Yesterday the House of Representatives debated and passed the Cut, Cap and Balance Act that would cut federal spending next year, statutorily cap all federal spending to 18 percent of GDP (it is now about 25 percent) and pass a broad balanced budget amendment.
We think the best solution is to cut and cap. Period.
No one disputes that we are living through a federal budget nightmare. After unpaid-for expansions to federal entitlement programs, a decade of wars and years of recession and sluggish recovery, the United States now pays more than $600 million each day on interest alone for its more than $14 trillion in debt. And that interest and debt will only increase unless strict fiscal discipline is restored to the budget process.
Given the credible projections that foresee federal debt eclipsing the country's GDP, it is well within the rights of the Republican majority in the House to lay out a clear plan, in line with their policy priorities, that cuts current spending and attempts to cap spending in the future.
It is time for strong fiscal medicine.
Nonetheless, it has long been the position of this paper that a balanced budget amendment is the wrong medicine for this problem. (Indeed, we have reprinted today an editorial from 14 years ago stating many of the reasons we have considered such amendments more of a gimmick than an effective tool.)
The balanced budget amendment proposed with the Cut, Cap and Balance Act is not specific enough to avoid accounting chicanery. Already, the federal government uses odd budgeting and accounting principles that allow for significant spending to occur off the books. It is hard to imagine that kind of creative accounting disappearing under the broad language of the proposed amendment.
And although the proposed amendment anticipates the need for "outlays" to exceed "receipts" during periods of declared war, its supermajority requirements are not flexible enough to deal with other kinds of emergencies and opportunities. For example, we can't see any scenario under this proposed balanced budget amendment whereby President Ronald Reagan could have accomplished the domestic economic growth or military build up that many believe won the Cold War.
The nation could benefit from cuts and caps, but it's the Congressional Budget Act of 1974, not the Constitution, that should be specifically amended to improve how we budget.