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66–316 PDF 2011

WHETHER THE CONSTITUTION SHOULD BE 

AMENDED TO ADDRESS THE FEDERAL DEFICIT? 

HEARING 

BEFORE THE

SUBCOMMITTEE ON THE CONSTITUTION 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

MAY 13, 2011 

Serial No. 112–30 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

LAMAR SMITH, Texas, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

DENNIS ROSS, Florida 

SANDY ADAMS, Florida 

BEN QUAYLE, Arizona 

[Vacant] 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

MIKE QUIGLEY, Illinois 

JUDY CHU, California 

TED DEUTCH, Florida 

LINDA T. SA ́ NCHEZ, California 

[Vacant] 

SEAN MCLAUGHLIN, Majority Chief of Staff and General Counsel 

PERRY APELBAUM, Minority Staff Director and Chief Counsel 

SUBCOMMITTEE ON THE CONSTITUTION

TRENT FRANKS, Arizona, Chairman 

MIKE PENCE, Indiana, Vice-Chairman 

STEVE CHABOT, Ohio 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

JIM JORDAN, Ohio 

JERROLD NADLER, New York 

MIKE QUIGLEY, Illinois 

JOHN CONYERS, JR., Michigan 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

PAUL B. TAYLOR, Chief Counsel 

DAVID LACHMANN, Minority Staff Director 

(III) 

C O N T E N T S 

MAY 13, 2011 

Page 

OPENING STATEMENTS 

The Honorable Trent Franks, a Representative in Congress from the State 

of Arizona, and Chairman, Subcommittee on the Constitution ....................... 1 

The Honorable Jerrold Nadler, a Representative in Congress from the State 

of New York, and Ranking Member, Subcommittee on the Constitution ....... 2 

WITNESSES 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia 

Oral Testimony ..................................................................................................... 5 

Prepared Statement ............................................................................................. 7 

David M. Primo, Professor, University of Rochester and the Mercatus Center 

Oral Testimony ..................................................................................................... 8 

Prepared Statement ............................................................................................. 10 

Robert Greenstein, Center on Budget and Policy Priorities 

Oral Testimony ..................................................................................................... 16 

Prepared Statement ............................................................................................. 17 

Andrew Moylan, National Taxpayers Union 

Oral Testimony ..................................................................................................... 21 

Prepared Statement ............................................................................................. 23 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Prepared Statement of the American Federation of State, County and Municipal Employees (AFSCME) .................................................................................. 44 

Prepared Statement of Craig Jennings, Director of Federal Fiscal Policy, 

OMB Watch .......................................................................................................... 47 

Prepared Statement of Alan Parks, President, Americans for a Balanced 

Budget Amendment ............................................................................................. 50 

Letter from Colin A. Hanna, President, Let Freedom Ring ................................. 51 

Letter from James L. Martin, Chairman, The 60 Plus Association .................... 52 

Letter from Geoff Duncan, Chairman, Pass the Balanced Budget Amendment, 

Georgia .................................................................................................................. 54 

(1) 

WHETHER THE CONSTITUTION SHOULD BE 

AMENDED TO ADDRESS THE FEDERAL DEFICIT? 

FRIDAY, MAY 13, 2011 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON THE CONSTITUTION, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 11:24 a.m., in room 

2141, Rayburn House Office Building, the Honorable Trent Franks 

(Chairman of the Subcommittee) presiding. 

Present: Representatives Franks, Chabot, Nadler, and Scott. 

Staff Present: (Majority) Zachary Somers, Counsel; Sarah Vance, 

Clerk; (Minority) David Lachmann, Subcommittee Chief of Staff; 

and Veronica Eligan, Professional Staff Member. 

Mr. FRANKS. The Subcommittee will come to order. 

We want to welcome everyone to the Subcommittee on the Constitution, particularly the witnesses that are here with us today. I 

also want to say that I know that because of the change in the 

schedule this morning, that we are going to have a few people that 

will not be here. One of the notable absences will be Mr. Jim Jordan, the Chairman of the RSC, who is very strongly in favor of a 

balanced budget amendment, and I wanted to express his comments in that regard. 

We called a hearing today because we must examine ways to 

change America’s course on Federal spending and the enormous 

Federal deficits that we face. It is absolutely necessary that a balanced budget once again become the norm in America. Currently, 

the Federal Government is borrowing $0.40 of every dollar it 

spends. The massive amount of borrowing is causing the Federal 

deficit to grow rapidly as a percentage of America’s total economic 

output. If we continue on our current path, the Federal deficit will 

climb to at least 100 percent of our annual Gross Domestic Product 

by the end of this decade. 

To put that another way, if we begin to pay our deficit and debt 

off today at $1 billion a year, a very modest effort on our part, it 

would take us somewhere in the neighborhood of 12 to 15,000 years 

to do that. And the good news is we are not doing that, we going 

into debt at a thousand times that pace. So that puts it into perspective. 

Unfortunately, the deficit spending has become the way of life for 

the Federal Government. It hasn’t always been this way, for the 

2 

first 140 years of America’s history, we lived under an unwritten 

constitutional rule that budgets should be balanced except during 

times of war. According to Nobel Prize winning economist James 

Buchanan, ‘‘Politicians prior to World War II would have considered it to be immoral to spend more than they were willing to generate in tax revenue, except during periods of extreme and temporary emergency.’’ 

We must return to those roots. The Federal Government cannot 

continue to live beyond its means. The question is how do we turn 

the current pattern of overspending around for the long term. 

Some suggest that we can tax our way out of this crisis. However 

that has never been proven to work, in fact, it has been proven 

many times not to work. In order to pay for entitlement spending 

alone, solely by raising taxes, we would have to double the marginal tax rates for all income tax brackets over the next 30 years. 

Others suggest that statutorily imposing spending caps and other 

legislative restraints will solve the problem. In the past, however, 

such efforts have failed miserable in the long run. The one solution 

that has the teeth to impose spending restraint on the Federal 

Government is a constitutional amendment. 

Since the 1930’s, there have been numerous proposed constitutional amendments to require a balanced budget or to control government spending or borrowing. Unfortunately, none of those constitutional approaches to spending restraints have been adopted. A 

balanced budget amendment has been unable to gather the necessary two-thirds majority of both Houses during the same Congress. 

But with this hearing, we can begin to consider once again 

whether the Constitution should be amended to control Federal 

spending. Hopefully our witnesses can help us determine whether 

Constitutional amendment is needed. And if it is, whether a balanced budget amendment is the correct approach and what the 

necessary components of such an amendment would consist of. 

Over 200 years ago, Thomas Jefferson wrote to James Madison 

that no generation can contract debts greater than may be paid 

during the course of its own existence. Because according to Jefferson, then the earth would belong to the dead and not to the living 

generation. Today America is contracting debts that will burden 

multiple future generations; it is time for Congress to act. 

And with that, I would now recognize the Ranking Member of 

the Subcommittee, Mr. Nadler, for his opening statement for 5 

minutes. 

Mr. NADLER. Thank you, Mr. Chairman. Here we go again, if you 

can’t balance the budget, and you can’t face your constituents after 

having voted for truly Draconian budget cuts, why not vote on the 

Constitutional amendment instead? That way you can vote for the 

idea of a balanced budget without having to make any hard choices 

and without doing anything real to get toward a balanced budget. 

Not a bad deal. 

Of course, we have all been down to road before. My Republican 

friends love constitutional amendments. For any complaint, there 

is the constitutional amendment. It is not, however, a free vote. If 

adopted, this proposed amendment would have catastrophic consequences for the Nation, for the economy, and for the future. 

3 

While it would be nice to have some easy way to force a balanced 

budget, the world doesn’t work that way. We know how to balance 

the budget because we have done it before. Under the Clinton administration, we balanced the budget, which would have remained 

in balance except for the reckless Bush administration’s tax cuts 

and unfunded wars. 

In the not too distant past, we managed not only to balance the 

budget, but to run surpluses and begin paying down the debt. That 

is what you do in good times, you pay down the debt. Unfortunately, thanks to President Bush and a Republican Congress we 

managed to turn record surpluses into record deficits in record 

time. How did we do it? There was the huge tax cuts for the very 

wealthy; there were two wars fought off budget. I don’t recall hearing a peep from any of my colleagues on the other side who are 

now born again fiscal conservatives. In fact, Vice President Cheney 

said, we have learned that deficits don’t matter. That summed up 

the Republican attitude during the Bush administration. 

Having the regulators go to sleep while financial manipulators, 

banks and hedge funds crashed the economy, killed off revenues, 

and that is one of the main causes of our present budget crisis in 

addition to those ongoing tax cuts. But rather than admit the serious economic mismanagement and looking for ways to straighten 

things out, we got this dusted off quack remedy from the past. 

I guess it is easier to vote for something like this than to have 

to endure another Town Hall where angry constituents want to 

know why you voted to destroy Medicare. 

Strangest of all, the amendment calls for balancing the budget 

by 2016, even though the Republican budget the House recently 

passed doesn’t project a balanced budget until 2040. 

The amendment would require a three-fifths votes by Congress 

to exceed a balanced budget. That should lead to some really history-making horse trading. Can you imagine what the holdouts, the 

ones that get to you 60 percent will get in exchange for passing a 

budget? I would predict if this goes into effect in order to pass 

budgets will need of 60 percent, and you will have monumental, 

monumental deficits to buy their votes, and monumental earmarks 

to buy their votes. It will make anything we do now look like 

child’s play. 

Really troubling is the proposal to require a three-fifths vote to 

raise the debt limit. Do the sponsors really want to reduce U.S. 

Treasury notes to junk bond status? Do you think anyone will buy 

our paper if this becomes law? I wouldn’t. The amendment also 

treats military engagements as the only true emergencies requiring 

the budget to be out of balance. That shows a poor understanding 

of history and of economics. By the way, given the proposal and the 

new Defense authorization bill that came out of Armed Services, 

we are going to be at war all the time anyway, so this would totally 

negate this amendment. 

Did Herbert Hoover win the last election? If in the middle of a 

recession when tax revenues are down and unemployment is up, 

we begin to slash the budget in ways my Republican colleagues are 

now suggesting, much less the far more Draconian measures that 

this amendment would require will go from the great recession 

right into another great depression. 

4 

It has been tried before and if we want the Constitution to enshrine Herbert Hooverism, we will get what we deserve. We should 

know that in good times you should balance budgets and pay down 

the debt; in bad times, during a recession you should run deficits 

in order to prime the pump and get the economy running and put 

people back to work. 

Let’s manage the budget the old fashioned way, by making hard 

choices, by promoting growth, by making everyone pay their fair 

share of taxes, including billionaires and oil companies. It isn’t fun, 

and it won’t make us a lot of friends. We have done it before and 

we can do it again. It only requires the courage of our own convictions to face the voters with the actual budget you are proposing. 

And I know how hard those Town Halls can be, I held many of 

them myself, but that is the job. Let’s get down to business and 

quit fooling around with proposals that could never be implemented with anything that the Congress, that the Republicans for 

that matter would be willing to vote for. Thank you, I yield back. 

Mr. FRANKS. Thank you, Mr. Nadler. And without objection, 

other Member’s opening statements will be made part of the 

record. We have a very distinguished panel of witnesses today. Our 

first witness is representative Bob Goodlatte, he has been a major 

force in all of this. Congressman Goodlatte is serving his 10th term 

as representative of Virginia’s sixth congressional district. He is 

Chairman of the House Judiciary Committee’s Subcommittee on Intellectual Property, Competition and the Internet, and serves on 

the House Agriculture Committee, where he is currently Vice 

Chairman of that Committee. 

On January 5, 2011, Representative Goodlatte introduced two 

balanced budget amendments: H. Res. 1, which has 131 cosponsors, 

and H. Res. 2, which has 221 cosponsors. Welcome you today, Bob. 

Our second witness is Professor David Primo. Professor Primo is 

an associate professor of political science at the University of Rochester and a senior scholar at the Mercatus Center at George Mason 

University. He received his doctorate in political science from Stanford University, his research focuses on American politics, government spending and campaign finance. Professor Primo has authored, or coauthored, several journal articles and policy reports, as 

well as three books, including Rules and Restraint, Government 

Spending and the Design of Institutions. 

Our third witness is Robert Greenstein. Mr. Greenstein is the 

founder and president of the Center on Budget and Policy Priorities. He is considered an expert on the Federal budget and a range 

of domestic policy issues. He has written numerous reports, analyses, book chapters, op ed pieces and magazine articles. Prior to 

founding the Center, Professor Greenstein was administrator of the 

Food and Nutrition Service at the U.S. Department of Agriculture. 

He was appointed by President Clinton in 1994 to serve on the bipartisan Commission on Entitlement and Tax Reform and headed 

the Federal budget policy component of the transition team for 

President Obama. He is a graduate of Harvard College, and has received honorary doctorates from Tufts University and Occidental 

College. 

Our fourth witness is Mr. Andrew Moylan. Mr. Moylan is vice 

president of the Governmental Affairs for the National Taxpayers 

5 

Union, where he lobbies on Federal and State issues, conducts policy research and analysis, assists in taxpayer education efforts, and 

formulates reports and opinion pieces. His writings have appeared 

in publications such as The Wall Street Journal, The Washington 

Times, Investors Business Daily and Forbes Magazine. Mr. Moylan 

is a graduate of University of Michigan, and prior to joining NTU, 

worked at the Cato Institute. Welcome, sir. I welcome all of you. 

Each of the witnesses’ written statements will be entered into 

the record in its entirety. I ask that each witness summarize his 

or her testimony in 5 minutes or less. And to help you stay within 

that timeframe, there is a timing light on your table. When it 

switches from green to yellow you will have 1 minute to conclude 

your testimony, when the light turns red, it signals that the witness’ 5 minutes have expired. Before I recognize the witnesses it 

is the tradition of the Subcommittee that they be sworn. So please 

stand to be sworn in. 

[Witnesses sworn.] 

Mr. FRANKS. Be seated. I will now recognize our first witness, the 

Honorable Bob Goodlatte for 5 minutes. 

TESTIMONY OF THE HONORABLE BOB GOODLATTE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF VIRGINIA 

Mr. GOODLATTE. Thank you, Mr. Chairman and Ranking Member Nadler, and Members of the Subcommittee. It is an honor to 

be before my colleagues on the Judiciary Committee to talk about 

this important issue. It is not a new issue. In fact, in 1798, less 

than 10 years after our Constitution took effect, Thomas Jefferson 

wrote to John Taylor and said ‘‘I wish it were possible to obtain a 

single amendment to our Constitution. I mean, an additional article taking from the Federal Government the power of borrowing.’’ 

This is also not the first time a serious effort has been made to 

pass a balanced budget amendment to the United States Constitution. On March 2, 1995, a pivotal day in the history of our country, 

the United States Senate failed by 1 vote to send a balanced budget amendment to the States for ratification. The amendment had 

passed the House by the requires two-thirds majority, with more 

than 70 Democrats joining with almost all the Republicans to provide 300 votes in favor of it. And the Senate vote was the last legislative hurdle before ratification by the States. If that amendment 

had passed and been ratified by the States, 49 out of 50 of which 

have balanced budget amendments of their own, then we would not 

be facing the fiscal crisis we now face. 

If that amendment had passed, then balancing the budget would 

have been the norm rather than the exception over the past 15 

years, and we would have nothing like the annual deficits and skyrocketing debt that we must address today. 

The good news is that like 1995, this Congress is again standing 

at a crossroads at this very moment. The decisions we made today 

will steer the direction of our country for the next 15 years. And 

we have an opportunity now to take action to ensure that 15 years 

from today, our children will face a much brighter fiscal picture. 

We must not allow ourselves to miss this opportunity. 

Here’s what we know, experience has proven time and again that 

Congress cannot, for any significant length of time, rein in excesVerDate Aug 31 2005 10:45 Jun 28, 2011 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6601 H:\WORK\CONST\051311\66316.000 HJUD1 PsN: DOUGA
6 

sive spending. The annual deficits and the resulting debt continue 

to grow due to political pressures and dependency on government 

programs. Budget plans that purport to cut spending over long periods of time are great goals, but in order to achieve the results 

these budgets promise, a majority of fiscally conservative Members 

must be elected in perpetuity. While it is one of my strongest desires that this will occur, we simply cannot afford to bet our children and grandchildren’s future on this happening. 

In order for Congress to be able to consistently make the very 

tough decisions necessary to sustain fiscal responsibility over the 

long term, Congress must have an external pressure to force it to 

do so. I believe the most realistic chance we have today to enact 

the institutional reform necessary is through a balanced budget 

amendment to our Constitution. 

Many Members of Congress have introduced balance budget 

amendments to this Congress. I introduced two versions on the 

first day of the 112th Congress. House Joint Resolution 2 is the 

exact text that passed the House in 1995 and failed in the Senate 

by 1 vote. This amendment requires that total annual outlays not 

exceed total annual receipts. It also requires a true majority of 

each Chamber to pass tax increases, and requires a three-fifths 

majority to raise debt limit. This legislation has limited exceptions 

for times of war. 

House Joint Resolution 1, which I also introduced, goes much 

further. In addition to provisions of H. Res. 2 it also requires a 

three-fifths majority to raise taxes and imposes an annual spending 

cap that prohibits spending from exceeding 20 percent of GDP. In 

the U.S. Senate, 47 Republican senators have cosponsored a balanced budget amendment that is similar to House Joint Resolution 

1, which is a strong sign that the Senate is ready to engage in debate on this subject. 

While my preference is to pass the stronger version of the balanced budget amendment, I want to be very clear in my testimony 

today, the two-thirds majority requirement for passing an amendment to the Constitution demands that we achieve bipartisan support for any balanced budget amendment. Our extraordinary fiscal 

crisis demands an extraordinary solution. So we simply cannot afford to succumb to political posturing on this issue at a point in 

time so critical to our Nation’s future. We must rise above that and 

move forward with the strategy that includes legislation that will 

get at least 290 votes on the House floor. 

So as we consider a balanced budget amendment, I encourage 

the Members of this Committee to devote our effort to passing the 

strongest balanced budget amendment that can garner two-thirds 

of the House of Representatives. 

We are at a crossroads in America. We can make the tough 

choices and control spending, paving the way for a return to surpluses and ultimately paying down the national debt. Or we can 

allow big spenders to lead us further down the road of chronic deficits and leave our children and grandchildren saddled with debt 

that is not their own. The choice is ours, the stakes are high and 

failure is not an option. Thank you, Mr. Chairman. 

Mr. FRANKS. And thank you, Mr. Goodlatte. 

[The prepared statement of Mr. Goodlatte follows:] 

7 

Prepared Statement of the Honorable Bob Goodlatte, 

a Representative in Congress from the State of Virginia 

March 2, 1995 was a pivotal day in the history of our country. On that day, the 

U.S. Senate failed by one vote to send a balanced budget amendment to the states 

for ratification. The amendment had passed the House by the required two-thirds 

majority previously and the Senate vote was the last legislative hurdle before ratification by the states. 

If that amendment had passed, then we would not be facing the fiscal crisis we 

now face. If that amendment had passed, then balancing the budget would have 

been the norm, rather than the exception over the past 25 years and we would have 

nothing like the annual deficits and skyrocketing debt that we must address today. 

The good news is that like 1995, this Congress is again standing at a crossroads 

at this very moment. The decisions we make today will steer the direction of the 

country for the next 25 years. We have an opportunity now to take action to ensure 

that 25 years from today, our children will face a much brighter fiscal picture. We 

must not allow ourselves to miss this opportunity. 

Here’s what we know: experience has proven time and again that Congress cannot 

for any significant length of time rein in excessive spending. The annual deficits and 

the resulting debt continue to grow due to political pressures and dependency on 

government programs. 

Budget plans that purport to cut spending over long periods of time are great 

goals, but in order to achieve the results these budgets promise, a majority of fiscally conservative Members must be elected into perpetuity. While it is one of my 

strongest desires that this will occur, we simply cannot afford to bet our children 

and grandchildren’s future on this happening. 

In order for Congress to be able to consistently make the very tough decisions necessary to sustain fiscal responsibility over the long term, Congress must have an 

external pressure to force it to do so. 

I believe that the most realistic chance we have today to enact the institutional 

reform necessary is through a balanced budget amendment to our Constitution. 

Many Members of Congress have introduced balanced budget amendments this 

Congress. I introduced two versions on the first day of the 112th Congress. H.J.Res. 

2 is the exact text that passed the House in 1995 and failed in the Senate by one 

vote. This amendment requires that total annual outlays not exceed total annual receipts. It also requires a true majority of each chamber to pass tax increases and 

requires a three-fifths majority to raise the debt limit. This legislation also has limited exceptions for times of war. 

H.J.Res. 1, which I also introduced, goes much further. In addition to the provisions of H.J. Res. 2, it also requires a three-fifths majority to raise taxes and imposes an annual spending cap that prohibits spending from exceeding 20% of GDP. 

In the U.S. Senate, 47 Republican Senators have cosponsored a balanced budget 

amendment that is similar to H.J.Res. 1, which is a strong sign that the Senate is 

ready to engage in debate on this subject. 

While my preference is to pass the stronger version of the balanced budget 

amendment, I want to be very clear in my testimony today. The two-thirds majority 

requirement for passing an amendment to the Constitution demands that we 

achieve bipartisan support for any balanced budget amendment. 

Our extraordinary fiscal crisis demands an extraordinary solution, so we simply 

cannot afford to succumb to political posturing on this issue at a point in time so 

critical to our nation’s future. We must rise above that and move forward with a 

strategy that includes legislation that will get at least 290 votes on the House Floor. 

So, as we consider a balanced budget amendment, I encourage the Members of 

this Committee to devote our effort to passing the strongest balanced budget amendment that can garner two-thirds of the House of Representatives. 

We are at a crossroads in America. We can make the tough choices and control 

spending, paving the way for a return to surpluses and ultimately paying down the 

national debt, or we can allow big spenders to lead us further down the road of 

chronic deficits and leave our children and grandchildren saddled with debt that is 

not their own. 

The choice is ours. The stakes are high. Failure is not an option. 

Mr. FRANKS. We will now recognize Professor Primo for 5 minutes. 

8 

TESTIMONY OF DAVID M. PRIMO, PROFESSOR, UNIVERSITY OF 

ROCHESTER AND THE MERCATUS CENTER 

Mr. PRIMO. Thank you very much, Chairman Franks, Ranking 

Member Nadler and Members of the Subcommittee. Thank you for 

inviting me here today to discuss whether the U.S. Constitution 

should be amended to deal with the Nation’s fiscal problems. As 

Chairman Franks mentioned, I am an associate professor of political science at the University of Rochester, and a senior scholar at 

the Mercatus Center at George Mason University. 

I have spent several years researching the mechanics of budget 

rules and I have written a book Rules and Restraint, on this subject. In my testimony this morning, I will establish why attempts 

to create long-term fiscal reforms are likely to fail in the absence 

of Constitutional budget rules. 

The recent bipartisan attention to our Nation’s fiscal problems is 

heartening. Eelected officials in both parties have proposed bold 

changes to the status quo. And finally voters are paying attention. 

In a recent poll an astonishing 95 percent of the respondents 

agreed that the Federal budget deficit is a problem, and 81 percent 

agreed that action is needed now. So I think this is a rare opportunity for meaningful, long-term change. But I fear, I fear that 

there’s a significant risk that promises made today will not be kept 

tomorrow. The political reality is that the hard cuts in any plan are 

usually deferred until well into the future. So the likelihood of having long-term agreements with durability, in the absence of some 

enforcement mechanism, is unfortunately very small. I believe that 

a Constitutional amendment can help us avoid making this a wasted opportunity. 

Today I will focus my testimony on three main points. First I will 

establish why a Constitutional amendment is necessary. Second, I 

will discuss three principles that Congress should follow as it designs a Constitutional rule. Third, I will argue that the benefits of 

Constitutional reform outweigh its potential risks. 

So first, why Constitutional reform? After all, there are other 

ways to enforce budget rules. The House and the Senate can create 

internal rules such as the PAYGO rule enacted in 2007. Congress 

and President could reach agreement on a statute with enforcement mechanisms such as Gramm-Rudman-Hollings in the 1980s. 

Well, the answer lies in Article 1, Section 5 of the U.S. Constitution, and this is going to establish why Chamber-based and even 

statutory rules are inferior to Constitutional rules. 

Article 1, Section 5 states plainly, ‘‘Each House may determine 

the rules of its proceedings.’’ What this means is that a current 

Congress cannot bind future Congresses. Historically, Congress and 

the President have chosen to evade or undo rules that proved to 

be inconvenient. PAYGO and Gramm-Rudman-Hollings are just 

two examples. 

Constitutional rules are different. Unlike internal or statutory 

rules, Constitutional rules can only be changed after several significant hurdles have been overcome. Constitutional rules, therefore, provide the means to help keep Congress in check and ensure 

that fiscal discipline is maintained even when the temptation to abrogate agreements is hard to resist. 

9 

The promise of Constitutional rules as enforcement mechanisms 

lies in this durability. But this durability is also a peril. Bad rules 

can be locked in just as good rules can be. And this brings me to 

my second main point. To prevent bad rules from being locked into 

the Constitution, legislators should follow three principles when 

constructing them: One, the rule should be general and apply to 

the entire Federal budget; a Constitutional rule is meant to be permanent, and as a consequence, it should focus on total spending 

and not on some programs at the exclusion of others. 

Two, the rules should be precise to prevent the use of loopholes 

or gimmicks. A Constitutional rule that leaves too many implementation details up to the Congress is likely to be eviscerated despite 

the best of intentions. Third, rules should have limited, carefully 

constructed exit options. In order to send a signal that Constitutional rules ought to be waived only in extraordinary circumstances, the threshold for waiving the rule should be very high, 

something like 90 percent of both Chambers. 

My final point addresses the critics of Constitutional reform. 

Amending the Constitution is a serious, some might even say drastic step for this country. Some critics argue that a Constitutional 

amendment is unnecessary or too risky. Well, the history of failed 

budget rules suggests that Constitutional rules are necessary. As 

for alleged risks, such as increased financial burdens for the States 

or the delegation of too much power to the U.S. Supreme Court, 

these are speculative risks and ought to be weighed against the 

very real danger that Congress will not be able to abide by the 

rules it sets out for itself. 

In closing, Congress and the President have a rare opportunity 

to enact meaningful budget reforms. Constitutional rules, unlike 

statutory or internal rules, can provide the enforcement mechanism 

that will help ensure that reforms to entitlements and other spending areas are not undone by future congresses. 

Thank you again for inviting me to testify and I welcome your 

questions. 

Mr. FRANKS. Thank you Professor Primo very much. 

[The prepared statement of Mr. Primo follows:] 

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Mr. FRANKS. We will now recognize Mr. Greenstein for 5 minutes. 


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TESTIMONY OF ROBERT GREENSTEIN, 

CENTER ON BUDGET AND POLICY PRIORITIES 

Mr. GREENSTEIN. Thank you for the invitation. And I should 

start by saying I very much agree that our fiscal policy is on an 

unsustainable course. However, a Constitutional balanced budget 

amendment would, in my view, be a highly ill-advised way to address that. It would require a balanced budget every year regardless of the State of the economy, unless a super majority of both 

Houses overrode that. And that would thereby require the largest 

budget cuts or tax increases precisely when the economy is weakest 

and would hold substantial risk of tipping faltering economies into 

recessions and making recessions longer and deeper. 

When the economy weakens, revenue growth drops and revenues 

may even contract while expenditures for programs like unemployment insurance increase. Those revenue declines and expenditure 

increases are temporary, but they are critical for helping struggling 

economies to keep from falling into a recession and from moderating the depth of recessions that do occur. 

When the economy weakens, consumers and businesses spend 

less and that causes further job loss. The drop in tax collections 

and increase in unemployment and other benefits that occur automatically when the economy weakens cushions that blow. It keeps 

the purchases of good and services from falling even more, and 

that’s why economists use the term automatic stabilizers to describe these reductions in revenue and increases in expenditure 

that occur automatically when the economy weakens. These 

changes help stabilize the economy. 

The Constitutional balanced budget amendment effectively suspends the automatic stabilizers. That’s the opposite course from 

what sound economics should call for. That’s why one of the Nation’s leading economists and budget experts, Bob Reischauer, as 

the director of CBO in 1992 explained, and I am quoting, ‘‘If it 

worked, a Constitutional balanced budget amendment would undermine the stabilizing role of the Federal Government.’’ It is why 

when a Constitutional amendment was considered in the ’90’s, 

more than a thousand economists, including 11 Nobel laureates 

issued a joint statement saying the proposed amendment mandates 

perverse action in the face of recessions. 

To keep the budget balanced every year would aggravate recessions and that is why this January when asked in a Senate Budget 

Committee hearing, the current CBO director, Douglas Elmendorf, 

sounded essentially the same warning. To be sure, the balanced 

budget requirement could be waived by a vote of three-fifths of the 

House and Senate, but that doesn’t address the problem. It is difficult to get three-fifths vote for anything considering the paralysis 

that regularly marks the Senate. 

In addition, it may take months after a downturn begins before 

sufficient data are available to convince three-fifths of the Members 

of both Houses that a recession is underway. And it is all too likely 

that even after evidence of a downturn is clear, that a minority in 

the House or the Senate would hold a waiver vote hostage to demands for concessions on other matters. By the time a recession 

were recognized to be underway and there were three-fifths in both 

Houses, if that could be achieved at all, extensive economic damage 

17 

could have been done and hundreds of thousands, or even millions 

of additional jobs lost. 

The bottom line is the automatic stabilizers need to be able to 

continue to work automatically to protect American businesses and 

jobs. And the balanced budget amendment effectively precludes 

that. I would also note that it would make it harder than it already 

is to raise the debt limit by requiring a three-fifths vote of both 

Chambers. Frankly, I think that is playing with fire. It would 

heighten the risk of a default which could damage our economy for 

years to come. 

I don’t have time to go into it in my opening remarks, but the 

Constitutional balanced budget amendment could interfere with 

the proper workings of Social Security and even the Federal Reserve as well. 

A final point I would make is that the fact that States must balance their operating budgets even in recessions makes it all the 

more important from the standpoint of economic policy that the 

Federal Government not be subject to the same stricture. That was 

theme of a recent article by the American enterprises institute 

scholar Norman Ornstein. 

And I will close by saying what Ornstein wrote. Ornstein wrote, 

‘‘Few ideas are more seductive on the surface and more destructive 

in reality than a Constitutional balanced budget amendment.’’ 

Thank you. 

[The prepared statement of Mr. Greenstein follows:] 

Prepared Statement of Robert Greenstein, President, 

Center on Budget and Policy Priorities 

Thank you for the invitation to testify today. I am Robert Greenstein, president 

of the Center on Budget and Policy Priorities, a policy institute that focuses both 

on fiscal policy and on policies affecting low- and moderate-income Americans. We, 

like most others who analyze fiscal policy developments and trends, believe that the 

nation’s fiscal policy is on an unsustainable course. As part of our work, we have 

been analyzing proposed changes in budget procedures for more than 20 years. We 

have conducted extensive analyses of proposals to write a balanced-budget requirement into the Constitution, among other proposals. 

The purpose of changing our fiscal policy course is to strengthen our economy over 

the long term and to prevent the serious economic damage that would likely occur 

if the debt explodes in future decades as a share of the economy. But we need to 

choose our fiscal policy instruments carefully. We want to avoid ‘‘destroying the village in order to save it.’’ 

The goal of a constitutional balanced budget amendment is to address our longterm fiscal imbalance. Unfortunately, a constitutional balanced budget amendment 

would be a highly ill-advised way to try to do that and likely would cause serious 

economic damage. It would require a balanced budget every year regardless of the 

state of the economy, unless a supermajority of both houses overrode that requirement. This is an unwise stricture that many mainstream economists have long 

counseled against, because it would require the largest budget cuts or tax increases 

precisely when the economy is weakest. It holds substantial risk of tipping faltering 


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1Statement of Robert D. Reischauer before the House Budget Committee, May 6, 1992. 

2This statement was issued on January, 30, 1997. 

3Federal Service, Transcript of Senate Budget Committee hearing, January 27, 2011. 

economies into recessions and making recessions longer and deeper. The additional 

job losses would likely be very large. 

When the economy weakens, revenue growth drops and revenues may even contract. And as unemployment rises, expenditures for programs like unemployment insurance—and to a lesser degree, food stamps and Medicaid—increase. These revenue declines and expenditure increases are temporary; they largely disappear as 

the economy recovers. But they are critical for helping struggling economies to keep 

from falling into a recession and for moderating the depth and length of recessions 

that do occur. 

When the economy weakens, consumers and businesses spend less, which in turn 

causes further job loss. The drop in tax collections and increases in unemployment 

and other benefits that occur automatically when the economy weakens cushions the 

blow, by keeping purchases of goods and services from falling more. That is why 

economists use the term ‘‘automatic stabilizers’’ to describe the automatic declines 

in revenues and automatic increases in UI and other benefits that occur when the 

economy turns down; these actions help to stabilize the economy. 

A constitutional balanced budget amendment, however, effectively suspends the 

automatic stabilizers. It requires that federal expenditures be cut or taxes increased 

to offset the effects of the automatic stabilizers and prevent a deficit from occurring—the opposite course from what sound economic policy calls for. 

Over the years, leading economists have warned of the adverse effects of a constitutional balanced budget amendment. For example, in Congressional testimony in 

1992, Robert Reischauer—then director of the Congressional Budget Office and one 

of the nation’s most respected experts on fiscal policy—explained: ‘‘[I]f it worked [a 

constitutional balanced budget amendment] would undermine the stabilizing role of 

the federal government.’’ Reischauer noted that the automatic stabilizing that occurs when the economy is weak ‘‘temporarily lowers revenues and increases spending on unemployment insurance and welfare programs. This automatic stabilizing 

occurs quickly and is self-limiting—it goes away as the economy revives—but it temporarily increases the deficit. It is an important factor that dampens the amplitude 

of our economic cycles.’’ Under the constitutional amendment, he explained, these 

stabilizers would no longer operate automatically.1

Similarly, when a constitutional balanced budget amendment was under consideration in 1997, more than 1,000 economists including 11 Nobel laureates issued a 

joint statement that said, ‘‘We condemn the proposed ‘balanced-budget’ amendment 

to the federal Constitution. It is unsound and unnecessary. . . . The proposed 

amendment mandates perverse actions in the face of recessions. In economic 

downturns, tax revenues fall and some outlays, such as unemployment benefits, 

rise. These so-called ‘‘built-in stabilizers’ limit declines of after-tax income and purchasing power. To keep the budget balanced every year would aggravate recessions.’’ 2

More recently, in January 2011, the current CBO director, Douglas Elmendorf, 

sounded a similar warning when asked about a constitutional balanced budget 

amendment at a Senate Budget Committee hearing. Elmendorf observed: 

‘‘Amending the Constitution to require this sort of balance raises risks . . . 

[t]he fact that taxes fall when the economy weakens and spending and benefit 

programs increase when the economy weakens, in an automatic way, under existing law, is an important stabilizing force for the aggregate economy. The fact 

that state governments need to work . . . against these effects in their own 

budgets—need to take action to raise taxes or cut spending in recessions— 

undoes the automatic stabilizers, essentially, at the state level. Taking those 

away at the federal level risks making the economy less stable, risks exacerbating the swings in business cycles.’’ 3

Proponents of a constitutional amendment likely will respond to these admonitions by noting that the proposed constitutional amendment would allow the balanced-budget requirement to be waived by a vote of three-fifths of the House and 

the Senate. That, however, does not address this problem. It is difficult to secure 

three-fifths votes for anything; consider the paralysis that marks the work of the 

Senate. Moreover, it may take months after a downturn begins before sufficient data 

are available to convince three-fifths of the members of both houses of Congress that 

a recession is underway. Furthermore, it is all too likely that even after the evidence for a downturn is clear, a minority in the House or Senate would hold a 

wavier vote hostage to demands for concessions on other matters (such as new, perVerDate Aug 31 2005 10:45 Jun 28, 2011 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6621 H:\WORK\CONST\051311\66316.000 HJUD1 PsN: DOUGA
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4 Norman Ornstein, ‘‘Four Really Dumb Ideas That Should Be Avoided,’’ Roll Call, January 

26, 2011. 

manent tax cuts). By the time a recession were recognized to be underway and 

three-fifths votes were secured in both chambers, if such support could be obtained 

at all, extensive economic damage could have been done and hundreds of thousands 

or millions of additional jobs unnecessarily lost. 

The bottom line is that the automatic stabilizers need to continue to be able to 

work automatically to protect American businesses and workers. The balanced 

budget amendment precludes that. 

Nor is a recession the only concern. Consider the savings and loan crisis of the 

1980s, or the financial meltdown of the fall of 2008. A constitutional balanced budget amendment would have hindered swift federal action to rescue the savings and 

loan industry or to rapidly put the Troubled Assets Relief Program in place. In both 

cases, history indicates that federal action helped save the economy from what otherwise likely would have been far more dire problems. 

Moreover, the federal government provides deposit insurance for accounts of up 

to $250,000; this insurance—and the confidence it engenders among depositors—is 

critical to the sound functioning of our financial system so that we avoid panics involving a run on financial institutions, as occurred in the early 1930s. A constitutional prohibition of any deficit spending (unless and until a supermajority of both 

houses of Congress voted to authorize it) could seriously weaken the guarantee that 

federal deposit insurance provides. That is a risk we should not take. 

These are illustrations of why fiscal policy should not be written into the Constitution. 

A parallel problem is that the proposed constitutional amendment would make it 

even harder than it already is to raise the debt limit, by requiring a three-fifths vote 

of both the House and Senate to raise the limit. This is playing with fire. It would 

heighten the risk of a federal government default. A default would raise our interest 

costs and could damage the U.S. economy for years to come. 

Mistaken Analogies to States and Families 

Proponents of a constitutional amendment sometimes argue that states and families must balance their budgets every year and the federal government should do 

so, too. But statements that the constitutional amendment would align federal budgeting practices with those of states and families are not accurate. 

While states must balance their operating budgets, they can borrow to finance 

their capital budgets—to finance roads, schools, and other projects. Most states do 

so. States also can build reserves during good times and draw on them in bad times 

without counting the drawdown from reserves as new spending that unbalances a 

budget. 

Families follow similar practices. They borrow—they take out mortgages to buy 

a home or student loans to send a child to college. They also draw down savings 

when times are tight, with the result that their expenditures in those periods exceed 

their current incomes. 

But the proposed constitutional amendment would bar such practices at the federal level. The total federal budget—including capital investments—would have to 

be balanced every year, with no borrowing allowed for infrastructure or other investments that can boost future economic growth. And if the federal government ran 

a surplus one year, it could not draw it down the next year to help balance the 

budget. 

I would also note that the fact that states must balance their operating budgets 

even in recessions makes it all the more important from the standpoint of economic 

policy that the federal government not be subject to the same stricture. American 

Enterprise Institute analyst Norman Ornstein addressed this matter in a recent article, where he wrote: ‘‘Few ideas are more seductive on the surface and more destructive in reality than a balanced budget amendment. Here is why: Nearly all our 

states have balanced budget requirements. That means when the economy slows, 

states are forced to raise taxes or slash spending at just the wrong time, providing 

a fiscal drag when what is needed is countercyclical policy to stimulate the economy. 

In fact, the fiscal drag from the states in 2009–2010 was barely countered by the 

federal stimulus plan. That meant the federal stimulus provided was nowhere near 

what was needed but far better than doing nothing. Now imagine that scenario with 

a federal drag instead.’’ 4

20 

H.J. Res. 1 Raises Additional Issues 

The foregoing concerns apply to all versions of the balanced budget amendment 

that have been introduced. Some versions of the balanced budget amendment, such 

as H.J. Res 1, raise additional serious concerns, because they would write into the 

Constitution new prohibitions against raising any revenues—including closing 

wasteful tax loopholes—to help balance the budget and also would prohibit federal 

expenditures in any year from exceeding a figure such as 20 percent of the Gross 

Domestic Product. These constitutional prohibitions could be overridden only by 

supermajority votes in both the House and the Senate. 

This requirement for a supermajority to raise taxes would be extremely unsound. 

It would protect what President Reagan’s former chief economic advisor, Harvard 

economist Martin Feldstein, has called the biggest area of wasteful government 

spending in the federal budget—what economists call ‘‘tax expenditures’’ and Alan 

Greenspan has called ‘‘tax entitlements.’’ 

In 2010, tax expenditures amounted to $1.1 trillion, more than the cost of Medicare and Medicaid combined (which was $719 billion), Social Security ($701 billion), 

defense ($689 billion, including expenditures in Iraq and Afghanistan), or non-defense discretionary spending ($658 billion, including expenditures from the Recovery 

Act). Many of these tax expenditures are fully the equivalent of government spending. Let me use child care as an example. 

If you are low- or moderate-income, you may get a federal subsidy to help cover 

your child care costs, and the subsidy is provided through a spending program. If 

you are higher on the income scale, you still get a government subsidy that reduces 

your child care costs, but it is delivered through the tax code, as a tax credit. (Moreover, if you are a low or modest income parent with child care costs, you likely will 

miss out because the spending programs that provide child care subsidies are not 

open ended and can only serve as many people as their capped funding allows. By 

contrast, if you are a higher income household—and there is no limit on how high 

your income can be—your child care subsidy is guaranteed, because the tax subsidy 

you get operates as an open-ended entitlement.) It is difficult to justify making the 

tax-code subsidy sacrosanct and the program subsidy a deficit-reduction target 

merely because one is delivered through a ‘‘spending’’ program and the other is delivered through the code. 

And as the child care example illustrates, sharply distinguishing between subsidies delivered through the tax code and those delivered through programs on the 

spending side of the budget also has a ‘‘reverse Robin Hood’’ aspect. Low- and moderate-income households receive most of their government assistance through spending programs; affluent households receive most of their federal subsidies through 

tax expenditures. Effectively barring reductions in tax expenditures from contributing to deficit reduction is a prescription for placing the greatest burden of deficit 

reduction on those who can least afford to bear it. 

The problems do not stop there. If it requires a supermajority to raise any revenue, another likely outcome is a proliferation of tax loopholes. New loopholes—including loopholes that Congress did not intend but that high-priced tax lawyers and 

accountants have found ways to create—could become untouchable once they appeared, because it would require a supermajority of the House and Senate to raise 

any revenue. It would become more difficult to close tax loopholes that opened up, 

since special-interest lobbyists could seek to block such action by preventing a 

supermajority in one chamber. 

Finally, H.J. Res 1 would bar federal spending from exceeding 20 percent of GDP. 

To hit that level would require cuts of a draconian nature. This can be seen by examining the austere budget that the House of Representatives passed on April 15, 

sometimes referred to as the Ryan budget. 

Under that budget, Medicare would be converted to a voucher system under 

which, the Congressional Budget Office has said, beneficiaries’ out-of-pocket healthcare costs would nearly triple by 2030 (relative to what those costs would be that 

year under the current Medicare program). CBO also has written that under the 

Ryan budget, federal Medicaid funding in 2030 would be 49 percent lower than it 

would be if the Affordable Care Act’s Medicaid expansion were repealed but Medicaid otherwise was unchanged. And funding for non-security discretionary programs would be cut more than one-third below its real 2010 level. Yet CBO says 

that under this budget, total federal spending would be 203⁄4 percent of GDP in 

2030, so it would breach the allowable limit under H.J. Res 1. This illustrates the 

draconian nature of the proposed 20 percent-of-GDP requirement. 

Another way to look at the 20 percent of GDP level is to examine federal expenditures under Ronald Reagan. Under President Reagan, who secured deep budget cuts 

at the start of his term, federal expenditures averaged 22 percent of GDP. And that 

21 

was at a time before any members of the baby boom generation had retired and 

when health care expenditures throughout the U.S. health care system (including 

the private sector) were one-third lower as a share of GDP than they are today. It 

also was before the September 11 terrorist attacks led policymakers to create a new 

category of homeland security spending, and before the wars in Iraq and Afghanistan led to increases in veterans’ health-care costs that will endure for a number 

of decades. 

Conclusion 

Policymakers need to begin to change our fiscal trajectory. As various recent commissions have indicated, we need to stabilize the debt as a share of GDP in the coming decade, and to keep it stable after that (allowing for some fluctuation over the 

business cycle). But establishing a balanced budget amendment in the Constitution 

would be most unwise. It would likely exact a heavy toll on the economy and on 

American businesses and workers in the years and decades ahead. It is not the 

course the nation should follow. 

Mr. FRANKS. Thank you, Mr. Greenstein. We now recognize Mr. 

Moylan for 5 minutes. 

TESTIMONY OF ANDREW MOYLAN, 

NATIONAL TAXPAYERS UNION 

Mr. MOYLAN. Chairman Franks, Ranking Member Nadler, Members of the Subcommittee, thank you for the opportunity to testify 

this morning on behalf of the American taxpayer regarding the important questions surrounding a Constitutional amendment to address the Federal deficit. My name is Andrew Moylan and I am 

vice president of Government Affairs for the National Taxpayers 

Union, a nonpartisan citizen organization founded in 1969 to work 

for limited government at all levels. 

I want to start with an old joke that our budget tells us what 

we can’t afford, but it sure doesn’t keep us from buying it. And unfortunately, that has been true of Washington for far too long, and 

that’s why for decades, NTU has been one of the most powerful 

voices supporting durable, structural reforms to our budget process 

to protect taxpayers. We believe that a strong balanced budget 

amendment is not only necessary to address our debt problems, but 

would provide the very life blood that will restore and sustain the 

financial health of our republic. 

Our current situation is certainly bleak, and I want to point out 

just three nuggets that I think are instructive about just how bleak 

it is. First of all, under President Obama’s budget outline for this 

year, our borrowing this year alone will be roughly equal to the entire Federal budget of 1982 after adjusting for inflation. To put this 

another way, again, after adjusting for inflation, we are spending 

both the 2003 Federal budget, and the 1982 Federal budgets this 

year. 

Second, in the President’s plan the lowest single year deficit we 

see in the coming decade is $607 billion, which is a number higher 

in absolute terms than every yearly deficit from 1789 to 2008, and 

roughly equal in inflation adjusted terms to our overspending in 

war mobilized 1944. 

Finally, while many in Congress attributed the recent explosion 

in spending due to crisis response due to a financial meltdown in 

a resulting recession, the Federal Government has actually run 

deficits in 44 of the last 50 years, which ought to give pause even 

22 

to the most diehard of Keynesians who believe that surpluses 

should be the norm in most economic growth cycles. 

We have been told for the better part of 40 years now that fiscal 

discipline would evolve by electing the right people, while Republican and Democrats alike abuse the Nation’s good credit. We were 

told statutory measures were sufficient to bring outlays under control, even as laws like Gramm-Rudman-Hollings were trampled 

underfoot. We were told that our foundational document shouldn’t 

be cluttered by mundane matters of budgeting as the tax, spend, 

and borrow culture in Washington threatens to erode the foundations of prosperity for people like my 2-year old daughter. 

No one would argue that the Founders of our Nation lacked political will. And even they could not balance the budget and keep up 

payments on the national debt without a structure to facilitate it. 

In 1786, the Articles in Confederation collapsed in large part because of chaotic finances and it took a structural change then, the 

drafting of a new Constitution. And it will take a structural change 

today, the drafting of a balanced budget amendment to ensure fiscal discipline. 

While the views I express here are mine alone, I also come today 

as the ambassador for more than 90 grassroots organizations 

across the country that comprise the BBA Now coalition. This collaborative effort, which you can read more about at bbanow.org 

worked together to develop a commonsense balanced budget 

amendment that has, at its core, three principles: A balanced budget requirement, a super majority threshold for passage of a tax increase, and a limitation on Federal spending. There are several resolutions that have been introduced that include these important 

pillars, including Representative Goodlatte’s H.J.Res 1, Senator 

Hatch’s S.J.Res. 3, and the so-called consensus BBA, introduced as 

H.J.Res. 56 by Representative Walsh, and S.J.Res. 10 by Senator 

Hatch and his 46 Republican colleagues. 

Opponents of a BBA often argue that it would leave Congress unable to respond to emergencies or recessions. But the truth is that 

under most BBAs, Congress can enact whatever kind of spending 

or taxation policies it chooses so long as the super majority of its 

Members vote in the affirmative. And furthermore, despite claims 

to the contrary, Congress is not only capable of the achieving such 

super majorities but has done so regularly when faced with truly 

urgent decisions. And as an example, I would point to the trouble 

Troubled Asset Relief Program which is surely as unpleasant a 

vote as has ever been cast in Congress. And yet it passed with a 

three-fifths majority in the House and with 74 votes in the United 

States Senate. 

It is also important to note that a BBA is not an economic policy, 

and it is not a Federal budget. It is simply a set of guidelines within which Congress can create a sustainable economic policy and a 

Federal budget. If we failed to seize this opportunity, the result 

could well be a painful debt crisis that could begin not over the 

span of 6 months, but over the course of 6 hours on a Sunday 

evening while you sit with your family, and investors in Asian markets begin to stampede away from American debt. 

The President has said that he hopes his era will be remembered 

as a time when ocean levels stopped rising, but to modify that line 

23 

slightly, I hope that we can look back on this time together and say 

that this was the moment when the rise of red ink began to stop 

and our budget began to heal. Thank you, and I look forward to 

questions. 

[The prepared statement of Mr. Moylan follows:] 


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Mr. FRANKS. Thank you, Mr. Moylan, and I thank all of you for 

testimony. I will now begin the questioning by recognizing myself. 

Now Mr. Moylan said I think this is perhaps a moment for us 

to deal with things that we haven’t thus far been able to deal with. 


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I don’t often quote Shakespeare, but he said, ‘‘There is a tide in the 

affairs of men, which, taken at the flood, leads on to fortune. But 

omitted all the voyage of their lives is bound in shallows and in 

miseries, and on such a full sea we now find ourselves afloat, and 

we must take the current when it serves or lose our venture.’’ 

And I think that this is a moment when the American people are 

awake, they understand the significance of the issue. They understand that the deficit they are dealing with may be able to eventually destroy us in a way that no military power has ever been able 

to be do. And I think this is the time for this Congress to take a 

stand. I want to especially thank Mr. Goodlatte for having the 

courage to come forward with this, and I want to also reiterate on 

behalf of Mr. Jordan, his support for this effort and the support of 

much of the RSC in Congress in that vein. 

I know that there are those who testified here today that we 

need deficits to prime the pump, in times of low economic activity, 

but I am convinced that if we prime the pump much more with 

deficits, we are all going to fall in the well. And I know that there 

are those who have said that there’s an automatic stabilizing factor 

with deficits, but as Mr. Moylan pointed out, 44 of the last 50 

budgets have been with deficits. 

And it seems to me that the deficits are not stabilizing us, but 

they are leading us to what has become one of the most significant 

points of instability in our history. 

So I am going to ask Mr. Goodlatte a question. The annual Federal budget has been balanced only six times since 1960, and yet 

many of the opponents of the balanced budget amendment seem to 

be more concerned with ensuring that the government can run deficits during recessions than addressing the major economic downturn that will eventually occur if we don’t get spending under control. 

And I would ask you, Mr. Goodlatte, do you believe that either 

of your balanced budget amendment proposals are so inflexible that 

Congress would not be able to address the short term needs of the 

country during a recession or a critical emergency? 

Mr. GOODLATTE. Well, thank you, Mr. Chairman. No, I do not believe that’s the case. In fact, I think Mr. Moylan has just cited a 

very good example with the TARP vote, very controversial, very difficult vote, but passed with majorities that exceed the requirements 

of even my stronger balanced budget amendment. 

So I don’t think that’s the case. I think the greater concern is 

this, there is no automatic stabilizer that Mr. Greenstein refers to. 

The evidence, of course, is in the few times that the budget has 

been balanced in the last 50 years, but it also defies Keynesian economic theory. An abbreviated version of Keynes would say in difficult economic times, the government will borrow money, spend 

that money to stimulate economic activity which will create jobs in 

theory, which will, in turn, result in increased revenues coming 

back to the Federal Government which the Federal Government 

will then use to pay back the money that it borrowed. 

Obviously, that last part of Keynesian economic theory is theory 

and not practice, and therein lies the problem and why I think we 

need to have the strongest rule possible to restrain the desires of 

Members of Congress representing people who have desires to see 

33 

government spend money on lots of different things know that they 

have to live within their means. And that’s obviously the core purpose of a balanced budget. 

Mr. FRANKS. Well, thank you, sir. I think history may bear out 

that your efforts were not only timely, but may have been critically 

important to the success of the country. 

Professor Primo, it will take years for a balanced budget amendment to be ratified and have the force of law, and that leads to two 

questions. First, is the delay in an amendment becoming effective 

a reason not to pursue the amendment? And second, what should 

Congress do to control spending while we’re waiting for the enactment of a balanced budget amendment? 

Mr. PRIMO. I believe that while we—it will take several years to 

put into effect a Constitutional amendment, but that doesn’t mean 

that we can’t take steps now to put us on the track to abiding by 

that amendment when it goes into effect. And right now the debate 

that’s going on between the Congress and the President over how 

to deal with the Nation’s fiscal problems, that debate should continue. And there should be an agreement that’s reached that takes 

on the difficult entitlement issues and takes on some difficult tax 

issues. There are reasonable positions on both sides of that issue, 

I believe. And those two sides should come together to formulate 

an agreement that will put us on the glide path toward abiding by 

that Constitutional amendment when it comes into effect. 

And the benefit of doing this is that it will send also a very 

strong signal to the markets that the United States is serious 

about fiscal reform. So the passage of the amendment today or the 

process of beginning of the passage of the amendment today is very 

important because of the signals it sends to the markets as well as 

the spur it will give, I believe, to the Congress and President to 

reach agreement on fiscal reform. 

Mr. FRANKS. Could I ask unanimous consent for 1 minute to ask 

Mr. Moylan a question? 

Mr. NADLER. By all means. 

Mr. FRANKS. Mr. Moylan, some of the opponents of balanced 

budget amendments argue that the Constitution is not the place for 

budget rules, that it somehow would be an inappropriate place to 

put a balanced budget requirement in the Constitution itself. Can 

you address that? 

Mr. MOYLAN. I think that it is precisely the place to lay out what 

we see as sort of the rules of the road for how Congress can budget 

moving forward. The Constitution is not the place to enshrine specific policies; it’s not the place to enshrine what marginal tax rates 

will be or anything like that. But laying out what the rules of the 

road are and establishing what those guidelines are is extremely 

important to be able to guide Congress in the direction that respects taxpayers and respects the burdens that they have to pay 

and that ensures that we can get to balance. 

So I think that that’s an objection that I find wanting a little bit 

because we’re not talking about enshrining any kind of particular 

policy or any particular implication to a budget or a program. I 

mean, all of that stuff is within the purview of Congress once the 

amendment is passed. 

34 

Mr. FRANKS. Thank you, sir, I would now recognize the Ranking 

Member for 5 minutes for questions. 

Mr. NADLER. Thank you. I would start off by pointing out that 

one of my objections to this amendment is that it precisely does exactly what you just said it doesn’t do. It enshrines in Constitutional 

our particular views as economics and the budget. It says it takes 

the view, for example, that we ought to cut expenditures rather 

than increase taxes, that’s legitimate political debate. But it’s a legitimate political debate our grandchildren ought to be as free to 

have as we are to have. Maybe we should increase taxes rather 

than reduce expenditures, maybe the other way around. That’s a 

decision every generation should be able to make for itself. 

And this amendment deliberately biases that by saying you a 

need three-fifths vote to increase the debt limit. You need a whole 

majority of those, not just persons voting, an extraordinary majority to increase taxes. 

Second, let me ask Mr. Goodlatte, and please answer quickly because I have a number of questions for a lot of people. This amendment demands a balanced budget by 2016. The House Republican 

budget that we just passed that some people are saying was rather 

Draconian in its cuts wouldn’t get to a balanced budget by 2040. 

In broad strokes, how would you advance the balanced budget from 

2040 beyond what the Republican budget does in 2016, which 

would be necessitated by this amendment? 

Mr. GOODLATTE. Thank you, Mr. Nadler. I would direct to you 

the House Republican Study Committee Budget which balances it 

in 9 years. 

Mr. NADLER. It’s not 2016? 

Mr. GOODLATTE. No, we don’t know it is 2016 because we don’t 

know how long the States will take to ratify this. But I certainly 

am prepared to adjust that budget by accelerating some spending. 

Mr. NADLER. Let me ask you the second question. Most of the 

States have balanced budget amendments; New York State adopted 

it in 1847. But those amendments, like any rationale corporation 

differentiate between the capital budget and an operating budget. 

This does not necessitate, if there were that we would never borrow 

money. If you never borrow money a family wouldn’t afford the 

house or the car, the corporation couldn’t invest, the Federal Government couldn’t invest in long-term investments. It makes no 

sense. How do you reply to that? 

Mr. GOODLATTE. As you know the Federal Government budgets 

on an annual basis and it does not make expenditures well into the 

future as it is now. So quite frankly, that certainly is another alternative to consider, but given the fact that we have a deficit—a debt 

that is now over $14 trillion, we have got a lot of debt on the plate 

we have to work—I think it is better to limit the—— 

Mr. NADLER. Let me just observe that any organization whether 

it be a government or a corporation, et cetera, ought to have some 

debt for long-term investments. If you want to balance an ongoing 

expense budget, that’s what most States do and that’s what a lot 

of corporations do. And you want to limit the amount of the debt 

for long-term investments and not say you should never borrow for 

it. 

35 

Mr. Greenstein, the basic theory behind this amendment is that 

we’re spending too much and we’re—period. What is the basic 

cause of the change? In 2000, the debate of the presidential election 

between Bush and Gore was what should we do with the anticipated $5.6 trillion deficit over the next 10 years—I’m sorry, what 

should we do with the anticipated 5.6 surplus then anticipated over 

the next 10 years? What turned that into the huge deficits we have 

now? 

Mr. GREENSTEIN. We just issued a paper on this earlier this 

week just using basically the Congressional Budget Office analyses. 

There are really three main factors, one of the largest factors were 

the costs including the extra interest, as a result of 2001 and 2003 

tax cuts. Another large factor were additional expenditures that 

certainly weren’t contemplated in 2001 for the wars in Iraq and Afghanistan and related funding for Homeland Security. We really 

didn’t spend much on that before—— 

Mr. NADLER. Tax cuts and the wars and Homeland Security? 

Mr. GREENSTEIN. And third big issue, of course, is the big increase in the deficit that resulted as a result of the biggest recession since the Great Depression. 

Mr. NADLER. If we got unemployment down to 5 percent as it 

was in 2007, what would that do to the size of our deficit? 

Mr. GREENSTEIN. Excuse me? 

Mr. NADLER. If unemployment were gotten down to 5 percent as 

it was in 2007 before the onset of the great recession, what would 

that, by itself, do to the size of the deficit? 

Mr. GREENSTEIN. I don’t have the figures in front of me, the economic maybe it would reduce it a third, but we’d still have very 

large deficits. 

Mr. NADLER. It would reduce it by about a third. Let me ask you, 

lastly, I saw a figure recently that as a percentage of GDP, total 

taxation is now running at about 15 percent, historically it has run 

22, 23 percent, are those figures correct? 

Mr. GREENSTEIN. Well, historically if you take a long average it 

is in the 18 to 19 percent range. It is very low now, that’s a combination of the tax cuts but also the fact the economy is so weak, 

whenever the economy weakens this much that reduces revenues 

a share of the gross—— 

Mr. NADLER. And finally, my last question is the following: I read 

this amendment and it says, no bill to—it says that the Congress 

shall enforce and implement this article by appropriate legislation. 

The President shall submit a budget which shall be balanced in 

terms of anticipated revenues and anticipated expenditures. Let’s 

assume the President submitted a budget under this amendment 

and he said we’re going to cut taxes and therefore revenue is going 

to go up. So my—or because taxes are already cut I’m assuming 

this level of revenues. The revenues are, in fact, much lower and 

the expenditures are the same or higher. How would you enforce 

this amendment if the estimates were off? And if Congress decided 

to take wrong estimates either deliberately or not deliberately? 

Mr. GREENSTEIN. I don’t think this is clear, two parts to the answer is I read the wording of the Constitutional amendment. It 

does say that estimates can be used in determining whether the 

balanced budget requirement has been met. The bigger issue is 

36 

what happens if, due to factors in the economy, whatever the factors would be, we’re running a deficit in a given year, it is clear 

in the estimates it is going to be a deficit and the Congress and 

the President don’t rein it in, what happens? Do people have standing to go into court? Do the courts or the President unilaterally? 

Who is empowered to take the action to restore balance if the Congress and the President don’t pass legislation to do that? I don’t 

think that’s clear how that would be enforced from the wording of 

the amendment. 

Mr. NADLER. Thank you. 

Mr. GOODLATTE. Mr. Nadler, I wonder if I might be allowed to 

answer the question. 

Mr. NADLER. Please. 

Mr. GOODLATTE. First of all, the obvious answer it will be enforced at the polls in the next election, but secondly. 

Mr. NADLER. That hasn’t seemed to work in the last 30 years, 

that’s the whole point of your amendment. 

Mr. GOODLATTE. There is no such Constitutional requirement or 

even a requirement in the law that we balance the budget. But the 

second thing is that most States that have this requirement also 

have additional budget rules that may require the governor of the 

State to step in and make adjustments to expenditure in the middle of the budget process in order to bring it back into balance, that 

certainly is what is done in Virginia, and governors of both parties 

have to step in and make some tough decisions in the middle of 

process if the projections don’t match up with the initial budget. 

Mr. FRANKS. Thank you, Mr. Nadler. And I would now recognize 

Mr. Scott for 5 minutes for questions. 

Mr. SCOTT. Thank you, Mr. Chairman. Mr. Chairman, this entire 

discussion is interesting because you get down to the bottom line 

if we’re going to balance the budget, it is going to require some 

tough votes, whatever the mechanism is. And many of them will 

be career-ending votes. In 1993, we passed a budget by the thinnest of margins. One vote could have switched, would have ruined 

it in the House, the Vice President had to vote in the Senate. We 

received zero Republican votes in the House or Senate. There were 

tough votes. As a matter of fact, when the 218th vote was cast in 

the House, Marjorie Margolies-Mezvinsky was greeted by a chorus 

of cheers from the Republican side, bye-bye Marjorie. That vote 

was used to defeat her in the next election, along with 50 Democratic colleagues who lost their seats primarily because of those 

tough results. 

Those votes resulted a record number of jobs, record economy as 

measured by the Dow Jones industrial average. The Republicans 

tried to dismantle that plan in 1995. President Clinton let the government get shut down rather than sign those bills. The result was 

not only did we balance the budget, we were on course to paying 

off the entire national debt by 2008. Had we not fought two wars 

without paying for it, prescription drugs without paying for it, tax 

cuts without paying for it. We would have paid off the national 

debt by 2008. We’d owe no money to China, Japan, Saudi Arabia. 

We would have paid off the entire debt held by the public. In fact, 

when Greenspan was testifying in early 2001 he was asking questions like what happens if you pay off the national debt too quickly, 

37 

what happens if there are no government bonds, what happens to 

investments and long-term interest rates? 

In 2001, we eliminated PAYGO which we had, which meant if 

you wanted to do a tax cut, you’d have to pay for it with spending 

cuts. If you wanted to increase spending, you’d have to raise taxes 

to pay for it, PAYGO. We eliminated PAYGO, passed the tax cuts 

and everything else and went directly into the ditch; instead of 

paying off the debt we doubled the debt. 

Now at some we are going to have to actually vote for tax increases and/or spending cuts to get the budget under balance. This 

is not magic, it is arithmetic. Now if we look at the proposed 

amendments, one of the questions that’s been responded to is, we 

had all these questions responded to. One question that was not 

asked is how this proposal will actually help balance the budget? 

Now we have been debating the title, but not really the provisions. The provisions of the bill basically, not just dismiss H.R. 1, 

because that has a super majority to increase taxes, that will obviously make it more difficult to balance the budget. But all of them 

have—if you’re going to pass an unbalanced budget, you require a 

60, a three-fifths vote. 

The question is will that help or hurt passing a severe meaningful deficit reduction plan? Now the Clinton budget never got anywhere close to 60 percent, Ryan’s budget which is the one the 

House passed, didn’t get anywhere close to 60 percent. If you needed 60 percent those budgets wouldn’t have passed. Now we have 

heard examples of how you do get to 60 percent, you can pass an 

$800 billion TARP, spending. You can pass an $800 billion tax cut 

from last December, that got 60 percent. That’s obviously not the 

direction we need to go. 

My question is, how is a requirement of a super majority going 

to help you get people to cast career-ending votes? Would it be easier to pass the Ryan plan, for example, with a simple majority, or 

a three-fifths vote in both the House and the Senate? 

Mr. Greenstein, can you explain to me whether it would be more 

likely or less likely that a plan like Ryan’s would pass when you 

increase the number of votes required? 

Mr. GREENSTEIN. I think clearly less likely. In my view, super 

majorities requirements in some States, California as an example, 

have really led to gridlock and they have made it harder for a policymakers to make the very tough decisions that are needed. We’re 

going to need very tough decisions in the years ahead, whether it 

is a Constitutional amendment or not, the Constitutional amendment, I think, everyone on the panel agrees is, in itself, something 

that changes a program or raises a tax. 

Mr. SCOTT. Let me ask a follow-up question on that. There is no 

proposal on the table, the colleague from Virginia mentioned the 

Republican Study Group which balances the budget in 9 years. 

That budget to pass would require what percentage under this proposal? 

Mr. GOODLATTE. It would require a majority vote. 

Mr. SCOTT. No, it would require the Republican majority—may 

I have an additional minute, Mr. Chairman? 

Mr. FRANKS. Yes. 

38 

Mr. SCOTT. The Republican Study Committee Balances the budget in 9 years would require a three-fifths vote in the House and 

Senate to pass. 

Mr. GOODLATTE. No, it would require majority vote because it did 

not contain tax increases? 

Mr. SCOTT. It’s an unbalanced budget this year. 

Mr. GOODLATTE. Correct, correct. 

Mr. SCOTT. And you’re going to pass an unbalanced budget this 

year. 

Mr. GOODLATTE. Again, as I said before, it presumes that you 

have—the budget hasn’t been balanced in more than a decade, so 

you’ve got to have a glide path; there’s no question about that. 

Mr. SCOTT. Right. But the glide path requires a three-fifths vote 

to enact. 

Mr. GOODLATTE. No, not until this it ratified. 

Mr. SCOTT. Right, exactly. If the balanced budget amendment 

were in effect, the Republican Study Committee budget, it would 

take a three-fifths vote to pass. 

Mr. GOODLATTE. If the balanced budget amendment were in effect, that’s correct, but only if we hadn’t been doing the work together to get to a balanced budget—— 

Mr. SCOTT. But the point is that requiring a three-fifths vote to 

pass the Republican Study Committee’s budget would make it more 

difficult to pass rather than less likely. 

Is there anything in the three-fifths requirement that makes it 

more likely that a fiscally responsible budget would be enacted 

rather than a fiscally irresponsible budget? You didn’t have any 

trouble getting three-fifths to pass an $800 billion tax cut late last 

year. 

Mr. GOODLATTE. But we didn’t balance the budget. 

Mr. SCOTT. It made it worse, it made it worse. And you got threefifths for that. 

Mr. GOODLATTE. But that would be contrary to this law. 

Mr. SCOTT. Where is it in the law that prefers a fiscally responsible—once you get to three-fifths—and any budget that is going to 

pass under this, any budget this year, if this was the law, any 

budget that would pass would require three-fifths, my question is, 

why is it more likely that it would be fiscally responsible requiring 

three-fifths or ‘‘Katie, bar the door’’ Democrats get their spending, 

Republicans get their tax cuts, and we are further in the ditch. 

Mr. GOODLATTE. Because you’ve got to go face the voters after 

you’ve done that. 

Mr. SCOTT. We faced the voters after we cut taxes $800 billion. 

I don’t see anybody that got any pain for putting us $800 billion 

worse in the ditch last December than we are today; who’s suffering from that? 

Mr. GOODLATTE. There was no requirement that the budget be 

balanced, that’s the difference. 

Mr. SCOTT. And there’s no requirement that the budget be balanced under any of these proposals. The only requirement is it 

takes three-fifths to pass the budget. 

Mr. GOODLATTE. That’s correct. But I think it would have tremendous pressure on individual Members to go home and explain 

39 

why they voted for something that didn’t balance when there was 

an alternative offer that did balance and they didn’t vote for it. 

Mr. SCOTT. You have that today. You have that today. 

Mr. MOYLAN. Mr. Chairman, may I respond briefly to that? I 

think that the three-fifths supermajority requirement, we view that 

as a bulwark against what we view as irresponsible tax increases. 

And part of the reason that we hold that view is that even if you 

assume extension of the 2001/2003 tax cuts, even if you assume 

patching of the AMT, revenues will get back to historical average 

levels by about the end of this decade. And so eventually we are 

going to get back to average levels of revenue even if we again assume extension of the policies that I know you’re not a supporter 

of. And so we see this as really spurring the needed spending restraint to be able to bring the budget back to balance. 

Mr. SCOTT. You’re absolutely right, I don’t support those provisions. I support a budget that is $1.3 trillion better than the Republican budget we passed. As a primary author of the Congressional Black Caucus budget that let the tax cuts for the wealthy 

expire and we came up with revenues to be able to extend, by paying for them, the tax cuts under $250,000. We extended them, but 

we paid for them. And we ended up $1.3 trillion better than the 

Republican budget without repealing Medicare.That’s what I support. 

Mr. MOYLAN. I think there’s no question that we can balance the 

budget at a higher level of spending; it requires a much higher 

level of taxation. And I don’t have the numbers in front of me, but 

my recollection of a lot of the alternative budgets that came from 

the Democratic side is that we’re talking about balancing the budget at 23, 24, 25 percent of GDP. The question is whether or not 

that’s advisable. I would submit that it’s not. 

Mr. SCOTT. There is a difference between a tax limitation, limiting taxes and balancing the budget. If the society decides, for example, that it wants universal health care and society is willing to 

pay for it as the health care reform did, we had significant additional spending and we more than paid for it. 

Now unfortunately, under this proposal, you can pass a new 

spending plan with a simple majority, but then turn around and 

can’t pay for it because you can’t get the supermajority to pay for 

it. That’s how you end up in the ditch. 

Mr. FRANKS. The gentleman’s time has expired. But Professor 

Primo, did I hear you would like to make a response? 

Mr. PRIMO. Yes, I would. Thank you. 

One important thing that a Constitutional amendment will do is 

create a norm that used to be present in the Congress: that budgets ought to be balanced. The presumption of a Constitutional 

amendment that requires a balanced budget or that limits spending to a certain percent of GDP is that that is what is expected of 

Members of Congress. Deficits would no longer be the norm, but 

would have to become the exception. And so I believe that having 

a Constitutional amendment in place will send a very different signal to voters than the current status quo, which is that deficits are 

acceptable. 

40 

Mr. SCOTT. How do the provisions—not just the title, how do the 

provisions of the Constitutional amendment actually help get to a 

balanced budget? 

Mr. PRIMO. If I may respond, they would help to get to a balanced budget because elected officials would be able to go back to 

their districts and say I had to cast this tough vote because the 

Constitution requires fiscal responsibility, and that is a very different message. So right now you go back to your districts and you 

say, ‘‘Oh, I had to make a cut to this program, but look, we got 

some fiscal responsibility out of it.’’ Voters are going to say, but you 

cut my program. 

Mr. FRANKS. The gentleman’s time has expired. 

I would just say that we do have a fairly good laboratory to answer some of these questions; that is, in Arizona we have a balanced budget amendment, and it has, even in difficult moments 

like this, allowed us to balance our budget and improve our economy. It has worked very well in the States, and we do that all the 

time. So some of these doomsday, and when they talk about tax 

cuts being the problem, that is creating increased revenues. 

But in the interest of fairness, without objection, I will give the 

gentleman one more minute. 

Mr. SCOTT. I will just ask a question about Arizona. You said you 

have a balanced budget. Does that include capital expenditures? 

You have to balance the total budget, as these amendments would, 

all outlays and all revenues; or does your Constitutional amendment to balance the budget allow you to borrow money for capital 

expenditures like all the other—— 

Mr. FRANKS. I just answered the gentleman’s question. There are 

some efforts on the part of the legislature to try to circumvent that, 

but yes, we have to balance the budget on capital expenditures, too. 

But there are sometimes leasing programs to try to get around 

that, and I think the gentleman’s point is well taken. 

But in Arizona and a lot of other States who have balanced budget amendments that are not only not able to deficit spend, but they 

are not able to print money and they are not able to do a lot of 

other things that the Federal Government does, it has worked very 

well. Arizona was hit harder than just about anyone in this recession, and yet we are coming out of it very effectively, the United 

States isn’t. And the primary difference is the fact that we have a 

balanced budget, we have no alternative. 

But with that, I want to be fair, but if—— 

Mr. GREENSTEIN. Could I have one sentence? 

Mr. FRANKS. Please. 

Mr. GREENSTEIN. All I want to say is, what is the key goal? If 

the key goal is fiscal responsibility—and we all agree that requires 

tough choices, regardless of your views on what those choices 

should be—then I would urge not to erect new supermajority requirements which will make it harder, not easier, to get the tough 

choices made. 

Mr. FRANKS. Mr. Moylan, you have a last word? 

Mr. MOYLAN. I would just respond to Mr. Scott’s statement that 

what would incentivize a balanced budget here is, first of all, simply the requirement that the budget be balanced, and second of all, 

we view these supermajority requirements again as these backVerDate Aug 31 2005 10:45 Jun 28, 2011 Jkt 000000 PO 00000 Frm 00044 Fmt 6633 Sfmt 6601 H:\WORK\CONST\051311\66316.000 HJUD1 PsN: DOUGA
41 

stops against tax hikes. You could theoretically balance the budget 

by raising taxes. You would have to convince more of your colleagues to be able to do that than if you were to choose to do so 

through spending restraint. I view that as a feature of it, you may 

view it as a bust. But the requirement of the balanced budget is 

the most important portion of it because it requires that you square 

income and outlays, and the question is how do you get to that? 

Mr. FRANKS. I don’t know how to add anything more to that and 

would concur with that. 

Mr. Scott. 

Mr. SCOTT. Just very briefly. There is no requirement in these 

that the budget be balanced. You need a 60 percent vote to pass 

any budget that is pending in Congress today. There is no requirement to balance the budget. 

Mr. FRANKS. Well, with that, I am just saying that perhaps there 

is an alternative here, and that is to repeal the law of mathematics. So let’s work on that. 

Without objection, all Members will have 5 legislative days to 

submit to the Chair additional written questions for the witnesses, 

which we will forward and ask the witnesses to respond as promptly as they can so that their answers may be made part of the 

record. 

Without objection, all Members will have 5 legislative days within which to submit any additional materials for inclusion into the 

record. 

And with that, again I thank the witnesses, thank the Members 

for the lively discussion, and observers. And this hearing is now adjourned. 

[Whereupon, at 12:30 p.m., the Subcommittee was adjourned.] 

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