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S. HRG. 112–512 

THE PERILS OF CONSTITUTIONALIZING THE 

BUDGET DEBATE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON CONSTITUTION, 

CIVIL RIGHTS AND HUMAN RIGHTS 

OF THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

NOVEMBER 30, 2011 

Serial No. J–112–53 

Printed for the use of the Committee on the Judiciary 

( 
(II) 

COMMITTEE ON THE JUDICIARY 

PATRICK J. LEAHY, Vermont, Chairman 

HERB KOHL, Wisconsin 

DIANNE FEINSTEIN, California 

CHUCK SCHUMER, New York 

DICK DURBIN, Illinois 

SHELDON WHITEHOUSE, Rhode Island 

AMY KLOBUCHAR, Minnesota 

AL FRANKEN, Minnesota 

CHRISTOPHER A. COONS, Delaware 

RICHARD BLUMENTHAL, Connecticut 

CHUCK GRASSLEY, Iowa 

ORRIN G. HATCH, Utah 

JON KYL, Arizona 

JEFF SESSIONS, Alabama 

LINDSEY GRAHAM, South Carolina 

JOHN CORNYN, Texas 

MICHAEL S. LEE, Utah 

TOM COBURN, Oklahoma 

BRUCE A. COHEN, Chief Counsel and Staff Director 

KOLAN DAVIS, Republican Chief Counsel and Staff Director 

SUBCOMMITTEE ON THE CONSTITUTION, CIVIL RIGHTS AND HUMAN 

RIGHTS 

DICK DURBIN, Illinois, Chairman 

PATRICK J. LEAHY, Vermont 

SHELDON WHITEHOUSE, Rhode Island 

AL FRANKEN, Minnesota 

CHRISTOPHER A. COONS, Delaware 

RICHARD BLUMENTHAL, Connecticut 

LINDSEY O. GRAHAM, South Carolina 

JON KYL, Arizona 

JOHN CORNYN, Texas 

MICHAEL S. LEE, Utah 

TOM COBURN, Oklahoma 

JOSEPH ZOGBY, Democratic Chief Counsel and Staff Director 

WALT KUHN, Republican Chief Counsel 
(III) 

C O N T E N T S 

STATEMENTS OF COMMITTEE MEMBERS 

Page 

Durbin, Hon. Dick, a U.S. Senator from the State of Illinois .............................. 1 

Graham, Hon. Lindsey, a U.S. Senator from the State of South Carolina ......... 3 

Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah, prepared 

statement .............................................................................................................. 77 

Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont, prepared 

statement .............................................................................................................. 106 

WITNESSES 

Furchtgott-Roth, Diana, Senior Fellow, Manhattan Institute for Policy Research, Washington, DC ...................................................................................... 9 

Greenstein, Robert, President, Center on Budget and Policy Priorities, Washington, DC ............................................................................................................. 4 

Holtz-Eakin, Douglas, President, American Action Forum, Washington, DC .... 11 

Morrison, Alan, Professor, Lerner Family Associate Dean for Public Interest 

& Public Service, George Washington University Law School, Washington, 

DC .......................................................................................................................... 13

Romasco, Robert, President-Elect, AARP, Burke, Virginia .................................. 6 

QUESTIONS AND ANSWERS 

Responses of Robert Greenstein to questions submitted by Senator Franken ... 45 

Responses of Robert Romasco to questions submitted by Senator Franken ....... 47 

SUBMISSIONS FOR THE RECORD 

American Federation of State, County and Municipal Employees (AFSCME), 

Washington, DC, statement ................................................................................ 48 

AIDS United, Ronald S. Johnson, Vice President, Policy and Advocacy, Washington, DC, statement .......................................................................................... 53 

Coalition for Health Funding, Judy Sherman, President and Emily J. 

Holubowich, Executive Director, Washington, DC, December 2, 2011, joint 

letter ...................................................................................................................... 54

Constitutional Accountability Center, David H. Gans, Director of the Human 

Rights, Civil Rights and Citizenship Program and Douglas Kendall, Founder and President, Washington, DC, November 29, 2011, joint letter .............. 57 

Economists, undersigned, Kenneth Arrow, Stanford University; Peter Diamond, Massachusetts Institute of Technology; William Sharpe, Emeritus, 

Stanford University; Charles Schultze, Emeritus, Brookings Institution; 

Alan Blinder, Princeton University; Eric Maskin, Princeton University; 

Robert Solow, Massachusetts Institute of Technology and Laura Tyson, 

University of California, July 28, 2011, joint letter .......................................... 60 

Furchtgott-Roth, Diana, Senior Fellow, Manhattan Institute for Policy Research, Washington, DC, statement ................................................................... 62 

Greenstein, Robert, President, Center on Budget and Policy Priorities, Washington, DC, statement .......................................................................................... 70 

Holtz-Eakin, Douglas, President, American Action Forum, Washington, DC, 

statement .............................................................................................................. 80 

Kinkopf, Neil, American Constitution Society for Law and Policy, Washington, 

DC, November 2011, brief ................................................................................... 89 

Leadership Conference on Civil and Human Rights, Wade Henderson, President & CEO and Nancy Zirkin, Executive Vice President, Washington, 

DC, November 28, 2011, joint letter ................................................................... 104 
Page

IV 

Mitchell, Matthew, Research Fellow, Mercatus Center at George Mason University, Arlington, Virginia, statement .............................................................. 108 

Morrison, Alan, Professor, Lerner Family Associate Dean for Public Interest 

& Public Service, George Washington University Law School, Washington, 

DC .......................................................................................................................... 117 

National Education Association (NEA), Kim Anderson, Director, Center for 

Advocacy and Mary Kusler, Manager, Federal Advocacy, November 29, 

2011, joint letter ................................................................................................... 149 

National Organizations Opposing, 281 undersigned, November 16, 2011, joint 

letter ...................................................................................................................... 150 

National Women’s Law Center, Nancy Duff Campbell, Co-President and Joan 

Entmacher, Vice President, Family Economic Security, Washington, DC, 

November 29, 2011, joint letter .......................................................................... 157 

Romasco, Robert, President-Elect, AARP, Burke, Virginia .................................. 159 

State and Local Organizations, 424 Opposing, November 16, 2011, joint letter 163 

Strengthen Social Security, Nancy Altman, Compaign Co-Chair; Eric Kingson, 

Campaign Co-Chair; Frank Clemente, Campaign Manager and Alex 

Lawson, Executive Director, Washington, DC, December 6, 2011, joint letter .......................................................................................................................... 176 
(1) 

THE PERILS OF CONSTITUTIONALIZING THE 

BUDGET DEBATE 

WEDNESDAY, NOVEMBER 30, 2011 

U.S. SENATE, SUBCOMMITTEE ON THE CONSTITUTION, CIVIL RIGHTS AND HUMAN RIGHTS, COMMITTEE ON THE JUDICIARY, Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:01 a.m., Room 

SD–226, Dirksen Senate Office Building, Hon. Richard Durbin, presiding. 

Present: Senators Schumer, Whitehouse, Franken, Coons, 

Blumenthal, Hatch, Graham, Cornyn, and Lee. 

OPENING STATEMENT OF HON. RICHARD DURBIN, A U.S. 

SENATOR FROM THE STATE OF ILLINOIS 

Senator DURBIN. The Subcommittee on the Constitution, Civil 

Rights, and Human Rights will come to order. The title of today’s 

hearing is ‘‘A Balanced Budget Amendment: The Perils of 

Constitutionalizing the Budget Debate’’. 

I will first provide a few opening remarks and recognize my 

Ranking Member, Senator Lindsey Graham, for an opening statement before we turn to witnesses. I’d like to make a short statement of my own at this point. 

The Constitution of the United States is the foundation upon 

which our great Nation has been built. Each Member of Congress 

takes an oath to support and defend it; it is an oath we take very 

seriously. 

Since the ratification of the Bill of Rights in 1791, Congress has 

only acted to amend the Constitution a total of 17 times, 17 times 

in 220 years. The Founding Fathers set the bar high for revising 

our founding document, and rightfully so. It is a bar that has been 

met for some fundamental issues, such as ending slavery, establishing the principle of equal protection, and ensuring the right of 

women to vote. 

We are here today because some Members of Congress believe we 

should enshrine in the Constitution their theories on the Federal 

budget. It is ironic that the strongest supporters of a balanced 

budget amendment also proclaim their love for, and fidelity to, the 

Constitution. 

Yet many who claim to revere the Constitution have been trying 

all year to force a vote on a balanced budget amendment that 

would radically reshape our constitutional framework of government. This past August, Republicans threatened to default on our 
2 

National debt unless the House and Senate held a balanced budget 

amendment vote this year. 

In their political passion to take budgeting decisions out of 

Congress’s hands, the cut, cap and balance crowd even created a 

fast-track process to try to push their constitutional amendment 

through Congress with little debate and little opportunity to 

change the wording. 

The Constitution and the American people deserve better than 

this. Proposals to amend the Constitution should be carefully reviewed, and clearly a proposed amendment should not be adopted 

unless it is worthy of a place in our Nation’s most treasured document. 

Two weeks ago, the House of Representatives rejected a flawed 

balanced budget amendment after a hurried debate on the House 

floor. Opposition to the amendment was bipartisan, with even the 

Republican Chairman of the House Rules Committee and House 

Budget Committee voting against it. This coming month, the Senate is required by law to hold its own vote on a balanced budget 

amendment that was part of the negotiation for a budget agreement. 

Although the Budget Control Act requires this floor vote regardless of whether the Senate Judiciary Committee reports a balanced 

budget amendment, I thought it was important to hold this hearing 

to look carefully at what such an amendment would mean. 

Proponents claim the balanced budget amendment would solve 

our current budget problems, but a closer look suggests it would 

not. Instead, it would create a new and equally serious set of challenges and problems, while shifting the responsibility for solving 

those problems from Congress to the Federal courts. 

I look forward to discussing today the many challenges and perils 

of the current balanced budget amendment proposals, which would 

make economic recessions worse, endanger vital safety net programs that millions of Americans rely on, increase the likelihood 

of debt limit standoffs, increase fiscal burdens on the States, and 

create serious enforcement challenges that would end up being resolved by un-elected Federal judges. 

These concerns, among many others, will make clear that a balanced budget amendment is certainly no easier magic solution. The 

simple truth is this: putting our Nation’s fiscal house in order will 

require tough decisions about taxes and spending. 

The Constitution assigns that job to us, to Congress. Fulfilling 

this constitutional duty carries the political risk that many Congressmen and Senators are well aware of, but that’s the job we 

signed up for. Members of Congress should not try to change our 

Constitution to avoid their duty to make these hard choices. It’s 

anathema to our Constitutional democracy to insulate important 

decisions about our country’s values from the people and the political process. 

We are at a point now in our budget debate where some in Congress would rather take a red pen to the Constitution than reconsider an anti-tax pledge written by a political lobbyist. I believe 

these Members need to get their priorities straight. Our oath to 

support and defend the Constitution of the United States has more 
3 

important than any allegiance my colleagues owe to any other individual. 

We do not need to go to the extreme step of amending the 

foundational document of our democracy just to have Congress do 

its job. All we need is a Congress that’s willing to work hard, show 

some political courage, make tough decisions, and so what’s right 

for the American people. 

Senator Graham. 

STATEMENT OF HON. LINDSEY GRAHAM, A U.S. SENATOR 

FROM THE STATE OF SOUTH CAROLINA 

Senator GRAHAM. Thank you, Mr. Chairman. I will be very brief 

because we have Senators Hatch and Cornyn, who have been leading the effort on our side to craft, I think, a balanced budget 

amendment that would serve the country well. 

I would like to say something about the Chairman here. Being 

a member of the Gang of Six, you’ve tried to embrace a bipartisan 

solution to what is becoming a national security/economic crisis in 

this country. You, with other colleagues, have decided to do something about entitlement growth, you tried to generate revenue in 

a way without raising taxes, actually lowering taxes. 

So I want to acknowledge that what you and the Gang of Six did 

is really a political breakthrough, and I’d like to be part of that 

process so that we could eventually solve our problems. 

But here’s why I think we need a balanced budget amendment. 

If we were required to balanced the budget, the Gang of Six proposal would have a lot more wind to its back. The Super Committee’s efforts to find $1.2 trillion over the next decade failed. Good 

people could not get there under the political construct that exists 

today. 

I would argue, at $15 trillion of national debt, the political construct that exists today is incapable of saving the American people 

from financial ruin. The Congress, in a bipartisan fashion, cannot 

solve our Nation’s problems without some help. The missing ingredient, from my point of view, is a constitutional requirement to do 

what we all desire but were unable to achieve. 

The reason I think we need a balanced budget amendment to the 

Constitution is that all of us would be able to go back home and 

say, I have to do this because the supreme law of the land requires 

me to do this. Every special interest group can be heard from but 

their voice will be drowned out by the supreme law of the land. 

Right now, the law of the land is the loudest political voices who 

say no to every hard idea. The only way they will be trumped and 

the only way we will find consensus to save this country from becoming Greece, Spain and Italy is to impose a constitutional requirement on the Congress, like many States have imposed upon 

themselves. If I thought we could do it any other way I would say 

so. 

In 1997, we came within one vote in the U.S. Senate of passing 

a constitutional balanced budget amendment. I can only imagine 

what America would look like today if that requirement had been 

imposed in 1997, because, Mr. Chairman, I am confident that if the 

States had the opportunity to ratify a reasonable balanced budget 
4 

amendment to the Constitution, three-fourths of the States would 

do so within 1 year. 

The problem is not the States wanting to put limitations on constitutional action, the problem is the Congress doesn’t want to submit itself to constitutional oversight and a requirement to balance 

the budget. The day we cross that rubicon and understand that the 

current political dynamic will never lead to a balanced budget and 

change that dynamic by adopting a balanced budget amendment to 

the Constitution, I think America’s best days lie ahead. Without 

that change, I’m afraid that we’ll be here 10 years from now talking about a $20 trillion national debt. 

With that, I will yield back my time, and I appreciate this hearing. 

Senator DURBIN. Thank you very much, Senator Graham. 

We’re going to turn to our panel of witnesses for opening statements. They’ll each have 5 minutes. Their complete written statements will be made a part of the record. As is the tradition of this 

committee, if you would all please rise and raise your right hand, 

I would like to administer the oath. 

[Whereupon, the witnesses were duly sworn.] 

Senator DURBIN. Let the record reflect that all five witnesses 

have answered in the affirmative. 

Let me start, first, with Bob Greenstein, founder and executive 

director of Center on Budget and Policy Priorities; before that, administrator of the Food and Nutrition Service at the Department 

of Agriculture. He was appointed by President Clinton in 1994 to 

serve on the bipartisan Commission on Entitlement and Tax Reform, a graduate of Harvard College. 

Mr. Greenstein, glad to have you here today. Please proceed. 

STATEMENT OF ROBERT GREENSTEIN, PRESIDENT, CENTER 

ON BUDGET AND POLICY PRIORITIES, WASHINGTON, DC 

Mr. GREENSTEIN. Thank you, Mr. Chairman. 

The goal of a constitutional amendment is to address our longterm fiscal problems, but it would be an ill-advised way to do so 

because it would risk serious economic damage. To require a balanced budget every year regardless of the state of the economy is 

something large numbers of economists have long counseled 

against because it would require the largest budget cuts or tax increases when the economy is weakest, and thereby holds risk of 

tipping faltering economies into recession and making recessions 

longer and deeper. 

When the economy weakens, consumers and businesses spend 

less and that causes further job loss. But also, revenue growth 

drops and expenditures for programs like unemployment insurance 

increase and that automatic drop in tax collections and increase in 

UI benefits cushions the blow by keeping purchases of goods and 

services from falling even further. That is why economists term 

these the automatic stabilizers. They occur when the economy 

turns down and they help stabilize the economy. 

A constitutional balanced budget amendment effectively suspends the automatic stabilizers. It requires Federal expenditures to 

be cut or taxes raised to off-set the automatic stabilizers, which is 

the opposite course from what sound economic policy calls for. 
5 

As I’ve noted, leading economists have long counseled against 

this. Robert Reischauer, a CBO Director in 1992, testified, ‘‘If it 

worked, the constitutional Balanced Budget Act would undermine 

the stabilizing role of the Federal Government.’’ In testimony earlier this year the current CBO Director, Doug Elmendorf, said the 

same thing. 

A month ago, Macroeconomic Advisors, one of the Nation’s leading economic forecasting firms which has advised the Council of 

Economic Advisors under Presidents Reagan and George W. Bush, 

among others, issued a conclusion that if a balanced budget amendment had been ratified and were not being enforced, ‘‘The effect on 

the economy would be catastrophic’’. 

Macroeconomic Advisors found that if the 2012 budget were balanced through spending cuts, they would total $1.5 trillion in this 

year alone, and they forecast that would throw 15 million more 

people out of work, double the unemployment rate to 18 percent, 

and cause the economy to contract by 17 percent instead of growing 

by 2 percent. Macroeconomic Advisors warned that regardless of 

the year that a balanced budget amendment took effect, its effect 

over time would be to eviscerate he automatic stabilizers and make 

recessions ‘‘deeper and longer’’. 

Now, proponents of a constitutional amendment often dispute 

these claims by noting that a three-fifths vote of the House and the 

Senate, or in some versions a higher percentage, could waive the 

balanced budget requirement. But as you all know, it is difficult to 

secure a three-fifths vote in this body on a timely basis for almost 

anything. 

Moreover when the economy turns down it often takes several 

quarters, many months, before there’s economic data showing we’re 

actually in a recession. And even after the data became available, 

it’s all too likely that a minority in the House or the Senate could 

hold a waiver vote hostage to demand for concessions on other 

issues. 

By the time a recession were recognized to be under way and 

three-fifths votes were secured in both chambers, if that could be 

done at all, extensive economic damage could have been done and 

hundreds of thousands of additional jobs lost. There are a variety 

of other problems as well. 

Consider the savings and loan crisis of the late 1980s. Had there 

been a constitutional balanced budget amendment, in fact, we 

couldn’t have moved quickly because doing so would have created 

an unbalanced budget. Valuable time could have been lost. 

Now, the comments I’ve made so far apply to all versions of the 

balanced budget amendment. Some versions, such as S.J. Res. 10 

and 23, raise additional concerns for two reasons: 1) they would require a two-thirds super-majority to raise any revenues for deficit 

reduction, and that would protect what President Reagan’s former 

Chief Economics Advisor, Martin Feldstein, has called the biggest 

area of wasteful spending in the Federal budget. Tax expenditures 

are what Alan Greenspan has called tax entitlements. 

In addition, those versions of the balanced budget amendment 

would bar Federal spending from exceeding 18 percent of GDP in 

the prior calendar year, which translates into about 16.6 percent 
6 

of GDP in the current fiscal year. Now, to comply with that would 

require truly draconian cuts. 

If you consider the Ryan budget, which is stunning in the degree 

of reductions it has, CBO says the Ryan budget has spending at 

20 and three-quarters percent of GDP in 2030. This is four points 

below that. We used the largest CBO 10-year projections to model 

what the effect would be if you had to hit this 18 percent of prior 

calendar GDP stricture starting in 2018, which is the first year you 

would if Congress passed the balanced budget amendment now and 

the States ratified it by 2013. 

What we found was that in 2018, Congress would have to cut all 

programs by an average of 25 percent. If you cut all programs the 

same percentage, Social Security would be cut $1.7 trillion through 

2021, Medicare $1.1 trillion, veterans’ programs, $120 billion, and 

defense spending, $880 billion on top of the defense cuts, under the 

Budget Control Act and the now scheduled sequestration. 

Now, of course, Congress wouldn’t have to cut every program by 

the same percentage, but anything you exempted would require 

deeper cuts in other areas. If you exempted Social Security, everything else, including defense and veterans would have to be cut by 

an average of 34 percent. 

The bottom line is, policymakers do need to begin to change our 

fiscal trajectory. Like Senator Graham, I would very much commend you and others on the Gang of Six. We need to make hard 

choices like those reflected in the Gang of Six plan. But a balanced 

budget amendment in the Constitution would be unwise, as it 

would exact a heavy toll on the economy and on American businesses and workers in the years ahead. 

Thank you. 

Senator DURBIN. Thanks, Mr. Greenstein. 

[The prepared statement of Mr. Greenstein appears as a submission for the record.] 

Senator DURBIN. Robert Romasco is a graduate of Brandeis and 

Harvard Business School, president-elect of AARP, and will become 

its president next year. Currently the chair of its National Policy 

Council, he previously served as secretary/treasurer and worked as 

an executive at numerous companies, including QVC, J.C. 

Penney’s, Direct Marketing Services, and American Century Investments. 

Thanks for being here. Proceed. 

STATEMENT OF ROBERT ROMASCO, PRESIDENT-ELECT, AARP, 

BURKE, VA 

Mr. ROMASCO. Thank you, Chairman Durbin, Ranking Member 

Graham, and members of the Committee. Good morning. On behalf 

of all Americans aged 50 and older, including our more than 35 

million members, AARP appreciates the opportunity to comment on 

the impact that a balanced budget amendment to the Constitution 

would have on Social Security and Medicare. 

Such an amendment, while seemingly a common-sense answer to 

America’s fiscal challenges, would subject Social Security and 

Medicare to very deep cuts without regard to the impact on the 

health and financial security of real people. 
7 

Such an amendment would also result in significantly diminished 

resources for other services, like delivered meals or heating assistance for those Americans who are too frail or poor to take care of 

these basic needs without some community support. 

Such an amendment would prohibit outlays for a fiscal year from 

exceeding total receipts for that same fiscal year. This is the equivalent of imposing a constitutional cap on all spending that is equivalent to the revenues raised in a given year. 

For example, Federal spending in 2011 is projected to be 23.8 

percent of GDP, but revenue is only projected to be 15.3 percent. 

If a constitutional balanced budget amendment were in place 

today, Federal spending would need to be capped at 15.3 percent 

of GDP or revenues need to be increased to that 23.8. 

Based on an analysis prepared by the Lewin Group for AARP, 

the American College of Cardiologists, the American Hospital Association, and the AMA, slowly reducing current spending to the less 

drastic 21 percent of GDP over the next 10 years would still result 

in significant cuts to Social Security, Medicare, and Medicaid. 

Assuming cuts were phased in and distributed proportionately to 

the rate of growth and the costs of each of these programs, by 2021 

it would be $1.2 trillion cut in Social Security spending, a $788 billion cut in Medicare, and a $527 billion cut in Medicaid spending. 

Such cuts will have a severe impact on real people. 

Social Security is currently the principal source of income for 

nearly 2 out of every 3 American households receiving benefits, and 

in roughly 1 in 3 households it represents their entire income, or 

90 percent or more. These Social Security earned benefits are modest, averaging only about $1,200 a month, for all retired workers 

of this past year. 

Yet according to the same Lewin analysis, capping spending at 

21 percent of GDP would increase the number of people living in 

poverty by 2 million people in 2014 and 3.4 million by 2021. A 

shocking number of these people reduced to poverty would be older 

Americans, 1.1 million Americans over 65 in poverty in 2014, and 

nearly double that, 1.9 million older Americans would be poor by 

2021 if the spending were reduced to the 21 percent of GDP. 

These outcomes would only be more extreme if a constitutional 

amendment required spending to be capped at a lower percentage. 

In fact, if the balanced budget amendment were in place today the 

average Social Security benefit would be cut 27 percent. 

Based on CBO projections of revenue, Federal spending would 

need to be reduced from 23 percent of GDP to 16.8 of GDP in 2012. 

If across-the-board cuts were applied to reach balance, a low-earning retiree would see his or her 2012 benefit reduction from 

$10,300 to $7,500. A median income recipient would see their benefits go from $17,000 to $12,300. 

In addition to the possibility of these drastic reductions, there’s 

the issue of predictability. Social Security and Medicare would be 

undermined by the requirement that spending outlays equal revenues annually. Revenues fluctuate based on many factors, consequently, annual spending would also fluctuate under the balanced budget amendment. 

As a result, Social Security and Medicare benefits would fluctuate and individuals who have contributed their entire working 
8 

lives to earn a predictable benefit during their retirement would 

find their income and health care benefits and costs vary significantly year to year, making planning difficult and peace of mind 

nearly impossible. 

Another element of the balanced budget amendment, the requirement of a three-fifths vote to increase the debt limit, is especially 

likely to wreak havoc with the reliability aspect of Social Security 

and benefits in the future. 

The increased threshold for increasing the debt limit was part of 

the balanced budget amendment proposal that Congress voted on 

in 1995, and most recently the House of Representatives considered 

on November 18th. 

In light of the intense debate surrounding the increase in the 

debt limit earlier this year, the uncertainty that the debate created 

for millions would make it almost impossible to plan. 

We maintain it is particularly inappropriate to subject Social Security to a balanced budget amendment, given that Social Security 

is an off-budget program that is separately funded through its own 

revenue stream, including significant trust fund reserves to finance 

benefits. 

Social Security benefits are financed through the payroll contributions of employees and employers each and every year 

throughout their individual life. The payroll contributions and benefits paid, including administrative costs, are accounted for separately from the rest of the budget. Importantly, Social Security has 

not contributed to our large deficits. 

Our members and older Americans everywhere acknowledge the 

difficult challenge of getting our Nation’s fiscal house in order, but 

doing so requires a real debate about the choices we need to make 

and what kind of country we want. A balanced budget amendment 

would result in forced cuts to Social Security and Medicare rather 

than informed decisionmaking about the future of our Nation. 

We urge Congress to not simply look at the numbers in the budget, but the real people who would be affected by fundamental 

changes that such an amendment would produce. We look forward 

to working with members of this committee, as well as members 

from both houses of Congress and both sides of the aisle, to promote a conversation that will address our Nation’s long-term debt 

without sacrificing the current and future health and retirement 

security of our Nation’s seniors, fulfilling our mission to help Americans of every generation live with dignity and purpose. 

Thank you. 

Senator DURBIN. Thank you very much, Mr. Romasco. 

[The prepared statement of Mr. Romasco appears as a submission for the record.] 

Senator DURBIN. Before I introduce our next witness I want to 

make sure I get her name right: Furchtgott-Roth? 

Ms. FURCHTGOTT-ROTH. Furchtgott-Roth. Yes. Thank you very 

much. Thank you so much. 

Senator DURBIN. A collision of five consonants there, and I’m trying to get it. Furchtgott-Roth. 

Ms. FURCHTGOTT-ROTH. Yes. Well, please call me Diana. It’s my 

husband’s fault. He had the Furchgott. And he’s from Columbia, 

South Carolina, so I’m sure you’re going to forgive him. 
9 

Senator DURBIN. Senator Graham. 

Senator GRAHAM. I’ve always been a big admirer. 

[Laughter.] 

Senator DURBIN. Ms. Furtchgott-Roth is Senior Fellow with the 

Manhattan Institute, and previously served as Chief Economist at 

the U.S. Department of Labor, and Chief of Staff at the Council of 

Economic Advisors under President George W. Bush. She served as 

Deputy Executive Secretary for the Domestic Policy Council under 

President George H.W. Bush, and as a Staff Economist on the 

Council of Economic Advisors under President Reagan. She has a 

B.A. from Swarthmore and an M. Phil in Economics from Oxford. 

Please proceed. 

STATEMENT OF DIANA FURCHTGOTT-ROTH, SENIOR FELLOW, 

MANHATTAN INSTITUTE FOR POLICY RESEARCH, WASHINGTON, DC 

Ms. FURCHTGOTT-ROTH. Thanks so much for inviting me to testify today. 

Look, none of us really want a balanced budget amendment because the best option would be for Congress to work as it’s supposed to and pass budgets that would enable us to live within the 

revenues that we have. But the Senate hasn’t passed a budget for 

over two and a half years. The deficit last year was $1.3 trillion. 

The Super Committee failed even to get $1.2 trillion of cuts. That’s 

over a decade, not even in 1 year. We borrow 40 cents out of every 

dollar that we spend. 

Congress has considered many balanced budget amendments in 

the past, which is summarized in an excellent study by the Congressional Research Service. Versions in nine Congressional sessions did not pass. But imagine that the balanced budget amendments of 1982 and 1995 had passed and had gone on to be ratified 

by three-quarters of the States. Today we would be in a far stronger position, no trillion-dollar deficits, no 100 percent levels of gross 

public debt. 

Of course, everyone prefers for us to be able to restrain government spending through the normal budget process, but we haven’t 

been able to do that, not just in the United States but also in Europe. And look at what’s happening to Europe now. If we look at 

Europe now, that’s what we are facing 10, 20 years down the line 

and that’s simply unacceptable. 

Of course, one can quibble with details of this proposed constitutional amendment, but the philosophy behind it is laudable. It 

would impose spending discipline and it would enable us to live 

within our means. 

The Senate balanced budget amendment ties outlays to 18 percent of GDP in the prior calendar year, hence the budget now 

under construction would be based on GDP in 2010. Now, the final 

GDP figure for calendar year 2010 was only available in March 

2011. This timing is adequate for Congress, but not for the President, who sends his budget to Congress in the first week in February and starts working on the fiscal year 2012 budget in the fall 

of 2010, when even third quarter GDP is unknown. 

But if the fiscal year 2012 budget were based on GDP in calendar 2009 or some multiple thereof, guidelines and limits would 
10 

be clearer to the President as well as to Congress. So another way 

of structuring a balanced budget amendment would be to tie it to 

spending in a given year, to tie spending to revenues 3 years earlier or a multiple so people would know in advance how much 

money we had to spend. 

We have talked here about the problems of recessions, but in a 

recession year when revenues are low it would be possible to have 

a rainy day fund the way many States do, and the rainy day fund 

that could be set aside and be exempt from these limits, set aside 

for recessions. As the amendment is worded now, there isn’t any 

provision for a rainy day fund, but I would suggest that this should 

be added and set aside from surplus funds in high-growth periods. 

With regard to wartime spending, I would say the balanced 

budget amendment as it’s written is, if anything, too flexible because the balanced budget amendment provision is weighed for any 

year in which a declaration of war is in effect or when the United 

States is engaged in military conflict. Then a simple majority of 

members can waive the amendment. 

But for the past 10 years we’ve been engaged in military conflicts 

in Afghanistan, Iraq, Libya, and Somalia, so the current version of 

the amendment would have already been overridden. In my opinion, an exception should be made only for a declaration of war by 

the United States against another country, and even in that case 

expenditures should be limited to military spending rather than all 

spending. 

There are other proposed fixes we could do to help the budget 

process. One idea is to get rid of the concept of entitlements and 

put all expenses under the appropriations process. Congress should 

pass a law that says no money gets spent unless it gets specifically 

voted out every year. 

This could happen with a one-sentence law: ‘‘notwithstanding 

any other provision of law, the United States shall expend no funds 

and shall be responsible for no liabilities and guarantees except in 

amounts as specifically appropriated annually by Congress.’’ This 

would force Congress to take a look every year at spending and not 

rely on entitlements that build up year after year. 

Congress should also consider putting the Federal Government 

on Generally Accepted Accounting Principles, like these corporations that are the focus of protests by the Occupy Wall Street 

crowd. They may be evil, but they have to stick within their accounts and within their budgets. If the government had to file its 

accounts under GAAP, current measures of both deficits and public 

debt would be far different. 

Thanks very much. 

Senator DURBIN. Thank you. 

[The prepared statement of Ms. Furchtgott-Roth appears as a 

submission for the record.] 

Senator DURBIN. Dr. Douglas Holtz-Eakin is currently the president of the American Action Forum. He served as Chief Economist 

at the Council of Economic Advisors and as Director of the CBO. 

During 2007 and 2008, he was Director of Domestic and Economic 

Policy for John McCain’s Presidential campaign. He worked as 

president of DHE Consulting and at several Washington-based 
11 

think-tanks. He has a bachelor’s from Denison and a Ph.D. from 

Princeton. 

Thanks for joining us. 

STATEMENT OF DOUGLAS HOLTZ-EAKIN, PH.D., PRESIDENT, 

AMERICAN ACTION FORUM, WASHINGTON, DC 

Dr. HOLTZ-EAKIN. Thank you, Mr. Chairman, Ranking Member 

Graham, and members of the Committee. It’s a privilege to be here 

today. 

Let me just make four brief points; you have my written statement. 

First and most importantly, we have an enormous and immediate problem in the U.S. The gross debt-to-GDP is now 100 percent, above the 90 percent of GDP line that history has shown imposes two costs: (1) on average, a growth penalty of about a percentage point a year, so we’re already paying for our high debt 

load; and (2) an increased probability of sovereign debt crisis of the 

type we see in Europe. 

Given that we are projected to accumulate massive amounts of 

debt over the next decade, it is a surety that we will face the problems that Europe is facing right now within that decade. So this 

is not something which we have the luxury to put off, we have to 

begin to address it immediately. 

The U.S. has all the characteristics of countries that get in trouble. Our debt levels—our projected debt levels, our heavy reliance 

on short-term borrowing, our continued discovery of contingent and 

not well-understood liabilities that pop up in the Federal budget, 

your efforts, Mr. Chairman, and others, I applaud because there 

simply is no time to avoid taking on this problem. 

One of the reasons we have this, and the second point, is the 

U.S. doesn’t have—the Federal Government does not have a coherent fiscal rule that guides its operations. It has no budget that’s 

agreed upon between the Congress and the administration. Often 

the House and the Senate do not agree on a budget resolution, fail 

to even do that. 

We have an uncoordinated set of mandatory spending programs, 

discretionary spending programs, taxes and fees that don’t add up 

in any coherent way and often give us bad results. So the Federal 

Government does not have a fiscal policy, it gets bad fiscal outcomes on a regular basis, and something is needed to put this in 

coherent order. The notion of a fiscal rule, something guiding the 

overall process, I think, is essential. 

Now, what kind of fiscal rule could you have? You could have a 

rule that says there’s a maximum amount of spending, a maximum 

amount of spending as a fraction of GDP. You could have a debtto-GDP ratio, you know, don’t exceed 60 percent of GDP. Or you 

could have something like a balanced budget, and the balanced 

budget amendment falls as one of the possible fiscal rules that 

could bring some coherence to a system that’s clearly broken. 

Now, what would you want in such a fiscal rule? You’d want a 

couple of things. No. 1, you’d want it to work. We have tried fiscal 

rules in the past, such as pay-go rules, which were intended to simply stop things from getting worse. They were often waived and 
12 

didn’t stop things from getting worse and they would not in any 

way compel Congress to make things better. 

So you need something that’s going to work. You need something 

that has a tight link between the decisions made by Congresses 

and the outcomes. You can’t have a lot of intervening steps so that 

you can’t control the outcome, and you have to have something 

that’s simple and transparent because in the end the American 

public has to buy into the fiscal rule. They have to agree to live 

under the constraints that we’re imposing on the Federal budget. 

The balanced budget amendment has those characteristics. It 

would work. It has a tight link between the decisions made and the 

outcomes, they have to add up, and it’s simple and transparent and 

allows the possibility for the public to understand it. 

Some key features of it—the third set of remarks I’d like to 

make—are that the ratification process, which will take a fair 

amount of time in any event, is the opportunity for the public to 

buy into this. If three-quarters of the States ratify a balanced budget amendment, the public will have agreed that this is how they 

want to run their fiscal affairs. I think that’s a very important 

thing because that is important in supporting the Members of Congress. They have to have the voters behind them. 

Secondly, is that it will be much harder for a Congress to reneg. 

There are some serious issues in enforcement. You mentioned that 

at the outset. I want to acknowledge those. Nothing is perfect, but 

right now nothing constrains the Congress, for example, for 

waiving the caps imposed in the Budget Control Act. History has 

shown that’s exactly what it will do, so we need something which 

is stronger and generally constrains the Congress, something it 

cannot reneg on. 

The fact that we’re talking about constitutional amendments, I 

think, is commensurate with the problem we face. This is an enormous and immediate danger to the American economy and our futures. Other panelists have mentioned some concerns. They’re legitimate. 

How you deal with economic fluctuations, how you deal with 

wars and other emergencies are things that must be worked into 

a balanced budget amendment, but I think that’s doable. You do 

as well have to worry about the size of government and the level 

of taxation, and most balanced budget amendments have additional 

features to cap the size of government. 

So this is not something that I think should be presented as perfect, but it is imperative that we move from a system that is demonstrably imperfect and broken to something better. I think this 

will be a sensible step in the right direction. 

Senator DURBIN. Thanks for your testimony. 

[The prepared statement of Dr. Holtz-Eakin appears as a submission for the record.] 

Senator DURBIN. Professor Alan Morrison is the Lerner Family 

Associate Dean for Public Interest & Public Service and a professor 

at George Washington University Law School. He graduated from 

Yale and Harvard Law School, served as a commissioned officer in 

the United States Navy. 

Early in his career he worked for Public Citizen Litigation 

Group, which he directed for over 25 years and argued 20 cases be-
13 

fore the U.S. Supreme Court. He was past president of the American Academy of Appellate Lawyers and served as an U.S. Attorney. 

Please proceed. 

STATEMENT OF ALAN MORRISON, LERNER FAMILY ASSOCIATE DEAN FOR PUBLIC INTEREST & PUBLIC SERVICE, 

GEORGE WASHING UNIVERSITY LAW SCHOOL, WASHINGTON, DC 

Professor MORRISON. Thank you, Mr. Chairman and members of 

the Committee. 

Even if the balanced budget amendment were a sensible idea, 

the question I want to ask is, how is it going to be enforced? My 

first problem is that almost none of the bills that are presently before this house or the other house deals with that question openly 

and tells the American people who is going to enforce the balanced 

budget amendment. 

It surely is not going to be the Congress. That’s the problem. It 

is surely not going to be the President. The President has no inherent authority to not spend money, and the Line Item Veto case 

proved that Congress cannot delegate that authority to him. So either it will be the courts or no one, and if it’s no one we’re back 

where we started from. 

Now, let me talk about the courts for a minute. In my written 

statement I have established that under current constitutional law, 

no one—taxpayers, Members of Congress—would have standing to 

go to court to challenge a budget that was alleged to be in violation 

of the Constitution. 

Senator Lee, to his credit, in his proposed amendment has provided that Members of Congress would have that authority to go 

to court. That deals with the standing problem. It does not deal 

with three other doctrines that stand in the equal problematic path 

of any enforcement of a balanced budget amendment. 

First is the political question doctrine, and that principally deals 

with the problem of remedy, which I’ll talk about in a second, then 

there are the problems of ripeness and mootness, that is, getting 

litigation through in a timely manner so that if a court decided 

that the budget was unbalanced, it could actually order a remedy 

before all the money had been spent, and there was nothing left to 

fix. 

So let me talk for a minute about what litigation would look like 

if we had an actual challenge to an amendment that was supposed 

to be unbalanced. And let me begin by stating the optimistic, but 

highly unrealistic, assumption that Congress would actually pass a 

single bill with a budget before the beginning of the fiscal year on 

October 1, so that we at least had a target at which a litigation 

could begin to focus. 

Obviously nobody who’s going to make a challenge is going to be 

limited to what the budget actually says. We all know that there 

will be rosy estimates in the budget and that’s how the budget will 

be ‘‘in balance’’. 

So anyone who is a challenger will want to go behind those numbers and will start to go into the papers at the Congressional Budget Office, the Appropriations Committees, and we will start to have 
14 

a massive discovery. We will have expert witnesses being deposed, 

and eventually we will have a trial. 

It will make the trial of United States v. Microsoft look like 

child’s play because this will go on forever, not just with respect 

to one department like the Defense Department and all of its subsidiaries, but every single department of the government could be 

subject to the same kind of inquiry. 

And then, of course, we’ll have to figure out whether the tax estimates are sensible and reasonable. At the end of that there will be 

a trial. The judge or judges will have to write a decision after the 

briefs are all in. There will be an appeal to the U.S. Supreme 

Court. 

All of that is supposed to be done within a single fiscal year in 

time for a remedy to be decided upon, issued, and put into place 

to correct the unbalanced budget. It seems to me to be impossible, 

but even if it were possible, think about the problem of Federal 

judges now deciding that the budget is out of balance by, let’s say, 

$200 billion. Where are they going to make the corrections? Are 

they going to increase taxes? Are they going to take it out of Social 

Security? Are they going to take it out of defense? 

I cannot imagine a job for which Federal judges are less suited 

than trying to make those obviously political, very important, 

value-laden judgments about how the taxpayers’ money should be 

spent, yet that is what is going to happen if we allow the case to 

go to court. 

So you are faced with a choice. Either you’re going to have the 

judges of the United States courts running the Federal budget, or 

you’re going to have to admit that the balanced budget is an idea, 

it’s rhetoric, and it’s non-enforceable. 

My own view is that this is not the way to go, that the balanced 

budget amendment is a false promise and that it will only deter 

you from engaging in the kind of hard work that you need to get 

done in order to get our fiscal house in order. Slogans and constitutional amendments will not solve the problem, only hard work will. 

Thank you. 

Senator DURBIN. Thank you, Professor Morrison. 

[The prepared statement of Professor Morrison appears as a submission for the record.] 

Senator DURBIN. We’ve got a great turnout here at the Subcommittee and we may face a vote, so I talked to Senator Graham 

and we had thought about 7-minute rounds. Let’s do 5-minute 

rounds so people can have a better chance to ask questions. 

I’ll kick it off here. Let me just say at the outset, I concede what 

you said, Dr. Holtz-Eakin. We are facing a global economic challenge. The United States is in stronger position than many other 

countries, but we are naive to believe that a day of reckoning is not 

coming. If we don’t deal with it early, the later consequences will 

be much more difficult. 

That is what has motivated me through this whole conversation 

from my side of the political spectrum. It is easier because of the 

miracle of compound interest and similar economic principles to 

make decisions today which will play out in a more sensible way 

than to wait till the last minute. I concede that point. 
15 

When we get to the balanced budget amendment I think we are 

addressing two different levels. We are addressing what Professor 

Morrison has raised, the very fundamental constitutional questions 

of the relationships of our branches of government and enforcement 

between them, and I think you raised some excellent points. Casting our fate to the Federal court system to resolve our budget difficulties may make all of our efforts toward resolving budget issues 

look like child’s play as it would go through that court system. 

Secondly, there’s the policy question about, if there is to be a balanced budget amendment, where do you draw the line? The sweet 

spot, if history is any guide, was 11 years ago when we balanced 

the budget, and if I’m not mistaken—someone can correct me 

here—it was at 19.5 percent. Revenues and expenditures at 19.5 

percent, and an equal balanced budget. 

Now today we are somewhere in the range of expenditures in the 

24.5 to 25 percent ranges and revenues in the 15 percent range: 

the delta equals the deficit. Now we have suggestions from Mr. 

Romasco that even 21 percent won’t meed our needs under our entitlement programs, and suggestions by Mr. Greenstein that we’re 

actually talking about somewhere close to 16 percent. These are 

dramatic changes in terms of how we’re going to raise and spend 

money. 

Ms. Furchtgott-Roth, let me ask you this question, if I can. Do 

you believe that if we are going to honestly deal with the budget 

deficit we have to put everything on the table, including taxes, tax 

expenditures, entitlements, and other spending? 

Ms. FURCHTGOTT-ROTH. The best way to solve this problem 

would be to have greater economic growth, and we can accomplish 

greater economic growth through fundamental tax reform, getting 

rid of deductions both on the corporate and individual side and lowering tax rates, which we call base broadening. 

So, yes, I think that everything should be on the table but we 

should keep a revenue-neutral tax system. In other words, to raise 

the same amount of revenue initially but then additional revenue 

would come in with greater economic growth. 

Senator DURBIN. I know I’ve heard this theory from my friends 

on the Republican side and I would say dynamic economic growth 

may be true, may not be true. Our approach in Bowles-Simpson 

and Gang of Six is trust but verify, to go back to one of your former 

bosses, or Mr. Holtz-Eakin’s former bosses, and that is, CBO plus 

dynamic scoring. 

Let’s make sure that we’re at least dealing in that world. So 

when we get to the point where we have an expanding base of recipients of Medicare, just as an example, and Social Security as the 

baby boomers reach the age of eligibility, how do you deal then 

with that demographic growth in terms of the budget? Does it require then that either taxes be raised or other spending be reduced? 

Ms. FURCHTGOTT-ROTH. Medicare is one of the most challenging 

problems that we have and Medicare needs to be revamped to 

allow more competition between providers. I would recommend 

something like the plan suggested by House Budget Chairman 

Paul Ryan, where current seniors would keep the traditional Medicare plan but people who are now 55 or below, when they get to 
16 

retirement age, would have a choice of different plans with the contributions means tested, and they can put more in to have different 

levels of health care. And competition among these plans, I believe, 

would bring down the cost of Medicare, just as it has in Lasik and 

cosmetic surgery. 

Senator DURBIN. It’s a controversial approach but it is certainly 

one approach that we need to consider. 

Ms. FURCHTGOTT-ROTH. Yes. 

Senator DURBIN. Dr. Holtz-Eakin, when it comes to exceptions 

under a balanced budget amendment, Ms. Furchtgott-Roth has spoken about war. Would you concede there should be other exceptions? Should there be exceptions for automatic stabilizers that Mr. 

Greenstein has related to? Should there be an exception for ‘‘the 

big one’’ in California, God forbid, if we ever face it? 

Dr. HOLTZ-EAKIN. So the major objection that comes up and the 

one that Mr. Greenstein mentioned is this issue of automatic stabilizers. I think this is more a textbook concern than a real one because if you listen to what Diana said about the timing that’s necessary to actually do this, you’re going to operate off a GDP from 

at least 2 years ago, maybe three. 

So if you’re going through a recession you’re using a number 

that’s here and you’re going to be spending more than you would 

relative to the economy anyway. When you’re coming out, you’re 

going to do the reverse. So instead of actually having a big pro-cyclical problem it’s going to build in an automatic stabilizer. 

It’s going to work exactly the way the textbook says it’s supposed 

to. So I think that’s overrated. The exception you want is for Great 

Depressions. Yes, you ought to—you know, in those cases, those are 

the only cases when we want Congress doing things in a discretionary fashion. 

Senator DURBIN. Look at the current recession. The current recession, with 14 million people out of work, not paying taxes and 

needing Unemployment as well as food stamps and other things, is 

a classic example where we need the stabilizers, do we not? 

Dr. HOLTZ-EAKIN. So I think you would get the automatic stabilizers, and I would hope that for the typical business cycle the Congress would get out of the business of trying to fine tune it. We 

tried it in the 1960s and 1970s, it failed miserably. We swore off 

discretionary fiscal policy in the 1980s and 1990s. That was for the 

best. Then we unlearned that lesson for some reason in this decade. 

We should use fiscal policy to set the parameters for long-run 

growth, let the Fed take care of short-term business cycle fluctuations, with the exception of major downturns. This is the worst recession since the Great Depression. There’s going to be a line at 

which Congress is going to have to move, and inevitably would. I 

don’t view that as a big deal. 

Senator DURBIN. And the question is whether words in the Constitution will allow us the flexibility to accommodate that. 

Senator Graham, your turn. 

Senator GRAHAM. Thank you. 

Let’s sort of go down memory lane here and look at previous attempts by Congress to make sure that we don’t over-spend. 

Gramm-Rudman-Hollings. Are all of you familiar with that con-
17 

cept? Do you all agree it didn’t work? The Balanced Budget Agreement in 1997. Are you familiar with that concept? Do you agree it 

worked in the short term but it has failed over time? 

Do you agree that the numbers we set in the Balanced Budget 

Agreement on Medicare spending is continuously weighed by the 

Congress because the doctors are so adversely affected? Well, you 

need to go talk to a doctor. We’re going to have a $200 billion problem with doctors by the end of the year because under the Balanced Budget Agreement of 1997 the payments to doctors will have 

to be reduced by $200 billion or waived. So I guess the point I’m 

making, and I’ll let you speak here in a minute, Mr. Greenstein, 

is that all in-house efforts have failed and I see no hope in sight. 

Mr. Romasco is that it? 

Mr. ROMASCO. Yes. 

Senator GRAHAM. Would you be willing to accept age adjustment, 

as an organization, for Medicare eligibility, going from 65 to 67 for 

people under 55? 

Mr. ROMASCO. That’s one possibility that is being mentioned. You 

have to look at it in the broad context. The initial kind of look at 

that suggests that that actually costs society more than it actually 

reduces it, so I would be very hesitant to—— 

Senator GRAHAM. Would you be willing to accept a means test on 

premiums, for Medicare premiums? 

Mr. ROMASCO. Senator, I think the concept of going down a 

checklist, while certainly helpful, really doesn’t get at the issue. 

Senator GRAHAM. I’m asking a question: would you be willing, as 

an organization, to accept means testing Medicare premiums? 

Mr. ROMASCO. Not as a single solution. 

Senator GRAHAM. But would you be willing, as an organization, 

to accept means testing when it comes to receiving Social Security 

benefits? 

Mr. GREENSTEIN. Again, Senator, the issue is a complex one and 

any solution that strengthens Medicare or strengthens Social Security has to be—— 

Senator GRAHAM. I believe that means testing benefits received 

promised by Social Security would save Social Security from an inevitable bankruptcy. Would you agree to that concept as a way to 

save Social Security? 

Mr. ROMASCO. I think your objective is laudable. I’m not sure 

your prescription is the right one. 

Senator GRAHAM. OK. So therein lies the problem. 

Mr. Greenstein, any effort to balance the budget would have a 

dramatic effect on Social Security and Medicare. Do you agree with 

that? 

Mr. GREENSTEIN. That would probably be true. 

Senator GRAHAM. And the reason that would be true is because 

that’s where the most spending occurs over time. 

Mr. GREENSTEIN. Tax expenditures now are actually over $1 trillion a year; Medicare and Medicaid combined, about $750 billion. 

Senator GRAHAM. Over the next 75 years, the promises made 

under Medicare. How much revenue shortfall do we have to meet 

those promises? 
18 

Mr. GREENSTEIN. I don’t have the specific percentage, but I will 

agree with you that it is essential over the long run to deal with 

the rate of growth—— 

Senator GRAHAM. Over the next 75 years, how much money are 

we short to honor the benefits promised under Social Security? 

Mr. GREENSTEIN. That’s a smaller amount. Over—— 

Senator GRAHAM. It’s about $5 trillion. 

Mr. GREENSTEIN. Eight-tenths of 1 percent of GDP, less than 

one-half of the cost over 75 years—— 

Senator GRAHAM. Do you agree with me—— 

Mr. GREENSTEIN.—of making the Bush tax permanent. 

Senator GRAHAM. Do you agree with me that the entitlement 

growth of Medicare, Medicaid, and Social Security, that we have 

close to a $40 to $50 trillion unfunded liability over the next 75 

years? 

Mr. GREENSTEIN. I agree it’s very substantial. Exactly how you 

do the numbers depends on how you account for Medicare Parts B 

and D, but your basic concept is correct. 

Senator GRAHAM. The only reason I mention that, it is impossible 

for us as a Nation to achieve a balanced budget without affecting 

entitlement growth. There is not enough money coming in because 

there are fewer workers and we all live longer. Everyone is living 

like a South Carolina Senator, dying at almost 90 years old. That’s 

the good news. The bad news is, we have not planned as a Nation 

for that event. If I thought there was some other way, Mr. Morrison, to do this without a constitutional requirement I would go 

down that road. 

I would just ask you a question: in South Carolina we have in 

our constitution the requirement to provide a minimally adequate 

public education. That has been in litigation in South Carolina. I 

will tell you, the litigation process has opened the eyes of South 

Carolinians and that the legislature has responded to the gaps in 

education funding. 

My view is, if we had a trial about Congress spending too much, 

that it would be a good thing to put the Congress on trial. It would 

be a good thing to seek remedies. I don’t think the court has to 

take over the Congress, but if the court, through a trial, could show 

the public how ineffective we are with spending and revenue, I 

think the remedies would come. They’re never going to come with 

the current system, so that’s where I disagree. I think litigation to 

get the Nation’s budget balanced may be the only hope we have because the current political engagement doesn’t seem to bring about 

the result. You may respond. 

Professor MORRISON. Well, I wouldn’t compare litigation over 

adequate funding of schools in South Carolina, which doesn’t have 

to be completed within one fiscal year, to a debate about whether 

a particularized set of spending and revenue meet the constitutional target within that fiscal year. 

I would also imagine that there would be lots of debates about 

all the exceptions to the rules, which would undoubtedly be invoked and people would be litigating over those. I agree with the 

Senator that litigation is a wonderful tool for getting people’s attention focused and bringing the facts to light. 
19 

Having said that, I cannot agree that this is an appropriate area 

for litigation. But if the Senator wants it as an educational tool but 

not as an actual enforcement tool, then we could have a discussion 

about that. 

Senator DURBIN. Thank you very much. 

Under the early bird rule, on the Democrat side we will be recognizing Senators Franken, Whitehouse, Coons, Blumenthal, and on 

the Republican side, Senators Hatch, Cornyn, and Lee. 

Senator Franken. 

Senator FRANKEN. Thank you, Mr. Chairman. 

Mr. Greenstein, in the months preceding President Obama’s assuming office our economy was sliding precariously into—almost to 

a depression. We were losing between 750,000 to 850,000 jobs per 

month. States, most of which have balanced budget requirements, 

consequently had to cut jobs and services. 

But a combination of the Federal Government’s automatic stabilizers, as you talked about, Unemployment Insurance, food stamps, 

along with the Recovery Act cushioned the economy and stopped 

the downward spiral and us from going into a depression. 

Mr. Greenstein, in your estimation, what would have happened 

in 2009 and 2010 had a balanced budget amendment been in place? 

Mr. GREENSTEIN. Well, the effects would have been far more severe. The one analysis we have of this is the one that Macroeconomic Advisors did of what would happen in 2012 if we had a 

balanced budget amendment right now, and their estimate is the 

unemployment rate would double to 18 percent and there would be 

15 million more unemployed people. Real GDP growth would drop 

17 percent this year rather than rising 2 percent. 

Senator FRANKEN. And what would that do to our deficit? 

Mr. GREENSTEIN. Well, if you had—you’d have this cycle that 

business activity would drop substantially. 

Senator FRANKEN. You’d have a vicious cycle, right? 

Mr. GREENSTEIN. You’d have a vicious cycle. Revenue would drop 

even further and then you’d have to cut more and it would put you 

on a further downward spiral. 

Senator FRANKEN. Mr. Morrison, when they wrote the Constitution the framers gave Congress the power to collect taxes, to borrow money, and to decide how to spend that money. In fact, the 

power of the purse is the first power granted to Congress under our 

Constitution. The framers did not give the courts the power of the 

purse. In fact, Hamilton wrote in Federalist 78 that the judiciary 

‘‘will have no influence over the sword or the purse’’. No influence. 

That seems pretty clear to me. 

But Mr. Morrison, if we passed a balanced budget amendment, 

won’t judges, as you testified, be able to decide budgetary matters? 

Aren’t we giving judges at least some power over the purse? 

Professor MORRISON. Well, either judges would have some power 

over the purse and it would be a very significant power if the 

amendment actually so provided. I agree with you, Senator 

Franken, that under the current law judges would have to stay out 

of that debate. 

But the amendment could provide, as all amendments can, that 

that system which has been in effect for 225 years should be 

changed. Instead of the Congress being in charge of the budget we 
20 

can put the Federal courts in charge of the budget. I think that 

would be a terrible idea, as I’ve expressed before, but we could do 

that. It would be a mess. It would be the wrong people deciding the 

wrong questions. 

But we could amend the Constitution and fundamentally change 

our system, but that is what would happen, or we could have it as 

an amendment which has no impact at all, that has no enforcement 

mechanism, and that it would be empty rhetoric, making some people feel good that they had done something but doing nothing to 

fix our budget problems. 

Senator FRANKEN. All right. 

Now, on the other hand, the Articles of Confederation sharply 

limited the legislature’s power of the purse. Congress needed a 

super majority both to borrow money and to send States their tax 

bills. The Articles were a total disaster because of it. You don’t 

have to take my word for it, take George Washington’s word for it. 

His word was good. As the Commander of the Continental Army, 

Washington famously wrote Hamilton to basically complain about 

Congress’ inability to effectively raise revenues to support the 

troops. 

In 1783, he wrote that unless Congress was given a greater 

power of the purse, ‘‘The distresses we have encountered, the expense we have incurred, and the blood we have spilled in the 

course of the 8-years war will avail of us nothing.’’ Yet the McConnell-Hatch amendment requires a super majority to raise revenues 

and another super majority to waive that requirement in times of 

military conflict. 

Mr. Morrison, are these provisions going to be the Articles of 

Confederation all over again? 

Professor MORRISON. Well, there are many other flaws with the 

Articles of Confederation, but this would certainly change the balance of power and the allocation of responsibility in our government system and would make it very hard to make changes that 

are needed for whatever reason. 

It seems to me—and this is less a legal question than a political 

question—that we have struck a balance in terms of checks and 

balances over the past 225 years that is about right. It doesn’t get 

it right every time, but overall it works to the advantage of the 

American people most of the time. 

I would be very reluctant to tinker with that system by starting 

to impose new three-fifths requirements for anything, regardless of 

whether you were in favor of raising revenues or reducing taxes or 

anything else. It seems to me we ought to stick to majority rule. 

It’s worked pretty well. 

Senator FRANKEN. Thank you. 

Mr. Chairman, I have some other questions I’d like to put in the 

record, or if we get to a second round, ask them then. Thank you. 

Senator DURBIN. Thanks, Senator Franken. 

Senator Hatch. 

Senator HATCH. Thank you, Mr. Chairman. I want to thank you 

and the Ranking Member for the privilege and opportunity to participate in this important hearing today. If I may, I’d like to ask 

consent to put a statement in the record. 

Senator DURBIN. Without objection. 
21 

[The prepared statement of Senator Hatch appears as a submission for the record.] 

Senator HATCH. Thank you, Mr. Chairman. 

Dr. Holtz-Eakin, the Senate has voted on a balanced budget constitutional amendment six times while I have been in the Senate. 

We passed one back in 1982 when the national debt was about $1.1 

trillion. We passed it in the Senate and it was defeated in the 

House. When we failed by one vote in 1997 to pass a balanced 

budget amendment that I introduced, the national debt was $5.4 

trillion. Today it is more than $15 trillion, larger than our entire 

economy. 

Now, would we be in this fiscal mess that we are in today if Congress had seized one of those previous opportunities and the balanced budget amendment were today a part of the Constitution? 

Dr. HOLTZ-EAKIN. I think, clearly, not. 

Senator HATCH. Well, it’s been suggested here that the balanced 

budget amendment would actually be bad for the American economy. Now, this is surprising to me, given the dire fiscal situation 

in Europe and in this country brought on by escalating sovereign 

debt. 

Now, in your view, what would be the long-term impact on economic growth if a balanced budget amendment like we’ve been discussing here today—if the balanced budget amendment imposed a 

spending cap on Congress and limited Congress’ ability to raise 

taxes, if that was ratified by the American people? 

Dr. HOLTZ-EAKIN. I think the long-run consequences would be 

entirely beneficial. Over the long term, economies only grow by putting aside resources in the present to have greater fiscal, technological, or human capital. Persistent Federal deficits eat away at 

that seed corn and undermine long-term economic growth. Keeping 

taxes low, I think, is part of the recipe for economic growth. 

The Bowles-Simpson Commission, I thought, clearly pointed in 

the right direction, to say if you want to talk about revenue you 

need tax reform. I think we could do that within the context of the 

balanced budget amendment. This is the kind of fiscal policy that 

we need but have never been able to consistently generate. 

Senator HATCH. Let me go to Ms. Furchtgott-Roth. Which is the 

greater threat to progress in your viewpoint, such as—well, greater 

threat to programs such as Social Security, Medicare, and Medicaid, the fiscal discipline required by a balanced budget amendment or the spiraling debt that we’re actually encountering today? 

Ms. FURCHTGOTT-ROTH. It’s clearly the spiraling debt. We have 

these entitlement programs that keep growing because fortunately 

we are living longer. We need to adjust them as we go along by 

raising the retirement age or making other modifications, such as 

means testing for the benefits. 

If we had had the balanced budget amendment in place, we 

might not have been able to spend the $825 billion in stimulus, we 

might not have had Cash for Clunkers, we might not have had the 

TARP program. In January 2009, Christina Roman and Jarrett 

Bernstein had a paper that said that if we did not pass the stimulus package, unemployment would peak at 8 percent and then go 

down, so perhaps we would have been a lot better off. 
22 

Senator HATCH. Now, I reviewed some of the floor debate when 

the Senate has considered balanced budget amendments in the 

past. In 1994, for example, one of our friends on the other side of 

the aisle, who also happens to be a member of this committee, said 

the following: ‘‘We do not need a constitutional amendment to balance the budget. As the Cowardly Lion puts it, ‘Courage is not 

something given to you, it comes from within.’’’ Now, that was 1994 

when the national debt was $4.5 billion, with a b, less than a third 

of what it is today. 

Do you think Congress will find fiscal courage from within or do 

you believe it has to be supplied from without through a constitutional balanced budget amendment? 

Ms. FURCHTGOTT-ROTH. Well, they say those who do not study 

history are doomed to repeat it, and history has shown that Congress does not find the courage to keep within any kind of spending 

limit, even spending limits it has set upon itself. 

Senator HATCH. Now, Dr. Holtz-Eakin, BBA opponents predict 

grave consequences for the economy. We’ve heard that here from 

our illustrious witnesses here today. And, of course, specific government programs will be hurt. 

Now, Mr. Greenstein cites a study that was mentioned often by 

opponents during the recent House debate, but they all use the 

same gimmick. They take today’s fiscal situation and just slap a 

ratified balanced budget amendment on top of it. If you stop and 

think about that, that’s not a very fair way to do it. That just 

seems crazy to me. Had we ratified a BBA in the past, the current 

economic situation would be very different. And I like your comment on this gimmick that many BBA opponents are using. 

Dr. HOLTZ-EAKIN. I think it’s utterly unrealistic and sheds no 

light on the real issues. The balanced budget amendment is important not because of the extreme cases that are cited. It’s the fact 

that when things are good, Congress can’t bring itself to balance 

the budget and, thus, arrives in situations like 2008 and 2009 with 

a budget that is already badly out of whack. And to pretend that 

that’s sort of the normal starting point you’d want to impose a balanced budget on is, I think, just utterly unrealistic. 

Senator HATCH. And we allow for a period of time to adjust to 

it. 

Dr. HOLTZ-EAKIN. Yes. 

Senator HATCH. My time is up, Mr. Chairman. 

Senator DURBIN. Thanks, Senator Hatch. 

Senator Whitehouse. 

Senator WHITEHOUSE. Thank you. 

States—this will be a question for Mr. Greenstein and for Dr. 

Holtz-Eakin. 

States with balanced budget requirements have capital budgets 

through which they undertake a variety of borrowing and spending, 

as do municipalities. Corporations, under Generally Accepted Accounting Principles, assume debt and assume capital investment liabilities that they disclose to their shareholders, but they’re perfectly legitimate. 

Families that believe they are balancing their family budgets— 

and I think in the ordinary sense of the word they are balancing 
23 

their family budgets—nevertheless have mortgages, they have student loans, they have credit card debt. 

We in Congress, on the Budget Committee, at least, have been 

talking about how you deal with the capital budget problem. We 

don’t do that at the Federal level. How does the problem of not 

having a capital budget interrelate with a balanced budget amendment? Would it limit the Federal Government’s ability to do what 

corporations, municipalities, States, and families all do, which is to 

borrow within a balanced budget structure? Mr. Greenstein, first. 

Mr. GREENSTEIN. Well, the answer is definitely, yes. There is no 

State that has a balanced budget requirement anything like the 

one in these amendments. As you say, States can borrow for capital 

expenditures. They also can run rainy day funds and draw them 

down in recessions. Neither of those—— 

Senator WHITEHOUSE. Would be possible under the proposed—— 

Mr. GREENSTEIN. Would be possible under this. 

Senator WHITEHOUSE. Yes. 

Mr. GREENSTEIN. But there is a—— 

Senator WHITEHOUSE. This is pretty unique and unusual. 

Mr. GREENSTEIN. Yes. There’s an additional issue, which is one 

that economists have pointed out for years. That is the fact though 

that States have to balance their operating budgets in recessions 

constitutes a drag that makes recessions deeper and it makes it all 

the more important that the Federal Government not abide by the 

same circumstance. 

The study that I and others cited by Macroeconomic Advisors, a 

mainstream firm that has worked for Republican administrations 

as well as Democrats, not only looked at the effect today if the balanced budget amendment had been passed several years ago, they 

also looked at the effect of the balanced budget amendment were 

passed during good economic times. 

Their conclusion was that because of the ‘‘pall of uncertainty’’ it 

would create about what would happen in future periods of slow 

growth that it would fundamentally affect cyclical dynamics and retard economic growth in good times as well as bad. 

Senator WHITEHOUSE. Dr. Holtz-Eakin, what should we do about 

capital budgeting under the proposal, which doesn’t appear to permit it? 

Dr. HOLTZ-EAKIN. We don’t have capital budgeting in the Federal 

Government and the balanced budget amendment wouldn’t change 

that. I mean, this has been a debate that, going back to 1967, 

President Johnson’s Budget Commission has, in a tiny circle of 

geeks, raged for decades. On balance, it has always been the conclusion that a capital budget will be too difficult to implement, and 

we have stayed with what is largely a cash-flow budget at the Federal level. 

Now, I would point out that—— 

Senator WHITEHOUSE.—different than the—— 

Dr. HOLTZ-EAKIN.—we appropriate the—— 

Senator WHITEHOUSE.—State budgets that people refer to often 

as being a model for what we’re doing. It’s a very significant distinction, is it not? The difference between cash-flow budgeting and 

capital budgeting. There’s a significant distinction. 
24 

Dr. HOLTZ-EAKIN. It can be a significant distinction. I will say 

my experience at the State level is that the ability to have a capital 

budget is one of the ways that States actually evade all sorts of 

supposedly self-imposed restrictions, because things that are capital get relabeled all the time. When times are good they put them 

in the current budget, when times are bad they stick them in the 

capital budget. 

I am not a fan—and I say this lovingly—of letting the Congress 

have its hands with more gimmicks that they can use to evade discipline. The problem is not finding a way for Congress to borrow, 

the problem is finding a way to get them to stop. 

Senator WHITEHOUSE. I think I took from everybody’s answers 

that every witness concedes that there is a counter-cyclical role at 

some point for the Federal Government in the economic swings 

that economies naturally produce. Is that true of everybody across 

the board at some point? 

Professor MORRISON. I’m not an—— 

Senator WHITEHOUSE. Dr. Holtz-Eakin, you said that you 

wouldn’t want it to do just the ordinary up the bounds of the economy. 

Dr. HOLTZ-EAKIN. Right. 

Senator WHITEHOUSE. You’d wait for real catastrophes. But then 

it would be important, correct? 

Dr. HOLTZ-EAKIN. Yes. I think that—and every balanced budget 

amendment has provided for a waiver that would allow a Congress 

to step in in extreme circumstances. 

Senator WHITEHOUSE. And Professor Morrison, you wanted to 

say something? 

Professor MORRISON. Yes. I’m not an economist but I know a little about accounting. This is—in effect, a balanced budget amendment would make everybody on the cash accounting basis, where 

no corporation in the United States would ever be allowed to be on 

the cash basis as opposed to the accrual basis. 

So if you’re going to do this, at the very least you ought to put 

them on the same basis that everybody else is so that we don’t hide 

things on promises in the future. Accrual basis is a much more 

sound way of looking at it, but it’s surely not the way that our 

budget has been run. 

Senator WHITEHOUSE. Yes. I’d suggest not only no corporation, 

but no State, no municipality, and no family. 

Thank you. 

Senator DURBIN. Senator Cornyn. 

Senator CORNYN. Thank you, Mr. Chairman. I think this hearing 

has been very revealing and important. I guess the problem I had 

with the parade of horribles being marched out here with regard 

to what would happen if the Federal Government passed a balanced budget amendment is hard to believe in light of the fact that 

49 States have some form of balanced budget requirement. 

You may say to me, well, the Federal Government is not a State, 

I concede that, but I think most Americans would have a hard time 

believing that while they’re required to balance their budget, while 

every business is required to balance its budget, that the Federal 

Government can continue spending and is not required to balance 

the budget because the Federal Government can print money and 
25 

the Federal Government can borrow debt that no other person, no 

other entity, no other government could borrow. 

And as far as—the distinguished Chairman has, I think, shown 

great courage in his participation in the Simpson-Bowles Commission. Actually, I wish the President would embrace his own bipartisan Fiscal Commission report. Instead, he’s walked away from it 

and has barely mentioned it since then. Because I think that really 

does demonstrate a way that Congress could, working with a leader 

at the White House, actually solve, or at least make great inroads 

into solving, this problem. 

But because Congress cannot bind future Congresses, we need 

some sort of restraint. If it’s not going to be imposed by self-restraint, we need some sort of constitutional restraint, I believe, in 

order to require Congress to get back living within its means. 

It’s not just my idea, it’s actually the framers of our Constitution, 

in Article 5, that said that Congress could take up a joint resolution to amend the Constitution. We’ve done it 27 times, including 

the Bill of Rights, so it’s not a novelty. We don’t do it often. We 

do it for important things. But surely this would qualify as important. 

And you know what? If Congress doesn’t act, the States can actually apply and require the invocation of a constitutional convention, 

which if Congress doesn’t act, I hope State legislatures will take a 

close look at what the power that the people retain in order to force 

action in Congress unless Congress does act. So this is entirely 

within the mainstream of constitutional doctrine and thought and 

it’s regretful we find ourselves here. 

Mr. Greenstein, is there any level of Federal debt that you would 

find so threatening to the potential of a sovereign debt crisis, such 

as we’re seeing over in Europe, that you would—where you would 

say that Congress should be able to accumulate debt without end, 

or is there some point where you would say, well, in order to stimulate the economy and keep people at work, the Federal Government 

should have to reign in spending because, notwithstanding its desire to stimulate the economy, it would threaten the sovereign debt 

crisis? 

Mr. GREENSTEIN. Senator, my view that the constitutional balanced budget amendment is unwise does not at all mean that I 

don’t think we face serious fiscal problems. We do. I think the work 

of our centers indicated we have kind of a fiscal hawk outlook. We 

very much commend the Gang of Six, for example, as the kind of 

changes we need to make. 

I think the most relevant metric is the debt as a share of the 

economy. It is the single metric that every bipartisan commission 

elevated as the key. We’re currently at about 67 percent of GDP, 

but the risk is that in future decades, if we don’t change course, 

the debt rises as a share of GDP above 100 percent, 200 percent, 

and so forth. That’s a serious problem. We need to ensure that 

doesn’t occur. 

It’s not the case that if you go above 90 or 100 percent of GDP 

that the world immediately falls apart. We were at 110 percent in 

World War II, but that wasn’t permanent. It then came back down 

when the war ended. The long-term challenges—— 
26 

Senator CORNYN. I’m sorry to interrupt you, but unfortunately 

my time is about up and we have votes, and so I’m going to have 

to—I would like to get to other people. 

So the problem is, Simpson-Bowles has been ignored by the 

President of the United States, the very same person who appointed the people to serve. I believe that Senator Durbin and others, on a bipartisan basis, showed great courage. I don’t agree with 

all of it, I don’t like all of it, but it represents a serious attempt 

to deal with a real problem, but in fact it hasn’t been done. 

But I’d like to ask Mr. Romasco, what is AARP’s current position 

on reforms to Social Security benefits and the Social Security system? What’s on the table and what’s off the table? 

Mr. ROMASCO. Our position has been pretty clear. We view that 

Social Security has a solvency problem and a challenge. It is a 

long-term one and actions can be taken to strengthen it over the 

long term. We were active in not wanting to see it part of the 

Super Committee because we thought there was a need for that 

discussion, a broad national discussion about how to solve that 

problem. 

Senator CORNYN. Do you agree with Mr. Rother, AARP’s longtime policy chief, when he told the press in June that AARP was 

dropping its longstanding opposition to cutting Social Security benefits as part of an overall reform effort? 

Mr. ROMASCO. Those context—those comments were taken out of 

context. We certainly didn’t authorize that. 

Senator CORNYN. According to press reports, Mr. Rother defended the decision, stating that, ‘‘Some of our members will no 

doubt be upset by any such effort, but I believe most would welcome a balanced and fair proposal that could strengthen the program for future generations and possibly even approve it for current vulnerable beneficiaries’’. Are you rejecting his proposal or his 

statement? 

Mr. ROMASCO. Well, he didn’t make a formal proposal and we 

have long maintained that both Social Security and Medicare need 

full discussion, a broad range of conversation, and a balanced approach. 

Senator CORNYN. And you see what discussion has gotten us to 

this point. 

Mr. ROMASCO. I’m sorry, Senator? 

Senator CORNYN. And you see what that discussion has gotten us 

at this point. 

Mr. ROMASCO. I have—— 

Senator CORNYN. Without reform, no changes, and beneficiaries 

of Social Security in the future may find themselves without the 

benefits that the Federal Government has promised, and that’s, to 

me, unacceptable. 

Senator COONS. Thank you, Senator. As I’m sure both other Senators are aware, the vote has begun, thus explaining the sudden 

exodus of the rest of the members of the Committee who will return promptly. I’ve been offered the opportunity to ask questions 

unexpectedly, given the change in order, if I might. I’ll be relatively 

brief. 

I’m someone who served as a county executive and lived under 

the strictures of a balanced budget amendment, and thus on some 
27 

level am intuitively drawn to them as a potential budgetary solution, but find compelling the question Senator Whitehouse asked 

about the differences between both the Federal practices and State, 

local, municipal that I’m used to that have a capital budget that 

have rainy day funds and so forth. 

Mr. Morrison—Professor Morrison, what experience has there 

been across the country with enforcement actions? The State that 

I’m from, we haven’t violated the balanced budget requirements at 

the State, county, or local level. But given the dysfunction and the 

challenges that State legislatures and municipal and local legislatures also at times face in maintaining fiscal discipline, there must 

have been some actions that enforcement—I may have missed that 

in the portions of this—of your testimony. 

What enforcement actions have been taken by courts? Have they 

been successful, unsuccessful, complex, simple? 

Professor MORRISON. I’m not familiar with any actions taken at 

the State level. My principal experience is at the Federal level and 

my concerns are that the State level doesn’t translate, in part, because of the opportunity for capital budget, for borrowing, and 

other things like that. 

Secondly, certainly at the county level, the States have control 

over anything to be done at the county level. But as far as the litigation is concerned, I’m not aware of any that has been either helpful or harmful, but I did not look into that specifically. I’ve principally been concerned with the Federal laws, and the Federal doctrine of standing is rather different than it is in most States. 

Most States have provisions under which taxpayers can go to 

court. You can’t do that in the Federal system. So my first proposition is that regardless of whether the States have or have not 

been successful, I think we need—if we’re going to pass a balanced 

budget amendment, which I do not support—to spell out exactly 

how it’s going to be enforced, what the role of the courts are going 

to be, who’s going to be allowed to go to court, what kind of questions the courts are going to be allowed to resolve and what kind 

of questions are going to be out of bounds. 

The members of the Minority have suggested that we have a dialog with the American people about this. The American people 

ought to know in advance whether they’re turning the process over 

to the courts or not. 

Maybe everyone thinks it’s a good idea, but I hear a lot of people 

criticizing the Federal courts for doing too much. This is the first 

time I’ve ever heard anybody actually propose that the remedy for 

all our problems with our budgets is Federal judges. 

Senator COONS. Let me make sure I hear you right, Professor. 

Your concern is that a balanced budget amendment, if passed without enforcement provisions, is nothing more than puffery, it’s just 

adding to the Constitution something that we all hope we will respect because we respect the Constitution but that has no actual 

enforcement mechanism. 

Given—taking as evidence in front of us the demonstrated inability of the Congress to achieve balanced budgets for any but four of 

the last 40 years, if memory serves, the likelihood that there would 

be actions to try and enforcement it fairly promptly are fairly high 

and, to your testimony, they would inevitably be messy, com-
28 

plicated, and then drag the Federal judiciary into the budgetary 

process in uneven and unpredictable ways. 

Professor MORRISON. Well, they would be messy and drag the 

Federal courts in only if they got over the threshold requirements 

of standing. 

Senator COONS. Right. 

Professor MORRISON. And in my view, and I’ve never heard anybody suggest to the contrary, that unless you specified in the 

amendment to the Constitution that the usual rules about standing, political question, ripeness, and mootness were changed specifically for the balanced budget amendment, then you wouldn’t 

have to worry about any messy trials but you wouldn’t have any 

enforcement either. 

And worse than just rhetoric and puffery, as you’ve said, it would 

be a step backwards because people would say, ah, now we’ve 

passed the balanced budget amendment, we don’t have to worry 

about it anymore, and of course we would have to worry about it. 

So it’s not just that it’s empty rhetoric, it actually would set us 

back, in my view. 

Senator COONS. Dr. Holtz-Eakin, as one of the advocates of a balanced budget amendment, if I remember your position correctly, is 

that correct or incorrect? How would it be enforced? How would it 

actually have an impact in producing fiscal restraint? 

Dr. HOLTZ-EAKIN. I’m not a constitutional lawyer so I’m not 

going to pretend I can weigh in on those. But in terms of what 

we’ve seen at the States’ level, there are a wide variety of constitutional, statutory, and other balanced budget requirements at the 

State level. Regardless of their severity, the commitment to a balanced budget appears to affect outcomes. That, in and of itself, I 

think would be beneficial. 

How you do the enforcement is, I think, an important issue, 

there’s no question about it. But to have a public debate that would 

be necessary for three-quarters of the States to ratify this would 

be a national commitment to balancing the budget. I cannot believe 

that wouldn’t change things for the better. I really believe that. 

And I just want to say on the capital budget, I think this is a 

distraction. You know, the notion of a company borrowing to make 

a capital outlay is really—those are outlays that are large relative 

to the scale of those firms. We have no capital outlays that are 

large relative to the scale of the U.S. economy. We can afford to 

fund our capital and we do it. 

When we buy a missile, the appropriations process pre-funds 

that. You have to appropriate all the budget authority, even though 

the actual outlays might not occur for a long time. You had no 

trouble handling capital expenditures at the Federal level. I think 

this misses the point entirely. 

Senator COONS. Forgive me, I am at some risk of missing this 

vote if I don’t call a short recess, but I’m just too tempted to follow 

up on that. 

If you could, Mr. Greenstein, any difference of opinion about 

whether or not a capital budget is simply a dodge? As was suggested previously, a capital budget, despite the restrictions of balanced budget requirements, if I heard your previous testimony cor-
29 

rectly, it is the existence of rainy day funds in capital budgets that 

allow States to largely evade any enforcement. 

Do we actually have capital investments as a Federal Government that are significant relative to the size of our economy? My 

hunch is you would say yes, but I’d be interested—— 

Mr. GREENSTEIN. Well, we have highways and transportation, 

but I don’t think the answer—I—the area where I agree with Doug, 

is I don’t think it would be a wise change to change Federal budgeting to bring capital budgeting into Federal budgeting. I think the 

answer is not to do a constitutional balanced budget amendment 

with the capital budgeting exception. It’s not to do a balanced 

budget constitutional amendment in the first place. 

Senator COONS. Mr. Greenstein, is there a world in which you 

can imagine a balanced budget amendment that would have the 

positive effects that Dr. Holtz-Eakin has suggested, meaning you 

would produce a national debate at the State level about whether 

or not we should be pursuing balanced budgets and the very real 

costs that would impose, the very significant potential restrictions 

on entitlement programs that are broadly popular, and that this 

National dialog, in and of itself, would have some value, some salutary effect? 

Mr. GREENSTEIN. No. I really think it would be a very serious 

mistake to try to write macroeconomic policy or fiscal policy into 

the U.S. Constitution. I don’t think that’s what the Constitution is 

for. There were all kinds of unforeseen effects that then you can’t 

respond to without having to do a new amendment to the Constitution. I think over time we would come to regret it in the way we 

did Prohibition, when that was added to the Constitution. We need 

a national debate on these issues but a constitutional amendment 

isn’t the way to get from there to here. 

Senator COONS. Can you suggest any alternative way to get a 

constructive and meaningful national debate on the importance of 

achieving a balanced budget and its importance? I mean, I think 

most of the members I’ve gotten to know in my year so far agree 

that we are fiscally on an unsustainable path, but there is obviously, from the failure of the Super Committee, fundamental disagreement over, what are the changes that need to be made to get 

there. 

Mr. GREENSTEIN. A couple of points. First, I think that if you 

look at all the bipartisan Fiscal Commissions of the last several 

years they did not erect as the goal balancing the budget. They 

erected as the goal stabilizing the debt as a share of the economy 

at a reasonable level. 

Senator COONS. Correct. 

Mr. GREENSTEIN. I do think it’s a significant distinction. I think 

we—you know, if you compare where we are now to where we were 

two or 3 years ago, we’ve had much more of a national debate. If 

you look at polling data, the public is becoming much more focused 

on these issues. 

Bowles-Simpson, Gang of Six, even the failure of the Super Committee, I think we’re moving to a point where there will be significant changes. I don’t share the view that Congress’s record is nothing but one of failure here. 
30 

In 1990, there was a major bipartisan deficit reduction agreement. There was another in 1993. It wasn’t bipartisan. Then we 

had the 1997 Balanced Budget Act. The combination of those three 

pieces of legislation, combined with a strong economy, got us back 

to budget surpluses in the late 1990s. 

The biggest mistake we made was when we walked away from 

the pay-as-you-go rules in 2001. Were we to make a decision to 

fully abide by the pay-as-you-go rules going forward for everything, 

from the Medicare physicians to the tax cuts that are scheduled to 

expire, that would produce $7 trillion in deficit reduction and 

would help stabilize the debt over the coming decade. 

Senator COONS. So if we simply followed the policy that is in 

place and didn’t change it, we would make significant progress in 

terms of—— 

Mr. GREENSTEIN. Very substantial progress, even bigger than 

Bowles-Simpson or Gang of Six. 

Senator COONS. If you’ll forgive me, with that I’m going to call 

a brief recess. Several members are on their way back, but I must 

vote or I will miss this vote. 

With that, this hearing is in recess. 

[Whereupon, at 11:28 a.m. the hearing was recessed.] 

AFTER RECESS [11:31 a.m.] 

Senator DURBIN. I know this has been irregular with our roll call 

vote, and some members will be returning and I’ll yield the floor 

immediately when they do. But in the interest of a couple questions 

here I’d like to continue. 

I’d like to ask Professor Morrison to comment on an interesting 

meeting we had, hearing, of the Senate Judiciary Committee on 

October 5th with Supreme Court Justices Scalia and Breyer. It was 

a fascinating hearing. One particular exchange I’d like to share 

with you between Chairman Leahy and Justice Scalia. 

Chairman Leahy asked, ‘‘Justice Scalia, under our Constitution, 

what is the role, if any, the judges play in making budgetary 

choices or determining what is the best allocation of taxpayer resources? Is that within their proper role or is that somewhere 

else?’’ Justice Scalia answered, ‘‘You know it’s not within our proper role, Mr. Chairman. Of course it’s not. Of course it’s not.’’ 

Naturally, Scalia is pretty outspoken in his response there. That 

is a reflection of—in fairness to him and both justices, a reflection 

of the current interpretation of the Constitution. Absent specific 

language giving the court authority to review the provisions of a 

constitutional balanced budget amendment, do you believe the 

courts—the Federal courts have the authority to take up that question? 

Professor MORRISON. As my written testimony shows, it’s my 

view that the law is quite clear that the Federal courts would 

refuse to get into this balanced budget mess unless directed to do 

so by the Constitution. I think Justice Scalia accurately reflects the 

view of most Federal judges, that they would be dragged kicking 

and screaming and try to find every way they could do to possibly 

avoid having to make the kind of choices between Medicare, defense, Social Security, environmental protection, transportation, 

and food stamps, which is the kind of choices that would have to 

be made. 
31 

So I don’t think that Federal judges are the right people to make 

those decisions and I think that they would gravely resist any effort to do so. But of course, they would follow the law if they were 

required by the Constitution explicitly to do that. 

Senator DURBIN. Dr. Holtz-Eakin, assuming that the courts have 

the authority, either they find authority where Justice Scalia did 

not or it is expressly given in the balanced budget amendment, 

what are your thoughts about the expertise of Federal judges to 

make these decisions about the budget? 

Dr. HOLTZ-EAKIN. I think it’s probably a tie between them and 

what we see in Congress, sir. 

Senator DURBIN. I’m going to take that as faint praise. 

Dr. HOLTZ-EAKIN. You should. 

Senator DURBIN. But go to the specifics that Professor Morrison 

raised. If you’re faced with a challenge or the argument’s being 

made that the Congress has overspent in its Federal budget, work 

this through even the quickest Federal judicial schedule and come 

up with the remedy that you think would allow us to continue to 

harmoniously govern this country as we go through this question 

period. 

Dr. HOLTZ-EAKIN. Well, again, let’s take some of the balanced 

budget amendments that have been under consideration. They 

typically say balance, but they also say, you know, spending shall 

be capped at this level of GDP, taxes at another level of GDP. So, 

you know, if you’ve overspent and its clear you’re above that level 

of GDP, you’re going to have to solve this problem by cutting 

spending, and the judges are going to know that. The simplest rule 

is going to be, they’re going to just cut everything across the board 

and get down to the cap. So I actually don’t think that—— 

Senator DURBIN. Across-the-board cut, you’re suggesting? 

Dr. HOLTZ-EAKIN. That would be my guess. 

Senator DURBIN. Veterans, disability, military—— 

Dr. HOLTZ-EAKIN. It’s strictly—strictly—— 

Senator DURBIN [continuing]. Retirement? 

Dr. HOLTZ-EAKIN. Strictly conjecture. I mean, there’s no way to 

know for sure. 

Senator DURBIN. OK. 

I’m going to defer immediately to Senator Blumenthal after this 

question. Would you comment on the notion that has been put forward in a number of these amendments that we should somehow 

enshrine the question of revenues and taxes so, for example, the 

court could not order additional revenue be levied against the people of this country, a surtax to pay for the difference. 

Assuming we are facing a natural disaster, that someone argues 

Congress has over-spent and the President signed it, I suppose, 

and at this point the Federal judiciary could not even consider additional revenue to deal with that type of disaster. 

Dr. HOLTZ-EAKIN. So again, every amendment that I think has 

been taken up with serious consideration has had the capacity for 

a waiver. So let’s—you know, let’s acknowledge that there would 

always be the possibility of raising more revenue, doing more 

spending in extreme circumstances. 

The next question is, you know, how should you set the level of— 

the scale of the Federal Government? In the end, that’s a question 
32 

of politics in a representative democracy and you wouldn’t get such 

a balanced budget amendment enshrined in the Constitution unless the American people signed on. And so I think that’s how it 

should be solved. 

Senator DURBIN. Senator Blumenthal. 

Senator BLUMENTHAL. Thank you, Senator Durbin. Thank you 

all for being here today. This hearing has been very instructive. I 

want to sort of pursue the point, Mr. Holtz-Eakin, that you were 

making just now about the existence of a waiver. Isn’t there the 

very real danger, and knowing how the Congress operates from my 

brief experience here of less than a year, that the exception of the 

waiver would swallow the rule? 

In other words, that the balanced budget amendment itself would 

become a sort of message bill, another term that’s frequently used 

around here, and that it would have very little practical effect because the waiver would be in vogue for other reasons, and the difficulties that have been mentioned during this hearing. 

Dr. HOLTZ-EAKIN. I’m rarely the one to come to the defense of 

the Congress, but—— 

Senator BLUMENTHAL. You did speak of us, to use your word, lovingly. 

Dr. HOLTZ-EAKIN. Yes. 

Senator BLUMENTHAL. Give me one of your responses. 

Dr. HOLTZ-EAKIN. I mean, in the end the mechanical ability to 

have a super majority waiver of the rules would be there and it 

could be the case that a Congress would exercise it more frequently 

than we might anticipate or like. 

But remember, prior to that happening the American public is 

going to have to amend the Constitution. Three-quarters of the 

States are going to have to ratify this. There’s going to be enormous national debate. 

If a Congress then turned around and started violating the express wishes of the American public with great frequency, I can’t 

believe that many of the members would keep their jobs. 

Senator BLUMENTHAL. Well, I guess that is an optimistic view of 

the way it would operate. But let me also, going into some of the 

practical implications, Professor Morrison, it’s true that, for example, the education litigation has taken years and years and has 

proved very unwieldy, but in the end it has had some effect. Can 

you think of a way to structure the challenge, assuming that the 

standing obstacle could be overcome, that there could be a practically enforceable result from the courts? 

Professor MORRISON. I’ve thought a lot about that. I think the 

answer is no. That’s because the amendment itself focuses on a fiscal year, and the problem is only in a given fiscal year and you 

would have to be able to provide a remedy within that fiscal year. 

Of course, the amendment could specify that if in year one you 

improperly run a deficit, then in year two you have to pay back 

that deficit before you spend more. That’s not what any of the 

amendments say. I can think of 100 objections as a matter of policy 

to that, but you could legally do that, I suppose, and you would get 

around the problem of mootness. 

I should also point out that even if you manage to get a remedy 

in place by, say, the middle of August that required a 10 percent 
33 

reduction, you’re taking 10 percent not out of the whole year’s 

budget, but you’re taking it out of what’s remaining of the portion 

of that year so the effect is, in effect, a 50 percent—or close to 50 

percent—reduction for the remainder of the year. And so you really 

have to be very careful with any kind of remedy like that. And 

then, of course, there would be appeals of that order, and people 

would argue about it, and Congress might step in and it’s very 

hard to do anything effective. 

Senator BLUMENTHAL. But the major obstacle that you have 

identified, and I think very plausibly and correctly, is the time line 

and the amount of work and time that would be required to litigate. There are precedents for dealing with very complex and politically charged issues in a narrow window of time. 

Professor MORRISON. Yes. Yes. I would say this issue, of course, 

is quite different from many other constitutional challenges which 

I’ve been involved in where the issues are purely legal issues. Here, 

there are going to be very sharp disputes about facts, about whether estimates are good or not. 

Meanwhile, by the way, the economy doesn’t stand still while the 

fiscal year is going on. That is, the unemployment gets worse, tax 

revenues go up or down, and all of that will have to be factored 

into what will be a moving target. So, yes, there’s surely precedent 

for very prompt litigation, but not of a kind like this. 

Senator BLUMENTHAL. Where massive fact-finding is required. 

Professor MORRISON. And discovery and trials and briefs and—— 

Senator BLUMENTHAL. Well, of course all that could be limited 

under rules that could be established by the courts for defining 

what amount of discovery and putting very narrow deadlines on 

that. But while the litigation is ongoing there would be massive uncertainty in the markets, in the economy, which itself could have 

a negative effect. Is that true? 

Professor MORRISON. Yes. But to the extent that you put limits 

on discovery, you put burdens on the challenger, and therefore you 

make enforcement that much less likely and that much less effective. 

There’s been discussion here about a debate with the American 

people. If we’re going to have a debate, item one on the debate 

should be, are we prepared to turn this over to the courts if the 

Congress doesn’t do its job, because that’s a debate that barely has 

begun in the Congress and it surely has not begun with the American people. 

I don’t think anybody has really taken this issue and tried to explain it. It’s not an easy issue to explain to ordinary people, that 

the means by which this amendment is going to be enforced is by 

turning the case over to the Federal courts. 

Senator BLUMENTHAL. Thank you. My time has expired. But 

thank you all for your testimony today. 

Senator DURBIN. Thanks for returning, Senator Blumenthal. 

Senator Lee. 

Senator LEE. Thank you, Mr. Chairman. I’d like to thank each 

of you for coming. I also want to thank Chairman Durbin for convening this hearing, which I think addresses one of the most important issues of our generation. This was a central focal point of 
34 

my campaign for the U.S. Senate. It’s also something that I’ve focused on extensively since coming to the U.S. Senate. 

I feel so strongly about the fact that we need a balanced budget 

amendment that I’ve even written a book about it. So needless to 

say, I am an advocate of this. I’d like to respond, before I get into 

questions, to some of the points that have been made today. 

First of all, I think one of the reasons we need to remember why 

we need this is because as fun as it is to say that Congress just 

needs to do its job, one of Congress’s jobs, as it has perceived it, 

and one of its jobs as is made clear in Clause 2 of Article 1, Section 

8, is to borrow money on credit of the United States. 

The problem is that that power has been abused to the point where we’re now $15 trillion in debt, to the point that by the end 

of this decade we’ll be paying close to, if not in excess of, $1 trillion 

a year just in interest on our national debt. 

Now, this is no longer a simple debate between liberals and conservatives, between Republicans and Democrats, because whether 

you’re most concerned on the one hand about shoring up our ability 

to fund national defense, or on the other hand most concerned 

about making sure that we have enough money to fund entitlement 

programs, you have to acknowledge that the roughly $800 billion 

delta between what we’re paying in interest right now and what we 

could be paying in interest just a few years from now has the potential to bring about devastating consequences for every Federal 

program, from defense to entitlements. 

This isn’t a situation in which we can just do nothing because 

doing nothing will bring about a situation in which we’re forced to 

make abrupt, draconian, and very painful cuts to every Federal 

program, and including and especially those upon which the most 

vulnerable members of our civilization have come to rely. That’s 

why I think it’s irresponsible for us to pretend that there isn’t a 

problem that we have to address. 

I want to address the problem that suggests that somehow this 

would be dead letter law unless we turn over the entire budgeting 

process to the courts. I respectfully, but most forcefully, disagree 

with this point. First of all, we have to remember that, particularly 

when Congress is entrusted with certain constitutional responsibilities, it does take them seriously. There are a number of instances 

in which Congress is required to pass certain things by a super majority threshold. That’s required in the case of expelling a member 

under Article 1, Section 5. It takes two-thirds of that House. That’s 

the case under Article 1, Section 7, Clause 2, where it takes twothirds to override a presidential veto. 

And yet, we don’t find ourselves mired in litigation every time 

those thresholds are implicated, or in the case of Senate ratification 

of a treaty. This is simply that. This is a super majority requirement that says Congress needs to spend no more than it takes in, 

and Congress needs to spend no more than a fixed percentage of 

GDP, keeping in mind the fact that there ought to be a limit to 

how much out of every dollar the Federal Government ought to be 

able to take and consume before it’s even spent, and spend money 

that future generations have yet to make on behalf of people who 

one day will have to pay it back, people who are in some cases not 

old enough to vote, in other cases not yet born, in other cases peo-
35 

ple who will one day be born to parents who have yet to meet. This 

results in a really nasty, pernicious form of taxation without representation. We fought a war over that. We won that war. 

Now, if you’re suggesting that if this did result in litigation—and 

I understand your standing concerns. I address that in Senate 

Joint Resolution 5. It’s not directly addressed in Senate Joint Resolution 10. I wish it were. I will continue to keep that in mind. 

But if it were to result in litigation there are benchmarks against 

which Congress could ensure that the litigation would not be mired 

down for years, that it wouldn’t have to result in extensive discovery. The balanced budget amendment that all 47 Republicans, 

including myself, have co-sponsored provides that Congress may, 

by appropriate legislation, enforce the terms of this amendment. 

This means that Congress could identify as a particular entity, 

a particular office—perhaps the Congressional Budget Office—as 

the entity in charge of deciding whether or not a particular budget 

is or is not balanced. This could result in a binary compliance 

standard, one in which the CBO either does or does not say it’s in 

compliance. 

Then you could have a court, assuming you could get around the 

Article 3 justiciability issues that I believe you could, because with 

respect, I think Raines v. Byrd, although it makes some important 

points in this, it’s not necessarily the inexorable command that you 

could never have a Member of Congress with standing, irregardless 

of what we came up with. 

So Professor Morrison, in the few seconds I have left, I’d like you 

to just answer the question: have we ever had extensive, protracted 

litigation on issues of public importance, national importance that 

have focused on whether or not Congress has complied with its 

mandate to pass certain things by a super majority? 

Professor MORRISON. The question is whether a court has never 

had to decide whether Congress has complied with a requirement 

like that. The answer is, there is a case involving the question 

about whether or not a revenue bill originated in the House of Representatives or not. The court decided that question. That’s a kind 

of technical compliance question. But no questions involved—— 

Senator LEE. And how did the court decide that case? 

Professor MORRISON. It decided that the bill had originated in 

the House of Representatives. 

Senator LEE. OK. So in that one case, the one case that you can 

point to where that resulted in litigation, the court decided it. 

Professor MORRISON. But that’s a very—— 

Senator LEE [continuing]. The country in months and months or 

years and years or decades of litigation, did it? 

Professor MORRISON. A very different kind—that’s a pure legal 

question. No facts, no discovery. 

Now, can I say a word about the Congressional Budget Office, for 

which I have great respect? Under the Gramm-Rudman case, it is 

perfectly clear that, unless you make another part of an amendment to the Constitution, the Congressional Budget Office cannot 

carry out the function of deciding whether the Congress has complied with the Constitution or not or whether a particular budget 

is in line with the Constitution. That would either have to be given 

to the President or to the courts. 
36 

The Congressional Budget Office is part of Congress and separation of powers is very clear that the CBO cannot do that. As far 

as raising standing, I was the losing lawyer in the Raines case so 

it pains me—— 

Senator LEE. It was masterfully litigated, nonetheless. 

Professor MORRISON. Yes, yes. But we won on the merits eventually. If I may say a word, I regret the passing of your father, with 

whom I worked on many cases on both sides. 

Senator LEE. As do I. We miss him. Thank you very much. 

Senator DURBIN. Let me ask you, if I can, Professor Morrison. 

There’s a provision in here that was topical a few months ago. I’m 

referring to Senator McConnell’s balanced budget amendment. It’s 

the provision on the limit on the debt of the United States shall 

not be increased unless three-fifths of the duly chosen and sworn 

members of each House of Congress shall provide for such an increase by roll call vote. 

We went through this debate not long ago, and the question 

was—and maybe this is something you can or cannot answer, or if 

someone else would like to—do you feel that the President had any 

inherent authority to borrow that money absent an express vote of 

Congress to extend the debt ceiling? 

Professor MORRISON. In my opinion, the President does not have 

that authority, but I have not done the legal research necessary to 

do that. I say that because in my view the power to borrow money 

and to incur obligations on behalf of the United States is one that 

is given to the Congress, that it must be done pursuant to a law. 

The problem is a little complicated by the fact that there was an 

existing law in effect at the time. Had there been no law, if we had 

had no debt ceiling at all, then it might have been a more arguable 

question. It’s rather like the Youngstown case in which there were 

existing laws that limited the power of the President. If Congress 

were to eliminate those laws it would be a different question. I’m 

not sure I would come out the same way, but I would at least want 

to hear the arguments about it. 

Senator DURBIN. I guess the only element there that I would 

raise is that Members of Congress, having voted for the appropriation, for the spending, or many of them, then turned around and 

said, but of course I’m not going to vote to borrow the money to 

cover what I’ve just voted for. So they had made an inherent decision to borrow money by spending it, voting to spend it, appropriate it, and then turned around and said, but no, not—I wouldn’t 

extend the debt ceiling for that. 

Professor MORRISON. I think we will never get an answer to that 

question because even if something actually happened along those 

lines, the Federal courts would say we don’t have any jurisdiction 

to decide that question. That’s not a case of controversy within Article 3, and nobody’s got standing to raise it. 

Senator DURBIN. Mr. Greenstein, one of the things that you 

noted in your testimony and didn’t have a chance to put it in your 

oral statement, is a distinction related to child care, if I’m not mistaken. It’s an important distinction because this balanced budget 

amendment enshrines the Tax Code and says to touch the Tax 

Code you need a super majority vote, but you can cut all the spending you want with a majority vote. You made the point in there, 
37 

when it came to child care, that when it came to the poorest families in America that child care was a matter of appropriation. 

When it came to families of means, it was a benefit under the 

Tax Code. So we clearly are creating, on this one single issue, a 

distinction where, if we are going to change the Tax Code and reduce the benefits for child care for people with means who itemize, 

we need an extraordinary vote. 

But if we’re going to cut the appropriation for child care for those 

who are of limited means, then that can be done by simple majority. It seems to me that is one illustration of why we should not 

make this distinction, why tax expenditures should be treated as 

expenditures. They have the same budget impact. I appreciate your 

comment. 

Mr. GREENSTEIN. Well, not all tax expenditures are equal and exactly the same, but a substantial number of tax expenditures are 

really the pure equivalent of spending just done through the Tax 

Code. They are subsidies where the mechanism Congress has chosen to provide the subsidies is through the Tax Code rather than 

through the spending side, and there are distributional implications here. 

So the child care example, to elaborate on it a little bit more, is 

that if you are a low or moderate income family your child care 

subsidy, if you have one, will come through a Federal spending program, appropriated program, or a mandatory program—child care 

and development block grant for example. And that’s not an openended entitlement. Only about 1 of every 6 low-income families 

with children that are eligible for Federal child care subsidy gets 

it. 

By contrast, if you’re an upper-middle or upper income family 

and you have child care costs, you get a Federal subsidy, too. You 

get it through the Dependent Care Tax Credit. That is not subject 

to appropriation. It is not a capped mandatory program. So we 

have an open-ended subsidy at the top: 100 percent of the eligibles 

who apply on their tax return get it. We have a limited subsidy at 

the bottom, where only a percentage, a fraction of the eligibles get 

it, but they’re both child care subsidies. 

So if you wanted to say we have a deficit and we think the Federal Government should do less in child care subsidies, why would 

you want a structure that shields the child care subsidies for the 

people that need it the least that are going to work anyway and 

constrains the child care—you’d want to have a level playing field. 

Senator DURBIN. So, Ms. Furchtgott-Roth, why would we? Why 

would we put that in the Constitution? Why would we draw this 

distinction? It’s a government service provided to American citizens, one through direct appropriation, one through the Tax Code, 

and we are protecting one by arguing that to reduce it takes an extraordinary vote, but we’re not protecting the other. 

Ms. FURCHTGOTT-ROTH. Well, there are many examples of benefits in the Tax Code that affect lower income individuals also. 

Senator DURBIN. Now, let’s take this specific—let’s stick with 

this one for a minute. Tell me why you think our Constitution 

should protect, by requiring a higher vote to reduce it, this tax expenditure, this tax credit for child care for wealthy people but not 
38 

protect the appropriation needed to provide child care for people of 

limited means? 

Ms. FURCHTGOTT-ROTH. So I think if you’re going to look at particular individual provisions of spending and of the Tax Code you 

need to look at them in the aggregate because the EITC, for example, that benefits low-income people, would also require a super 

majority. 

But the general idea is that it constrains Congress more because 

it would be more difficult to raise taxes, because otherwise taxes 

will just go up and spending will just go up. One can think of other 

examples where spending initiatives benefit upper income individuals and tax changes benefit lower income individuals. The point 

of the balanced budget amendment is to make it more difficult for 

the Federal Government to spend money. 

Senator DURBIN. I understand. 

Mr. GREENSTEIN. With all due respect, the answer is not correct. 

The Earned Income Tax Credit and other low-income refundable 

credits are classified in the Federal budget as spending, not as revenue. You would not need a super majority to cut the refundable 

Earned Income Tax Credit or the Refundable Child Credit. You 

would need a super majority to restrain an egregious tax loophole 

that was on the tax side. 

Senator DURBIN. I would just say, and I’ll defer to my colleagues 

here, when we went into the Bowles-Simpson debate that was one 

of the first things that everyone agreed on: the Tax Code was not 

sacred. It is earmarked expenditures through the Tax Code to meet 

certain ends, achieve certain goals, which is comparable to what we 

do with appropriation spending. Each has an impact on the deficit. 

When we start drawing distinctions in the Constitution, that if 

it’s in the Tax Code it somehow is more sacred, I think it belies 

the reality of politics in Congress. What goes on in the Finance 

Committee, what goes on in the Appropriations Committee is very 

similar in terms of the political push-and-pull, and to make this 

distinction in our Constitution, I think, goes too far. 

Senator Blumenthal, did you have any follow-up questions? 

Senator BLUMENTHAL. I noticed that at least two of the witnesses 

wanted to respond to your point, so I’m actually going to give them 

the opportunity, if you have a response—— 

Dr. HOLTZ-EAKIN. Thank you, Senator. 

Senator BLUMENTHAL.—because I would be interested in it. 

Dr. HOLTZ-EAKIN. Thank you, Senator. I guess my reading of this 

is, there’s a super majority needed to raise the level of taxes. It 

doesn’t constrain in any way the composition of the Tax Code, so 

if one were to eliminate a tax-based subsidy for child care or anything else, and there are lots there, and offset that with reduced 

revenues somewhere else, you wouldn’t need a super majority to do 

that. 

So what you would do, is you would broaden the base and lower 

the rates, which means this would in fact drive the kind of good 

policy tax reform that we know we need. So I don’t view this—— 

Senator BLUMENTHAL. But you don’t disagree with the point that 

Senator Durbin was making, that there really is a comparability as 

to tax expenditures and what we know as appropriations? 
39 

Dr. HOLTZ-EAKIN. Oh, I—the notion that we are providing targeted subsidies through both the tax and the spending side, I agree 

with that. My point is that the balanced budget amendment provides caps on total spending, it provides caps on total taxes, it is 

silent on the composition. It’s a level playing field in that sense. 

Senator DURBIN. If the Senator from Connecticut would yield. 

Senator BLUMENTHAL. Sure. 

Senator DURBIN. Section 4, any bill that imposes a new tax. The 

elimination of the mortgage interest deduction will result in higher 

taxes on my family. That, at least, is a question that has to be resolved, maybe in the courts, as to whether that is a new tax on my 

family. 

Now, there is a specific exemption in that same section which 

says, but this doesn’t apply if you’re lowering statutory rates of tax. 

But when it comes to new tax, you know, when you get into this 

area and try to enshrine the Tax Code and say it’s going to be 

treated in a different fashion, first, we’re not paying any attention 

to the deficit when we do that. Secondly—I’m sure the dynamic 

growth people see this differently, but this is how I view it. But 

secondly, we end up protecting earmarks in the Tax Code, as we 

have condemned earmarks in spending, and that troubles me. 

Dr. HOLTZ-EAKIN. Well, I mean, my reading of it is that that 

would not be a new tax. I view this as, we have an income tax, we 

can configure it in many ways, and have through history, and that 

what the amendment would in fact simply do is limit the total level 

of taxation and allow the Congress to, within that cap, rearrange— 

and should rearrange, quite frankly. 

Senator BLUMENTHAL. Yes. But aren’t you troubled, Mr. HoltzEakin, by the enforcement issue? You do raise it in your testimony. 

You say we need to consider it. Without an answer to that enforcement issue and the standing issue that Senator Lee does, as you 

said, to his credit, address, or I think Professor Morrison said to 

his credit, address, is only one and might be viewed as the least 

important of those issues, the most easily soluble. But without enforcement, even with the waiver, isn’t this really just dead letter? 

Dr. HOLTZ-EAKIN. Again, I’m not a constitutional lawyer, but 

when I look at this and I hear the debate about it, First, to repeat 

what the Senator from Utah said, which is that Congress takes its 

constitutional responsibility seriously and I do not think it would, 

in a frivolous and large way, violate a balanced budget amendment 

so the remedy would have to be imposed with this course would be 

so draconian that—as has been portrayed. I just view that as quite 

unlikely. 

Secondly, the threat of such a remedy would actually impose 

some discipline on Congress. They would not want to have a judge 

imposing that. In fact, we know that Congress dislikes the threats 

of across-the-board cuts and sequesters because it regularly waives 

its self-imposed—— 

Senator BLUMENTHAL. But the opposite is also true. The lack of 

an effective remedy would encourage, in effect, disobeyance by the 

Congress. I take the point that Congress has a constitutional responsibility, independent of the judiciary, independent of the executive branch, but again, on issues that are so complex and so politi-
40 

cally charged, doesn’t that enforcement issue have to be solved before we adopt this kind of very momentous amendment? 

Dr. HOLTZ-EAKIN. Again, I think we have learned that this may 

be the only way to get real enforcement because every budgetary 

enforcement mechanism that Congress has attempted to impose on 

itself, it has waived. There is no enforcement at all now. This at 

least takes us a step in the right direction. So I view this as far 

less troubling than certainly you and my panelists do. 

Senator BLUMENTHAL. Professor Morrison. 

Professor MORRISON. There’s one other problem that I haven’t alluded to yet, and that is that I don’t even know which proposed 

constitutional amendment is going to be on the floor. So when 

we’re discussing what this one means, I say, wait a second. You 

know, usually we have a debate at the Committee level. We have 

a target, we know what it is, and we can have perfecting amendments. 

Not that I think this can be perfected, but we surely should not 

be in a position where this kind of question about whether something—whether tax expenditures are or are not subject to this exception—is to be decided, what, by the people out there or by the 

Federal courts? No. That compounds the felony. 

Senator BLUMENTHAL. Thank you, Mr. Chairman. 

Senator LEE. Thank you. 

Professor Morrison, I just want to pick up on sort of where we 

left off. I want to clarify, first of all, that in referring to CBO I’m 

not talking about making CBO the enforcement arm. I share your 

concern that that would create its own range of constitutional problems. I’m saying simply that that could narrow any discovery that 

might need to be conducted in court. 

If Congress were to say we’re going to use CBO numbers, we’ll 

look at those, Congress would then have the opportunity to accept 

or reject their own estimates and that would narrow the litigation 

possibilities—the opportunity for discovery significantly to the 

point that I think it could be shortened. 

But I want to get back to the point about the oath to the Constitution. Each of us, when we’re sworn in as Members of Congress, 

are required to take an oath to ‘‘uphold the Constitution and to 

bear true faith and allegiance to the same’’. That does have an effect. 

Much as our popularity rating among the American people— 

which is somewhere to the south of that of Fidel Castro—might 

suggest otherwise, Members of Congress, when faced with very specific commands, do tend to take those very specific constitutional 

obligations quite seriously. 

Let me point to one of the examples that rarely gets brought up, 

which is the impeachment and removal of sitting presidents. You 

had a situation a few years ago in which a Democratic President 

was not removed—after having been impeached by the House, was 

not removed by the Senate, notwithstanding the fact that the Senate was Republican controlled and this President was a Democrat. 

One of the reasons why that President was not removed, even 

though the votes might have been there if they wanted to, there 

was extensive discussion about what it means to have committed 

a high crime or misdemeanor. There was Founding Era documenta-
41 

tion of what that really meant and there were a number of members of this body in both parties who said, you know, I don’t think 

this is it. 

Congress does police itself fairly well, especially when it knows 

that the buck stops with Congress. So I really think that we ought 

to avoid any situation in which we are simply going to assume Congress won’t follow it, this has to result in litigation, and the only 

way that this could ever be enforced would be through litigation. 

I simply reject that viewpoint. 

I’d like to ask a question to you, Dr. Holtz-Eakin. Do you think 

an argument can be made—do you agree with my viewpoint, and 

if so, why, that the longer we postpone requiring Congress to balance its budget and to live within certain parameters of spending, 

that we really are jeopardizing the very same programs that we’re 

talking today about that many have expressed concern about preserving. 

Dr. HOLTZ-EAKIN. Absolutely. Our social safety net is broken. I 

mean, the Social Security rate now is running a $50 billion cashflow deficit. The current ‘‘plan’’—and I put that in quotes because 

it’s a disgrace—is for future retirees to get an across-the-board cut 

of 23 percent so that we maintain the solvency of the system. 

That’s terrible. That should be fixed. 

Medicare, right now, there’s a gap of $280 billion between premiums and payroll taxes in and spending going out. Ten thousand 

seniors are retiring every day. That program will not survive for 

the next generation of seniors. So we should be fixing these now 

for the programs’ and beneficiaries’ sakes, plus the red ink and the 

economic consequences. 

Senator LEE. So those are problems that in some respects go 

above and beyond the present-day problems that we face from our 

debt, in other words. 

Dr. HOLTZ-EAKIN. Yes. 

Senator LEE. How far do you think we have to go before our interest rates, or the yield rates we have to pay on U.S. Treasury instruments, start to return even just to historical levels, let alone 

start to go Greece on us? 

Dr. HOLTZ-EAKIN. The truth is, we don’t know. In the end, these 

are relative comparisons and we have the virtue of being the bestlooking horse in the glue factory at the moment. But those relative 

comparisons can switch quickly and I don’t think we should take 

any comfort in that. 

I was asked the same question on a panel in the other body. I 

was sitting next to Carmen Reinhart, who is a subject matter expert in this. My answer was, ‘‘I don’t know how long we have. We 

should pretend we have no time.’’ And she said, ‘‘Doug’s an optimist’’. I take that seriously. 

Senator LEE. Great. That’s very helpful. Thank you. 

Dr. Diana. 

[Laughter.] 

Ms. FURCHTGOTT-ROTH. Yes. 

Senator LEE. I did want to point out, in response to your testimony, the provision dealing with the military conflict or declaration 

of war. That is different in the consensus Republican proposal, Senate Joint Resolution 10. That extends only to the extent of the 
42 

funds required to be—that have to be expended in connection with 

that war or military conflict. So the specific excess has to be identified and then the specific excess above the spending rates of this 

provision would be limited to that military conflict. 

Ms. FURCHTGOTT-ROTH. Right. 

Senator LEE. So that isn’t present at that moment. 

Ms. FURCHTGOTT-ROTH. Yes. That’s a big improvement. 

Senator LEE. Oh, thank you. I thought so. We worked pretty 

hard on that. 

I see that my time has expired. I thank each of you for coming. 

Senator DURBIN. Senator Lee, you’ve been very patient and returned. If you’d like to continue for a couple minutes, please feel 

free. 

Senator LEE. Thank you very much. I appreciate that, Mr. Chairman. 

Mr. Morrison, with respect to standing, couldn’t Congress, pursuant to what I analogized to, our version of Section 5 of the 14th 

Amendment, the portion of this that says Congress may, through 

appropriate legislation, take steps to enforce this provision. 

Couldn’t Congress provide through that legislation that Members 

of Congress could, under certain limited circumstances, have standing to sue under this provision and establish standing? Or is it 

your position that Raines v. Byrd conclusively resolves that issue 

and that there is no possibility that they could satisfy Article 3 

standing requirements in that circumstance? 

Professor MORRISON. My view is that Raines would control and 

that Congress could not, and the Supreme Court would agree that 

it could not, create standing for Members of Congress or anybody 

else. 

But if—as you are aware of the standing problem and believe 

that standing is important to have enforcement, then I agree that 

your S.J. Res. 5 does the right thing if you want to confer standing 

on Members of Congress by putting it in the Constitution. The Supreme Court would honor that. 

It would not necessarily agree to hear the case because, as my 

testimony points out, the political question doctrine, as well as 

ripeness and mootness, would also stand in the way, and surely the 

political question doctrine, focusing mainly on the issue of remedy, 

I think, as the quotation from Justice Scalia indicates, the court 

would be very reluctant to assume that Congress intended to make 

it the arbiters of the Federal budget. 

Senator LEE. And you may well be right in that respect in that 

the court may well be reluctant to become the first and last arbiter 

of the Federal budget. That being the case, I think that plays in 

exactly to my point about how Members of Congress, particularly 

when they understand that the buck stops with them as far as 

their interpretation of a particular constitutional provision. 

For example, those clauses dealing with the impeachment power, 

the power to remove individual Members of Congress, the power to 

ratify treaties, the power to override a Presidential veto, things like 

that, Members of Congress have tended, have they not, to abide by 

the Constitution. 

Professor MORRISON. Yes. If you want to say that the Federal 

court shall stay out of it then you ought to say that in your amend-
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ment to make it absolutely clear the Federal courts don’t get into 

it, then the American people can then decide, based upon a clear 

statement in the amendment, that we’re going to depend upon Congress to enforce this amendment and we’re not going to depend on 

anybody else. 

I think many people would think that it would be empty rhetoric, 

and by the time the amendment got passed and got enacted by all 

the States, we’d be another 5 years down the road, and everybody 

would say, we’re waiting for the amendment to take place, then 

Nirvana will arrive and all our problems will go away. I don’t think 

that’s a very good bet. 

Senator LEE. But aren’t there countless circumstances in which 

we benefit from the fact that there is some perhaps minimal uncertainty, the Sword of Damocles effect, in the fact that the courts 

could step in in a given circumstance? Doesn’t that that keep Members of Congress honest? 

Professor MORRISON. I don’t think in this situation they would. 

Senator LEE. Why is this situation any different than any other 

situation? 

Professor MORRISON. Because in this situation the temptations to 

exceed the budget limits are so great, given all the pressures from 

outside groups. The very reason we have this problem today is because it’s easier to say yes than it is to say no. That’s why we have 

the problem. The once-in-a-generation impeachment is not the 

same as the regular, annual budget cycle, campaign contributions, 

all the things that cause Members of Congress to do what they do 

in creating deficits. 

I don’t think that this alone may do it. Maybe Congress should 

just pass a joint resolution that every Member of Congress takes 

an oath to see that there’s a balanced budget, and everyone say 

we’ll run upon it next year in the election. At least that wouldn’t 

be enshrined in the Constitution and we wouldn’t have any litigation over that. 

Senator LEE. Although we could find a way to litigate that, too. 

Professor MORRISON. Well—— 

Senator LEE. I’m sure we’d want to retain you. 

Professor MORRISON. I’m pretty good at that. I think I would 

have—there’s also the speech and debate clause, which I’ve got 

backed up for you if you don’t want to worry about that kind of litigation. 

Senator LEE. OK. 

But your bottom-line analysis is: fish or cut bait. Either put 

standing in the amendment itself or leave it out and leave it something that is committed constitutionally to Congress’s discretion. 

Professor MORRISON. I would say standing and political question 

also. 

Senator LEE. OK. Thank you. 

Senator DURBIN. Thanks a lot, Senator Lee. And thanks to all 

the witnesses. Professor Morrison, I was with you until the end 

until you talked about a new pledge for Members of Congress. 

We’ve got enough of those. Let’s stick with our oath to the Constitution. 
44 

Thanks, everybody for coming, and especially thanks to the witnesses, for your patience. It’s been a good hearing. I want to note 

that there’s been a great deal of interest in it. 

I’d like to place into the record statements of the following individuals and organizations that oppose the balanced budget amendment: a letter from 281 national organizations, 424 State and local 

organizations; 8 leading economists, including 5 Nobel laureates; 

the Leadership Conference on Civil and Human Rights; the National Women’s Law Center; Constitutional Accountability Center; 

AFSME; Age United; National Educational Association; and an 

issue brief from the American Constitution Society. 

Without objection, they’ll be placed in the record. 

[The letters and brief appear as a submission for the record.] 

Senator DURBIN. The hearing record is going to be open for a 

week, and I think some questions may come your way, which is always a possibility. I hope you can answer them promptly so we can 

complete the record. 

If there are no further comments, I’d like to bring this hearing 

to a close and thank the witnesses and colleagues. 

The hearing is adjourned. 

[Whereupon, at 12:20 p.m. the hearing was adjourned.] 

[Questions and answers and submissions for the record follows.] 
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