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A balanced budget amendment is the path to spending restraint

Congresswoman Virginia Foxx

Last month the nonpartisan budget watchdogs at the Congressional Budget Office (CBO) released what is becoming a routine piece of grim news.  They found, for the third year in a row, that the federal budget deficit is set to top a trillion dollars, clocking in this year at $1.5 trillion.

When you add this year’s projected budget shortfall to the deficits from the past two years, the federal government ends up more than $4 trillion in the red in just three years.   This is unacceptable and unsustainable. 

Moody’s, the debt rating service that investors look to for information on borrowers’ creditworthiness, issued a warning shortly after the CBO report.  Moody’s said that if the federal government doesn’t reduce its deficits it risks endangering its top credit rating.

What caused Moody’s to issue this warning?  It’s pretty simple.  Budget shortfalls and government borrowing are consuming an ever-larger part of our economy.  For instance, the 2009, 2010 and 2011 budget deficits are the three largest, as a percentage of our economy, since the wartime deficits of the 1940’s. 

If Congress doesn’t act soon America will face a major crisis. 

There are different ways Congress can avert a national debt crisis.   However, I’m convinced that unless Congress puts structural reforms in place, whatever action we take now could be easily undone by big spending policies in the future. 

So one of the first things I did when the 112^th Congress was gaveled in last month was to cosponsor a bipartisan balanced budget amendment, H.J.Res.1.  This legislation aims to make it very difficult for the federal government to overspend.

It tackles the deficit problem from a number of angles, although the primary approach is to rein in spending.  The balanced budget amendment would do that by putting a cap on how much money the federal government could spend.  This cap would be 20 percent of economic output—which is the average level of government spending for the past 50 years. 

This is different from many balanced budget proposals, in that it puts a cap on spending instead of just a cap on borrowing.  There’s a straightforward reason for this.  If we don’t cap spending, then a balanced budget amendment could easily turn into a tax and spend juggernaut—which any spending increase Congress passes automatically triggering another tax increase.

Instead of setting up such a train wreck, H.J.Res.1 specifically forbids both deficit spending and spending above the 20 percent cap.  As a result, deficits could be kept in check along with the growth of government spending. 

The amendment also would require a 60 percent supermajority vote in Congress to increase the debt limit or to increase taxes.  By putting these safeguards in place we can control spending and tax increases at the same time, putting us safely on the road to a balanced budget. 

There is only one exception in the amendment, is one which would allow a budget deficit in the case of a declaration of war.  This would give the government the flexibility to raise the money it needs to defend the nation should we find ourselves at war. 

The runaway spending of the past few years illustrates that Congress needs a strong dose of spending restraint.  More than $4 trillion in new debt rung up in 36 months is almost incomprehensible.   If we are to hold off a debt crisis, a balanced budget amendment is an absolute necessity. 

Fortunately, 109 Representatives already signed onto this bipartisan bill to create a balanced budget amendment.  That’s a strong showing and bodes well for Congress finally getting serious about cutting spending and balancing the budget.