Junior Ganymede
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The Limited Government Amendment

September 27th, 2010 by G.

The Limited Government Amendment is a vast improvement over the Balanced Budget Amendment (too inflexible) and the Line-Item Veto Amendment ( too much power to the President). I like it.

Its essential mechanism is to limit federal budget growth from year to the next to no more than the rate of inflation plus 2%. This is not a tight limit, yet it would have greatly reduced the total government budget if it had been in place over the last few decades. The Amendment allows exceptions for emergencies and for defense spending in times of war.

Section 1: The annual rate of growth in total federal spending shall not exceed the rate of inflation, plus two percentage points, and neither budgeted nor actual spending shall exceed this limit, apart from the exceptions listed below. If no budget is passed, then the most recently passed budget, excluding any exceptions granted in Section 2, shall apply.

Section 2: Defense spending shall not be limited during a time of formally declared war, and further exceptions to the spending limits specified in Section 1 may be granted by the legislatures in three-quarters of the several states, upon the application of two-thirds of both houses of Congress, as they deem necessary; but any such exceptions shall not be included in determining spending limits for subsequent years.

Section 3: The spending limit for the first fiscal year following the cessation of hostilities in a declared war shall be the limit that was established for the fiscal year preceding the declaration of war, excluding any exceptions granted in that year, and adjusted for compounded inflation through all fiscal years completed in the interim.

Section 4: The rate of inflation used in determining spending limits shall be the rate from the most recently completed fiscal year prior to the passage of a given year’s budget, and the method of measuring inflation shall not be altered substantially from long-established norms. Spending that is not defense spending shall not be characterized as such; each exception granted by the states shall apply only to one fiscal year if not granted anew; and every citizen of the United States shall have standing to sue in federal court to enforce the language of this amendment.

Sticky points in the legislation are defining “budget,” defining “inflation” (there is no perfect measure of inflation and over time Congress will likely monkey with inflation measurements), defining “cessation of hostilities,” defining “defense spending” (would the insterstate highway system have counted, for example?), and deciding what remedy a court can offer if Congress violates this Amendment. These are all imperfections, but they are probably inevitable imperfections, and the status quo where Congress racks up gigantic mounds of spending every year is even more imperfect.

Some tinkering might be in order, however. I am told that every some federal spending is considered to be “off-budget.” Courts might well say that this Amendment does not apply to that spending. Perhaps add the sentence “all federal expenditures shall be included in the budget”?

I also want something that clarifies when and to what degree tax breaks are part of the budget. I would hate to see Congress pass a budget for the Department of Bloat and then add a tax credit for every donation to the Department of Bloat up to a total $10 billion. If the Amendment does not apply to tax credits, Congress has increased government expenditures by up to $10 billion more than it should under the Amendment while technically complying. I am no expert in this area, so conceivably the law is such that a government department simply cannot spend money unless authorized by Congress. Since Congressional authorizations to spend money presumably are the same as “budget,” the little dodge I just described may not work. It is generally agreed, however, that some tax breaks and tax credits are simply thinly disguised spending, and I would like the Amendment to account for them.

The practical effect of this legislation is to shift some power from Congress to the state legislatures and to the courts. Mostly to the courts, because the emergency provision for state legislature override is probably too restrictive. Congress will spend more time trying to game the Amendment in a way that the courts will accept. If the state legislature override provision were less restrictive, Congress would try to use it more. The emergency override should only require an ordinary majority in both houses (subject to veto?) and approval by three-fifths or even a majority of the states. To ensure that power is mostly shifted to the state legislatures and not the courts, I would also state that 2/3 of the state legislatures can vacate a court interpretation of the Limited Budget Amendment.

The emergency override is also too restrictive in that the emergency override cannot create a new budgetary baseline. After the emergency is over, the Amendment returns the budgetary baseline to what it was before the emergency. This mostly makes sense. But if an emergency is extended or if a new budgetary baseline becomes needed, then the state legislatures will have to approve emergency funding every year and over time Congress is in a position to lard up the rest of the budget, because state legislatures only have a thumbs-up or thumbs-down approval of the emergency override. If Congress needed to spend more to deal with the zombie attacks of the 2030s, and Congress also decided to appropriate extra billions for moonbeam research each year, the state legislatures could only disallow both or allow both. The Amendment could deal with this problem by allowing state legislatures to override specific expenditures—not itself a bad idea—but the danger of “emergency” overrides becoming routine still remains. It would be better to simply allow two-thirds of Congress to set a new baseline on approval of two-thirds of the state legislatures.

The Amendment may also effectively punish Congress for cutting spending in any given year. Here’s what I mean. If Congress passes a $10 trillion budget in year 1, then in year 2, depending on inflation, the Amendment allows Congress to pass a budget that is roughly $10.4 trillion. If Congress passes that budget, then in year 3, the Amendment allows Congress to pass a budget that is roughly $10.8 trillion. But what if Congress exercises fiscal restraint in year 2 and for the second year in a row only passes a $10 trillion budget? In that case, in year 3 the Amendment may only allow Congress to appropriate $10.4 trillion (I say “may,” because the Amendment does not clearly address this situation). The Amendment would therefore discourage Congress from cutting spending in any one year, because any cuts would permanently reduce Congress’ authority to spend. Imagine how difficult budgeting in your household would be if cutting out restaurants this month meant you could never visit a restaurant again? A Term Limits Amendment would attenuate the degree of discouragement, however.

Update: I forgot to mention that the Amendment *sounds* constitutional. Whoever drafted the language has a good ear. I also forgot to mention how brilliant this line is: “If no budget is passed, then the most recently passed budget, excluding any exceptions granted in Section 2, shall apply.” The line sounds innocuous. Heh heh. Keep thinking that. If this line had been in place during the Contract for America years, Clinton would not have been able to dangle the threat of government shutdown over the GOP Congress. If the Congress and the President are divided, this line puts the lever of power in the hands of whichever branch wants to limit spending. This line is far more important than it seems.

Comments (4)
Filed under: Deseret Review | Tags: , ,
September 27th, 2010 08:12:09

September 27, 2010

Your critiques are good ones. While I admire the spirit of this amendment proposal, I don’t think it has a ghost of a chance.

I am skeptical of term limits because I believe they will tend to shift power from Congress to the bureaucracy. I might favor term limits combined with an explicit prohibition on Congress delegating its legislative authority.

Adam G.
September 27, 2010

I am more sanguine than you. Some things are possible now that wouldn’t have been three years ago.

September 27, 2010

There is an opinion piece on this in today’s Wall Street Journal.

September 28, 2010

It’s easier to define and measure GDP than inflation. Government budgets should be set to some percentage of GDP rather than inflation. Couple this requirement with a return to sound money, and this restricts the ability of government to grow without real economic growth.

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