Frequently Asked Questions
There have only been 27 constitutional amendments ratified in the entire history of the United States. Why does a sustainable debt limit deserve to become a part of the Constitution?
Simply put, national solvency is the highest moral imperative. Long-term solvency must have priority over any particular taxing or spending policy.
Why enact a sustainable debt amendment now?
Politicians of both major parties have been steadily growing our national debt for over 50 years. For the last 10 years, the rate of increase has been unsustainable. Our national debt is now over 100% of Gross Domestic Product and growing at 6% per year. We are dangerously close to a tipping point beyond which a debt crisis and default will become inevitable. The default and insolvency of the U.S. Government will be a wrenching experience, far worse than the 2008 financial crisis. The longer we wait, the more difficult the fix will be.
How did we get into this situation?
For decades, year after year, Congress has routinely approved increases to the debt ceiling to enable large annual budget deficits. The temptation of higher benefits and lower taxes is too strong to overcome when the next election is always less than two years away. In a democracy, voters have short-term vision and tend to reward politicians who will cut taxes without cutting expenses, or increase spending without raising revenues.
Our nation's founders wisely wrote many limits on the powers of Congress into the Constitution. But they made one crucial omission by not limiting how far the Congress and President can take the country into debt.
Won't the financial markets limit how much debt we can take on?
Eventually, yes. On current trends, in three to five years, and with very little warning, buyers of U.S. government debt will simply fail to show up. Interest rates will skyrocket and half of federal revenues will suddenly be needed to pay the interest on the national debt. All federal benefits and payments will swiftly be slashed in half. This is what we saw happen in Greece a few years ago. But, unlike Greece, there will be no one big enough to bail out the United States of America.
It is far better to apply a brake on the growth of the public debt in a controlled way than to have it forced on us suddenly.
Our proposal of a sound path to solvency will enhance U.S. creditworthiness, hold down interest costs and reduce the burden of debt borne by all Americans.
How would this proposal differ from simply denying congressional approval on future debt ceiling increases?
The debt ceiling episode of 2011 was so disruptive precisely because the possibility of a No vote and temporary default arrived with only weeks of warning. Every future debt ceiling vote will be contentious and will lead to months of damaging uncertainty in the business and hiring sector.
In contrast, the limits defined by a Sustainable Debt Amendment would be known years in advance. Debt growth would be transparent, gradual, steady, and not a surprise to anyone.
Congress would be free to design mechanisms to maintain a safe margin away from the limit, to account for the natural ebb and flow of the business cycle.
Why not give the President sole authority to raise the debt ceiling?
It is too dangerous to concentrate this responsibility in the hands of just one person. A lot of damage can be done in four or eight years' time.
Is this a balanced-budget amendment?
No. A sustainable debt amendment would not require balanced budgets every year. But balanced budgets or surpluses in good years would provide extra capacity for short-run deficits in recession years.
Why not write the amendment to require zero growth in the national debt?
Our population growth by birth and immigration and the long-term growth of our economy can sustain a modest 2 to 3 percent nominal-dollar annual growth in the federal debt indefinitely.
Why not write the amendment to limit federal government taxing or spending to a certain fraction of the total economy?
A constitutional amendment cannot be ratified unless it enjoys widespread and bipartisan support. The sole aim of this proposal is to avert a debt crisis while there is still time to do it. It is not intended to take a position on whether government should be large or small; that is a debate that should be conducted by the legislators in Congress.