America’s Fiscal Constitution
Its Triumph and Collapse, by Bill White
By Bill Hobby
Our traditional fiscal constitution collapsed in 2001. Afterward—for the first time in history—federal elected officials cut taxes during war, funded permanent new programs entirely with debt, grew dependent on foreign creditors, and claimed that the economy could not thrive without routine federal borrowing.
Until the beginning of this century Presidents and Congresses of whatever party observed this unwritten constitution which mandated four financial practices: clear accounting, pay-as-you-go budget planning, trust funds financed entirely with dedicated revenues, and explicit Congressional approval of debt for specific amounts and purposes. These practices curbed the temptation to borrow.
Here is how the author would cure the problem:
“Congressional procedures now divorce votes on spending from votes on how to pay for that spending. Congress considers amendments to the debt ceiling only after only after it has voted to spend more than available tax revenues. As a result, debates on the debt ceiling have become a form of bad political theater, a bizarre combination of tragedy and farce.”
A legal debt limit established apart from specific appropriations breeds cynicism and hypocrisy, since many members of Congress vote against a higher debt ceiling, having already voted for appropriations exceeding tax revenues.
Deficit financing is clearly necessary in times of war and depression. Paying off the debt is just as necessary in happier times.
Congress should adopt the fiscal procedures of the Texas Legislature:
*All bills that call for spending money must have fiscal notes prepared by the Legislative Budget Board. Maybe we wouldn’t go to war so often if Congress had to raise taxes whenever it declared war.
*Appropriations bills must be certified by the State Comptroller as being within available revenues. In order for the Comptroller to certify, the bills must specify where the money is coming from. Is it coming from dedicated funds or general revenue?
Funds can be dedicated by the state constitution or by statute. The Motor Fuels Tax is statutorily dedicated 75% to highways and 25% to schools.
Much of the money for the Texas University and Texas A&M University systems come from the constitutionally dedicated Permanent University Fund. The PUF holds approximately $8.8 billion in investments and 2,100,000 acres of mineral-rich land in 21 counties, mostly in West Texas.
Also, Congress passes about thirteen appropriations bill every session. If appropriations were limited to available revenues each of the thirteen bills would be constrained by previous appropriations. The Texas Legislature passes only one General Appropriations Bill each session.
What about an amendment to the federal Constitution requiring a balanced budget? Many state legislatures have passed resolutions in favor os such an amendment and any have been proposed in Congress. In 1995, one came within one Senate vote of passing Congress and being submitted to the States.
It sounds like a good idea, but how would it work? Congress would still have to specify the details. The one that nearly passed said that “Congress shall enforce and implement this article by appropriate legislation...”
Bill White tells us that “Madison was right: it makes more sense to limit debt with broad principles enforced by the voters than with specific constitutional language enforced by the courts.”
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Book was used and described as “new”
Reviewed in the United States on February 11, 2019
This book was described as “new” but has clearly been written on by someone before me.
Reviewed in the United States on February 11, 2019
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