David Primo – Professor, University of Rochester

September 9th, 2011

Primo_200x230Constitutional Rules Needed for Real Budget Reform

If federal budget battles this year have taught us anything, it is that there is vigorous disagreement in Washington about how to address the nation’s fiscal problems.  The result of this disagreement is gridlock, which often prevents Congress from acting in a rash manner.  But, in the case of a national debt spiraling out of control, change is needed, and soon.

Unfortunately, under our current system, Congress tends to wait until a crisis manifests itself before acting.  And as the bailouts of Wall Street and auto makers in 2008 show, crises are expensive, and policy changes crafted in times of crisis are usually misguided. Constitutional budget rules can help break the impasse over spending reform.

Budget rules restraining legislators are necessary because elected officials have little incentive to deal with long-term budget problems, including staggering projected increases in the cost of entitlements like Medicare, Medicaid, and Social Security.  A plan that restructures entitlements to deal with these long-term risks may have near-term consequences for a legislator’s reelection prospects.

A constitutional amendment requiring Congress to limit spending or balance the budget will change the terms of the debate by forcing Congress to act on entitlements and other spending problems before they reach the point of crisis.  Inaction, or the creation of yet another committee in an attempt to evade difficult choices, will no longer be an option.  Why?

First, constitutional rules cannot be easily undone, since doing so requires the same process as the enactment of the rule:  two-thirds majorities in both Houses of Congress (or a constitutional convention requested by two-thirds of the states) followed by approval by three-fourths of the states.

Second, these rules are enforceable in court in ways that other rules are not.  Because the U.S. Constitution grants Congress the authority to make its own rules, Congress is the judge and jury when it comes to enforcement, with court involvement very unlikely unless a constitutional issue arises, which is rare.  The U.S. Supreme Court is much more likely to intercede if a constitutional budget rule is not followed because adherence to the Constitution is the Court’s purpose.

Opponents of constitutional budget rules raise the specter of multiple lawsuits each year challenging the federal budget, with the U.S. Supreme Court adjudicating competing claims and rewriting the federal budget.  In reality, the Court is much more likely to send a budget back to Congress for adjustment than tinker with it.  Still, to alleviate this fear, the rule can be written so that judicial oversight powers are limited.

In addition, opponents raise other inconsistent objections to reform.  On the one hand, opponents argue that the proposals on the table are too rigid, failing to give Congress the flexibility it needs to spend in times of war or economic turmoil.  On the other hand, they point to the ability of Congress to exploit loopholes in any rule.  In other words, constitutional rules are rigid and hamstring Congress, and at the same time they are so loophole-ridden that Congress can easily evade them!

The reality is this: constitutional rules can be written with waiver provisions that enable Congress to increase spending or run deficits in true emergency situations, but at the same time the rules can also be designed to minimize loopholes and gimmicks.  The key is careful design, which though difficult, is not impossible.

Is all of this debate merely academic? After all, if a constitutional rule forces Congress to make tough choices down the road, won’t constituents punish legislators for supporting such an amendment, making it a no-go politically?  Certainly, some voters will.  But the vote on the amendment won’t be a vote on specific changes to government programs.  These votes will be held once the amendment is in place.  And, at that point, legislators will be able to point to the constitutional rule to justify making hard choices, making voters less likely to punish them at the ballot box.

To those who still fear constitutional budget rules or think that the uphill political battle is not worth fighting, remember that the alternative of letting Congress continue down the path of fiscal irresponsibility is far more terrifying.  And the track record of Congress on budget reform does not inspire confidence that we will deviate from this pattern anytime soon.

David M. Primo is Associate Professor of Political Science and Business Administration at the University of Rochester and a Senior Scholar at the Mercatus Center at George Mason University.  He is the author of Rules and Restraint: Government Spending and the Design of Institutions (University of Chicago Press, 2007).

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