Proposing a Balanced Budget Amendment to the Constitution
Floor Speech
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Mr. NADLER. Mr. Speaker, I yield myself such time as I my consume.
This amendment, while superficially appealing, is one of the most damaging things we could do to the Constitution of the United States. And, yes, it is true, if you ask people do they think we should have a balanced budget, they say yes; and if you ask people do you think we should have an amendment requiring a balanced budget in the Constitution, they say yes. But if you ask them do you think we should have an amendment requiring a balanced budget in the Constitution if it meant a cut in Social Security, they say no; if it meant a cut in Medicare, they say no; if it meant a cut in other essential services, they say no.
And when you probe further, you find that this is a very damaging provision. For a number of reasons, economists tell us that, in a recession, you want to increase the government spending temporarily. You have to increase it because unemployment insurance payouts go up, food stamp payouts go up; and if you decrease the spending, it reduces the amount of products that people want in society, it reduces the amount of money in circulation, and it makes the recession into a depression.
In good times, you should run a surplus; in recession, you should run a deficit. Over a long period of time, the budget should be balanced. But if you attempt to balance the budget during a recession, you generate a much worse loss of jobs. And that's why you don't want this--or you shouldn't want this.
Secondly, this amendment is not self-enforcing. All it says is outlays shall not exceed receipts, and Congress can pass appropriate legislation.
But what does that mean? It means that if outlays exceed receipts or if someone thinks that the estimates are wrong and outlays are going to exceed receipts, then you go to court, and then a court has to decide whether that's correct. A court has to decide whether the estimates are correct. And if the court decides the estimates are not correct, then the court has a choice. It can say, ``This is political. We're going to exercise judicial restraint,'' as the gentleman from Virginia said yesterday, in which case it won't enforce the amendment and the amendment is meaningless; or the court will say, ``Okay, we'll order a tax increase'' or ``we'll order an expenditure cut,'' in which case you have those judges making political decisions, which I don't think we'd want to see.
Thirdly, a balanced budget amendment starting where we are now with a huge deficit that's been accumulated over a few years means that you're going to have to make drastic cuts in Social Security and Medicare and veterans' benefits. Some people say on the other side of the aisle, well, that won't be true because they don't count; but, yes, they count.
The amendment says ``outlays.'' Outlays are defined as all expenditures other than debts. Social Security is not a debt; the courts have held that. Medicare is not a debt; there's no contractual right. This means that if you're going to reduce outlays, Social Security is right in it. And if you're not going to reduce Social Security, you've got to reduce a lot of other things by much more. So this is a dagger pointed at the heart of Social Security and Medicare and veterans' benefits.
Now, we're told that the only way we can get our budget into balance is by this amendment. Well, the fact is that's not true. The reason we have the problem we have now is because of years of reckless Republican Presidents and administrations.
When President Clinton took office, we had a huge budget deficit--$300 billion a year. The forecast was for 500 and 600 billion by the mid-nineties. Within a few years, we had turned that around. Congress made decisions to turn that around followed by the President's recommendations in 1993 and a smaller one in 1997. That one the Republicans held with, with Speaker Gingrich. As a result of those decisions, by the time President Clinton left office and President Bush assumed office, we had a huge surplus. And the question was: What are we going to do when we've paid off the entire national debt by 2012? That was what was going to happen.
What changed that? Two huge tax cuts for rich people, pushed through by the Republicans and President Bush. And we said, at the time, that that would generate tremendous deficits. In fact, the reason they were set to expire in 2010 was because the CBO said that after 2010 they would generate tremendous, ongoing deficits, which they are doing.
Secondly, we had two unfunded wars. For the first time in American history, we didn't raise taxes to pay for wars. Thirdly, we doubled the Pentagon budget, not including the wars. And fourth, we had a recession starting in 2008 during the end of the Bush administration.
Now, some people say, well, it's the Obama administration, the unfettered spending of the Obama administration. Nonsense. The amount of money being spent on non-defense discretionary spending--that is, all spending other than defense--veterans' benefits, Medicare, Social Security, and interest on the debt, is the same today, the same, not a penny more, adjusted for inflation and population growth, as it was in 2001. And in 2001, we had a huge surplus.
Where did the surplus change to a deficit? Wars, tax cuts, and increased Pentagon spending.
Now, what can we do about this? So the problem is not spending alone, the problem is that we're not taxing the rich and the corporations enough. In 1970, corporations paid 30 percent of all Federal income tax receipts from corporate income taxes. Today, it's 8 percent. We've let the corporations get away with murder--the big businesses, with Exxon paying no taxes on profits of $6 billion, General Electric paying no taxes, getting a refund. That's our problem. But we don't want to deal with that, we want to pass a constitutional amendment.
Now, if we pass this constitutional amendment, it would mean that any time we went into a recession, it would drive it into a depression. It would mean we would have to make huge spending cuts now. It would mean we would have to decimate Social Security, Medicare, veterans benefits. It makes no sense at all.
If this were in effect now--we were told by the macroeconomic analysts that if this amendment went into effect for next year, it would increase unemployment by 15 million people. So I urge that we not pass this amendment, and instead we do the hard work of increasing taxes on corporations and rich people, of getting discipline into our expenditures. But the first thing to do is jobs. If we got unemployment down to 5 percent, where it was in 2007, that by itself would reduce unemployment by 40 percent.
In a recession, first you take care of the jobs. When you're back into better times, then you can start thinking about balancing your budget, and that's when you ought to do it; not force cuts in expenditures or increasing taxes during a recession, which just makes the recession much worse and the unemployment much worse, which is what this amendment would do.
I reserve the balance of my time.
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Mr. NADLER. Mr. Speaker, I yield myself 90 seconds.
It is not true, as we have heard on this floor repeatedly today, that both parties are addicted to spending and that the deficit is equally the fault of both parties.
It is the fault of George Bush. It is the fault of the Republican Congress. Under President Clinton, a Democratic Congress voted for tax increases and for spending cuts, and produced balanced budgets 4 years in a row of such a significance that we were going to eliminate the entire national debt by 2012. The Republicans came in and without Democratic support voted for huge tax cuts, for two unfunded wars, and for doubling the Pentagon's budget without increasing taxes to pay for it.
That generated the huge deficit we have. The deficit was also generated by the fact that, because of, arguably, Republican deregulatory policies, we got into this huge depression caused by Wall Street, and that increased the deficit. In January of 2009, before President Obama took office, 1 month before, the CBO said that the next year's deficit would be $1.2 trillion without this President's having done a thing.
The point, as I said before, is that nondefense discretionary spending--everything other than Medicare, Medicaid, Social Security, veterans benefits, and interest on the debt--has not increased since 2001 when adjusted for inflation and population growth. So that is not the source of our budget deficit. The source of our budget deficit is that we cut the taxes on the rich and the corporations and that we spent money on wars we didn't pay for.
I reserve the balance of my time.
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Mr. NADLER. Mr. Speaker, I yield myself 2 minutes to reply to what the gentleman just said.
The fact is, the reason this country is in such deficit is because of a deliberate Republican crusade over the last 30 years to reduce taxes on the rich in order to deliberately create huge deficits, and to then use those deficits as the excuse to justify large cuts to gut Social Security and Medicare and Medicaid and education programs that they have never liked in the first place but could not justify cutting without it.
Taxes used to be 18 to 19 percent of the economy, of GDP. Now they're about 14 percent of GDP, and yet the Republicans won't increase it because we have decreased the taxes on the rich and on the corporations. The country is not broke; we're just not taxing the millionaires and the billionaires the way we used to.
And the fact is, you look at the history here. When Ronald Reagan took over as President of the United States, the entire national debt of the United States accumulated from George Washington through Jimmy Carter was less than $800 billion. Then you had 12 years of Reagan and the first Bush cutting taxes on the rich. When Clinton took over, you had a $4.3 trillion deficit, and it was expected to go much higher. We made the tough decisions; we voted for increased taxes in 1993 and for cutting the budget. And when Clinton left office 8 years later, the budget had been balanced. But from the time we made that vote in 1993, the deficit decreased every year until it became a surplus, then it increased every year. And when Bush II took over, we were looking at a $5.7 trillion surplus over the next 10 years, and we were going to pay off the entire national debt. Then we had those huge Bush tax cuts and the irresponsible, unpaid-for wars. And when Bush left office, we had a $9.5 trillion deficit--a turnaround of $15 trillion--and a recession, which causes the bigger deficits now.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. NADLER. I yield myself an additional 30 seconds.
The CBO estimated, before President Obama took office, that the next year's deficit would be $1.2 trillion before he did anything. And I would remind us that nondefense discretionary spending in this country has not gone up by a nickel, adjusted for inflation and population growth, since 2001, when we had a huge surplus.
The problem is that our taxes on the rich are too low. We cannot reach an agreement in the supercommittee because the Republicans will not tax the rich. That's the basic problem, and a balanced budget amendment will not solve that problem.
I reserve the balance of my time.
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Mr. NADLER. I yield myself the balance of my time.
Madam Speaker, since 1995, when this amendment was last on the floor, we proved we could balance the budget without a balanced budget amendment. But a balanced budget is not the highest goal. The highest goal is prosperity, a full employment economy; and that requires a balanced budget over the business cycle. It requires that in good times we have a surplus and pay down the deficit. But then in recessions, you should have a deficit to spur the economy; you should spend money to spur the economy to get out of the recession. To try to balance the budget by cutting spending during a recession is to increase unemployment, is to guarantee that every recession becomes a depression. Just look at what's happening in Germany, which was in pretty good shape until they elected a government that enacted austerity to try to balance the budget. Their economy is tanking. The same thing in Great Britain.
The second point I want to make is that when we talk about balanced budgets in the States, they have a separate budget for operating expenses and for capital budgets. Here, this balanced budget amendment would say we should never borrow money for anything; the Federal Government should never borrow money. That's insanity economically. It means we have no money for our bridges, roads, highways, et cetera.
Third, this amendment would say if we couldn't reach agreement, if we didn't pass the balanced budget, the courts would have to decide whether to increase taxes and, if so, which taxes, or cut programs, and in such a case, which programs. We should not be giving the courts the power to make such decisions.
Finally, Social Security, Medicare, these are not debts. They're obligations of the Federal Government. A balanced budget amendment would put them at risk. We would have to cut Social Security, cut Medicare, cut all these things if we passed a balanced budget amendment. And if we're unwilling, as our colleagues on the other side are, raise taxes on the rich. The fact is taxes on the rich are much less than they've ever been, which is the basic cause of the deficits that we're running now.
The balanced budget amendment would not balance the budget. You would still have a stalemate between Republicans, who want no taxes on the rich and want draconian cuts on lower- and middle-income programs, and those on our side of the aisle who disagree on them. If you can't reach agreement on those things now in the supercommittee, what makes you think you would reach agreement just because you had a requirement on the books that said you should? It would end up in court.
The balanced budget amendment is simply a sop to be able to say we are doing something about a balanced budget when we are, in fact, unwilling to make the tough decisions that could, in fact, balance the budget. We showed, during the Clinton administration, that those decisions could be made. And if we really want to balance the budget, we have to undo most of the Bush tax cuts, we have to stop voting for wars that we don't pay for, and we have to really balance the budget, not pass an amendment.
I yield back the balance of my time.
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