January 15, 1995 | Lecture on Federal Budget
Congressman Barton, a Republican, represents the 6th District of Texas in the U.S. House of Representatives. He spoke at The Heritage Foundation on January 5, 1995. ISSN 0272-1155 0 1995 by The Heritage Foundation.going to be rewarded in the short term for promising to spend more money on constituents. You are seldom going to be rewarded at the margin for voting to kill a program. The taxpayers have seen the share of personal income lost to federal taxes grow from about five percent when I was born to over twenty percent now. Yet, taxpayers are diffused, and they are not nearly as well organized as the groups which benefit from the spending. The reality is that, short of some disciplinary mechanism like the balance d budget amend- ment, we will simply never balance the federal budget again in Washington, D.C. Ronald Reagan could not do it. George Bush could not do it. Jimmy Carter could not do it. Bill Clin- ton certainly cannot do it. It will simply not happen. That is why, generally, a balanced budget amendment is important. Next we should consider what kind of balanced budget amendment we want. We have to be more definitive than a simple declarative statement that "The budget shall be bal- anced." I don't think we h ave to have a balanced budget amendment that is too technical to understand, though. We have to be somewhere in between. There are generally three types of balanced budget amendments. There is a spending limitation amendment. The Kyl amendment from the 10 3 rd Congress balanced the budget by limiting spending as a percent of GNP. I believe the number was 19 percent. In the previous Congress, the more popular balanced budget amendment, very similar to the Barton-Hyde-Tate Amendment, is the Simon-Stenholm Amen d ment. It says the Presi- dent shall submit a balanced budget; the Congress shall enact a balanced budget. Actual spending shall be less than or equal to the revenue estimates. There shall be required a 60 percent super-majority vote to borrow money and a 6 0 percent super-majority vote to in- crease the national debt, but only a majority vote required to raise taxes. To me, that is a tax bias. I believe we must take the Simon-Stenholm Amendment a step further and say you should balance the super-majority re q uirements. Require 60 percent to borrow money, 60 percent to increase the national debt, and 60 percent to raise taxes. My option, the Tax- Limitation Balanced Budget Amendment, is the most "balanced" balanced budget amendment. The bias. is removed and pl a ced on spending cuts. Some Democrats raise a red flag when you talk about super-majority votes for tax in- creases. They say that's not politically possible; that's not pragmatic; we agree in principle, but we just don't think that the body politic can ac c ept that, so we are going to strip that. The Democrats have been the majority in the House for the entire ten years that I have been in the House. With the leadership of Congressman Stenholm, we have been able to get the balanced budget amendment votes to the floor. But in order to do that, we have had to accept that those of us who are proponents of tax limitation were orphans in the debate. They used a "king-of-the-hill" procedure where we are allowed debate and a vote, but the rule was structured such t h at the amendment that got the last affirmative vote was the amendment voted on for final passage. In that system, the Stenholm Amendment, the one without the super-majority for tax increases, always was the one considered for final pas- sage. Under that r u le, a funny thing has happened. There were never enough Democrats at the final passage vote with the guts to vote for a balanced budget. So we would get right to the cup but the putt would not drop. Three years ago, when President Bush was President, twel ve Democrats who were cosponsors of the balanced budget amendment voted against it on final passage. The amendment failed by about nine votes.
2Tax limitation is important for two reasons. Number one, if you have super-majorities in the balanced budge t amendment, which the Stenholm Amendment does, for borrowing money and increasing the debt ceiling but do not have it for raising taxes, you have put a bias in the balanced budget amendment to raise taxes. If it takes a 60 percent vote to waive the Budge t Act to borrow money and only a simple majority to raise taxes, there is a greater probability that you are going to raise taxes instead of borrowing money or cutting spend- ing. Cutting spending is what we should do. Second, the data available on tax lim i tation show that it really works. It is not merely some academic theoretical model. It works in the real world. There are currently nine states that have some sort of super-majority requirement for tax increases. In one study, in those nine states that ha d the super-majority requirement for a tax increase, taxes as a portion of personal income went down two percent. In the states that did not have a super-majority tax requirement, the tax burden went up about two percent. That's a differential of four per- cent that can be credited to super-majority requirements. Similarly, spending in the states with super-majority requirements for tax increases did in- crease, but only about two percent. In the states that do not have the super-majority for tax increases, spending went up nine percent. That is a seven percent difference. If you -take those two differentials, seven percent on spending and four percent on taxes, and put it against the federal budget, today our income taxes would be $56 billion less and our s p ending would be over $100 billion less. Even in Washington, that is real money. If ' your federal income taxes were over $50 billion less, and if federal spending was over $100 billion less, we would have less federal debt, you would have more money in yo u r pocket, and it would be a better world for all. Tax limitation works. Tax limitation is popular, too. Some of my Democrat friends say, "We can't vote for that tax limitation-it's too tough." But when you go out and ask people, "Are you for a bal- anced b udget amendment?" about 80 percent of the people are going to say yes. When you ask what kind of amendment, and explain the differences, 90-95 percent prefer the tax limi- tation amendment over any other amendment. It is very popular. I believe that this i s. the year we are going to pass, by a two-thirds vote in the House and a two-thirds vote in the Senate, the tax-limitation balanced budget amendment and send it to the states for ratification. We had our first test vote last night on the House floor. On t he vote, there were 279 yeas and 152 nays and 3 people not voting. That translates into 65 per- cent of the people present and voting. Of those present and voting, we needed only seven more votes to have the two-thirds vote required for constitutional ame n dments. Also, the three members not voting would support our amendment. We are really close in the House to having the two-thirds. Really close. And we have a leadership with Speaker Newt Gin- grich, Majority Leader Dick Armey, Whip Tom DeLay, and Confere n ce Chairman John Boehner that is totally for a tax limitation balanced budget amendment. We have a Judiciary Chairman in Henry Hyde of Illinois who is for it. We have a Rules Chairman in Gerry Solo- mon of New York who is for it. We got 52 Democrats last n ight to vote for the tax-limitation income tax provision. We have got great Democratic leadership in Pete Geren of Fort Worth, Texas, and Ralph Hall of Rockwell, Texas; Billy Tauzin of Louisiana and, I think, Mike Parker of Mississippi and Gary Condit of California are also going to be very supportive and take leadership roles.
3When we pass the amendment in the House, I believe passage in the Senate is assured. Then it will take three-fourths of the states to ratify it. They will have seven years. The House will plan on a program to balance the federal budget in real dollars in real terms by the year 2002, when the amendment would likely go into effect. When the first budget has been balanced, we will finally have a year ending with money left in the T r easury instead of additional bond packages. When that happens, interest rates are going to be lower, there is going to be more money for real federal programs that reach people and meet basic needs that the American government feels needs to be met, and m y generation of political leadership will have accomplished something that some people say is impossible. I strongly believe it will happen. But let me stress that even if a balanced budget amendment does not pass, we in the 104th Congress will move toward a balanced budget. It is my understanding that Congress- man John Kasich, the Chairman of the House Budget Committee, and the Republican leadership intend to produce a budget document this year that spends less in absolute terms than was spent last year. I t is also my understanding that we in the House plan to pro- duce a five-year budget with declining budget deficits each year. Congressman Bill Archer, the Chairman of the Ways and Means Committee, has told me that his plan in the Commit- tee is to.produc e tax bills and reconciliation packages at the appropriate time 'that put us on the slope to balance the budget by 2002-with or without the balanced budget amend- ment. We are going to start practicing what we have been preaching. 4.