The Balance Budget Amendment (Bba)—A Path To Reduce the Federal Debt or Pandora’s Box?

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Stephen R. Rolandi
June 26, 2023

“The national budget must be balanced . The public debt must be reduced; the arrogance of the authorities must be moderated and controlled.” — Marcus Tullius Cicero (106 B.C. – 43 B.C.), Consul of the Roman Republic

This quotation attributed to the Roman statesman and philosopher Cicero has relevance today as earlier this month, the Federal government narrowly avoided default with the passage of the debt ceiling extension legislation; the New York Times recently reported that the national debt exceeded $32 trillion on June 16, 2023.

In recent years, there has been renewed interest in adding a balanced budget amendment (BBA) to the Federal constitution. A BBA is a constitutional rule requiring that the Federal government not spend any more than it receives in income; it would require a balance between receipts and expenditures.

According to the Organization for Economic Cooperation and Development (OECD) balanced budget amendments have been added to the constitutions of:

Italy, Poland, Hungary, Germany, Mexico, Slovenia, Spain and Switzerland; Austria tried unsuccessfully several times to have a “debt brake” added to its Constitution. According to a 2022 OECD study, most nations currently do not require a balanced budget in their national constitution.

In the United States, 49 states have an explicit balanced budget requirement in their constitution; the lone exception (Vermont) balances its budget annually. In addition, towns, villages, cities, counties and other forms of local government have a balanced budget requirement, with the lone exception being the Federal government.     

The history of the Federal debt goes back to the American Revolution when nearly all of the $78 million debt was the result of the war effort. During Andrew Jackson’s administration in 1835, the total national debt was reduced to $35,000, essentially making the United States debt-free. Since then, wars, economic conditions and stock market crashes have combined for the Federal government to incur budgetary deficits and accumulate large amounts of debt (the last balanced budget occurred in 2001, during the Clinton administration).

Few issues are more contentious in contemporary American politics than the Federal government’s budget. Those who support requiring the Federal government to have a balanced budget advocate for the inclusion of a constitutional amendment; indeed, since 1936, there have been various versions of a BBA advanced in Congress. The Federal Constitution, according to Article V, can be amended in one of two ways:

• Method No. 1 (Congressional Proposal): Requires two-thirds of both houses of Congress vote to propose and approve an amendment and then send that proposal to the states; three-fourths of the state legislatures (currently 38) or ratifying conventions are required for ratification

• Method No. 2 (States Demand a Constitutional Convention) Under the second method, two-thirds (currently 34) of the state legislatures vote to demand that Congress convene a full constitutional convention. The latter method has not been successfully utilized in amending the constitution (there have been only 27 such successful amendments to date).

Most proposals have followed Method No. 1, which have been introduced regularly in Congress since the 1970s. The only proposed amendment to have passed either chamber was S.J. Res. 58 (“Balanced Budget/Tax Limitation Amendment”), which was adopted by the Senate in 1982; however, the measure failed in the House of Representatives. Similar measures were proposed in the 117^th Congress (2021-22)—H.J. Res. 3 by Rep. Steve Chabot (R-Ohio), and as H.J. Res. 78 (2021-22) by Rep. Lauren Boebert (R-Colorado), both of which have been referred to their respective committees. Prospects for passage of these bills are unknown at this time.   

In recent years, the second method of amending the Constitution has gained significant traction. This effort is currently being led by the Balanced Budget Amendment Task Force (BBATF), Inc., a Section 501 c-4 organization created in 2010, with offices in Washington, D.C.; Florida and Illinois; advocates seek an Article V convention to pass a constitutional amendment to balance the Federal budget and limit taxes.

To date, a total of 28 have made the formal request to call such a convention, while five state legislatures (Colorado, Delaware, Maryland, Nevada and New Mexico) have rejected calling a constitutional convention. Pursuant to Article V of the Constitution, two-thirds or 34 state legislatures’ approval are required to call such a convention. BBATF organizers are hopeful of securing the approval of six additional state legislatures.

BBA: Pros and Cons

• BBA advocates believe that such an amendment would force decision-makers at the Federal level to make difficult choices to achieve a balanced budget. Presumably, this would have to include expenditure reductions, tax increases and/or some combination of the two

• BBA proponents believe that large deficits occurring when the economy is at full employment levels would shift some degree of economic activity from the private to the public sector, and tamp down economic growth

• Opponents of a BBA argue that a constitutional amendment might lead to a breakdown in certain areas of mandated Federal spending, such as Social Security and military personnel/veterans benefits; critics also point out that even if a BBA became law, it would not replace the need to identify tax and spending changes to eliminate such deficits; others fear a recession might occur if the Federal budget were balanced too quickly

• Analysts have pointed out that some provision for flexibility/waiver of a constitutional balanced budget requirement would have to be made to deal with financial exigencies caused by war, national emergencies, economic hardships, etc.

• Finally, BBA opponents of a national convention convened to consider such a constitutional amendment are concerned that convention delegates might be tempted to consider amending significant parts of the Constitution such as limitations on Federal government power, individual liberties, etc.

There are a host of other issues such as what role would the Federal courts have to play in resolving budgetary disputes? Would dubious accounting and budgetary gimmicks be utilized to reflect a balanced budget? What if there was a BBA on the books and subsequent economic conditions created a deficit? How would that be handled? 

Time will tell. Stay tuned.

Postscript:

If one is interested in learning more about proposed BBA amendments, I would recommend:

– Robert G. Natelson, The Law of Article V: State Initiation of Constitutional Amendments, 2^nd Edition (2020), published by APIS books;

– Various reports analyzing the BBA by Congressional Research Service; U.S. Congress (https://crsreports.congress.gov);

– Carlo Cottarelli, What We Owe: Truths, Myths and Lies about Public Debt, (2017) published by The Brookings Institution, Washington, DC.

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Author: Stephen R. Rolandi retired in 2015 after serving with the State and City of New York. He holds BA and MPA degrees from New York University, and studied law at Brooklyn Law School. He teaches public finance and management as an Adjunct Professor of Public Administration at John Jay College of Criminal Justice (CUNY) and Pace University. Professor Rolandi is a Trustee of NECoPA; President-emeritus of ASPA’s New York Metropolitan Chapter and past Senior National Council Representative. He has  served  on many  association boards; and is a frequent guest commentator on  public affairs issues affecting the nation and New York State. You can reach him at [email protected] or [email protected] or  914.441.3399 or 212.237.8000.

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