Proposing an Amendment to the Constitution Relative to Requiring a Balanced Budget

Floor Speech

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Mr. LEE. Mr. President, I stand today to urge my colleagues to support one of the most important pieces of legislation that has come before this body in decades, Senate Joint Resolution 10, the Hatch-Lee balanced budget amendment proposal.

The reason why I insist this is so important is because of a crisis we are facing today. We have accumulated about $15 trillion in sovereign debt on behalf of the United States--$15 trillion. It works out to about $50,000 for every man, woman, and child in America. This is an amount of money that could represent an expensive car. It could represent a college education. It could represent all kinds of things. But it represents ultimately debt that Congress has incurred, debt that Congress cannot afford to continue to incur at this same rate, which we are doing every day. We are adding to that debt at an unsustainable rate of about $1.5 trillion every single year.

Here is why that is so distressing to me. As the White House itself acknowledged a few months ago, we are now within about a decade, perhaps much less, of owing about $1 trillion a year just in interest on our national debt. Currently we are paying a little over $200 billion a year in interest. By the end of this decade, that number is likely to rise to an astounding $1 trillion a year. We could reach that number much sooner than that. It could happen perhaps in half that amount of time if interest rates suddenly started to climb, as they easily could do, particularly given the fact that we are about 350 basis points below the historic average for yield rates on U.S. Treasury instruments, the means by which our governmental debt is financed.

We have to get this problem under control now, because if we wait until then, until we have to pay $1 trillion a year in interest on our national debt, it will be too late to do anything. By waiting, by postponing the day of our accountability, we will have made a choice, a devastating choice, that will prove to signal the downfall of the greatest economy the world has ever known. We cannot allow that to happen--not now, not on our watch, not when the stakes are this high.

If we have to make up that difference, the difference between the $200 billion a year we are paying now and the trillion a year we will have to be paying in interest on our national debt a few years from now, that money has to come from somewhere. That money is not something we can expect simply to obtain through an increase in taxation.

Over the long haul, we have learned that our tax system is capable of generating a revenue stream equaling a little over 18 percent of all of the revenue that moves through the American economy every single year--a little over 18 percent of our gross domestic product. As this chart shows, that percentage remains relatively constant. It has remained that way for many decades, going back to at least 1960. It averages out a little over 18 percent of gross domestic product.

That remains true even when we go back 30 years or so when our top marginal income tax rates were approaching 90 percent. The economy finds a way to produce no more than a little over 18 1/2 percent--a little over 18 percent of GDP. So we cannot just raise taxes at that point in order to generate more revenue, because our income tax system, no matter how we tweak it, no matter how high we raise top marginal rates, is not capable of generating that much revenue. What we do when we simply ratchet up those tax rates, if anything, is we shrink the size of our economy. We chill economic growth to the point where we are actually generating less revenue, not more. So we cannot tax our way out of that problem, nor can we at that point simply borrow our way out of that problem. In other words, we cannot borrow an additional $800 billion a year on top of the present-day $1.5 trillion a year we are borrowing, because if we did that, our interest rates would go up that much more. That would make our decision that much more crippling on our economy.

There are a lot of reasons why this matters. My colleague from Ohio, Mr. Portman, acknowledged a few minutes ago that this chills job growth when we have this much debt. It is also true that this impairs our ability to fund every conceivable government program from defense to entitlements, such that if we wait in order to make the necessary changes to the way we spend money in Washington, we will wait at our own peril. We will wait at the peril of those who have become dependent on those very government programs that will have to have their budgets slashed immediately, abruptly, severely. We cannot afford to do that. Those who have become dependent on Social Security, on Medicare, on Medicaid, on other entitlement programs, on supplemental nutritional assistance, would be devastated if all of a sudden we cut off funding for those programs, we had to slash those budgets by 30, 40, 50 percent overnight. It is these abrupt changes that prove most difficult for our

economy to absorb.

I have often said it is something that we can analogize to being on top of a large building. Let's say our $15 trillion debt can be compared to a 15-story building. If you need to get down off of that building, you need to get to the ground floor. If you want to do it quickly, you could decide to jump. If you decide to jump, it is not the fall that will kill you, it is the abrupt halt at the end of that fall. So you need to do something to cushion the fall, to slow it down a little bit so it can be accomplished gradually, so nobody gets hurt. That is where the balanced budgeted amendment comes in. The Hatch-Lee balanced budget amendment, Senate Joint Resolution 10, would bring about severe, significant, systemic changes, but it would do so gradually so that the cuts, while significant over the long haul, are not abrupt, so that the impact is not severe, other than avoiding the severeness of the impact that would otherwise occur.

We have to get down from that 15-story building, from that $15 trillion debt. We do that through a balanced budget amendment, one like Senate Joint Resolution 10, which contains a 5-year delayed implementation clause. That would give us time to work out a phased-in glidepath toward balancing our budget. That is what we need do in order to protect and preserve our economic stability, our jobs market, and our ability within the Federal Government to fund everything from defense to entitlements.

Those who ignore the need for this amendment ignore the fact that our spending continues to escalate. I want to talk about how much we have spent as a country as a percentage of our overall economy, as a percentage of our gross domestic product. Between the early 1790s and the early 1930s, the Federal Government spent, on average, between 2 and 4 percent of gross domestic product every single year with only two notable exceptions, once during the Civil War and the second time during and in the immediate aftermath of World War I. With those two exceptions, Congress's spending was modest, between 2 and 4 percent of GDP.

That all started to change in the early 1930s when we reached the double digits during peacetime for the first time in our history. We have, unfortunately, never retreated from that cycle. Federal spending today, as a percentage of GDP, stands close to 25 percent, meaning that for every dollar that moves through the American economy, a quarter of that goes to Washington, is sucked in by the Federal Government, and cannot move on and help to continue to stimulate the economy.

That pattern of increased Federal spending as a percentage of GDP is expected to increase in the next few years. It is expected, based on the data provided by the Congressional Budget Office, to reach 26.4 percent of GDP within the next 10 years, by 2021. Some say that figure is too optimistic and that it could actually be much higher than that, it could be significantly higher than 30 percent. At a minimum, we know it will be 26.4 percent or more unless we take pretty significant steps to control our spending.

So I find it interesting that many are saying we do not need to make changes, that we can somehow have Congress do its job, that Congress needs to follow the Constitution and do its job and balance its budget.

Let me tell you the problem with that. First of all, there is nothing currently in the Constitution that restricts Congress's power to borrow money. Clause 2 of article I, section 8 of the Constitution gives us power to do that, and we have done it. We have done it again and again and again. We have done it so many times in recent years that we have almost lost track.

Congress first placed a statutory limit on the acquisition of new Federal debt in 1917, which was the Second Liberty Bond Act. Since 1962, Congress has altered the debt limit through 74 separate measures, and has raised it 10 times since 2001, in the last 10 years.

Since 1990, the debt limit has been raised by a total of $10.1 trillion. Nearly half of that increase has occurred in the last 4 years, since late 2007. So this is not a situation in which we are seeing the normal growth of government spending, either in normal numbers, in numbers adjusted for inflation, in numbers measured as a percentage of GDP. By any metric, the amount of Federal spending and the amount of debt acquisition has grown exponentially, giving us this hockey stick-like curve in the acquisition of Federal debt.

We cannot continue this practice. We especially cannot continue it given the fact we know that the natural limit on our ability to receive revenue through the income tax system is a little over 18 percent of GDP. So we have to have something in place that keeps us from spending more than we take in. That cannot possibly by accomplished, in my opinion, without something that ups the ante, something that makes it structurally more difficult on a permanent basis for Congress to engage in deficit spending and to spend more than 18 percent of GDP. That is why there are a few critical features in Senate Joint Resolution 10, the Hatch-Lee balanced budget amendment proposal, that I think any viable balanced budget amendment proposal ought to have. First, it needs to apply to all spending. Second, it needs to cap spending at 18 percent of GDP. It also needs to require a supermajority vote in order to exceed that percentage of GDP spending limit in order to raise taxes or in order to raise the debt limit. Without these kinds of provisions, this kind of redundant protection against the inexorable growth of Federal spending generally, and the inexorable growth of deficit spending in particular, our debt will crush the very programs we purport to be protecting.

Those who plot against this say we cannot limit spending to 18 percent of GDP or else we will hurt program X, Y or Z. While they are making this argument, it is in reckless disregard of the fact that those same programs will be jeopardized if we continue to borrow recklessly, without structural spending restraint or reform on the horizon.

Others have argued we don't need this because somehow it is unenforceable. I am not quite sure what they mean. Perhaps they don't know what a court would do with it. They are forgetting we have other provisions in the Constitution that raise the vote threshold, which is essentially what the Hatch-Lee balanced budget amendment does. In other words, we have other provisions in the Constitution that are followed routinely, without the need for litigation, just based on Members of Congress taking an oath to uphold the Constitution, as we are all required to do pursuant to article VI. Those are complied with every day.

For instance, we all know none of us will dispute the fact that it takes a two-thirds supermajority vote in both Houses of Congress to override a Presidential veto. It takes a two-thirds supermajority vote in both Houses of Congress to propose a constitutional amendment. It takes a two-thirds supermajority vote in the Senate to ratify a treaty. We don't dispute the fact that these vote thresholds exist. We don't have to wait for the courts to intervene for us to enforce them within Congress. We follow them. That is what this would do.

This says that because Congress has the ability to destroy itself, destroy the economy, destroy the very government we have created through reckless, indefinite, perpetual deficit spending, we must protect Congress from itself--perhaps better said, we must protect people from Congress by requiring that Congress approve any amount of money spent in excess of what Congress brings in or in excess of 18 percent of GDP or in excess of the debt limit by a supermajority vote. We have to have that. It will be followed, and it is absolutely necessary.

It is interesting that few, if any, of my colleagues will dispute the fact that Congress should balance its budget. There is perhaps a difference of opinion--maybe even a widespread difference of opinion--as to how best we should try to close this gap, how best we should close the gap between the money Congress brings in each year through the tax system and the money it spends. There is widespread dispute about where cuts need to be made. I think we all agree we need to balance our budget.

That begs the question, if we all agree, as I think we all do, then why can't we agree we need to adopt a permanent structural mechanism that will be embodied in the Constitution that will ensure that actually happens? This proposal remains agnostic as to where cuts will be made. All it says is if we are going to spend more than we take in or more than 18 percent of GDP or raise taxes or the debt limit, we are going to do it by a supermajority vote. That is something the American people support. In fact, 75 percent of the American people support the basic principle that Congress should not, for example, spend more than it takes in each and every year.

That brings me to the question of why it is that we should support S.J. Res. 10, the Hatch-Lee balanced budget amendment, and not another proposal--for example, S.J. Res. 24, which I might refer to alternatively as the ``Trojan horse'' balanced budget amendment or as the ``do nothing'' amendment proposal, which purports to be a solution when, in fact, it is not, for one simple reason: It gives Congress unfettered discretion to exempt itself out of the budget balancing requirement it contains. This would, in effect, I am certain, render this amendment, were it to take effect, virtually a dead letter provision.

We have seen what Congress does when it has the option of exempting itself out of statutory spending caps--in the pay-go rule, the Gramm-Rudman-Hollings Deficit Control Act, and in other statutory provisions such as this. Congress giveth and Congress taketh away. Congress has become a walking, breathing waiver unto itself. When Congress is given the option of saying: I know we are supposed to balance the budget, but we don't feel like it today, it ends up doing that. All Congress would have to do under S.J. Res. 24--the ``do nothing'' amendment proposed--is simply acknowledge that the United States is involved in a military conflict, and by simple majority vote it can exempt itself out of these provisions entirely.

By contrast, the Hatch-Lee balanced budget amendment proposal acknowledges that in a time of war or military conflict, it may be necessary to spend more than we take in. But in the case of an armed military conflict, it requires a three-fifths supermajority vote, and in either a war or another armed military conflict, it specifically provides that in that war or conflict, any overage, any amount spent above and beyond what Congress brings in has to be limited to that required to prosecute that war or that military conflict effort. That is a huge difference. We can't simply give Congress the option of complying with a balanced budget amendment provision only when Congress feels like it. This is a little akin to telling an alcoholic they have to give up drinking, while leaving an open container of whiskey on the table and requiring that person to walk past that bottle or even to carry it around every day. It doesn't work. You have to take it out of the house. You certainly have to take it out of the possession of the recovering alcoholic.

This is the challenge of our time--to figure out how to prevent Congress's chronic abuse of its own borrowing authority from collapsing under its own weight, from bringing about the economic collapse of the United States of America.

We have to have these structural spending reform mechanisms because our government is run by imperfect people. Benjamin Franklin has often been quoted for a line that says: ``He'll cheat without scruple who can without fear.'' When looking at Congress today, we might say Congress will spend more money than it has whenever it possibly can, whenever it has the option of spending more.

As Madison said: ``If men were angels, no government would be necessary. And if angels were to govern men, neither external nor internal controls on government would be necessary.''

We are, as human beings, not angels, and our government isn't run by angels either. This is why we need the structural permanent spending reform mechanism. We cannot afford to accept a substitute, a cheap imitation, a ``Trojan horse'' balanced budget amendment such as S.J. Res. 24, because if we adopt something such as that, we will create the illusion to the American people that we are actually undertaking efforts to control our out-of-control deficit spending program when, in fact, we are doing nothing. Because it is always the case that we are involved in a military conflict somewhere. Congress will always be able to muster a simple majority, saying we cannot be expected to balance our budget because of that.

We have to draw that line in the sand and stand for those who support everything from defense to entitlements. We have to stand for our children and our grandchildren, those who will come after them, those who are not yet old enough to vote, those who have not yet been born and whose parents have yet to meet. Those people are not here to vote against us as we spend their money.

This is a particularly pernicious form of taxation without representation. We fought a war over two centuries ago over that practice, and we won that war. We should not subject our children, their children, and their grandchildren after them to that same practice. This is contrary to liberty, contrary to economic prosperity. We cannot stand for it to occur anymore.

We have two choices. One choice involves supporting, passing, and submitting to the States for ratification of the Hatch-Lee balanced budget amendment proposal, putting in some permanent restraint, at long last, on Congress's self-destructive borrowing capacity.

The other option can take many forms. It can take the option of supporting S.J. Res. 24, which doesn't solve the underlying problem, or it can take the form of doing nothing

at all. If we do nothing, we have still made a choice--a devastating choice--a choice that will inure to the detriment of the American people and of the Federal programs that we all rely on, the Federal programs that people rely on to keep them safe, protect them from the ravages of nature, and protect them from the conditions of poverty we seek to avoid in this country. It is, after all, the objective of us all to seek a better, more prosperous, more safe country, but we jeopardize all those interests the longer we allow this practice of perpetual deficit spending to continue.

At the end of the day, we have to face our own constituents. Those who choose not to vote for the Hatch-Lee balanced budget amendment will have to face their constituents and tell them why they were unwilling to stand for a proposition so basic as we should balance our budget.

There is no excuse, based on the fact that we cannot do this overnight, because it has a delayed implementation clause. It will not take effect until 5 years after it has been ratified by the States. In the meantime, we will be able to set in motion a sequence of events, a series of implementing bills that will allow us to put ourselves on a smooth glidepath toward balancing our budget. We will be able to do that. Those who vote against this cannot look their constituents in the eye and tell them they did everything they could do to get our out-of-control spending habits or our out-of-control deficit spending habits under control.
I urge each of my colleagues to do this for themselves, for the programs they want to save, and for their children and grandchildren. Our prosperity, our success as Americans, our survival as a nation, and the success of our government requires nothing less.

I yield the floor and suggest the absence of a quorum.

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