A Balanced Budget Amendment That Would Actually Work

The ‘Do Your Job’ Amendment.

Regarding the deficit problem, Warren Buffett once joked:

I could end the deficit in five minutes. You just pass a law that says that any time there is a deficit of more than three percent of GDP, all sitting members of Congress are ineligible for reelection.

Dern’d if he ain’t right.

The prospect of unemployment concentrates the mind wonderfully, especially the mind of an incumbent politician—which seems to respond to no other incentive.

Until I heard Buffett’s little joke, I had never seen a proposed balanced budget amendment that I thought would actually work. They all contained loopholes.

But this one, I thought, might actually work. Assuming it were drafted right.

Instead of a balanced budget amendment, it would be a do-your-job amendment.

It would also be better than term limits, because, instead of firing every elected incumbent after X number of years’ service—a meat-ax approach, taking out the good with the bad—it would impose a contingent timeout on the entire elected incumbent class, but only when they fail to do their job.

So long as they do their job—so long as they keep debt and spending under control—nothing bad happens to them.

In practice that would be much more effective and beneficial than term limits.

Inspired, I sat down to translate Buffett’s brilliant insight into legal language.

To ensure the provision would actually work, I framed it as a constitutional amendment, since Congress cannot change the Constitution.

And to make it airtight, I built it around capping the national debt rather than capping the deficit. (For more detail on the drafting process, see my background notes below.)

The final result is a draft constitutional amendment that imposes an eight-year ban on future federal office-holding by all existing elected incumbents, after their current terms expire, whenever a firm but reasonable debt limit is breached without prior authorization by the states.

This approach, I think, represents a golden mean between being too rigid and too flexible.

As drafted, it contains no loopholes. No fatal ones, anyway. (At least, none I can detect.)

It is a bit wordier than I’d like: 259 words, including section headers. Brevity is the soul of constitutional wit. But then, isn’t specificity a small price to pay for effectiveness?

This BBA would actually work.

But judge for yourself.

The Do Your Job Amendment

Section 1. Whenever the total outstanding debt of the United States exceeds the authorized debt of the United States, any person then serving as a Senator, Representative, President, or Vice President of the United States shall at that moment become ineligible for reelection and shall also be ineligible, for a period of eight years following the expiration of his or her term, to serve in any of the aforesaid positions or to hold any other office or public trust under the United States.

Section 2. The authorized debt of the United States shall be equal to one hundred five percent of the total outstanding debt of the United States on the date of the ratification of this article, but may be altered from time to time with the approval of Congress and a majority of the state legislatures in States containing a majority of the population of the United States as determined by the most recent decennial enumeration. For purposes of enforcing this article, debt shall be measured in constitutional dollars.

Section 3. In this article ‘debt’ means any obligation backed by the full faith and credit of the United States, ‘total outstanding debt’ means all debt held in any account and by any entity at a given point in time, ‘authorized debt’ means the maximum total amount of debt that may be lawfully issued and outstanding at any single point in time, and ‘constitutional dollar’ means a coin or note worth three hundred seventy-one and one quarter grains of pure or four hundred sixteen grains of standard silver.

How do we know this 253-word amendment would actually work?

Because, as I hope the reader can see, it contains no loopholes—no ambiguities or gaming opportunities.

The amendment creates no new powers subject to interpretation.

Rather, it merely creates a new qualification for holding federal office, one that’s clearly defined and extremely easy to enforce.

Basically, it promulgates a simple rule—’Hit your numbers or hit the road’—to a small, well-defined population, with an easy-to-execute enforcement mechanism, and self-defines its own key terms in language too plain to be misunderstood.

I’m hard-pressed to see how it could do anything but work.

Unlike a traditional balanced budget amendment, which tries to shame lawmakers into doing their job, this one punishes them for not doing it, and in the only way they really understand: denying them reelection.

A traditional BBA tries to command balance. This one ensures it.

Would we see frequent turnovers of the entire political class? No. I doubt it would ever happen.

Incumbents would actually do their jobs, to keep their jobs.

The language thus harnesses, if I may wax poetic, fiscal discipline to that most potent of all engines, political self-interest—as with chains of iron.

Henceforward, the interest of the representative shall be aligned with that of his constituents, ensuring the two rise or fall together.

And yet, happily, this language is also flexible enough to withstand the inevitable crises and unexpected needs.

The amendment allows Congress to secure an increase in the constitutional debt limit to meet such a need, without creating a loophole whereby politicians declare an ’emergency’ every time they merely want to increase spending.

Securing such an increase is intentionally made difficult, but not impossible. If Congress does its job, the limit will never need to be raised. Our representatives will have plenty of head room to deal with the unexpected—in effect, a rainy-day fund.

Importantly, the amendment makes the separate states the co-signers on any increase in Uncle Sam’s credit limit. That’s a power they used to have, effectively, before the Seventeenth Amendment, when U.S. senators were still chosen by, and had to answer to, the state legislatures.

For a century now, we’ve basically cut the states out of the loop, and it shows.

We’ve given Uncle Sam a credit card and said, ‘Set your own credit limit.’

Are we surprised by the result?

Thanks to the clarity, simplicity, and flexibility of this balanced budget amendment, we can assume it will be followed.

It would actually work.

The result would be routinely balanced budgets, which would in time become politically sacrosanct.

Departures from fiscal discipline would become unthinkable, because they’d be so infrequent.

Ultimately Congress wouldn’t even consider asking the states to increase the debt limit, because it would be unnecessary.

Uncle Sam would have grown up. He’d have learned self-control.

Well, I’ll be dern’d!

Warren Buffett’s little joke could save the country.

Dean Clancy, a former senior official in the White House and Congress, writes on U.S. health reform, budget, and constitutional issues. Follow him at deanclancy.com or on twitter @deanclancy.


Questions

Q. Why merely cap the debt? Why not eliminate it?

A. Denying the government any power to borrow is too rigid. Governments need to borrow, just as businesses, households, and individuals do. For example, if a defensive war becomes necessary, borrowing may make the difference between survival and destruction. But a large debt should certainly be a rare exception, not the rule. In my view, the goal shouldn’t be to avoid debt altogether, but rather to keep the total amount of debt manageable. To be manageable, the debt should be growing less fast than our ability to repay it. In good times the debt should be getting steadily smaller as a share of national income (due to a combination of economic health and the running of routine budget surpluses). In a time of crisis, the debt should be allowed to spike up temporarily, but only to the level necessary to meet the crisis and not so high as to be unmanageable once the crisis has passed. The debt itself should not be a source of crisis. Rather, debt should be an occasional tool for handling the unexpected.

Q. Why cap the debt in terms of a specific number of dollars? Why not as a percentage of GDP?

A. Because elected incumbents would find ways to game the definition of ‘GDP.’ Plus, we shouldn’t want the national debt to be perpetually growing with GDP. We should want it to shrink continuously as a share of national income.

Q. Why include the President and Vice President? Why not just Congress?

A. Because they share in the power of the purse. The President has the veto. The Vice President is president of the Senate. They play a role in decisions about how Congress will tax, borrow, and spend.

Q. Why eight years for the timeout period?

A. Eight years seems a happy medium between too long and too short.

Q. Why are there no exceptions for national emergencies or declared wars?

A. There’s no need. Congress can increase its credit limit at any time with the approval of the states.

Q. Under this scheme, won’t we lose the talents of truly indispensable statesmen? The Washingtons, the Jeffersons, the Lincolns of the future?

A. We won’t. The vast majority of office-holders, who are admittedly not statesman, will work hard to keep themselves in office, and thus guarantee the continued eligibility of the small fraction of office-holders who are statesmen.

Q. What federal offices, if any, could a person serve in, during the eight-year timeout period?

A. None. The provision bars any federal employment or position, in the legislative, executive, or judicial branches, regardless of whether or not it is compensated, during the eight-year timeout.

Q. Why not impose term limits instead?

A. This approach is better than term limits. Terms limits says, ‘Time’s up, hit the road.’ This amendment says, ‘Hit your numbers or hit the road.’ Which is more likely to get results?

Q. Would the amendment prompt Congress to raise taxes (to close deficits and pay for high spending)?

A. Possibly. It might also prompt Congress to cut spending. Or a combination of tax hikes and spending cuts. The important thing is it will put the thumb on the scale in favor of balancing the budget, which means it will incentivize Congress to promote economic health and the higher receipts a healthy economy can throw off.

Q. Is really necessary to define terms like ‘debt’ and ‘dollar’ in the amendment itself?

A. Yes. We must define the key terms used in the preceding sections. If we don’t, politicians will find a way to defeat the amendment through clever redefinition.

Q. Why define debt in the Constitution? Isn’t it already well understood, legally speaking?

A. Yes, debt is pretty well understood, but the definition is not legally fixed. Nothing prevents the government from changing the definitions of ‘debt,’ ‘outstanding debt,’ or ‘authorized debt.’ If we ratified this amendment without defining them, the temptation to monkey around with those definitions would be overwhelming.

Q. Could Congress get around the amendment by means of new and cleverly disguised forms of debt, such as ‘IOUs,’ special-issue bonds that supposedly do not have recourse to the general fund, debt issued by quasi governmental organizations that are supposedly legally separate from the government, and so on?

A. The amendment’s definition of ‘debt’ covers all of those kinds of disguised debt. If it’s an obligation that rests on the full faith and credit of the United States, it’s a debt that counts toward the cap.

Q. Does the term ‘debt’ in the amendment include unfunded future liabilities? Some estimates quantify those unprovided-for future costs at more than $200 trillion in today’s dollars!

A. The amendment’s definition of ‘debt’ does not include the net present value of unfunded future liabilities, and it doesn’t need to. All such liabilities eventually resolve themselves into a simple choice of whether to pay or not pay a bill that has come due. Which is where our debt cap kicks in. The important thing is to cap debt in the limited sense of obligations backed by the full faith and credit of the government, e.g., Treasury bonds.

Q. Could Congress get around the amendment by imposing unfunded mandates on the states or regulations on the private sector?

A. We need regulatory relief and an end to unfunded federal mandates. But those problems are beyond the scope of this amendment, which is about restoring fiscal common sense. If we do that, I suspect that, while regulation and mandates may go up in some areas, they may go down in others, as unnecessary or bloated agencies are eliminated or put on a diet.

Q. Couldn’t the states abuse their leverage over approving federal debt increase requests to demand more federal spending? Shouldn’t the amendment prohibit such ‘quid pro quos’?

A. Politicians are horse-traders by nature. No mere parchment barrier can fully suppress their horse-trading impulses. Quid-pro-quo requests are inevitable, and not necessarily always bad. The trick is to block the bad ones without blocking the good ones. The amendment’s enforcement mechanism is well-suited for that, encouraging federal politicians to say no to things that increase long-term debt and yes to things that reduce it.

Q. Shouldn’t there be a time limit on federal debt increase requests? How will we know when the states have rejected such a request?

A. A time limit isn’t really necessary. We’ll know when a request has been approved or rejected, when the ‘majority-plus-one’ state (such as the 26th state out of 50) votes to approve or reject the request. Should Congress be impatient, it can just insert a deadline in the request resolution in the form of a sunset or self-repeal clause.

Q. Would the amendment create a perverse incentive, whereby ambitious state-level politicians, greedy to take federal politicians’ jobs, intentionally block a request to increase the debt limit? 

A. Actually, that scenario strengthens the case for the amendment. Nothing concentrates the mind like the prospect of unemployment. To thwart ambitious state-level politicians, ambitious federal incumbents need only do their jobs, thereby averting any need to ask the states for a debt-limit increase.

Q. What’s a ‘constitutional dollar’? How does it differ from a regular dollar? Why is it even necessary to distinguish the two?

A. The amendment could be easily evaded without a fixed definition of ‘dollar.’ If the government could simply redefine ‘dollar’ at any time and to any extent, then our debt cap, no matter how it’s framed, would contain a big loophole. Nowadays the word ‘dollar’ is regarded as not reflecting any fixed definition, but in the Constitution as originally understood, it had a very clear, fixed meaning. It meant (and here I’m quoting the Coinage Act of 1792, which implemented the Framers’ understanding, which was incorporated into the Constitution by reference):

DOLLARS OR UNITS—each to be of the value of a Spanish milled dollar as the same is now current, and to contain three hundred and seventy-one grains and four sixteenth parts of a grain of pure, or four hundred and sixteen grains of standard silver.

That is the definition of the word ‘dollar’ as used in the United States Constitution. To change it would require a constitutional amendment. Since that definition is implicit in the constitutional text, and has unfortunately come to be forgotten or denied, prudence dictates we take this opportunity to make it explicit. (For more on this topic, see my article on the Constitution’s seven money clauses.)

Q. Mathematically, how would we determine the amount of the debt as ‘measured in constitutional dollars’?

A. We would divide the amount of the debt as expressed in Federal Reserve Notes (I’ll call them ‘greenbacks’ here for clarity) by the value of the constitutional dollar, also expressed in greenbacks. How would we know the value of the constitutional dollar in greenbacks? We would multiply the current troy-ounce price of silver, as expressed in greenbacks, by 77.344 percent. (Explanatory note: Precious metals are defined in terms of troy ounces, which are subdivided into grains. One troy ounce equals 480 grains. A constitutional dollar contains 371.25 grains of pure silver, which is equal to 77.344 percent of a troy ounce. Therefore, when a troy ounce of silver is worth ten dollars in greenbacks, a constitutional dollar is worth $7.73 in greenbacks—and so on.)

Q. Would this amendment lead to a silver standard or gold standard or the like?

A. No. This amendment does not impose a metallic standard, or eliminate the Fed, or constrain the Treasury’s ability to print greenbacks, or anything along those lines. (Would that it did!) Rather, it merely gives us a clear, fixed, reliable, and indispensable definition of ‘dollar,’ for the narrow purpose of enforcing this particular amendment.

Q. Why does the amendment not include a new enumerated power authorizing Congress to ‘enforce this article by appropriate legislation’?

A. There’s no need to grant Congress any new federal powers. It already has all the powers it needs to tax, spend, and borrow. It just needs some new incentives, to get it to use those existing powers prudently. The purpose of the amendment is to police Congress. It would be strange to give it an explicit new power to police itself.


Notes on the Drafting

As I began to draft this amendment, I quickly realized a few things:

  1. Buffett’s concept needs to be framed not as a law but as a constitutional amendment. Congress can always change a law.
  2. To frustrate potential gaming, it should focus, not on capping spending or deficits, but on capping debt.
  3. The debt cap should be framed, not in terms of a share of the economy (GDP), but rather as a specific number of dollars.
  4. To keep the debt cap from becoming elastic, the meaning of the term ‘dollar,’ as used in the amendment, needs to be fixed and non-elastic.
  5. And finally, all of the amendment’s key terms should be defined in the text of the amendment itself.

As I drafted, my natural caution and constitutional conservatism kicked in, and I came up with some additional rules, which I think should apply to every constitutional amendment, not just this one:

  1. The amendment should be brief, in keeping with the Constitution’s existing style and spirit.
  2. It should not be too brief, lest it contain mischievous ambiguities and loopholes.
  3. It should avoid innovating too much. Better to stick with familiar terms and concepts as much as possible.
  4. It should not rely on the courts to enforce its provisions, nor invite judicial meddling in fiscal matters.
  5. It should not trust Congress to police Congress.
  6. It should not create new federal powers.
  7. Where advisable, it should restore the original powers of the states.

Acknowledgments

While I am the sole author of the Do Your Job Amendment, I did have some help. I cobbled the idea together almost entirely from existing materials. Basically I just wedded Buffett’s idea of a temporary timeout for congressional incumbents to the best debt-control ideas I had seen elsewhere, and made a few refinements. To give credit where credit is due:

  1. The basic concept for the amendment (specifically section 1), I got from Warren Buffett.
  2. For the idea of capping the debt rather than capping spending or deficits (section 2), and for the specific definitions of ‘debt,’ ‘outstanding debt,’ and ‘authorized debt’ (section 3), I am—you’ll pardon the expression—indebted to the authors of the Compact for America Balanced Budget Amendment (CFA-BBA), principally the indefatigable Nick Dranias, Esq.
  3. The idea of requiring a majority of states sign off on any increase in the federal debt (section 2), I took from the National Debt Relief Amendment (NDRA).
  4. For the idea of also requiring a majority of the U.S. population to sign off as well (section 2), I am indebted to Professor Rob Natelson.
  5. The concept of ‘constitutional dollars’ (section 2), I got from Professor Edwin Vieira, author of the magisterial Pieces of Eight: The Monetary Powers and Disabilities of the United States Constitution.
  6. As for the actual definition of ‘constitutional dollar’ (section 3), we can thank the Founding Fathers.

Updated: July 23, 2017.

Published: December 19, 2014.

Author: Dean Clancy.

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