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October 21, 2014

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Genuine National Security Requires the Compact for a Balanced Budget

October 2, 2014

National Security is served by the Compact’s Balanced Budget Amendment because fiscal responsibility is essential to national security. The Amendment is designed carefully to avoid any need for any exception, including an express "war exception." It allows for the prudent use of debt, but not the unlimited use of debt. Against that backdrop, an express "war exception" is both unnecessary and counterproductive.

 

First of all, flexibility for borrowed military spending is already provided by the amendment’s large initial line of credit. After all, the contemplated borrowing authority of 105% of the outstanding debt on ratification could be as much as $21 trillion if the amendment were ratified in the near future.

 

Additional flexibility for borrowed military spending is also provided by the amendment’s referendum process in which simple majorities of Congress can request simple majorities of the state legislatures to increase the federal government’s initial line of credit.

 

The fact that the Compact’s amendment provides for an initially fixed, but flexible, line of credit distinguishes it from other proposed balanced budget amendments that do not contemplate granting Congress any standing amount of borrowing authority. Amendment proposals that make no provision for borrowing may very well need an express war exception. But in the case of the Compact’s amendment, basic fiscal responsibility (such as paying down the debt during good economic times) would ensure more than enough borrowing capacity exists for necessary wars.

 

After all, it is important to remember that military spending is only 19% of the budget currently. Close to 60% of the budget is funded by taxes. By reprioritizing appropriations, there is no reason why the President and Congress could not double or triple military spending based on existing tax cash flow without borrowing an additional dime. No one has yet proposed a war scenario in which more than double or triple the amount of current military spending would be necessary to finance our national defense (with bond markets somehow still functioning and able to deliver massive cash infusions of borrowed money while the neutron bombs drop).

 

Moreover, there has never been a truly necessary war in which majorities of the States and the American People have not rallied to the cause. The amendment’s referendum process is itself an implicit war exception allowing for additional borrowing capacity for wars that command a genuine national consensus. But by design it is not a loophole under Congress’ sole control.

 

Furthermore, Congress cannot complain about the supposed lack of national security expertise possessed by state legislators when it is a well-established fact that Congress rarely reads the legislation it passes into law. Wars require a national consensus. If Congress cannot bring a majority of state legislatures into the fold to authorize additional borrowing for a war that is so cataclysmic that it necessitates more than doubling or tripling current military spending, it has failed to make the case that prudence dictates must be made to justify such a war.

 

Secondly, leaving a war exception in the hands of a profligate Congress addicted to debt-fueled spending would create a loophole that would strongly incentivize Congress to declare and extend declarations of war—both real and imagined; both transparently and opaquely. Even if Congress did not start routinely declaring wars to avoid hard fiscal choices, there is reason to anticipate the possibility that well-lawyered declarations of war might be buried in national security legislation passed by Congress, opening the floodgates for borrowing through a war exception indefinitely.

 

An express war exception could easily swallow the amendment’s rule of limited borrowing capacity.

 

Even if a totally unexpected war erupted that somehow necessitated additional borrowing capacity to enable more than double or triple the current amount of military spending, one must recognize that an express war exception would be irrelevant unless bond markets were still functioning such that additional borrowing on a massive scale could be financed by selling new bonds. And if bond markets were still functioning on such a massive scale, there is every reason to believe that the political infrastructure would also exist for Congress to seek an increase in its borrowing authority from a majority of state legislatures. Indeed, to the very extent that it is realistic to anticipate the need for totally unforeseeable borrowing on this scale for military spending, there is every reason to believe that Congress and the states will have developed contingency plans to quickly convene and entertain such a request.

 

This last point underscores the fact that the Compact’s amendment strongly incentivizes rational national security planning precisely because it does not have an express war exception. Congress does not need to wait for a war to erupt before seeking additional borrowing capacity from the states. Under the Compact’s amendment, if Congress really thought that military spending would require more borrowing capacity in times of war than the Compact’s amendment allows, Congress is free to make that case to the nation; and could always seek authority to increase its line of credit from a majority of state legislatures long before any war appeared on the horizon. Congress would then have the power to set aside that portion of its line of credit for declared wars by federal statute, if it so chose.

 

Surely, advocates of an express war exception to the Compact’s balanced budget amendment, who apparently trust Congress not to abuse that exception, would be able to trust Congress with setting aside a portion of its authorized line of credit for military spending by statute. And if not, why would they trust Congress with an express war exception? Wouldn't a Congress willing to sacrifice national security to domestic spending also be willing to abuse an express war exception to obtain the same result?

 

Yes, with the Compact’s amendment in place, Congress could not have everything it wants on its own terms. Yes, Congress would have to make hard spending choices and work to secure and preserve dedicated borrowing capacity for military spending. Yes, Congress would have to deal with outside oversight by a majority of state legislatures; and federal fiscal policy could not simply assume the unilateral capacity to borrow unlimited amounts of money.

 

But that is only bringing the reality of scarcity home to Congress.

 

We want Congress to recognize that it has limited resources because otherwise it will continue to borrow without limit, spurred on by the constant demands of constituents and ambitions of unprincipled politicians who want to buy their votes. That unsustainable path will ultimately crash the system, hobbling the federal government’s ability to fight necessary wars, because resources are, in fact, scarce.

 

The greatest possible national security threat is thus posed by allowing Congress to continue to persist in making fiscal policy decisions based on the unreality of unlimited borrowing capacity.

 

Genuine national security requires a balanced budget amendment without easily abused loopholes.

 

In reality, an express war exception to the Compact’s balanced budget amendment would pose a grave national security threat.

 

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by Nick Dranias

 

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If you have not done so already, please visit the Compact for America website and load up on intellectual ammunition. 

 

Please show your support for the cause by purchasing cool Compact for America gear.

 

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