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Balanced Budget Amendment Is the Price for a Debt Limit Increase

Posted By Brian Darling On May 9, 2011 @ 2:27 pm In Economics | Comments Disabled

A battle is raging within the conservative movement on Capitol Hill whether to shoot at the flag stick or lay up (in golf terms). The battle is between the Balanced Budget Amendment (BBA) versus a statutory spending cap bill. Both factions have good points.

The bold, shoot-at-the-flag-stick faction of the movement wants to push for a BBA strategy or bust. This strategy includes taking the debt limit increase hostage for the demand of a BBA passing both the House and the Senate.

Another other faction of the movement is pushing for a law that would set a statutory cap over the next 10 years, limiting the spending of the federal government to about 20.6 percent of the economic output of the United States’ economy. This strategy would settle for an amendment in the form of a spending cap to the debt limit increase as a price for passing an increased debt limit.

Today, I wrote at Human Events [1] that Senator Mike Lee (R–UT) is rounding up support for the idea that the price of increasing the debt limit is passage of the BBA by both the House and the Senate.

Senate conservatives are working to pass a Balanced Budget Amendment (BBA) as part of the debate over a debt-limit increase. According to Politico, Sen. Mike Lee (R.-Utah) is circulating a letter to other senators asking them to join his pledge to “oppose any attempt to raise the debt ceiling” until a BBA is passed by both houses. Lee has been joined by Republican Senators Rand Paul (Ky.), Jim DeMint (S.C.), Jim Risch (Idaho), Marco Rubio (Fla.), Jim Inhofe (Okla.), and Richard Shelby (Ala.).

Robert Costa [2] over at NRO interviewed Senator Lee on the strategy, and Lee said the following:

I would like to see a scenario in which Republicans in both houses draw a line in the sand. If Democrats do not give us the supermajorities we need in both houses to pass the balanced-budget amendment, we are not going to even come to the table. It is a condition precedent. We are always hearing the Left, from the political establishment, that it would be catastrophic if we do not raise the debt limit. I don’t mean to minimize the significance of that happening; it would create a lot of uncertainty and a lot of fear. But we have to remember that there are at least equal corresponding risks of raising it without putting anything else in place.

The Commitment to American Prosperity Act, or CAP Act [3] (S. 245), was introduced by Senators Bob Corker (R–TN) and Claire McCaskill (D–MO) as a means to cap spending as a percentage of America’s gross domestic product. I write in Human Events [1] that the CAP Act is being viewed as a safe landing place for those who want to cap spending but fear that a BBA is a bridge to far, because it would take a two-thirds vote of the House and Senate to pass a change to the Constitution in the form of the BBA.

Some conservatives worry that a bipartisan plan to cap spending … may undermine efforts to pass a BBA this year. The CAP Act would start in Fiscal Year 2013, capping spending at 25% of the gross domestic product, then ratchet down spending caps over the years 2014 through 2022. This isn’t enough for some conservative senators, who note that spending caps have proven ineffective. Furthermore, some complain that the CAP Act sets spending levels too high, and doesn’t even cap spending for the next fiscal year.

Senator Corker describes the CAP Act [3] as follows:

The CAP Act reduces total federal spending—discretionary and mandatory spending combined—to a target of approximately 20.6 percent of gross domestic product (GDP), the historical average of federal spending. Beginning in 2013, the CAP Act will establish federal spending limits that will be gradually reduced over 10 years to 20.6 percent.

Some conservatives demand fundamental constitutional reform, because statutory spending limits are too easy to waive and change. This debate will play out over the next few weeks approaching Secretary of the Treasury Tim Geithner’s declared deadline of August 2 for passage of a debt limit increase. It will be interesting to see if the House and Senate decide to throw in all their chips for a bold strategy or an incremental strategy to cut the size and scope of the federal government.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2011/05/09/balanced-budget-amendment-is-the-price-for-a-debt-limit-increase/

URLs in this post:

[1] Human Events: http://www.humanevents.com/article.php?id=43388

[2] Robert Costa: http://www.nationalreview.com/articles/266695/lee-s-limit-robert-costa?page=1

[3] CAP Act: http://corker.senate.gov/public/?a=Files.Serve&File_id=12ca2650-f86c-49c7-b3ac-1d750587cbf2

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