Taxes & Spending

Senate GOP Demand Balanced Budget Amendment for Raising Debt Ceiling

The Senate Republicans are preparing to tell President Obama that they want a Balanced Budget Amendment (BBA) to the Constitution passed in Congress in exchange for raising the statuary debt ceiling above $14.2 trillion.

“My hope is that we would force a vote on a Balanced Budget Amendment as a condition to voting on the debt ceiling,” Sen. John Cornyn (R.-Tex.) told HUMAN EVENTS.  “By next week, or shortly thereafter, we will have all 47 Republicans unified behind the effort, and then begin to reach out to our Democratic colleagues.”

A BBA would force the federal government to balance the federal spending to incoming revenue each year and cap spending at 18% of the gross domestic product (GDP).  For the current Fiscal Year (FY 2011), the nonpartisan Congressional Budget Office (CBO) projects that government spending will be $1.4 trillion more than revenue and account for almost 25% of the GDP.

Passage in the Senate

Senate Minority Leader Mitch McConnell (R.-Ky.) is planning to roll out the details of the new version of the BBA in the next two weeks.  McConnell’s plan is to to build public support and pressure on the Democrats to vote for it before the debt ceiling is hit, which is estimated to happen between mid-April and the end of May.

“We will have a genuine rollout so the American people can know what we’re doing and they can call, and e-mail, and fax, and demand their senators and congressmen support it and create a true grassroots effort,” said Cornyn of the leadership strategy.

So far, the Republicans have at least 33 members supporting the new BBA.  Cornyn said that he and others are making calls this week to line up the others to support it.  He expects to have all 47 Republicans in support by next week, and then will start outreach to the Senate Democrats.

“This is something that should have a bipartisan appeal, but we need to get unified behind it first before reaching out,” said Cornyn.

According to Article V of the Constitution, an amendment must get a two-thirds vote in both the House and Senate and be ratified by three-quarters of the states.  So in the Democrat-majority Senate, the amendment would need all 47 Republicans votes plus 20 Democrats for passage.

The last time that the Senate voted on a Balanced Budget Amendment was in 1997.  The amendment, sponsored by Republican Sen. Orrin Hatch (Utah) failed by only one vote.  Former senator and now Vice President Joe Biden voted in favor of the amendment.  Of the 11 Democrats who voted for the Hatch BBA in 1997, four are still in the Senate: Max Baucus (Mont.), Tom Harkin (Iowa), Herb Kohl (Wisc.), and Mary Landrieu (La.).

“In 1997, when they came within one vote of getting the Balanced Budget Amendment, the deficit was a little over $100 billion, and now it’s $1.5 trillion.  The national debt was a little over $5 trillion in ’97, and now it’s $14 trillion,” said Cornyn.  “If people thought that the circumstances were sufficiently compelling in 1997 to get that close, I think the evidence is overwhelming that the deed is there to get it done in 2011.”

Politics of Debt Ceiling Negotiations

The debate over the debt ceiling pits the White House, which needs Congress to legally raise the current statutory limit, against congressional Republicans who want to see serious budget reforms tied to the deal.

The congressional GOP has said that it will not allow Obama to borrow more money for government spending without significant reforms to the budget process and deficit reduction.

“McConnell said that he thinks that no Republican would vote to increase the debt ceiling without some real fiscal reforms,” said Cornyn.  “To my mind, a vote on a Balanced Budget Amendment would be a minimum requirement before we would have that vote.”

The pressure for a Balanced Budget Amendment this year is most pressing because of the escalating budget deficits of the past years during Democrat control of Washington and the record-breaking national debt.

“The Balanced Budget Amendment is part of the strategy this spring to have a meaningful vote on the debt ceiling,” said Cornyn.

Currently the United States has $14.17 trillion in debt.  At the rate of spending, the nation will hit the current statutory debt ceiling of $14.294 trillion sometime between April 15 and the end of May.  The Secretary of the Treasury Timothy Geithner will tell Congress exactly when the U.S. is about to hit the debt limit.

Cornyn, who is chairman of the National Republican Senatorial Committee, spoke of the impact of the vote in the next election.

“If, for some reason, the Balanced Budget Amendment were not to pass, I think the voters would then know, with very stark clarity, who is for a balanced budget and who is not, and it could have a big impact on the 2012 elections,” Cornyn said.

He added that if the BBA does not pass in this Senate, then “we could pick it up again in 2013, when we have some reinforcements.”

Provisions of the Senate Balanced Budget Amendment

The new Senate version of the Balanced Budget Amendment stipulates a spending limit so that annual outlays for any fiscal year cannot exceed 18% of the GDP.  This year, the CBO projects government spending will be 24.7% of the GDP.  In 2010, outlays were 23.8% of the GDP. 

Under the BBA, Congress would need a vote of two-thirds of the House and Senate to pass a budget over 18% of the GDP, and the specific excess would be specified in the bill.

Also, the Senate’s balanced budget requirement would stipulate that total annual government spending cannot exceed total revenue unless two-thirds of the House and the Senate vote for a specific spending-excess amount.

In addition, the BBA states that in order to increase the debt limit in the future, the vote would require three-fifths of both chambers to pass it.

The Senate BBA would require that the President submit a balanced budget to Congress every year.  In February, Obama submitted his budget for FY2012, which the CBO projected would create a budget deficit of $1.2 trillion in the first year, and add $9.5 trillion to the debt over the next decade. 

The federal government is currently spending without any budget restraints because last year, the Democrat-controlled Congress did not pass Obama’s budget nor one of its own.  Since the current budget rules were put in place in 1974, last year was the first time that the House failed to pass the annual budget resolution.

Instead of a budget, the government is being arbitrarily funded with a series of Continuing Resolutions (CRs) that were originally set at 2010 spending levels, but have been cut by $2 billion a week by House Republican leadership.

Furthermore, the Senate BBA prevents future Congresses from raising taxes in order to meet the requirements of the balanced budget by stipulating that any bills with tax increases will need two-thirds votes in both chambers.

The Senate BBA attempts to prevent Washington from cooking the books by defining “outlays” as all spending except for repayment of debt principal, and “receipts” as all revenue except from borrowing.  The BBA also includes a judicial limitation to prevent any courts from ordering an increase in revenue (taxes) in order to enforce the amendment.

There are two waivers included in the BBA.  First, the spending limit provision (18% of the GDP) can be waived “when a declaration of war against a nation-state is in effect and where a majority of both Houses provide by law for a specific excess by a roll call vote”.

Second, the spending limit and the balanced budget requirement could be waived “when the U.S. is engaged in military conflict which causes imminent and serious military threat to national security and declared by a joint resolution that is approved by a three-fifths vote of each House of Congress.  The suspension must include a specific excess of outlays for that fiscal year for the military conflict and be adopted by three-fifths of both Houses.”

Republican Senators Attempt to Resolve Split on BBA Details

Sen. Hatch and freshman Sen. Mike Lee (R.-Utah) had been pushing two different versions of a BBA this year, which split Republicans into two camps.  There were 33 Republicans who supported the Hatch-Cornyn amendment, and 17 supported an amendment by Lee and Arizona Sen. Jon Kyl.

The primary differences between the two were that Hatch-Cornyn called for a 20% GDP spending cap, but Lee-Kyl limited spending to 18%, which was the final number. Also, the Hatch-Cornyn amendment required that the President submit a balanced budget every year that met the GDP spending cap and waived the balanced budget requirement in times of war.  Both of those provisions were included in the final agreement.

“By uniting a diverse group of Senate Republicans behind this consensus proposal that incorporates ideas from a wide variety of senators, we have made this Balanced Budget Amendment stronger and moved closer to the goal of getting the necessary 67 votes in the Senate,” Hatch told HUMAN EVENTS.  Hatch has been leading the Senate on the issue since he introduced his first version of the Balanced Budget Amendment in 1979.

Before the two camps officially came together with the final compromise BBA, they put out a media advisory last week, which said:  “GOP Senators to Unveil Balanced Budget Amendment to Constitution.”  The five senators who were supposed to be at the press conference the following day were Hatch, Cornyn, Lee, Kyl, and Pat Toomey (Pa.).

The next morning, reporters received an e-mail saying the press conference was “postponed,” but no explanation was given.  In the tightly controlled Senate, the abrupt cancellation of a high-profile event is a rare occurrence and demonstrated a break in party organization.

Behind the scenes, McConnell called together about 20 senators and told them that they had “put the cart before the horse,” in the words of one aide familiar with the meeting.  McConnell told the group that they needed to come together with one combined BBA.  He also told them that they needed to have all 47 GOP senators supporting the compromise plan, a House companion bill, and a communications plan to sell the BBA to the American public.

“We want to try to get everybody behind a single amendment, so we don’t divide up and undermine our own chances of success.  And then we’re going to try to reach out to Democrats and try to get them to support it,” Cornyn told HUMAN EVENTS.

Hatch said that “I expect Republicans will stand strong in requiring a vote on this amendment.”

By the end of last week, the two camps came together to compile the provisions of the compromise Hatch-Lee-Cornyn-Kyl-Toomey-Olympia Snowe (Main) Balanced Budget Amendment.  The Republican senators are continuing to nail down the final details of the new legislation, which is expected to be announced early next week.

House Version of the BBA

The House passed a Balanced Budget Amendment in 1995 as part of the “Contract for America.”  As mentioned, the BBA failed in the Senate in 1997 by one vote.

Rep. Bob Goodlatte (R.-Va.) reintroduced that same BBA from 1995 at the beginning of this year as HJ Res 2, which was referred to the Judiciary Committee.  The bill has 215 co-sponsors, including 13 Democrats: Jason Altmire (Pa.), Sanford Bishop (Ga.), Dan Boren (Okla.), Leonard Boswell (Iowa), Jim Cooper (Tenn.), Henry Cuellar (Tex.), Peter DeFazio (Ore.), Jane Harman (Calif.), Jim Matheson (Utah), Mike McIntyre (N.C.), Collin Peterson (Minn.), Mike Ross (Ark.), and David Scott (Ga.).

Goodlatte also introduced this year HJ Res 1, which has 126 co-sponsors, including Democrat McIntyre.  The bill includes the straight BBA from his other bill but adds on several provisions to strengthen it.  The Goodlatte bill would require a three-fifths vote in both chambers to pass spending bills that are in deficit, establishes a spending cap of 20% of the GDP, and sets the threshold at three-fifths to raise the debt limit.

“I am extremely encouraged by the strong support my legislation has received so far,” Goodlatte told HUMAN EVENTS.  Goodlatte has introduced Balanced Budget Amendments in Congress three times in the past six years.

Goodlatte said that the large number of bipartisan co-sponsors to his bill “shows the strong commitment on behalf of nearly half the members of the House to balancing our federal budget.”

Assuming that the Republican House considers Goodlatte’s more extensive BBA, the House and Senate versions of the BBA would need to find compromise on several provisions for final passage before going to the states for ratification.

First, the House BBA would require a three-fifths vote in both chambers to to pass spending bills that exceed revenue, compared with a two-thirds vote in the Senate version.  Second, the House amendment sets the spending cap at 20% of the GDP, compared with 18% in the Senate version.  Finally, the House BBA only requires a simple majority vote to pass tax increases, while the Senate version requires a two-thirds threshold.

After Congress: State Ratification

If the BBA can get the two-thirds vote to pass the House and Senate, then it goes straight to the state legislatures.  The amendment would not need Obama’s support to be enacted.

“The great thing about the constitutional amendment is that it doesn’t require the President’s signature,” said Cornyn.  “The joint resolution would be passed by the House and the Senate, and then it would go to the states.  It’s not like an ordinary piece of legislation.  It wouldn’t require the President’s participation or approval.”

In the new Senate BBA, there is no time expiration for states to ratify the amendments.  The provision for no time limit keeps the BBA an active issue in the states, while the Congress does not have to go through the process again in the future.

Once ratified, the amendment would not go into effect until the beginning of the fifth fiscal year following.  The time lag is intended to give the federal government a reasonable amount of time to make the major spending shifts needed to meet the revenue levels.

As Sen. Hatch, who has been fighting for this fiscal restraint since 1979, tells HUMAN EVENTS, “A Balanced Budget Amendment to the Constitution’s time has more than come.”

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