Cornyn Urges Congress to Adopt Strong Balanced Budget Amendment

Ahead of the upcoming vote in the House of Representatives, U.S. Sen. John Cornyn (R-Texas), a member of the Senate Budget Committee, called on Congress to adopt a strong balanced budget amendment to the Constitution in a speech at the Heritage Foundation today.

The following is a transcript of his remarks:

Ed, thank you for that very nice introduction, it's good to be back at The Heritage Foundation. I would be remiss if I didn't say thank you for what you and The Heritage Foundation does, not only to enlighten all of us, but to provide us the ammunition we need to fight the good fight on behalf of our conservative principals here in Washington and around the country. And, indeed, we've seen those principals embraced around the world. So many of your scholars do such great work, and help advance the policies that keep us strong, and prosperous, and free.

Now, the last time I spoke at Heritage was last June. I spoke about a related topic--well, it's really the same topic, but I wasn't talking so much about solutions then, I was talking about the threat of the debt, and that the debt is actually a national security problem. I know a lot of times people think about the federal government's spending--will we have enough money to provide the safety net? Well, if we continue down the current path, we not only won't have the money to provide the safety net for the most vulnerable in our society, we won't have the money to provide for our national defense and keep us all safe.

Last June I talked about the fact that China remains our largest creditor and, indeed, the lack of transparency of China's actual holdings and how much money they are investing in growing their national security apparatus. The problem is, as well, the Administration's apparent ambivalence when it comes to dealing with China in so many areas and in so many ways--subtle and some not so subtle--affecting U.S. national security policy in East Asia.

Well, since last June our debt has now grown to roughly $15 trillion. $4 trillion dollars larger than when President Obama became President, which is a remarkable expansion of not only the federal government but also the debt. That represents a 40% increase in just a little less than three years. So, instead of just talking about the problem I'd like to offer you what I think is the solution to that problem, which is a balanced budget amendment to the United States Constitution--and, as Ed suggested, talk to you about what version of that Constitutional amendment I think makes the most sense.

Well, since we're talking about the United States Constitution, it's appropriate, I think, to start at the beginning. The views of our founders, who were very focused on what to do with all the debt accumulated during the Revolutionary War. And in fact one of the reasons why the Articles of Confederation were revised--actually, abandoned in favor of a new Constitution--was that the Articles of Confederation denied Congress the power to raise taxes needed to pay off the debt accumulated during the Revolutionary War. One of the greatest achievements of Alexander Hamilton, our first Treasury Secretary, was to refinance the debt of the new federal government as well of those of the constituent States and put our nation on a sound financial footing.

Today's Challenges

So what's the difference between the fiscal challenges our founders faced and those that we face today? The answer is simple: back then government was the solution to the problem. Today our federal government is the problem. The American people understand the difference. Today, the American Congress spends roughly 40 cents more than it brings in the door out of every dollar it spends. In other wards 40 cents on the dollar is borrowed money. We used to say this is a threat to not only our children and grandchildren, but as we've seen over in Europe with the threat and probability of sovereign default of some kind or fashion--it's starting in Greece and elsewhere--is this is a threat to not only future generations, but to the present generation as well.

Ed mentioned a figure of a couple hundred thousand dollars of unfunded liabilities. The actual individual share of the debt--and that doesn't count unfunded liabilities like Medicare and Social Security--is about $46,000 for every man woman and child in America. So congratulations, the day you come into this world you inherit $46,000 in debt that you didn't accumulate but has been accumulated before you came into the world. Our gross debt in America is a little larger than the entire size of our national economy, which means that were in the same trajectory as, yes, Greece, and Spain, Italy, in Europe. And of course we do not like, and should not like, where that path leads.

Now the American people understand that this is a threat, not only to our ability to provide for the most vulnerable through the social safety welfare net in our country, but also our national security. And it's a threat to our future prosperity and to what we inherited as Americans. The American people understand that the debt is a job-killing, economic wet blanket on the economy. It's simply discourages economic growth that we depend upon to create the expansion that creates jobs and opportunity.

Admiral Mike Mullen, though, also said it's a national security threat. He's of course the former Chairman of the Joint Chiefs of Staff, and he said the debt's the single "biggest threat to our national security.' Now that's quite telling, I think, coming from the Chairman of the Joint Chiefs of Staff. With all the different dangers we have in a very dangerous world that he considers the national debt the number one threat.

Secretary of State Hillary Clinton said it this way -- she said that the debt "undermines our capacity to act in our own interest ... and it also sends a message of weakness internationally.'

Well another one of my colleagues back in 2006 put it this way - he said "increasing America's debt weakens us domestically and internationally' He said "it's a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies.'

Well you may have guessed who that was, he happens to be the resident of the White House -- then-Senator and now-President Barack Obama.

I bring the President into the discussion because our national debt not only represents a growing fiscal problem and a national security risk, but it also is risking a crisis of confidence in America's ability to govern itself and to deal with the real problems that confront us.

President Obama campaigned back in 2008 on the idea that he would change Washington -- that was a welcome message. He would cut the deficit in half in four years -- he's about to run out of time to accomplish that goal. And he said he would go through the budget, line-by-line, to reduce wasteful spending. And he'd lead the way on meaningful entitlement reform.

Instead, I think we've seen a very different President Obama than Candidate Obama. Now he's essentially checked out of governing and is spending full-time on the campaign trail, engaging in the kind of class warfare that doesn't solve the problem but divides America. He's contributed tremendously to exploding our deficits -- that's our annual shortfall, as well as our national debt. And spent untold amounts of stimulus dollars, indeed, borrowed money, on questionable projects and dubious economic theory known as "Keynesian' economics.

And he's created a whole new entitlement program, known as his healthcare bill, sometimes called "ObamaCare,' which took a half trillion dollars from Medicare - which is already on a fiscally unsustainable path - to fund an additional entitlement program known as ObamaCare.

One of the things that saddens me, more than makes me angry, is the fact that the President is a smart man. He understands the problem; indeed, he appointed a fiscal commission to study this issue and report back to him -- sometimes called the Simpson-Bowles Commission, that reported back to him in December 2010.

Unfortunately the President promptly neglected, or ignored, the Simpson-Bowles Commission Report. When he gave his State of the Union speech he didn't mention it. When he submitted his first budget, he did not even attempt to engage in meaningful deficit and debt reduction. And in fact he proposed a budget that was defeated 97-0 when Republicans -- not Democrats -- proposed a vote on the budget, because it grew the debt and made the problems worse, not better.

Well leadership on the national debt hasn't simply been coming, or not coming as the case may be, from the White House. I have to confess that Congress has not done a whole lot better. True, I do think Republicans have changed the conversation, particularly since 2010. Before then Washington was asking all of the wrong questions like how can we spend more money that we don't have? How can we create more regulations, which have the unfortunate collateral effect of providing a dampening effect on job creation? And the question being asked is how can we increase the role and the scope and the intrusiveness of the federal government?

Those were all the wrong questions, but those were the questions being asked before the 2010 election by a single-party government. The President's party controlled 60 votes in the Senate, which is enough to run the tables, and had the House, and of course the White House.

But in 2010 voters sent new voices to Washington, to join conservatives asking what I would submit are the right questions. How can we cut government spending? How can we keep taxes low in order to incentivize the very people we're depending upon to create jobs in the economic recovery? And how can we get Washington's boot off the neck of the people we're depending upon to create new jobs, especially our small businesses?

Well, as I think Charles Krauthammer put it, in November 2010 the American people, the voters, issued a restraining order on the Obama legislative agenda. And so we got divided government. We have been successful in stopping much of the President's legislative agenda. This summer we won an argument--not the way I would hope--but we did get at least get some cuts, and a step forward in reducing our debt and balancing our budget. And, of course, that is only to be expected when we control one half of one third of the federal government. We're not going to be able to impose our will or our agenda. We are simply now in a position of stopping the President's legislative agenda, and trying to work with him when he will agree to work with us on the priorities of the American people: putting America back to work, cutting spending, and dealing with our unsustainable debt and unfunded liabilities.

Supporting a Strong Balanced Budget Amendment

Nevertheless, the American people want solutions. Sometimes people will say--I heard it this morning on a TV news show--"I just want you do something." Well, I'd like to do something good, not just do "something." So it's not just enough to stop bad legislation. We need to solve the problem. And Congress has shown, unfortunately, both during Republican administrations and Democratic administrations, that it cannot balance the budget on its own. And it cannot, effectively--this is the nature of our system--control future Congresses.

So that's why Congressional Republicans, as part of the negotiations earlier this year on the Budget Control Act, fought for a vote on a balanced budget amendment to the United States Constitution as part of the deal. Now that vote, by law, will occur before December the 23rd this year. In the House, I understand from news reports, they're likely to vote on a version of the balanced budget amendment on Thursday or Friday.

Well, the question conservatives should be asking is: which of these 18 versions of the balanced budget amendment makes most sense. I would suggest that you take a look at the version that has been cosponsored by all 47 Republicans in the United States Senate. And let me just quickly go over the provisions.

If ratified by three-quarters of the States, our balanced budget amendment would require a two-thirds supermajority in both chambers to allow a deficit in any given year. The rule would be: no deficit, a balanced budget, but under extraordinary circumstances two-thirds could waive that in a given year. And the only exceptions to the balanced budget requirement otherwise would be a majority of both chambers could approve a deficit under a declared war--something we haven't had in a long time--and a three-fifths supermajority would be required to approve a deficit during a military conflict, something short of a declared war. Our balanced budget amendment would also require a two-thirds supermajority to approve outlays more than 18% of our gross domestic product, with the same exceptions as above--a two-thirds supermajority for tax increases and a three-fifths supermajority to raise the debt limit. Now, why 18%? Well that's been, roughly over the last 30 years, the percentage of revenue we've seen coming into the Treasury, while our outlays have been somewhere on the order of 20%. Hence, the deficits we've been running with the exception of actually four years during the last 30 years.

Our balanced budget amendment would require the President, as he submits his budget each year, to actually submit a balanced budget. That's a good first step. Have the President--the executive branch--submit a proposed balanced budget for consideration by Congress--something he's not required to do now.

As I said, Senate Republicans are united in our belief that this so-called "strong" balanced budget amendment is the right way to go because it's got the best provisions on spending and on taxes. I know that our House colleagues have struggled over which versions of the balanced budget amendment to consider. And this is the debate that has been going on in the House: should they propose a strong balanced budget amendment like the Senate version, but one that might not have a chance of passing in the House, or should they go for what some are calling a "clean" version of the balanced budget amendment without any spending and taxing provisions in a hope to obtain support from Democrats across the aisle and maybe enough to get to the two-thirds required under the Constitutions for passage in that house?

I've been telling my friends in the House, with all due respect for their right to decide their course in the other legislative body--they respect the Senate's rights to do its thing and we respect their right--but I've been encouraging my friends in the House to go strong for two reasons. First, a balanced budget amendment will actually solve the problem. Let's all remember that the disease in Washington is out of control spending, and budget deficits and the debt are really symptoms of that disease. I think it's better to not just treat the symptoms, but actually go to the disease and deal with the underlying cause of these symptoms. A strong balanced budget amendment would cure the disease along with the symptoms. An amendment with too many loopholes and exceptions will not. And indeed I think there's a risk of the American people seeing a weak version of the balanced budget amendment as really just looking like you're doing something when you're not solving the problem. If it's too easily waived or overridden I think it will enhance their cynicism that business as usual continues and Washington has not changed, which isa message I think would be very damaging.

Secondly, a strong balanced budget amendment would ensure financial markets and the American people that we "get it." We understand what the 2010 election was telling us, and what the American people, as well as economic experts, are telling us. Think about the message that Standard and Poor sent us when they downgraded our credit rating earlier this year. Financial markets are looking for a serious long-term solution to our fiscal problems. They're not looking for empty promises. In fact, they're cynical about Congress's ability to deal with this, and we need to reassure them that we can and we will deal with the problem. So I believe that a vote for a strong balanced budget amendment would send that right message and deal with the underlying disease.

Well, I'm optimistic that we can get a vote on strong version of the balanced budget amendment in the Senate. We must remember that even if we are unsuccessful in attaining the two-thirds vote--that's 67 votes in the Senate--even if we're unable to send the balanced budget amendment to the States for ratification, that we have other options. And this may be the failsafe option that the founders were thinking of in Article V of the Constitution. Now, don't get me wrong, we're going to fight really hard. And I know Heritage and other members of the Conservative movement around this city and around the country, as well as ordinary Americans, are going to encourage their congressman and senator to vote for a balanced budget amendment. But even if we're unsuccessful this time, the Founders did provide a failsafe provision in Article V of the Constitution.

Now, I realize this makes some people a little nervous, but actually the founders said that on the application of two-thirds of the States, there would be a Constitutional convention called. At which time the people representing us at the Constitution convention could offer amendments. As I said it makes some people nervous. But our founders were pretty smart, and they realized that no matter how many amendments might actually be offered in a Constitutional convention it would still be required that three-quarters of the States would actually have to ratify it. And so the 38-State ratification requirement, I think, is our best protection against a runaway Constitutional convention.

Conclusion

But even if there isn't a Constitutional convention, I think the threat of one has actually motivated Congress in a constructive fashion in the past--for example, in approving the direct election of Senators nearly a century ago, and major budget reform in the 1980s.

I think amending our Constitution with the 28th Amendment to the United States Constitution since our founding would go a long way to helping restore faith in our system of government and give future generations greater confidence that they have the power to address challenges in their lifetime and expand the political freedom for those who will follow them.

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