Politicians face an overwhelming temptation to use unlimited borrowing capacity to buy political advantage today while shifting the costs of their policies to non-voting future generations. There is no effective political check against this temptation-except to impose a strong constitutional limit on the use of debt.
This is not a partisan point. It is a policy fact. Our nearly $18 trillion national debt is the proof. Both parties have caused it; albeit one more recently than the other. Unlimited debt leads to unlimited spending on unsustainable programs no matter who is in charge of Washington.
For this reason, fixing the national debt is not a partisan issue. That's why debt limits and balanced budget requirements are a feature of fiscal policy in 49 states. That's why both 19th century classical liberals and 20th century progressives insisted on them in formulating state constitutions. The political class has forgotten their wisdom-or, like President Obama and President Bush before him, evaded it.
This point underscores that we cannot trust the political class in Washington with unlimited debt or even to control any debt limit. We must impose outside oversight. The Compact for a Balanced Budget would do just that.
The Compact for a Balanced Budget uses an agreement among the states to advance and ratify a powerful balanced budget amendment in as little as one year. The BBA would limit spending to cash flow from taxes except for borrowing from a constitutionally-fixed line of credit-to handle cash flow volatility and emergencies.
To ensure that line of credit is not abused, the core of the Compact's BBA is a requirement of outside oversight for any proposed increase in the federal debt. Specifically, a majority of state legislatures would have to approve any increase in the federal government's credit limit.
With the Compact's BBA in place, the states would become an active board of directors charged with keeping an eye on a wayward CEO. Washington would no longer have the ability to set its own credit limit and write itself a blank check. The logistics of securing approval from a majority of state legislatures for any increase in the debt limit would guarantee transparency. A broad national consensus would have to support national debt policy. Debt would finally become scarce. Priorities would have to be set. Sustainable programs would have to become the norm.
The Compact's BBA promises the outside oversight needed to restore fiscal responsibility-without loading the dice to favor any political party. It would provide a real remedy for the fiscal damage done by Washington.
Restoring our country to fiscal health should not be a partisan policy objective.
With the Compact for a Balanced Budget, it is not.
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by Nick Dranias