Nebraska lawmakers have before them a measure, LB1058, which would help pave the way for a Convention of the States to enact federal “fiscal restraints,” such as a federal balanced budget amendment.
Any imposition of federal “fiscal restraint” is likely to have unintended consequences that would be devastating to our state and national well-being.
Federal debt actually works to stabilize the economy during recessionary periods. During these times, businesses and consumers spend less, which leads to job losses. At the same time, the cost of unemployment benefits and other programs increase as more people need these services.
Borrowing to fund these increases in benefits helps cushion the blow to the economy as it helps families that receive the benefits and also helps preserve the remaining jobs and income for those who produce or sell goods, health care and other services.
A balanced budget amendment would hinder our ability to stop an economic free fall, which is why more than 1,000 economists, including 11 Nobel laureates, issued a joint statement in 1997 condemning a balanced budget amendment that was considered by Congress, warning that it would aggravate recessions. It’s also why Macroeconomic Advisers, an economic forecasting firm, found “recessions would be deeper and longer” under a balanced budget amendment. Had one been in place in FY12, the firm found unemployment would have doubled nationally.
Another method of “fiscal restraint” that could result from a Convention of the States and that was adopted during a simulated convention would require a supermajority of Congress to approve increases to the national debt.
There are serious problems with this policy. For example, the U.S. Treasury will borrow in most months to pay daily expenses of federal programs because revenues come in irregularly. This provision could make that practice unconstitutional even if the budget was balanced over the course of a year. This would threaten funding for many services that are essential to our citizens and our economy.
Nearly $3 billion in federal funding supports critical services in Nebraska, including almost $400 million for K-12 education. Without federal funding for education, we would be forced to make severe cuts to our education system or raise state taxes, local property taxes or fees. A significant amount of federal dollars also come to Nebraska through defense-related spending, farm subsidies, Medicaid and Social Security. All of this funding would be threatened by federal fiscal restraints.
The bill itself – LB 1058 – aims to allay fears of a “runaway convention” by requiring the removal of delegates to an Article V Convention who vote to change the Constitution in ways that are beyond the scope of the issues the convention was called to address. However, unless all states involved in the convention also adopt these restrictions, this would not prevent a runaway convention, as it would only bind our delegates and not others. Also, constitutional scholars such as Georgetown law professor David Super don’t believe states can even bind delegates as LB1058 purports to do.
Furthermore, resolutions calling for a Convention of the States are so broad that a runaway convention is not needed to make sweeping changes. The president of Convention of the States Action said at a 2015 gathering that a convention would allow not just for the implementation of fiscal restraints, but also for other drastic changes, including the elimination of the U.S. Senate, elimination of the U.S. Department of Education and elimination of the Internal Revenue Service.
We appreciate concerns about our country’s fiscal health, but there are better ways to make policy changes and better policy changes to make. Our amendment process, for example, has proven to be an effective way to make significant changes to our Constitution multiple times throughout our history. And rather than enacting sweeping fiscal restraints, we would be better served by examining and reforming state and federal tax expenditures to ensure they are a good use of tax dollars.
Given all this and what is at risk, Nebraskans would be better off if lawmakers rejected LB1058 and measures calling for a Convention of the States.