Cut, Cap, and Balance Act of 2011

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Mr. NADLER. Many of our colleagues on both sides of the aisle would not be
here today if President Jefferson had not borrowed to finance the Louisiana Purchase.

Mr. Speaker, this bill promises all the fun of a constitutional amendment without actually amending the Constitution. It simply says that the United States should default on our debts and destroy our economy if we don't amend the Constitution.

If we default on our debts, we will do more damage to our economy than large deficits, tax increases and draconian cuts combined. Right now, we enjoy very low interest rates because we are still the most stable, reliable and wealthy country in the world.

If the markets get the idea that we are too dysfunctional to pay our debts, even though we are certainly wealthy enough to do so, nothing else will matter. Interest rates will climb. Homeowners and businesses will be pushed out of the credit market. The stock market will crash.

Never before in the history of this country has anyone been irresponsible enough to play chicken with our full faith and credit. Never.

We know how to balance the budget, because we've done it before. In the not-too-distant past, we managed, in working with President Clinton, not only to balance the budget but to run surpluses and begin paying down the debt. Unfortunately, President Bush and a Republican Congress managed to turn record surpluses into record deficits in record time.

Rather than admit to serious Republican economic mismanagement and finding responsible solutions, we get this dusted-off quack cure from the past. The so-called balanced budget amendment requires a balanced budget much sooner than does the Republican budget that the House recently passed, the one that abolishes Medicare and turns Medicaid into a block grant.

I asked the sponsor of the balanced budget amendment, the gentleman from Virginia, how he thought this could be done. He answered that the Republican Study Committee budget, which is even more radical than the Ryan budget, would be in balance in just 9 years. That's what we're really voting for today--an accelerated version of the Republican Study Committee budget. Anyone voting for this should be prepared to go home and explain that vote, including Republican members who voted against their study committee budget.

Economists have long known that, in good times, you should balance the budget and pay down the debt but that, in times of recession, when tax revenues plummet and the economy contracts, you have to spend money on unemployment insurance and on putting people back to work. You must run a deficit to get the economy going again. The balanced budget amendment would force us to do the exact opposite and turn every recession into a depression.

This constitutional amendment does a whole lot more than require a balanced budget. Many of its provisions simply cement into the Constitution the policy preferences of the current majority and bind our children and grandchildren to those preferences.

The two-thirds requirement, for example, to increase revenues would have the perverse effect of allowing special interest tax loopholes to be slipped into law with a majority vote, but would require a supermajority to repeal them. This is not just antithetical to a balanced budget; it would also cement the most corrupt aspects of our Tax Code into the Constitution.

The amendment would also require a two-thirds vote for any budget that exceeds 18 percent of GDP. The CBO tells us: ``Outlays have averaged close to 21 percent of GDP over the past 40 years.'' Federal outlays have not dropped below 18 percent since 1966--that is, since the enactment of Medicare.

Regardless of what other parts of this bill may say, there is no way to meet these restrictions without destroying Medicare, Medicaid, Social Security, veterans' programs, and military preparedness. That's just arithmetic, and no amount of rhetoric will change it.

The SPEAKER pro tempore. The time of the gentleman has expired.

Mr. VAN HOLLEN. I yield the gentleman an additional 10 seconds.

Mr. NADLER. The real problem is that tax revenues have declined from 20 1/2 percent of GDP in 2000 to 14 1/2 percent of GDP because we no longer tax the millionaires, the billionaires and the large corporations the way we used to.

Let's start doing that, and we can have a balanced budget without phoney constitutional amendments which promise balanced budgets, without showing how, but that do protect the millionaires from paying their fair share.

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