Cut, Cap and Balance Amendment Would Fold, Spindle and Mutilate Constitution

Thursday, July 21, 2011 Print Email

The so-called “cut, cap and balance plan” legislation that passed the House would require the passage of a Balanced Budget Amendment to the U.S. Constitution that would mandate a two-thirds supermajority to approve any future tax increases.

The House Republican-backed measure is not expected to get very far in the Senate. Even if it does, President Obama has threatened to veto it. Still, the bill did attract five Democratic votes in the Republican-dominated House, where it passed by a 234-190 margin on Tuesday. The bill would require Congress to pass a Balanced Budget Amendment to the U.S. Constitution and send it on to the states for eventual ratification (or not) before the debt ceiling could be raised. That’s a tall order when the debt limit needs to be lifted by August 2 to avert a government default.

The bill would require steep cuts of $111 billion in mandatory and discretionary spending in fiscal 2012, with the goal of slicing the deficit in half next year. That would be united with enforceable caps on spending to align federal spending with average revenues of 18 percent of gross domestic product, with automatic spending reductions if the caps are breached. It would also require sending to the states a Balanced Budget Amendment with protections against federal tax increases. The amendment would contain a spending limitation as a percentage of GDP and require that any future tax increases be approved by a two-thirds vote in both chambers of Congress for ratification.

Currently, under the Constitution, a two-thirds vote is needed to override a Presidential veto, but not to pass a revenue-raising bill. “All bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills,” wrote the Founding Fathers in Article I, Section 7. “Every Bill which shall have passed the House of Representatives and the Senate, shall, before it become a Law, be presented to the President of the United States; If he approve he shall sign it, but if not he shall return it, with his Objections to that House in which it shall have originated, who shall enter the Objections at large on their Journal, and proceed to reconsider it. If after such Reconsideration two thirds of that House shall agree to pass the Bill, it shall be sent, together with the Objections, to the other House, by which it shall likewise be reconsidered, and if approved by two thirds of that House, it shall become a Law.”

While it’s true that these days, it often takes 60 votes to get anything through the Senate because of the pervasive use or threat of a filibuster, that still falls short of the 66 or 67 who would be needed to provide a two-thirds majority. Of course, the whole process of amending the Constitution is to allow for such exceptions, but a Balanced Budget Amendment would still stick out like a sore thumb in the context of Article I. Getting the states to ratify it would be a long-drawn-out process with no certainty of passage, especially when many states are so cash-strapped these days that they are counting on revenue fr om the federal government to help them balance their own budgets. A reduction in federal revenue makes it harder for them to meet their own spending and debt obligations.

In any case, even though the cut, cap and balance bill managed to pass the House and may even pass the Senate, it’s not likely to become law given the Presidential veto threat, which would require a two-thirds supermajority to overcome. A more promising plan, put forward by the so-called “Gang of Six” (or perhaps Seven now, according to Obama) materialized unexpectedly in the Senate on Tuesday, and won support fr om a number of influential Republican lawmakers in that chamber (see Gang of Six Senators Present Budget Deficit Plan). The plan calls for slashing $3.7 trillion over 10 years, and cutting $500 billion immediately from the deficit as a “down payment.” The plan also gives Congress an additional six months to come up with other spending reductions.

It calls for reducing marginal tax rates and simplifying the Tax Code by creating three tax brackets of 8-12 percent, 14-22 percent, and 23-29 percent. It would reduce tax breaks on mortgage deductions, 401(k) plans and individual retirement accounts, charitable deductions, child tax credits and other areas. The plan also proposes to close some corporate tax loopholes, lower tax rates for both individuals and businesses, and permanently repeal the alternative minimum tax.

Under the plan, the Senate Finance Committee would be required to deliver a tax reform package within six months that would broaden the tax base, lower tax rates and generate economic growth while providing $1 trillion in additional revenue.

It’s less certain that House Republicans will go along with that plan, but if not there’s a fallback plan that Senate Minority Leader Mitch McConnell, R-Ken., and Senate Majority Leader Harry Reid, D-Nev., have been negotiating in recent days (see Debt Lim it Talks Gravitate Slowly to McConnell Plan). It includes approximately $1.5 trillion in spending cuts and would allow Obama to raise the debt ceiling in increments through the end of 2012. Under the plan, even if Congress voted against raising the debt ceiling, Obama could veto them and they would need to override his veto.

Once again, that would mean a two-thirds supermajority, but no Constitutional amendment required.

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