On Monday, August 1, 2011, the House approved the Budget Control Act of 2011 (S. 365), by a vote of 269-161. Among other things, the bill would create and enforce discretionary spending caps to cut and restrain spending over the next ten years, provide a mechanism for increasing the debt limit in two steps (subject to congressional disapproval and more than dollar-for-dollar spending cuts), establish a Joint Committee to produce deficit reduction legislation, and provide for sequestration of mandatory and discretionary spending to achieve cuts equal to a debt limit increase if the committee’s legislation is not enacted or falls short of the amount of the debt limit increase. Additionally, the bill creates a path for a balanced budget amendment to the Constitution of the United States. The following is a summary of the Balanced Budget Amendment (BBA) provisions in the bill.
Vote on a BBA and timeline: Section 201 of the legislation specifically requires a vote on passage of a joint resolution “proposing a balanced budget amendment to the Constitution of the United States” between October 1, 2011 and December 31, 2011. The bill also provides for expedited consideration by the House and Senate of the joint resolution of the other House. If one chamber passes a resolution under this section, the other chamber is required to proceed to a vote on that legislation regardless of other consideration or votes on a balanced budget amendment. The Constitution requires a two-thirds vote in each house of Congress for passage of an amendment, which would then be transmitted to the fifty states for ratification by the respective legislatures, requiring approval by three-fourths of the states for final passage.
BBA and the debt limit increase: In the absence of any further action by Congress, section 301 of the Budget Control Act authorizes the Secretary of the Treasury to borrow an additional amount equal to $1.2 trillion, subject to Presidential certification and Congressional disapproval. However, if a balanced budget amendment is sent to the states for ratification, the Secretary may borrow $1.5 trillion. If a balanced budget amendment is not sent to the states for ratification, but the amount of deficit reduction achieved by the Joint Select Committee (created under a separate section of the Act) is greater than $1.2 trillion, the Secretary is permitted to borrow an amount equal to the amount of deficit reduction, but may not exceed $1.5 trillion. All increases in borrowing authority are subject to Congressional disapproval.
It should be noted that even if a BBA is sent to the states for ratification, authorizing the administration to borrow an additional $1.5 trillion, and the joint committee fails to report legislation or that legislation is not enacted, a $1.2 trillion sequestration process must be implemented. As part of the sequestration procedures, this section establishes revised security and non-security allocations for each fiscal year in the 2012-2021 period and revises the definition of security category, limiting the category to the Department of Defense. It also reduces the discretionary spending limits and includes sequestration procedures for direct spending to ensure these spending reductions are achieved.