I offer a compromise deficit cap solution that give all sides what they desperately want. Republicans finally get a balanced budget amendment to the Constitution, Democrats won’t have to make any hard spending cuts for three years, President Obama achieves his goal of pushing off a final budget solution until after the 2012 election, and the American people finally get a sustainable fiscal future.
Here is the legislation I propose:
1. Upon approval of two-thirds of both Houses of Congress, the legislative limit on the public debt shall be $17 trillion.
2. Upon approval by two-thirds of both Houses of Congress, this Amendment to the Constitution is proposed to the states for ratification. Failure to receive ratification by the necessary number of states before midnight 30 September 2012, shall cause the imposition of a federal debt limit to be equal to the total amount of federal debt incurred as of midnight 30 September 2012. Neither the date of ratification, nor the date of implementation of this amendment shall be extended by legislation.
The hereby 28th Amendment to the Constitution is proposed:
1. Except in years containing a war declared by two-thirds of both Houses of Congress, not to exceed four years in any consecutive ten-year period, neither shall Congress propose nor shall the President execute any spending encumbering or obligating any moneys in excess of total government revenues received during the same annual fiscal period plus any surpluses remaining from previous periods.
2. Congress shall levy no tax on individual citizens except that it be applied at an equal rate to all, and without threshold, exemption, deduction, credit, exception, or limitation of any kind.
3. Having been ratified by the necessary number of States prior to 1 October 2012, this amendment shall take effect on the First day of October 2014.
Even Keynesians get something: the ability to spend more in a recession. (That is, assuming that governments do what J.M. Keynes said governments should do in principle, but what few Keynesian economists advocate in practice: run a surplus in good years.)
This Amendment (slightly modified as a result of reader comments made previously) balances the budget, but does so in a way that prevents levying confiscatory taxes upon one segment of society in order to sustain spending lavished on another. In other words, taxes are forever removed as a weapon to be used in the hands of class warriors.
The date of implementation obviously benefits the President by completely removing an overhanging deficit from the 2012 presidential campaign. Actually, it obligates the President and Congress to actively pressure state legislatures for the amendment’s passage in order to keep that issue from resurfacing before next November–and that’s a feature, not a flaw. After all, what incumbent politician (at both the federal and state level) wouldn’t want to be seen as being actively on the side of a balanced budget in an election year?
Finally, by forcing passage of the amendment until one month prior to next year’s election, the timeline removes from Congress an incentive to purposefully draft a balanced-budget amendment loaded with a provision that cannot gain state approval, but serves the purpose of removing the debt ceiling issue past the next election.