. Additionally, some proponents claim that a balanced budget amendment would be sufficient to maintain the country’s AAA rating despite deficits.

Opponents, on the other hand, claim that it would unnecessarily tie the hands of government in raising revenue during times of emergency or war. Of course, to Obama anything qualifies as an emergency. It is conceivable that one can get around this objection by specifically allowing deficit spending during times of war, but that would then require Congress to actually declare war, something they have an aversion to doing. Secondly, they could also define “emergency” specifically, but I personally believe that is a mental exercise beyond their proven abilities.

Instead, the more troublesome objection is the fact that once it becomes a constitutional amendment, it becomes subject to review by the courts. This can open a whole new can of worms where courts can conceivably be engaged in determining how revenue is spent. For example, one problem is timing. The President is supposed to propose a budget by February 1st to go into effect on October 1st. In the interim, Congress acts on that budget. At any point between, anyone would be able to file a lawsuit. It usually takes 2-3 years for a court case to percolate to just the appellate level. Hence, we can never be sure the budget met the requirements of being “balanced” until well after the fact. Secondly, in order to reach a balanced budget, courts would have to determine what spending needs to be cut and what revenues need to be raised. This would totally upset the constitutional order. The legislative branch’s power over the purse would be usurped by life-appointed judges outside the reach of politics. Therefore, the more important power of the people to vote out the spending cutters or the tax raisers would be nullified. In New Jersey, just such a scenario happened. Christie’s first budget cut some $300 million from state education spending. However, the state supreme court ordered that funding reinstated as it violated the constitutional requirement for a fair and equitable public education. No one challenged that decision beyond rhetoric. All school districts stood to gain by the reinstatement of funds and the court decision provided the political cover for legislators who may have voted for the cuts. Of course, this was well after the fact that the budget was passed and deemed technically “balanced.”

It becomes increasingly obvious that any amendment would have to include flexibility to account for these facts. By doing so, we simply come back to square one. Instead, the better option would be to elect those who take the budget deficit and national debt seriously and then act to reign in out-of-control spending. A formulaic amendment would be too rigid and self-defeating. Some proposals state that spending should be capped at 18% of GDP, which sounds like a good number. In a $15 trillion economy, that amounts to $2.7 trillion in spending. That sounds like a good dollar amount and a lot should get done with that amount. But, let us look at what happens when things go either way. Suppose the economy grows by 3% in a year from $15 trillion to $15.45 trillion. That is decent growth and one could assume that absent a war or such, the economy is doing generally fine. One can also surmise that this was achieved through fiscal discipline. Does it now make sense to raise spending by $81 billion in a good economy? Conversely, when the economy is weak or going in the opposite direction, that is when people need the most help, but the 18% of GDP regimen would dictate a decrease in such spending when people are most in need. Granted, the government cannot and should not be the conscience and de facto parents of every American. Some would argue that the increases in spending should be made when the economy is doing well and the Nation can more readily afford it. But, when you are trying to pay off national debt equal to the size of that economy, a more prudent use of that increase in “expenditures” should go towards paying down that debt. That, more than a balanced budget amendment, would be a longer lasting guarantee for the country’s credit rating.

Proponents also like to note that most states have these provisions. But just a cursory reading of statistics indicates that every state carries some debt to varying degrees, even those with so-called budget surpluses. The reason is that the requirement applies only to the operating budgets of the states which require that expenditures not exceed revenues. The operating budget of a state includes such things as Medicaid, prisons, law enforcement, roads to a certain degree (supposedly from a dedicated trust fund), etc. The capital budget is the actual debt carried by the state in the form of bonds which usually need voter approval. So to assert that states adhere to balanced budget requirements ignores the fact that they, like the federal government, carry debt. It is true that some of that operating budget surplus, if it exists, can be and is used to service some of that debt. In practice, one needs only look at any state which has a balanced budget requirement and then ask if this is a balanced budget in the traditional sense of the term? Most of the “balancing” is done by accounting gimmickry. Some states used supposed funds from the tobacco settlement to balance their budgets- balancing with unseen revenues. Others simply raided pension or health care funds and diverted them on paper to balance the state budget. Sometimes, revenue figures are inflated. Such was the case in Delaware where they added in anticipated funds from sports betting that never materialized. In my home state of New Jersey, it was commonplace to raid the unemployment insurance fund to balance the state budget. This is nothing but accounting gimmickry the likes of which landed the executives of Enron in jail. The actual practice of “balancing a budget” is institutionalized accounting chicanery.

There are two issues that need discussion before leaving this subject. The proposal that any tax increase be approved by a 2/3 vote could probably be achieved easier by statute. The Constitution provides for a supermajority in four cases- to remove the President from office, to ratify a treaty, to override a veto and to advance an amendment. The reason is our Founders determined that these were serious issues. Some may argue whether raising taxes belongs in that category. One can see the potential problems here. In Washington, for example, they have had such a law approved five times although the legislation has waived it three times. One can imagine the problems at the national level. Also, would ending a tax cut qualify as a tax increase? What taxes should be included? And then there are the definitions of taxes. Who knew that a mandate to purchase health care insurance was, according to the Supreme Court, a tax by another name?

The other issue is a recent move to deny legislative pay until a balanced budget is passed. Although these efforts are laudable, they are window dressing. When Obama froze federal pay, he was criticized on these very grounds. Conservative window dressing is no better than liberal window dressing. And what would this solve? Legislators would simply pass a sloppy budget for political expediency and a pay check.

As concerns term limits, if voters use their brains, we already have them- they are called elections. The main arguments are that it would create a system based on merit rather than seniority. In effect, it would cease the creation of career politicians and create a “citizen’s Congress.” They also claim special interests would be weakened and it would usher in an era of fresh thinking and ideas. A side issue is that it would increase voter participation.

Lets take these reasons in turn. Several studies of term limits out of several states and at the local and state level indicate that they actually have the effect of decreasing voter participation. Voter turnout for open races at the state level does not increase any more than that in states without term limits. As for the citizen’s Congress idea, one needs to look to the Federalist papers to see what our Founders had in mind. Obviously, the age requirements dictated that as one moved up the political food chain, the increased age requirement was designed to attract experienced people. Congress or even state office need not be the stepping stone to a higher office. No one was required to be a lawyer, but the Senate certainly had more learned people than the House in its history. The longer term of the Senate was designed to guard against political pressures and whims. The Senate itself is devised to be more deliberate and cerebral than the House. In effect, the two year limit in the House was designed to keep the representatives close to the people; they were constantly campaigning and testing the political winds and whims. That was the designed “term limit” for House members. It was not until FDR that presidential term limits became law. Of all the Presidents before Roosevelt, every incumbent served only two terms following the example of George Washington. This is evidence that the Founders placed great emphasis on and faith in the electorate to, in effect, impose term limits on the political class without specifically spelling them out. Perhaps they gave the electorate more credit than is rightfully due, but an informed electorate is a better solution than mandated term limits.

As to the merit versus seniority issue, most of the intended consequences of term limits can be achieved through congressional reforms. For example, the seniority system, not merit, dictates committee assignments and power. A certain case can be made for experience and knowledge of the workings of Congress. Of course, most of that “knowledge” is a function of the complexity of the rules they make in the first place. And it helps when you are writing the rules. Robert Byrd, despite being a blubbering fool most of the time, was considered a rules expert. The alleged learning curve can be overcome by making the rules less complex and cumbersome. It should not take any legislator more than four years to learn the intricacies of Congressional rules.

It is true that most incumbents become entrenched. As a result of constant reelection in the case of the House, members of Congress do become stale and full of themselves. They come to view themselves as self-appointed experts in a certain area by virtue of a committee assignment. But, that is what is great about politics and the Tea Party. Instead of constitutionally mandating that proverbial breath of fresh political air, it can be done better at the grassroots level and spontaneously. It worked in Utah with Mike Lee and in Indiana with Mourdock. Sometimes, the circumstances at the time dictate it- Scott Brown and Ben Nelson are examples. In the case of Brown, he took a seat held by a Democratic icon in Massachusetts not because Massachusetts suddenly had some conservative epiphany, but because the circumstances were right for change. Likewise, Nelson’s decision to retire rather than run for another term was dictated by the fact that he had fallen out of favor with his constituency over the health care debacle. Regardless, every two years an adequate number of incumbents either retire or are voted out so that there is actual turnover. Mandating a certain threshold of turnover every so number of years achieves very little at the end of the day. Most congressional districts are not that competitive and we would have, in effect, one liberal replacing another liberal. Granted, it would be nice to see a Nancy Pelosi or Debbie Wasserman-Schultz term limited, but I digress.

One argument is that special interests are somehow magically weakened with term limits. Special interests are special interests and will be whether the person is allowed a specified number of terms or it is open ended. Some have said that people would be motivated less by politics and money, and more by their consciences to vote accordingly, especially in their last term. Shouldn’t they be doing that anyway? And if not, then a hopefully-informed electorate will remind them by voting them out.

One final reform mentioned is giving the President line item veto authority. The main reasons given are (1) practically every Governor has that authority and (2) the President would unilaterally control pork barrel spending. Pork barrel spending is, collectively, but a drop in the fiscal bucket as far as federal spending. There certainly are the well-publicized boondoggles at the expense of the public trough. And as Senator Jim DeMint has correctly noted, it is like a gateway to runaway spending in other areas. Those legislators who have pledged to refrain from it and stuck to that promise should be lauded. But, ending pork barrel spending through a line item veto would not solve any debt or deficit problems in the long or short term. Also, granting the President this power (which must be done through a Constitutional amendment) would, this writer believes, grant the Executive unprecedented power over the purse. This was clearly not intended by our Founders. In fact, throughout the Federalist papers, one will find numerous references to Congress’ power over the national treasury. One can imagine a liberal ideologue like Obama using the line item veto to exact concessions for his agenda, or using it to “punish” states with recalcitrant legislators. While many on the conservative side rightfully rant against Obama’s power grabs through executive orders, appointments and regulatory agencies, the line item veto would simply grant the Executive even more power and another tool to expand their power. From a Constitutional standpoint, it would seriously upset the balance of power between the Legislative and Executive branches. And while Congress can override a line item veto, getting to that supermajority is damn well near impossible except in rare cases. Consider this fact: since George Washington was President, 1,498 bills have been vetoed and only 110 have been over-ridden. That is a 7.3% chance that both houses of Congress reach that two-thirds majority. Can one imagine the gridlock that would occur with a line item veto, the debate to override and voting and compromising needed? Given the unfortunate complexity of today’s legislation, it would simply further bog down Congress into the micromanagement of any law which is rightfully the place of the committees in Congress.

In conclusion, it would appear that the better solutions are commonsense rather than constitutional. Some involve reform at the congressional level. But an informed electorate that votes in fiscally responsible legislators is the best and longest lasting solution.