Arizona Balanced Budget Amendment

Arizona Balanced Budget Amendment

- in Publius Huldah
@Publius Huldah

Balancing the Budget?

Or Adding A National Sales Tax To The Income Tax?


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By Publius Huldah


The stated purpose of Compact for America, Inc. is to get a balanced budget amendment (BBA) ratified. Here is their proposed BBA. State Legislators recently introduced it in Arizona. 1

The gap between what this BBA pretends to do – and what it actually does – is enormous. It has nothing to do with “balancing the budget” – it is about slipping in a new national sales tax or value-added tax in addition to the existing federal income tax.

We have become so shallow that we look no further than a name – if it sounds good, we are all for it. We hear, “balanced budget amendment”, and think, “I have to balance my budget; they should have to balance theirs.” So we don’t read the amendment, we just assume they will have to balance theirs the same way we balance ours – by cutting spending.

But that is not what the BBA does. In effect, it redefines “balancing the budget” to mean spending no more than your income plus the additional debt you incur to finance your spending. To illustrate: If your income is $100,000 a year; but you spend $175,000 a year, you “balance” your budget by borrowing the additional $75,000. See?

Under the BBA, Congress may continue to spend whatever it likes and incur as much new debt as it pleases – as long as 26 States agree. And since the States have become major consumers of federal funding, who doubts that they can’t continue to be bought? Federal grants make up almost 35% of the States’ annual budgets! The States are addicted to federal funds – who thinks they won’t agree to get more money?

The BBA enshrines Debt as a permanent feature of our Country; gives it constitutional approval; does nothing to reduce spending or “balance the budget”; authorizes a new national tax; and wipes out the “enumerated powers” limitation on the federal government.

Let’s look at the BBA, section by section, using plain and honest English. And then let’s look at how our Framers wrote our Constitution to strictly control federal spending.


Compact for America’s BBA

Section 1 says the federal government may not spend more than they take from you in taxes or add to the national debt. [Yes, you read that right.]

Section 2 accepts debt as a permanent feature of our Country – the “Authorized Debt”. This is the maximum amount of debt the federal government may incur at any given point in time.

  • Initially, when the Amendment is ratified, the “authorized debt” may not be more than 105% of the then existing national debt. So! If the national debt is $20 trillion when the Amendment is ratified, the federal government may not initially add more than 105% of $20 trillion [or $1 trillion] to the national debt. 
  • After that initial addition to the national debt, the “authorized debt” may not be increased unless it is approved by State Legislatures as provided in Section 3. 

Section 3 says whenever Congress wants, it may increase the national debt if 26 of the State Legislatures agree. [Yes, you read that right.]

Section 4 says whenever the national debt exceeds 98% of “the debt limit set by Section 2”, the President shall “impound” sufficient expenditures so that the national debt won’t exceed the “authorized debt”. And if the President doesn’t do this, Congress may impeach him! 

This is a hoot, Folks! I’ll show you: 

  • No debt limit is set by Section 2! The national debt can be increased at any time if Congress gets 26 State Legislatures to agree. Can 26 States be bought? 
  • Section 6 defines “impoundment” as “a proposal not to spend all or part of a sum of money appropriated by Congress”. Who believes Congress will impeach the President 2 for failing to “impound” an appropriation made by Congress? 

Section 5 says any new or increased federal “general revenue tax” must be approved by 2/3 of the members of both houses of Congress.

Now pay attention, because this is a monstrous trick to be played on you: Section 6 defines “general revenue tax” as “any income tax, sales tax, or value-added tax” levied by the federal government.

And when you read the first sentence of Section 5 with the definition of “general revenue taxin place of “general revenue tax”, you see that it says:

No bill that provides for a new or increased income tax, sales tax, or value-added tax shall become law unless approved by a two-thirds roll call vote…”

Do you see? This permits Congress to impose a national sales tax or value added tax in addition tothe income tax, 3 if 2/3 of both houses agree. [Yes, you read that right.]

But the trickery of the drafters of this evil piece of work is even worse. Section 5 also says that any bill for a new sales tax which would replace the federal income tax need only be approved by a simple majority of the members of both houses.

This makes most readers believe that the income tax would be replaced by a sales tax.

But the Amendment does not require Congress to introduce a sales tax to replace the income tax. [Remember, that sales tax requires only a simple majority to get passed.]

Whereas it authorizes Congress to impose a sales tax or value-added tax in addition to the income tax! [This sales tax requires a 2/3 majority to get passed.]

Do you see? Are they tricky or what!

And which option will Congress choose?

Section 6 sets forth the definitions for the amendment. As you see, you must always read the definitions and apply them to the text. 

Section 7saysthe Amendment is “self-enforcing”. Rubbish! No Constitution or amendment is “self-enforcing”. There is only one way to enforce our Constitution: WE THE PEOPLE, who are “the natural guardians of the Constitution” (Federalist No. 16, next to last para), enforce it by learning it and by throwing out politicians who ignore it. And we must always be on guard against the wolves who seek to destroy it.

Nick Dranias, on the Board of Directors for the Compact for America , is a constitutional lawyer. History professor, Kevin R. C. Gutzman, on the Advisory Council, is a lawyer. Other prominent lawyers and a 5th Circuit Court Judge, are on the Council. They all know what their BBA does.


How Does Our Constitution Control Federal Spending?

Our Constitution lists – itemizes – every power WE THE PEOPLE delegated to the federal government when we ratified the Constitution. These are the “enumerated powers”. Article I, §8 lists most of the powers delegated to Congress for the Country at large: 4

  • immigration office (Art. I, §8, cl.4)
  • mint (Art. I, §8, cl. 5)
  • a few criminal laws (e.g., Art. I, §8, cl. 6)
  • post offices & post roads (Art. I, §8, cl. 7)
  • patent & copyright office (Art. I, §8, cl. 8)
  • federal courts (Art. I, §8, cl. 9)
  • military and citizen militia (Art. I, §8, cls. 11-16) 

Various other Articles, sections, and clauses list additional objects of Congress’ spending, such as payment of the salaries of persons on the civil list (Art. I, §6, cl.1; Art. II, §1, next to last clause; and Art. III, §1).

Do you get the idea? The Constitution lists what Congress is permitted to spend money on. Its spending is limited to the enumerated powers, and the salaries of those on the civil list. If you will go thru our Constitution and highlight every power delegated to Congress and the President, you will see ALL the objects on which Congress has constitutional authority to appropriate funds. THAT is ALL – ALL – they may lawfully spend money on.

We have a debt of $17+ trillion (plus unfunded liabilities) because WE ignored our Constitution for 100 years; and Congress spent money on objects outside the scope of the enumerated powers.

This one page chart depicts the Constitution We established, and most of what Congress may lawfully spend money on. Is it not a thing of beauty? Do you want it back? Then Restore it!

Understand this: All versions of a BBA eliminate the enumerated powers limitations on the federal government. Under all versions, the Constitution is “fundamentally changed” to permit the federal government to do anything they want and to spend money on anything they please. 

Amendments are a tricky business. And tricksters abound in our Land.



1 Compact for America is also trying to use the “compact of the states” provision & is calling for an Art. V convention. Red Flag, Folks! But for now, let’s look just at their dishonest BBA.

2 Congress always had authority to impeach and remove a President for usurpations of power – see this short Primer.

3 Section 5 also says Congress may reduce or eliminate existing income tax exemptions, deductions, or credits by a simple majority vote.

4This paper lists all the powers delegated to Congress by our Constitution. You can learn them! 




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  1. identicon


    I won’t claim clairvoyance as to the BBA’s drafters’ intentions here, but I do know the road to hell is paved with them. I also know there was never legislation or amendment written that lawyers of both the Left and the Right did not immediately dig into it with the express purpose to 1, (on the Left) circumvent for the usual leftish purposes, in this case raising even more money while being able to tell the citizens the budget is nonetheless balanced, so we can all sleep better at night, and (2. on the right) try to make yet another square law fit into the original round hole the Framers had inserted in the Constitution, already knowing it can’t or shouldn’t be done.

    I am always with the people trying to protect people’s wallets and rights, rather then those who, whether negligently, vaingloriously, or intentionally, are trying to pick their pockets.

    Regardless of the act’s intentions, everything that the author has warned can be done with the new law, in fact can be done. And since there are at least 20 states out there already who are on record as being unable to balance their own books, some into perpetuity or bankruptcy, so who would be willing to cut any “sharing deal” with the federal tax authorities in order to ease these conditions, as a simple act of math, the other five of six states could easily be co-opted with some bribe or another, to insure that despite the amendment’s stated purposes, the federal government can raise spending almost at will. “The states” is quite quite as magical as some might want to make it sound.

    Finally, in agreement with the commenter, Bob, above, just as a matter of debating points, the article’s author raised several straight- forward, to-the-point possibilities as to how this law could go wrong. But the amendment’s author riposted with what can only be called platitudes and those infamous good intentions. Once prepared to defend facts with facts, it would be nice to see the parties hire a hall and debate this face to face.

    Finally, in my own view, until center-right politicians can learn to think criminally, or at least as the left thinks, they would be much better off to stay away from any coalitions, as Mr Dranias quoted in his first argument “any idea must be capable of attracting support from the Left and the Right”. Booshway. At any time Left and Right join hands, in these times, one is a liar and the other the most gullible fool on the planet. Being an ex-Arizonan and having known Sen Goldwater in the 70s, I personally hate to see his name associated the likes of some of those kinds of people.

  2. identicon

    On raising the debt ceiling, I appreciate your logic , but Publius has a very valid point. We saw it with Obama’s Race To The Top education scheme.. Obama waved a chance to qualify for a handful of Grants, provided they signed up for a set of standards that hadn’t been written yet.. I live in Florida, they were passing bills that would have spent the money- except they didn’t win a grant on that go around.

    On the other hand, if the debt ceiling needs to be raised for a specific reason that doesn’t benefit the states directly.. It could take years to get 26 states to sign on..

    On Item 3, I’ll agree that letting DC set it’s own credit limit is like giving a crack addict your credit card.

    More later.

  3. Here is the real analysis of the BBA section-by-section:

    • Section 1 – balances federal budget by limiting spending to taxes except for borrowing under a constitutional debt limit.

    • Section 2 – establishes a constitutional debt limit equal to 105% of outstanding debt at time of ratification

    • Section 3 – requires approval of a majority of the state legislatures if Congress desires to increase the debt limit

    • Section 4 – requires the President to protect the constitutional debt limit through impoundments Congress can override

    • Section 5 – encourages spending and tax loophole reductions to bridge deficits, as opposed to general tax increases

    • Section 6 – provides necessary definitions

    • Section 7 – provides for self-enforcement of the amendment

    The author above simply misrepresents or misunderstands the BBA. Her analysis is weak and wrong for eight reasons.

    First, keep in mind that to secure ratification, any idea must be capable of attracting support from the Left and the Right. The standard cannot be the perfect Center-Right policy. The standard should be whether the status quo is structurally improved upon without compromising any principles. There is no way in the world that this BBA fails that test.

    Second, it can hardly be worse than the status quo that we add a state referendum to the process of lifting the federal debt limit. It is a step forward by giving the states a portion of the power they once held in the U.S. Senate when they could control through proxies half of the whole federal legislative power. Having two simple majority processes to jump to secure an increase in the federal debt limit–one within Congress and one requiring a majority of the States–is significant restraint on the federal debt. It is real scarcity.

    Third, the analysis fails to grapple with the fact that the status quo involves the debtor–Washington–setting its own credit limit with no oversight whatsoever. This is a concentration of power that naturally has led to a runaway debt. The States are closer to the people, less controlled by Washington interests that are dependent on debt. Decentralizing power and control over the debt limit to the states acting as a board of directors certainly enhances the ability of people to control the debt.

    Fourth, the analysis fails to notice there is no loophole for wars, emergencies, special entitlement programs. This is a typical feature of proposed BBAs in the past, which allows enormous gaming potential by Congress. At least any effort by Congress to increase its debt limit will be transparent and subject to a nationwide debate with a referendum of the states being necessary. While certainly the debt spenders in Washington will win a few of those battles, there is no question that having transparency and national debate over efforts to engage in borrowing will enhance the prospects of those who oppose mindless debt spending. Further, it is hard to imagine that even 26 states populated with Jerry Brown on the legislature would approve a debt limit increase by congress with no budget behind it.

    Fifth, the analysis of the impoundment feature forgets that section 1 of the BBA limits total spending to total receipts when the debt limit is reached. If the President does not impound anything, and the debt limit is reached, this forces an across-the-board sequester–in other words nearly 45% of the budget would be cut without any rational plan. It is ridiculous for you to think that such budgetary bloodletting would not incentivize Congress to impeach the President under those circumstances. Almost as ridiculous to think that the President would not use his impoundment power. No President that had the impoundment power in history did not use it! Power is used. If there were any reasonable critique of the impoundment feature, it would be its risk of abuse. But that’s why we included a congressional override process that is far lower than a veto override (only simple majorities). Also, yes, we did make a judgment that it was better to have clear lines of accountability to the President and risk abuse of that power, than to have no such accountability. Abuse of impoundments can be corrected by the ballot box just as well as through impeachment.

    Sixth, the analysis of our tax limit provision is… how do I put this? Complete nonsense. The status quo already allows for layering a sales tax or VAT on top of the income tax with simple majority support from a mere quorum. That is already part of our existing Constitution–which is not perfectly drafted. The tax limit provision raises the passage requirement for any such new tax to two-thirds of the whole number of each house of Congress. That is a clear improvement on the status quo. A simple majority allows for a new sales tax only if it “completely” replaces every income tax. That is another clear improvement on the status quo. Sure this provision does not completely obliterate the risk of taxation. It even continues to allow tariffs to be increased with simple majority support and for tax credits, deductions and exemptions to be closed with simple majority support. But none of this is worse than the status quo. If anything, the drive for revenue through these narrow simple majority thresholds will either fail due to strong push back from impacted special interests, causing spending reductions of necessity, or it will tend to flatten the income tax or replace it with more voluntary consumption based taxes. That’s better tax policy.

    Seventh, even if taxes were raised as a result of the increased debt scarcity established by the BBA, that is BETTER than limitless debt incurrence. Debt that is to be repaid IS taxes. It is taxation without representation. It is the worst kind of taxation both morally and also because there is no effective political check when the burden of taxation is felt by non-voting future generations. If a choice has to be made between increased debt spending or increased taxes on current voting generations, the proper thing is to risk increased taxes on current voting generations because it is politically self-limiting–politicians will get fired if they raise taxes too much.

    Eighth, in criticizing the “self-enforcing” language, the author of this flawed analysis displays a lack of understanding that constitutional amendments can require separate enforcement legislation to actually take legal effect. Making the amendment explicitly “self-enforcing” avoids the need to wait on Congress to pass enforcement legislation to make it effective. This is basic stuff that any lawyer should know.

    Suffice it to say, either the author of this analysis is not a careful reader or she was deliberately attempting to mislead. Either way, this analysis is weak and wrong.

    1. What part of enumerated powers, and those reserved to the States, or to the people, do you not understand?
      Your bullet points above are a little bit ridiculous, especially #4 where you advise the president is to “impound” things and the Congress is to “override impoundments.” That is some kind of a mocking joke and outright abrogation of the Constitution and the rule of law and personal liberties that defined America for 200 years.
      “Provides necessary definitions”? Gee, that’s swell. The 2nd Amendment contained definitions of the right to keep and bear arms, which was that NOBODY was to mess with it. Definitions are in the mind of the definer. Your ballyhooed BBA is no more set in stone than the 2nd Amendment that continues to be flouted to this day because there aren’t enough honest men, or men with lamps to find them, to enforce it.
      Publius Huldah’s analysis is neither weak nor wrong. It is literal and empirical.

    2. Nick, you did not address my concerns at Freedom Post.

      You claim the Right and Left must be in this together. You must be serious since you have one of the biggest lefties/obama lovers around on your advisory board. Lawrence Lessig. Proponent of Net Neutrality and a charter member of Marxist Robert McChesney’s “Save the Internet” but in reality, he really wants it regulated.

      Nice also that “Save the Internet” donors are mostly Soros’ “societies” and one Herb and Marion Sandler, named one of Time Magazine’s “most wanted” for the mortgage meltdown.

      Ecuador’s socialist dictator Correa got his business degree from McChesney in Illinois and then McChesney turns around and gives him a big “award.” These are the kind of people you are palling around with either directly or by osmosis and you want Conservs to align with you?

      Remember in America “fat chance” and “no chance” mean the same thing.

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