Solution to Debt Deadlock Is Hidden in the Fine Print

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Published November 21, 2011

| FoxNews.com

There’s a solution to the imminent failure of the Super Committee on deficit reduction to reach an agreement, but it lies so deeply buried in the language of the Budget Control Act of 2011 that it has been missed by legislators and media alike. It has the potential to:

1) Meet some of Democrats’ political and philosophical needs by not gutting their cherished entitlement programs and by providing a large enough increase in the debt ceiling to get them past next November’s election.

2) Meet Republicans’ needs by neither raising taxes nor forcing dangerous cuts in the defense budget.

Sound implausible? It is indeed true: the Budget Control Act provides such an option. It is in section 301, (not the sections that are titled as addressing the Balanced Budget Amendment). It requires one precondition: passage of a Balanced Budget Amendment by both Houses of Congress so that it can be sent to the states for ratification.

Last week, the House of Representatives failed to pass a Balanced Budget Amendment largely because it was presented as a free-standing issue, not directly connected to deficit reduction. 

Republicans largely supported it, while Democrats dismissed it as an unnecessary political gimmick. 

It won the support of 25 Democrats and all but four Republicans, but fell 29 votes short of the 290 votes required for a Constitutional Amendment.

The likely collapse of the Super Committee will change everything. The Balanced Budget Amendment would be restored to the role of a pre-condition for a debt limit increase, as it was in the Cut, Cap and Balance Act. It was there all along, of course, but largely ignored while the Super Committee was trying to come up with enough cuts to avoid triggering the automatic cuts, or “sequesters.” Now it deserves new consideration as the only viable alternative to those sequesters.

A fundamental question naturally arises: how is it consistent with the purpose of the Budget Control Act to permit a solution which neither increases revenue nor cuts spending? It is consistent because it will put into place a permanent framework that will eventually bring an end to the irresponsible borrowing that has brought our nation to this perilous precipice, and thus ensure that it can never again occur, absent a war or some other disaster of similar proportion.

This solution will briefly make our fiscal condition somewhat worse, because it permits an immediate increase in the debt ceiling without an immediate cut in deficit spending, but it will set us on a course to long-term structural change, the very thing that the independent ratings agencies said is necessary if we are to regain our AAA status in the world bond markets.

A good Balanced Budget Amendment must provide some flexibility to deal with economic cycles that result in legitimately unexpected revenue shortfalls, as well as the need to accommodate the exigencies of wars and large-scale natural disasters, but whatever flexibility is provided must be related to the immediate cause. 

For example, if we were to be engaged in a declared war that necessitated deficit spending, the permissible deficit spending should be limited to outlays associated with that war. It should not provide for complete elimination of all requirements for balance, the way that Senator Mark Udall’s (D-Colo.) proposal does, for example. That makes a mockery of the name “Balanced Budget Amendment.”

Whether the Amendment includes a super-majority requirement to raises taxes, or a cap on federal spending, or both, should be the subjects of lively debate. No matter what spending controls are included, however, there is one to consider that has received little attention: a limitation on the jurisdiction of any court to order an increase in revenue to restore balance. Without that control, the Congress could routinely pass deficit budgets and leave it up to the courts to mandate tax increases, thus relieving our elected representatives from taking responsibility for voting for tax increases.

If the Super Committee fails to come up with a plan that meets the criteria of the Budget Control Act, as now looks likely, the Balanced Budget Amendment option in Section 301 should be immediately revived in the House and considered afresh in the Senate as an alternative to the universally reviled sequesters. Passage in both Houses by December 23rd is eminently possible. It is the only option that promises both short-term relief and a long-term solution.

Colin Hanna is president of Let Freedom Ring, a public policy nonprofit based in Pennsylvania.

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http://www.foxnews.com/opinion/2011/11/21/solution-to-debt-deadlock-is-hidden-in-fine-print/