Democracy and the Deficit

Among the rash of constitutional amendments recently proposed and taken seriously by Congress are two that would alter the way the federal government raises and spends money. Consideration of the balanced budget amendment has become an annual ritual—the House has passed it three times and it has lost in the Senate by one vote in 1995, two votes in 1996, and one vote in 1997. The amendment would forbid federal outlays that exceed receipts unless three fifths of both the House and Senate approved. The same would go for increases in the debt limit. Another proposed amendment would require a two-thirds vote for any tax increase. This amendment was defeated by 49 votes in the House of Representatives on April 15. Both these amendments are certain to be proposed again; both should be rejected, for they are politically, economically, and structurally unwise.

Fiscal amendments to the Constitution requiring more than a simple majority in congressional voting would depart markedly from the original constitutional scheme. If enacted, they would be the first amendments to abandon majority rule in ordinary legislation. The framers viewed supermajority requirements as strong medicine, to be used only in extraordinary cases such as ratifying treaties, impeaching government officers, expelling members from Congress, overriding presidential vetoes, and enacting constitutional amendments. All else was left to simple majority vote—including taxing, spending, and borrowing measures.

The framers of the Constitution considered but rejected supermajority requirements for ordinary legislation, preferring majority rule. As James Madison warned in The Federalist No. 58, if supermajorities were required for ordinary legislation, “it would be no longer the majority that would rule: the power would be transferred to the minority.” Under the proposed fiscal supermajority amendments, that is exactly what would happen. Under the balanced budget amendment, three fifths of each house of Congress would be required to authorize deficit spending and the increased borrowing needed to finance it. That means that two fifths of either house of Congress could hold the budget hostage. What’s wrong with that? As Madison delicately put it, the few could extort from the many “unreasonable indulgences”—in modern parlance, pork—as the price for the additional votes needed for a supermajority. The amendment in that event would not eliminate deficit spending but merely alter how its benefits were distributed. Such minority holdout power would be placed in even fewer hands by an amendment permitting only one third of either house to block any tax increase.

But if these amendments are bad for democracy, they are worse fiscal policy. The balanced budget amendment reflects alarm that both the annual deficit and total federal debt grew sharply as a percentage of GNP in the 1980s and that too great a debt load is being passed on to future generations. The tax increase amendment reflects a view that maintaining or reducing tax levels stimulates economic growth. Neither of these concerns justifies a constitutional amendment rigidly tying Congress’s fiscal hands.

To begin with, not all deficit spending is evil …

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