In 1993, when this author was editor of National Taxpayers Union’s printed newsletter Dollars & Sense, I wrote a piece entitled “The Balanced Budget Amendment: A Matter of Time.” It began with a simple observation:
As I sit down to write this, I realized that I have seen only one federal budget in my lifetime that did not result in a deficit. In 1969, when I was still a child, our government ran a $3.2 billion surplus. Since then, we have all watched our nation’s economy move dramatically closer to the precipice of ruin due to gross mismanagement of federal budget policy.
Spoiler alert: 33 years later, the situation hasn’t improved. But the headline, “A Matter of Time,” has held up well, as the U.S. House of Representatives prepares to vote on a new version (H.J. Res. 139) of a Balanced Budget Amendment (BBA) this week. Bringing this vitally needed reform to ratification will involve a massive effort over the months (and even years) ahead combining respect for the past, recognition of the present, and for reverence for the future of this country. This framework is especially useful for policymakers and the public alike, as we reflect on opponents’ arguments that have stood in the way of enacting a BBA ever since NTU began its campaign for the proposal over 50 years ago. A few examples:
1) “A BBA would amount to a fiscal straitjacket, leaving future leaders unable to inject a needed shot of federal spending stimulus whenever the economy is ailing from a recession.”
This perennial gripe from Keynesian economists ignores the fact that the deficit drug is an addiction our government can’t shake, even during long economic expansions. Between late 1991 and late 2001, when average annual Gross Domestic Product (GDP) growth was a healthy 3.4%, the budget was balanced just twice in nominal terms and large deficits as a percentage of GDP persisted all the way up until 1998.
The pattern has proven disturbingly worse in the subsequent economic rebounds around 2002, 2010, and 2020, when deficits have tapered off as a share of GDP but have nonetheless settled at higher levels than before. In earlier postwar recoveries, annual budget shortfalls would resume at 2% to 3% of GDP, but, since 2021, they have hovered stubbornly near 6%, accompanied by the inflation and high interest rates that Keynesians used to dismiss when calling for deficit spending. An NTU-organized open letter to Congress from 250 economists led by Nobel Laureate James Buchanan in 1994 supporting a BBA warned of the Keynesians’ “totally untenable” way of thinking “because it ignores the effects [on] both inflation and real economic growth.”
The Congressional Budget Office (CBO), along with the American people, now understand the linkage between reckless fiscal policy and high inflation and interest rates. The accumulation of deficits, in the form of the national debt, has exceeded 100% of GDP, with no near-term prospect of substantial decline. And, because of poor management decisions on the part of previous Treasuries, the costs of financing that debt are spiraling out of control. Interest payments on the national debt have roughly tripled since 2015, far faster than the debt principal itself.
Even making normal assumptions about the economy and the federal budget, CBO estimates that annual deficits will remain in the 5.6% to 6.7% range all the way through its ten-year forecasting period. But we know from experience that “normal” never holds for long. Right now, for example, Congress is contemplating a supplemental funding package for the conflict with Iran that could add tens or even hundreds of billions to current-year outlays. And, because public officials haven’t bothered to rebuild the government’s finances after major borrowing binges over the last 30 years, a severe economic downturn would test Washington’s capacity to respond. No wonder what Keynesians once considered impossible—a downgrade of the U.S. sovereign credit rating—has happened three times in 15 years.
2) “A BBA would write economic policy into the Constitution and trivialize our founding document. All Washington needs is the political will to reduce deficits.”
No, our constitution should not prescribe exact fiscal policy outcomes. Yet, naysayers are tragically wrong that it should be devoid of procedural guardrails within which such policy should be made. If political will from elected officials is the only prerequisite for guaranteeing Americans’ rights, why have a constitution at all? Everything from freedom of worship, to division of powers, to the prerogatives of sovereign states, would simply be left up to the people we elect (assuming elections would be held at all without a supreme law of the land guaranteeing them). As the liberal columnist Michael Kinsley, who came to support a BBA, wrote in 1992:
[H]ave you read the Constitution lately? Many of its clauses address concerns that now seem trivial. See the Third Amendment, about quartering soldiers. We should only be so lucky that fiscal responsibility seems a passé issue in future years. And the Balanced Budget Amendment, despite its name, is arguably procedural, not substantive. It doesn’t mandate a balanced budget, but amends the legislative process to counteract the current bias against one.
Returning to NTU’s economists’ letter, the signatories wrote:
Simple observation of the fiscal record of recent years tells us that the procedures through which fiscal choices are made are not working. The problem is not one that involves the wrong political leaders or the wrong parties. The problem is one where those whom we elect are required to function under the wrong set of rules, the wrong procedures.
We must bear in mind that, when those words were written 32 years ago, the “fiscal record” showed a deficit at less than 3% of GDP and a national debt at about 65% of GDP. Today, those figures are twice as high.
Constitutions exist to protect the rights of their citizens. If the fundamental freedom of current and future generations to pursue their own prosperity is crushed under the debts of the past, little else in that precious document will matter. Thomas Jefferson recognized this fact in calling for a constitutional amendment to impose strict controls on federal borrowing.
3) “A BBA would endanger Social Security.”
Although it served as the main line of attack during the Clinton years, no other assertion against a BBA has aged worse than this one.
As the BBA gathered momentum with Congress, including passage by a 330–132 vote in the House in 1995, opponents cleverly began advocating for a substitute proposal that would exempt the Social Security program from the BBA’s provisions. The reasoning, or what passed for it, behind this plan was that walling off Social Security from the rest of the budget would protect its finances from being raided to offset higher spending elsewhere.
Aside from contradicting the previous argument above, by undoubtedly injecting economic policy into the Constitution, this ploy would ironically endanger, not protect, the nation’s retirees. Testifying before a 1997 hearing of the House Judiciary Committee, John Berthoud (who would later become NTU’s president) wrote:
The fact is, no matter where politicians place the Social Security Trust Fund won’t change the fundamental long-term structural imbalances in the system that must be faced . . . [G]iving Social Security some type of privileged status will probably only be detrimental to the program in the long term by delaying needed action . . . Beyond this, putting Social Security “off-budget” would surely be an invitation to budget fraud. By establishing an area of the budget exempt from the requirement of balance, we provide politicians a big easy out to a true balancing of the budget. They could easily shift entire programs to the Social Security part of the budget. Of course, beyond intentional gaming of the Social Security account, early in the next century when Social Security starts running deficits, a Balanced Budget Amendment with a Social Security exemption would be completely meaningless.
Since 1997, Social Security has taken precisely the direction Berthoud predicted. Payroll tax surpluses, which were already being siphoned off to make the general budget look healthier, became shortfalls by 2015. The “assets” left in the Social Security “Trust Fund”—nothing more than intragovernmental IOUs—are now being “redeemed” and piled straight onto the national debt. According to the latest Social Security Trustees report, even those IOUs will be exhausted by 2033, at which point the program will face a projected automatic benefit reduction of 23%. Medicare Part A is in dire straits as well.
Taxpayers are left to wonder how much better off America’s seniors would be now, had a BBA been in place 30 years ago to help focus Congress more intensely on solving, rather than simply posturing, over the entitlement spending crisis.
4) “A BBA would be an excuse to raise taxes rather than reduce spending.”
Political conservatives worry that a BBA would be a pretext for knee-jerk tax increases rather than honest spending reductions to establish budget balance. The current version of the BBA before the House this week stipulates a two-thirds vote to raise taxes, a considerably high bar considering that the huge tax hikes Bill Clinton, Barack Obama, and Joe Biden signed into law made it through Congress on far smaller margins (Clinton’s by just one vote in each chamber in 1993).
Suppose, however, that a BBA proposed through Congress or an Article V convention contained only the “tax accountability clause” from versions of the Amendment NTU supported in the 1980s and 1990s: a requirement that tax increases could only pass by a majority of the whole number of members of each house, not just those present and voting or by a voice vote. That version of the BBA, which cleared the House in 1995 and earned 66 votes in the Senate, was usually paired with votes on BBAs that had stronger tax limitation provisions, but those versions always fell well short of the two-thirds required for passage. James Dale Davidson, founder of NTU, defended this approach in a 1992 Wall Street Journal piece, whose words remain powerful today:
[S]imply tolerating deficits at ever higher levels is not a viable alternative to tax increases. I understand the Journal’s distaste for taxes. Indeed, I share it, having worked actively at the National Taxpayers Union on behalf of federal and state tax limits. But we cannot be indifferent to the grave dangers posed by the over-reliance on deficits to finance the government. Even the most ardent supply-sider should recognize that some level of debt must be worse than even taxes. Otherwise, we should dispense with taxation altogether and finance government through debt alone.
To reiterate, however, H.J. Res. 139 contains a strong tax limitation safeguard by requiring two-thirds votes in both chambers for a tax hike to pass. Consider this objection dead and buried.
5) “A BBA would put the courts in charge of enforcing fiscal policy, which would bring the government to a halt and cause a constitutional crisis.”
This line of attack is likewise a blast from the past but isn’t any more persuasive today. Courts have proven traditionally reluctant to instruct leaders of the other two branches of government on the minutiae of taxes and spending. From striking down the line-item veto law enacted during the Clinton Administration in 2000, to overruling Donald Trump’s broad-based assertion of emergency tariff powers earlier this year, the Supreme Court has largely confined itself to ruling on the limits of legislative and executive power rather than ordering particular outcomes. In fact, the justices writing for the majority in the Supreme Court’s recent tariff ruling specifically noted “We claim no special competence in matters of economics or foreign affairs. We claim only, as we must, the limited role assigned to us by Article III of the Constitution.”
Where courts have erred in dictating economic policy (e.g., upholding the use of eminent domain for private development), elected officials have responded with corrective laws. But what if Congress simply ignored a BBA, and allowed massive deficits to continue without the approval procedures contained within a measure like H.J. Res. 139? The judiciary would then need to decide whether Congress failed to respect the highest law of the land—something the courts have regularly done since the beginning of the Republic. Congresses and executives likewise respond to such rulings by changing policy course, for better and sometimes for worse.
But what if Congress and the Executive in turn decided to ignore a Supreme Court ruling that declared them in breach of their constitutional responsibilities to abide by a BBA? Here is where the difference between a statutory law and a constitutional requirement matters. Congress has routinely flouted its own internal rules (e.g., the entire appropriations process), public laws mandating a balanced budget (which have dated back at least 45 years), and various measures designed to reduce the federal deficit. If the U.S. Constitution’s structural guardrails on how government should function cannot be brought to bear on the broad outlines of budgeting (not the specifics), then little else in our founding document will matter (reread arguments 1–4).
It is also important to remember that Article V of the Constitution allows amendments to be proposed not only through two-thirds votes of the House and Senate, but also through a limited convention called by two-thirds of the states. (Under either method, three-fourths of the states must then ratify an amendment.) NTU’s longstanding campaign to propose a BBA through a limited convention called by at least two-thirds of the states has reached its high point, with 32 of the 34 states needed to trigger a drafting assembly. By late 1988, however, states began rescinding their convention resolutions over unfounded concerns over how a convention would conduct itself.
During the past decade, more and more states (along with purpose-built Article V advocacy groups) have recognized the need to provide leadership out of Washington’s budget quagmire, and are once again signing on to fiscal reform convention resolutions. This prerogative, expressed through the will of the citizens, is today the strongest legal guarantee that Congress will adhere to an amendment it proposes, because otherwise it will face one that the states draft on their own. As the late David Stanley, a former state lawmaker and Chairman of NTU wrote nearly 30 years ago:
Our state legislatures hold the key to fiscal sanity.
State resolutions calling for a balanced budget constitutional amendment, and, if necessary, a limited convention to propose it, are essential to stop runaway spending, deficits, and debt.
The best way to ensure the survival of our Constitution and its guarantees of liberties is for the states to use the Constitution as the Founders intended – to pass enough Article V resolutions to force Congress to act.
One concern among opponents’ otherwise irrational fears of judicial meddling under a BBA should be taken seriously: the need to establish clear, concise, and elegant language for a constitutional amendment that will stand the test of time. H.J. Res. 139 is not perfect, any more than the predecessors previous Congresses have considered. For example, NTU has recommended that BBAs avoid embedding porous or malleable terms such as “inflation” or “population growth” in the Constitution. The definition of inflation, for instance, could be defined using several economic indices that could set off needless controversies in court. At least, however, population growth could be tied to the census for legislative apportionment that is mandated in the enumeration clause of the Constitution (with subsequent amendments).
The history of fiscal policy from 1988 through 2026 proved that virtually every prediction of proponents came abominably true in the absence of a BBA. Meanwhile, virtually every excuse that opponents of the BBA made to stall its passage has been rendered laughably irrelevant.
Unfortunately, the House will not muster the requisite two-thirds vote margin to move the measure to the Senate. Therefore, this exercise must have another purpose: to unify advocates in Congress behind a modern BBA, elevating its concepts to the place they deserve in the national discussion on federal fiscal responsibility. The vote will also encourage activists in the states to continue their drive for a limited Article V convention on behalf of a BBA, knowing that if Congress cannot do the job, they must.
But what, then, is the purpose of the written “exercise” you are reading now? It is to demonstrate that the BBA’s past speaks not only to present circumstances but also future needs. To quote again from this author’s 1993 article:
Without a binding promise of fiscal responsibility in the future, we as a nation face the possibility of a full-blown crisis. A Balanced Budget Amendment is our last, best hope for avoiding national bankruptcy, and embracing once again the principle of limited, sound government.
Much has changed since those words were written, the worst of which is that generations alive now—not just those yet to be born—are suffering from the consequences of profligate federal policy. The BBA is a genuine remedy to ease that suffering.