Chairman Goodlatte: March 2, 1995, was a pivotal day in the history of our country. On that day, the U.S. Senate failed by one vote to send a balanced budget constitutional amendment to the states for ratification. The amendment had passed the House by the required two-thirds majority and the Senate vote was the last legislative hurdle before ratification by the states.
If Congress had listened to the American people and sent that amendment to the states for ratification, we would not be facing the fiscal crisis we are today. Rather, balancing the federal budget would have been the norm, instead of the exception over the past 20 years and we would have nothing like the annual deficits and skyrocketing debt we currently face.
In 1995, when the balanced budget amendment came within one vote of passing, the gross federal debt stood at $4.9 trillion; today it stands at over $19.5 trillion. The federal debt held by the public is rising as well and is increasing rapidly as a percentage of the country’s economic output. Unlike the past, when the debt spiked to pay for wars of finite duration and then was reduced gradually after hostilities ended—more recently, the debt has risen as a result of having to pay for entitlement programs that are of indefinite duration and difficult to reduce over time.
As the non-partisan Congressional Budget Office has observed, “such high and rising debt [will] have serious negative consequences . . . interest rates [will] increase considerably . . . productivity and wages [will be] lower . . . [and] high debt increases the risk of a financial crisis.”
What is particularly troubling is that the debts we are incurring will burden multiple future generations. Indeed, a few years ago a cross-national study found that the United States ranked worst among 29 advanced countries in the degree to which it imposes unfair debt burdens on future generations. It’s time for Congress to stop saddling future generations with the burden of crushing debts to pay for current spending. We should not pass on to our children and grandchildren the bleak fiscal future that our unsustainable spending is creating.
The only way to ensure that Congress acts with fiscal restraint over the long term is to pass a balanced budget amendment. Experience has proven time and again that Congress cannot for any significant length of time rein in excessive spending. Annual deficits and the resulting debt continue to grow due to political pressures that the Constitution’s structure no longer serves to restrain.
In order for Congress to be able to consistently make the tough decisions necessary to sustain fiscal responsibility, Congress must have the external pressure of a balanced budget requirement to force it to do so.
The Framers of the Constitution were familiar with the need for constitutional restrictions on deficit spending. When the Constitution was ratified, it was the states that had exhibited out-of-control fiscal mismanagement by issuing “bills of credit” to effectively print money to pay for projects and service debt. As a result of that lack of fiscal discipline, Article I, Section 10 of the Constitution specifically deprives states of the power to issue bills of credit. Over two hundred years later, it is the federal government that has proven its inability to adopt sound fiscal policies and thus it is now time to adopt a constitutional restraint on federal fiscal mismanagement.
Several versions of the balanced budget amendment have been introduced this Congress, including two I introduced this Congress as I have every Congress for the last decade. H.J. Res. 2 is nearly identical to text that passed the House in 1995 and failed in the Senate by one vote. It requires that total annual outlays not exceed total annual receipts. It also requires a true majority of each chamber to pass tax increases and a three-fifths majority to raise the debt limit.
H.J. Res. 1, which I also introduced, goes further. In addition to the provisions of H.J. Res. 2, it requires a three-fifths majority to raise taxes and imposes an annual cap on federal spending.
While my preference is to pass the stronger version of the balanced budget amendment, the two-thirds majority requirement for passing a constitutional amendment demands that we achieve bipartisan support for any approach.
Our extraordinary fiscal crisis demands an extraordinary solution. We must rise above partisanship and join together to send a balanced budget amendment to the states for ratification.
We are at a crossroads. We can make the tough choices to control spending and pave the way for a return to surpluses and paying down the national debt, or we can continue further down the road of chronic deficits, leaving our children and grandchildren with crippling debt that is not of their own making. The choice is ours and the stakes are high.
I look forward to hearing from our distinguished panels of witnesses today about this important issue.