Background on Federal Balanced Budget Amendment proposals

Updated July 20, 2011

 

1992

During the 1992 election year, Congress debated the merits of adding a balanced budget amendment to the US constitution. It would have required Congress and the President to balance the federal budget each year in order to reduce the growing national debt. The proposed amendment allowed for exceptions in times of war or with a 3/5 vote of congress. Opponents of the amendment argued that passage of the amendment would make it difficult for the federal government to manage during emergency situations. The amendment fell short by nine votes of the 2/3 majority required in the House, with 280 voting for the amendment and 153 against.

1995 & 1997

At the outset of the 1995 Congressional session, the new majority leadership introduced their “Contract with America.” A central part of the contract included a balanced budget amendment. During 1995, the majority tried again to pass a budget balancing amendment and succeeded on a 300-132 vote. The measure failed to pass the Senate by one vote. As the majority feared that future administrations would use the amendment as a way to increase taxes rather than cut spending, the amendment required a 3/5 vote to raise taxes, as opposed to a regular majority. One of the main objections from the minority was the majority’s refusal to allow an amendment that would have required social security surpluses to be excluded while calculating the deficit. The Amendment came up for a Senate vote again in 1997, where it once again failed by one vote.

Current proposals

House: H.J. Res. 1, H.J. Res. 56, H.R. 2560

Senate: S.J. Res. 10

Congress continues to work on a solution to the deficit crisis striking the nation. The debt ceiling needs to be raised before August 2nd in order for the government to meet all of its financial obligations, and the current debate on raising the ceiling includes negotiations on future spending cuts and revenue changes.

As one solution to the growing deficit, the House majority and Senate minority have introduced a new Balanced Budget Amendment (BBA) plan. The House proposal passed the Judiciary Committee on June 15, 2011 on a 20-12 vote. Meanwhile, the Senate proposal has been referred to the Judiciary Committee.

The proposals include the following:

Senate version

  • Mandates a spending cap of 18% of GDP, requiring a 2/3 vote to go over that limit. However, allows for exceptions in times of declared war, and for a 3/5 majority during a military conflict deemed to be a serious threat to national security.
  • Requires a 2/3 majority vote for an increase in taxes.
  • Requires a 3/5 majority to increase the debt limit except in times of declared war.
  • Becomes effective the fifth year after ratification.

House Version

  • Mandates a spending cap of 18% of GDP, and requires a 2/3 majority to go over that limit.
  • Requires a 3/5 majority vote to increase taxes and to increase the debt ceiling.
  • Becomes effective in seven years or two years after ratification, whichever comes later.
  • Some proposed amendments would require a 2/3 majority to raise taxes.

During a recent markup in the House Judiciary Committee, the minority presented strong opposition to the idea of a BBA, arguing that it could push weak economies into recession by preventing the government from acting. They argued the BBA would make the government cut spending or raise taxes in weak economies, which would further weaken the economy. They argued further that a BBA would prevent the federal government from making worthy investments for future capital.

Conversely, the majority argued that drastic cuts and reform are needed in order to save Medicare and Social Security, which many claim are unsustainable long term. They added that had a BBA been passed in the 1990s, the nation would not be facing the same fiscal crisis it faces today. Further, as seen by the increasing deficits, they argued the country cannot rely on Congress to be fiscally responsible if the constitution does not mandate it.

H.R. 2560: Cut, Cap and Balance Act of 2011

On July 19, 2011, the House majority is expected to pass H.R. 2560, the “Cut, Cap and Balance Act of 2011.”

The bill:

  • Proposes $111 billion in spending cuts for FY2012.
  • Caps spending at 19.9% of GDP by 2019.
  • Requires the passage of a Balanced Budget Amendment, which would need to include a spending cap and a supermajority vote to raise taxes, as a condition on raising the debt ceiling.

The bill is expected to pass the House but is unlikely to pass in the Senate. Further, the Balanced Budget Amendment itself doesn’t appear to have the 2/3 majority needed to pass either the House or Senate. On July 18, the President confirmed his opposition to the bill and a Balanced Budget Amendment when he released a Statement of Administration Policy declaring his intent to veto the bill if it were to reach his desk. On July 19, the bill passed the House by a vote of 234-190.