H.J.Res. 2: Proposing a balanced budget amendment to the Constitution of the United States

H.J.Res. 2

Proposing a balanced budget amendment to the Constitution of the United States

Date
November 17, 2011 (112th Congress, 1st Session)

Staff Contact
Communications

Floor Situation

On Thursday, November 17, 2011, the House is scheduled to consider H.J. Res. 2, under a suspension of the rules requiring a two-thirds majority vote for approval.  H.J.Res. 2 is scheduled to be considered pursuant to a rule (H. Res. 466) that provides authority for the Speaker to bring up the bill under a suspension of the rules at any time through Friday, November 18, and extends debate on the resolution for up to five hours. H.J. Res. 2 was introduced by Rep. Bob Goodlatte (R-VA) on January 5, 2011, and was referred to the House Committee on the Judiciary.

Bill Summary

If approved by a two-thirds majority of each chamber of Congress and ratified by three-fourths of state legislatures, H.J. Res. 2 would amend the Constitution to prohibit federal spending in any fiscal year from exceeding receipts for that year. The balanced budget requirement could be waived in a given year if three-fifths of both chambers approve a law to allow spending to exceed revenues. 

In addition, the amendment would require a vote of three-fifths of both chambers to increase the statutory debt limit. The amendment would also require the president to submit a balanced budget to Congress each fiscal year and would require a majority vote of Congress to increase taxes.  Under the amendment, the balanced budget requirement could be waived for any fiscal year in which a declaration of war is in effect or in any year that the U.S. is “engaged in military conflict which causes an imminent and serious military threat to national security and is so declared by a joint resolution, adopted by a majority of the whole number of each House, which becomes law.” Any such waiver must identify and be limited to the specific excess or increase for that fiscal year made necessary by the identified military conflict.

Congress would enforce the amendment through appropriate legislation which may rely on estimates to determine spending and revenues in a fiscal year. Under the amendment, total revenues would include all U.S. receipts excluding those derived from borrowing. Total spending would include all U.S. outlays except those for repayment of debt principal.

If the amendment is approved by two-thirds of both chambers of Congress it would be sent to the states for ratification.  The amendment would become a part of the Constitution if it were ratified by three-fourths of state legislatures within seven years.  If ratified, the amendment would take effect in the fifth fiscal year after ratification by the states.

Background

History of the Balanced Budget Amendment

The idea of a constitutional amendment to limit federal borrowing and debt has been discussed since the early years of our nation. Many founding fathers were very concerned with the accumulation of public debt and discussed the possibility of an amendment to the Constitution that would limit borrowing and debt. According to the Congressional Research Service (CRS), the first constitutional amendment that would have required a balanced budget (H.J. Res. 579 in the 74th Congress) was introduced in 1936 by Rep. Harold Knutson. Since that time numerous attempts have been made to pass a Balanced Budget Amendment (BBA). In 1995, during the 104th Congress, the House approved H.J. Res. 1, a BBA which contained language identical to the underlying amendment, by a vote of 300-132.  However, the bill fell short of garnering the necessary two-thirds vote in the Senate by one vote, 65-35 (Majority Leader Dole switched his vote to no to preserve his ability to reconsider the measure). In 1997, the Senate voted on S.J. Res. 1, a BBA with identical language to the underlying bill and fell short of a two-thirds majority again by just one vote, with a final tally of 66-34.

On Monday, August 1, the House approved the Budget Control Act (BCA) of 2011 (P.L. 112-25), by a vote of 269-161. As a part of the BCA, the House and Senate are required to vote on a balanced budget amendment to the Constitution between October 1, 2011, and December 31, 2011. In order to be approved by the House and Senate, this constitutional amendment would require a two-thirds majority (290 Representatives, 67 Senators). Upon passage by the House and Senate, the amendment would be sent to all 50 states for ratification.

 

Timeline of the Balanced Budget Amendment Consideration in Congress


The following timeline is based on the CRS report A Balanced Budget Constitutional Amendment: Background and Congressional Options, which was last updated on August 3, 2011.

1936—The first balanced budget amendment to the Constitution (H.J. Res. 579) was introduced by Rep. Harold Knutson.  No committee or floor action was taken.

1947—The Senate Appropriations Committee reported S.J. Res. 61, to require a balanced federal budget, which was then referred back to the Senate Judiciary Committee (S.Rept. 80-154). No further committee or floor action was taken.

1956—The Senate Judiciary Committee held the first hearing on a proposed constitutional amendment to require a balanced federal budget (S.J. Res. 126). No further committee or floor action was taken.

1975—The Senate Judiciary Committee held hearings on a joint resolution proposing an amendment to the Constitution of the United States relative to the balancing of the budget (S.J. Res. 55). No further committee or floor action was taken.

1979—Senator Dennis DeConcini introduced BBA legislation (S.J. Res. 126), which was approved by the Senate Judiciary Subcommittee on the Constitution by a vote of 5-2.  The amendment was ultimately voted down by the full Judiciary Committee by a vote of 9-8.

1982—Congress produced the first two-thirds approval of a BBA when the Senate adopted S.J. Res. 58 by a vote of 69-31 on August 4, 1982, following 11 days of floor deliberation. The amendment required Congress to balance the federal budget each fiscal year except in time of war. In addition, the amendment allowed budget outlays to exceed receipts for any fiscal year if three-fifths of Congress approved.  Under the amendment, a majority of Congress could vote to allow additional receipts for any one year.   Following a successful discharge petition effort, a similar proposal (H.J. Res. 350) failed in the House by a vote of 236-187, 46 votes short of the two-thirds majority needed.

1984—The Senate Judiciary Committee reported a BBA (S.J. Res. 5) that received no floor action.  The comparable House proposal (H.J. Res 243) was not reported by the Judiciary Committee.

1985—The Senate Judiciary Committee approved two separate versions of a constitutional amendment to require a balanced budget (S.J. Res. 13 and S.J. Res. 225).  The former included a provision to limit tax increases.  However the latter (S.J. Res. 225) ultimately received Senate floor consideration and failed to achieve the necessary two-thirds by a vote of 66-34 on March 25, 1986.

1990—Following a successful discharge petition effort, the House considered a BBA (H.J. Res. 268) which failed to achieve the necessary two-thirds by a vote of 279-150.

1992—The House considered a BBA (H.J Res. 290) which failed by a vote of 280-153.  The Senate also considered a BBA (S.J. Res. 18) which failed by a vote of to gather the 60 votes necessary to invoke cloture in the face of a threatened filibuster.

1994—Once again, the House and Senate both considered BBAs on their respective floors but were both unable to achieve the necessary two-thirds vote.  S.J. Res 41 and H.J. Res. 103 made it to the floor of the Senate and House but were defeated by a vote of 63-37 in the Senate and 271-153 in the House.

1995—Under the leadership of the newly elected Republican Majority, the House approved a BBA with a two-thirds majority for the first time in history. H.J. Res. 1, which contained language identical to the underlying amendment, was approved by a vote of 300-132.  The amendment, however, fell short of garnering the necessary two-thirds vote in the Senate by one vote, 65-35 (Majority Leader Dole switched his vote to no to preserve his ability to reconsider the measure).

1997—The Senate considered yet another BBA (S.J. Res. 1) with language identical to the underlying legislation.  The Senate failed to achieve a two-thirds majority by just one vote, 66-34.  This was the closest the Senate came to a two-thirds majority since the approval of S.J. Res. 58 in 1982.

2003—The House Judiciary Subcommittee on the Constitution held a hearing on a BBA (H.J. Res. 22) and reported the bill to the full committee by a vote of 5-3, but the legislation was never reported to the full House.

2011—Congress approved the Budget Control Act (BCA) as a part of the August debt limit agreement. The BCA requires the House and Senate to vote between October 1, 2011, and December 31, 2011, on a balanced budget amendment to the Constitution. Under the legislation, if one chamber passes a resolution under this section with a two-thirds majority, the other chamber is required to proceed to a vote on that legislation regardless of other consideration or votes on a balanced budget amendment.

Additional Information

The U.S. Debt Crisis

The U.S. is in the midst of a spending-driven debt crisis.  As of November 16, 2011, the national debt had reached an unprecedented $15 trillion, or the equivalent of $127,900 owed by every U.S. household.  In 2011, the U.S. borrowed almost 40 cents of every dollar it spent, much of it from the Chinese, and is sending the bill to our children and grandchildren. With the national debt at the unprecedented level of $15 trillion, the U.S. debt-to-GDP ratio is now approximately 99 percent.  Within weeks, the nation’s debt will inevitably be greater than its GDP for the first time since World War II. 

While the nation’s runaway debt has long been a pressing concern, runaway spending and deficits over the last three years have accelerated debt accumulation at an unprecedented and unsustainable pace.  For instance, in the 32 months between the time President Obama took office in January 2009 and the end of October 2011, the national debt increased by $4.3 trillion or 40 percent.  To put that into perspective, it took from the presidencies of George Washington to Bill Clinton to amass the same amount of debt that President Obama has racked up in just 32 months.

 

A Spending-Driven Debt Crisis

The reason for the historic increase in U.S. debt in the past three years and the astronomical debt increases projected over the next decade is unsustainable federal spending. Despite the warning signs, the president and Democrats have been committed to continuing the runaway spending spree that has cost jobs and hurt the economy. In the five years since 2006, annual government spending has grown by $943 billion or 26 percent. The president’s FY 2012 budget doubled down on Democrats’ commitment to spend the nation into economic chaos.  Democrats were responsible for the nation’s first $1 trillion deficit in 2009, its second $1 trillion deficit in 2010, and its third $1 trillion deficit in 2011.  In the face of these record breaking deficits, House Republicans approved a budget (H.Con.Res. 34) that would stop spending money we don’t have and cut spending by $6.2 trillion compared to the president’s budget.  However, Democrats have repeatedly blocked attempts reduce federal spending.

The fact remains that the nation’s long-term debt crisis can only be solved if we stop spending more than we take in.  While future spending and debt is projected to skyrocket, revenues are expected to remain at their historic averages.  According to CBO’s estimates, without raising taxes as Democrats have called for, revenues will return to their post-World War II average of 18 percent by 2017 and remain there indefinitely. Spending, however, will continue to grow to 34 percent of GDP and drive public debt to 187 percent of GDP by 2035.  As a result of this spending, interest payments on the debt will increase from 1.4 percent of GDP in 2011 to 8.9 percent of GDP by 2035—an increase of 536 percent.  This runaway spending is paralyzing the jobs market, causing uncertainty among job-creators, and causing the worst economic recovery since the Great Depression.  According to CBO, “Growing debt also would increase the probability of a sudden fiscal crisis, during which investors would lose confidence in the government's ability to manage its budget.”

 

Endangering America’s Prosperity and Security

Simply put, the economy cannot grow and future generations will not prosper unless we stop spending money we don’t have. Unsustainable spending and debt are hamstringing the economy, destroying jobs and restraining growth. According to a recent study by economists from Harvard and the University of Maryland, in countries with debt totaling 90 percent of GDP or more, “median growth rates fall by one percent, and average growth falls considerably more.”  Our nation’s GDP to debt ratio will soon be 100 percent.  Erskine Bowles, Former Clinton White House Chief of Staff, acknowledged the threat to the country. Bowles stated, “This debt is like a cancer… It is truly going to destroy the country from within.” CBO has said “the sooner that long term changes to spending and revenues are agreed on, and the sooner they are carried out once the economic weakness ends, the smaller will be the damage to the economy from growing federal debt.” The nation’s uncontrolled debt also threatens our national security.  Admiral Mike Mullen, Chairman of the Joint Chiefs, said, “I think the biggest threat we have to our national security is our debt.”

 

Controlling Spending Through an Amendment to the Constitution

Having a balanced budget requirement is not an untested idea.  In fact, 49 states currently abide by some form of a balanced budget requirement, according to the National Conference of State Legislatures. American families do what they have to do to live within their means; so too should the government. Only by permanently turning off the “leaking faucet” of federal spending can we truly stop the flood and save our children and grandchildren from drowning in a pool of debt they did not create. If we choose to do nothing and continue on the path outlined by the president’s last budget, in just 10 years, 95 percent of all federal taxes would be used to pay off the nation’s debt and fund unsustainable mandatory programs. This will leave only 5 percent of the nation’s annual tax revenue for funding national defense and other essential functions of the government. Without an effective limit on borrowing and deficits, the economy will not grow and the country will not prosper.

 

Additional Messaging Points

Courtesy of the Republican staff of the House Committee on the Judiciary:

  • For the first 140 years of America’s history, the federal government operated under an unwritten constitutional rule that budgets should be balanced, except during times of war. Unfortunately, the past 50 years have proven that an unwritten rule is no longer sufficient.

  • Statutory attempts have failed to bring federal spending under control—from Graham-Rudman-Hollings, to the Budget Enforcement Act, to statutory Pay-As-You-Go requirements.

  • Many have concluded that only a constitutional amendment will work to impose fiscal restraint and rein in out-of-control federal spending.

  • According to President Ronald Reagan, “Only a constitutional amendment will do the job. We’ve tried the carrot, and it failed. With the stick of a Balanced Budget Amendment, we can stop government squandering, overtaxing ways, and save our economy.”

  • The 104th Congress came very close to passing a balanced budget amendment—falling just one vote short in the Senate of the required two-thirds majority.

  • Polls show that 95% of Americans believe the deficit is a problem and that 74% of Americans are in favor of a balanced budget amendment.

  • Amending the Constitution is not easy, nor is it a task that should be taken lightly. We’ve only amended the Constitution 27 times.

  • But if we want to make permanent cuts to federal spending—cuts that cannot be undone by future Congresses—a constitutional amendment is the only answer.

  • We need to put in place a framework to end deficit spending and the rash impulse to tax or borrow to pay for the government program du jour.

  • America’s continued economic prosperity depends on changing our course on federal spending and growing deficits.