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governments. Although the United States Government does not own these assets, it finances their acquisition and the benefits accure to the American people.
Most economists who have expressed themselves on the subject do not favor a separate capital budget.
A major study by Maynard S. Comiez-A Capital Budget Statement for the U.S. Government (The Brookings Institution: 1966) concluded that "the case for a federal capital budget involving separate loan financing for capital outlays is not persuasive.” (p. 30) The principal argument against å capital budget is that the condition of the economy rather than capital investment should be the main determinant of how much of a surplus or deficit ought to be incurred by the federal government. Countercyclical fiscal policy requires that overall economic conditions rather than immediate capital plans determine the government's borrowing policy. Because the federal government has economic management responsibilities, it should not apply the budget practices appropriate for state and local governments.
A subsidiary concern is that if capital outlays were financed by borrowing, there might be a tendency to favor them at the expense of operating programs. In some hard pressed states and localities, for example, it sometimes is easier to get funds for a new facility financed in the capital budget than funds for maintenance of an existing facility in the operating budget.
I should be noted that the segregation of capital and current expenses by many states and localities is in many cases an outgrowth of their own constitutional and legal restrictions on borrowing for operating programs. If the federal government were subjected to a similar restriction, the temptation to develop a separate capital budget would be very great, whether the capital borrowing is excepted from the constitutional restriction or for special entities which do the borrowing in behalf of the government.
Cambridge, Mass., January 17, 1979,
Article V of the Constitution provides that Congress, on the application of the legislatures of two-thirds of the states, shall call a convention for the purpose of proposing amendments. Twenty-two states have already passed resolutions asking Congress to call an Article V Convention to propose a balanced budget amendment. This memorandum responds to your request for my thoughts about the campaign for such a convention.
1. SUMMARY Holding an Article V Convention to write a balanced budget policy into the Constitution would be unwise for at least two sets of reasons.
First, the Constitution embodies fundamental law and should not be made the instrument of specific social or economic policies—particularly when those policies could be effected more sensitively and realistically through congressional or executive action within the existing constitutional framework.
Second, it would be a mistake to take the uncharted course of an Article V Convention while the well travelled route of amendment by congressional initiative remains open-particularly when the nation badly needs to recover from an Era of selon tincertainty, and unrest.
cautionstheless seems due in opposing the current convention can
ulls for ced federal budget and a limited rate of growth in refi
some sound aspirations and are widely supported. this area should thus be coupled with a reaffirmasterity as a policy objective. Moreover, at least in itself is preeminently democratic, and resistance to appear nopulist. To avoid such an impression, V Con
the fiscal context not as too opene peopl their Constitution, but rather as a less un
one likely to generate uncertainties salir
o invite division and confrontation likel
ather than vindicate the will of the ger
end the fabric of the Constitution.
II. THE IMPOROPRIETY OF WRITING A BALANCED BUDGET POLICY INTO THE
A. The Constitution Embodies Fundamental Law and Should not be Trivialized
as the Instrument of Specific Social or Economic Policies To endure as a source of unity rather than of division, the Constitution must embody only our most fundamental and lasting values—those defining the structures by which we govern ourselves, and those proclaiming the human rights government must respect. As Justice Holmes wrote at the turn of the century, "a Constitution is not intended to embody a particular economic theory, whether of paternalism and the organic relation of the citizen to the state or of laissez faire." 1 Unlike the ideals rightly embodied in our Constitution, however, fiscal austerity—though sound as a current goal-speaks neither to the structure of government nor to the rights of the people. It is symptomatic of this difference that, unlike values infusing the basic structures of fundamental rights, the goal of a balanced budget would have to couch its policies either in such flexible and general terms as to be virtually meaningless, or in such rigid and specific terms as to be unthinkably extreme-or in such great detail as to be wholly out of place in a constitution.
Consider, for example, what it would mean if the Constitution today actually required that the federal budget be balanced. The implications of such a mandate for the most vital programs, for the national security, for economic growth, and for the burdens of federal taxation are staggering to contemplate. Surely the mandate would have to incorporate major exceptions—loopholes large enough, it would seem, to drive the federal budget through-in order to avoid disastrous consequences in just such periods as the present. That very fact underscores the folly of engraving the policy of fiscal austerity in the Constitution. Thus the currently popular ideal of a balanced budget should not be frozen into our fundamental law.
Experience, no less than intuition, counsels against the incorporation of particular social or economic programs into the Constitution-even assuming that a balanced budget policy could be expressed in terms that would make sense in that document. Slavery is the only economic arrangement our Constitution has ever specifically endorsed, and prohibition the only social policy it has ever expressly sought to implement. It demeaned the Constitution to embrace slavery and prohibition not only because one was evil and the other intolerant, but also because neither arrangement expressed the sorts of broad and enduring ideals to which both the Constitution and the country can be committed---not just over a decade or two, but for centuries. The goal of fiscal austerity expresses no such idealsnotwithstanding its immediate popular appeal or the long-term soundness of at least some of its premises.
Because the Constitution is meant to express fundamental law rather than particular policies, it should be amended only to modify fundamental law-not to accomplish partisan goals. Thus Madison described the amendment process not as a mere alternative to the legislative mode, but as a means of correcting the "discovered faults” and “errors" in the Constitution itself. That was plainly true of the first fifteen amendments. And, of the (eleven amendments) ratified since Reconstruction, all but two have served the purpose envisioned by Madison. Five have extended the franchise, three haye involved presidential eligibility and succession, and one-permitting a federal income tax-gave to the federal government a power previously held unconstitutional by the Supreme Court. Of the two exceptional amendments, one attempted to enact a social policy--prohibition. The other amendment repealed the first. Thus a balanced budget amendment would be an anomaly not only in view of the Constitution's mission, but also in light of its history. B. The Amendment Process Should Not be Used to Achieve Aims That May be
Better Realized Through Congressional or Executive Action Even prohibition was a more appropriate subject for the amendment process than a balanced budget would be. For unlike fiscal policy, which lies at the heart of the congressional mandate, temperance could not be legislated for the nation by Congress without express constitutional authorization. A balanced budget amendment would therefore be objectionable not only because it would transform a specific economic policy into fundamental law, but also because there would be no need to amend the Constitution even if one wished to make the pursuing of that policy the law of the land.
1 Lochner v. New York, 198 U.S. 45, 75 (1904) (dissenting opinion).
For contrary views, see, e.g., "Brown Stresses Conservatism in Inaugural," N.Y. Times. Jan 10, 1979, at A1, col. 3 (urging California to become 23d state to apply for balanced budget convention) : "Friedman Urges Amendment to Set a Limit on Government Spend. ing." N.Y. Times, Oct. 25. 1976. at 44, col. 6.
3 The Federalist No. 43, at 296 (J. Cooke ed. 1961).
Legislation has in fact been introduced in the last three Congresses promoting the objectives of the balanced budget amendment. The President has worked to serve those objectives as well—and he has stressed to the public his continuing commitment to them. The matter is indeed much too complex to deal with through the sorts of generalities that belong in a constitution; it calls for the nuances and distinctions that can best be embodied in statutes, regulations, and executive programs.
Needlessly amending the Constitution injures our political system at its core. Once the amendment device had been transformed into a fuzzy substitute for the more focused legislative process, not only would the lawmaking function of Congress be eroded, but the Constitution itself would lose its unique significance as the ultimate expression of fundamental and enduring national values. If the Carter Administration were to continue its drive in Congress for action looking toward a balanced budget at the earliest feasible time, while resisting the abuse of the amendment device threatened by the current convention campaign, the Administration would thus visibly serve the national interest, preventing the Constitution's devaluation.
To be sure, this devaluation of the Constitution would not occur overnight. But until the Constitution had been effectively reduced to a shifting package of legislative commitments, each policy enshrined as an amendment would bind the government far more tightly than ordinary law. Obviously the proponents of the balanced budget amendment desire this very effect, but responsible opinion must resist any such constitutional straitjacket for the nation. In few areas are flexibility and rapid responsiveness to changing circumstances more vital than in the realms of fiscal and monetary policy. Until the Constitution becomes easier to alter than it has ever been or should ever become, it will remain the least appropriate instrument for American economic policy. For just this reason, even those sympathetic to its goals have described the balanced budget amendment as a “blunt weapon" that “would be flawed with a certain troubling rigidity” if ratified.
Perhaps infused with a deeper understanding of the purpose of the amendment device than today's proponents of the balanced budget amendment have displared, advocates of most earlier Article V Conventions have not sought to achieve through amendment what congressional and executive action could accomplish at least as well. Those advocates pursued ends that simply could not have been achieved without revising the Constitution itself-for example, the direct election of senators; the prohibition of polygamy; the repeal of the eighteenth amendment; the limitation of presidential tenure; the modification of the presidential treatymaking power; the reversal of constitutional holdings by the Supreme Court involving reapportionment, school prayer, abortion, and busing; and the general revision of the Constitution. Whatever one may think of the specifie ends sought hy the advocates of those amendments, one cannot fault those advocates for aiming needlessly to circumvent the ordinary channels of change offered by Congress and the Executive Branch, or for tampering with the Constitution when less drastic remedies would not only have sufficed but would have been more focused and effective. III. THE ARTICLE V CONVENTION: A RELUCTANT COMPROMISE OF DUBIOUS
Even if it were wise to amend the Constitution in order to mandate a balanced hudget, calling an Article V Convention would be an exceedingly unsound means of achieving the desired end. Understanding why this is so requires a brief digression into the history of the convention mechanism.
The Article V Convention device was a compromise between those at the 1787 Constitutional Convention who believed that the states should have unchecked power to amend the Constitution, and those who considered congressional involvement an essential safeguard for groups and interests that might otherwise be sacrificed to the majority's will. The plan of union originally submitted to the Federal Convention by Edmund Randolph of the Virginia delegation stated that
* Editorial, “The New, New Federalism," Wall Street Journal, Jan. 10, 1979, at 22, col. 1.
“provision ought to be made for the amendment of the Articles of Union whensoever it shall seem necessary, and that the assent of the National Legislature ought not to be required thereto.'' 5 The underscored clause was rejected by the Committee on the Whole; as Hamilton explained, if the convention process were entirely free of control by Congress, “the State legislatures will not apply for alterations but with a view to increase their own powers.” 6 The Article V Convention provision as it was finally accepted marks the compromise, offered by Madison, between those Framers who supported Randolph's view and those who shared Hamilton's.?
Like many compromises among conflicting interests, the Article V Convention provision is strikingly vague. It provides only that "[t]he Congress * * * on the Application of the Legislatures of two-thirds of the several States, shall call a Convention for proposing amendments ***"One of the few points on which authorities generally agree is that the Article V Convention device is appropriately utilized only in extraordinary circumstances—when a determined Congress rides roughshod over the interests of the states, or stubbornly refuses to submit for possible ratification an amendment widely desired by the states. Neither is the case today.
As for the hundreds of state applications that have been made to Congress since 1789,8 "[t]here can be no doubt that many (of those) petitions *** initiated not in the belief that Congress would convene a Constitutional Convention, but in the hope that the petitions would spur Congress to adopt a suggested proposal as its own and submit it to the States for ratification under the (congressional initiative) method of amending the Constitution.” . If the current convention drive were meant simply to spur Congress to draft and submit to the states a balanced budget amendment of its own, the nation might not have to face the risks and resolve the riddles of the Article V Convention device. But twenty-two states have already applied to Congress for a convention, and at least twelve more are expected to have applied by late spring this year—which would trigger a call by Congress for an Article V Convention.10
It is hard to imagine a less opportune moment for such potentially revolutionary step. The past decade has been among the most turbulent in the nation's history. The Vietnam War, the near-impeachment of a President, political assassinations, economic upheavals—it is hardly necessary to enumerate the many storms we have weathered. If, as a result of those bitter experiences, it is now time for self-healing and consolidation, for a return to basic concerns and a turning away from confrontation and division, little could be worse for the country than to risk the possible trauma of our first Constitutional Convention since 1787.
Indeed Jefferson, who considered the lack of a Bill of Rights in the Constitution a major defect in the draft orginally submitted to the states, told Madison that he would not oppose the Constitution's adoption-in order to avoid a second Convention. In calmer times, when national wounds have not been so recently inflicted, and when single-issue disagreements did not run so deep, the risk of another Convention might be worth running—if the need were sufficiently great and if other avenues of constitutional change had been exhausted. That is a time in which we do not yet live.
Particularly in a period of recovery from an era of unrest, it is vital that the means we choose for amending the Constitution be generally understood ani, above all, widely accepted as legitimate. An Article V Convention, however, would today provoke controversy and debate unparalleled in recent constitutional history. For the device is shrouded in legal mystery of the most fundamental sort, as the following section will explain.
IV. ANSWERABLE AND UNANSWERABLE QUESTIONS ABOUT ARTICLE V CONVENTIONS
In fairness, one must concede that a few of the questions periodically raised about Article V Conventions do in fact have clear answers. Thus, although questions have from time to time been raised about Congress' duty to call an Article V
5 I J. Elliot, The Debates in the Several State Conventions on the Adoption of the Federal Constitution 120 (2d ed. 1836) (emphasis added).
B II Farrand, The Records of the Federal Constitutional Convention of 1787, at 533 (rev. ed. 1937). ? Id. at 559-60.
A list of such applications made through 1974 is set forth in ABA Special Constitutional Convention Study Committee, “Amendment of the Constitution by the Convention Method Under Article V” 59-69 (1974).
> Brickfield, Problems Relating to a Federal Constitutional Convention 8 (Starr Report for the House Committee on the Judiciary, 85th Cong., 1st sess.) (Comm. Print 1957).
10 Theme For '80,” Time, Jan. 22, 1979, at 29, col. 1.
Convention after two-thirds of the state legislatures have duly petitioned Congress to do so, neither the text nor the history of Article V leaves any reasonable doubt as to the answer: “The Congress, ... on the Application of the Legislatures of two-thirds of the several States, shall call a Convention for proposing Amendments * * *.” In this context, “shall” clearly means "must." 11 It is equally clear that amendments proposed by any such Convention are to become part of the Constitution "when ratified by the Legislatures of three-fourths of the several States, or by Conventions in three-fourths thereof, as one or the other Mode of Ratification may be proposed by the Congress ** *.” Unless three-fourths of the States ratify in accord with the method Congress specifies, no amendment proposed by an Article V Convention can become the law of the land. Finally, although the text of Article V is silent on the point, it is clearly settled that the President has no role to play in the amendment process.
As to amendments initiated in the familiar way-by a two-thirds vote of both Houses—a good deal more could be said. But as to the untried Convention route, the preceding paragraph says all that is known or knowable. Nor should one suppose that the remaining matters involve minor technical questions which could readily be settled by Congress or the courts. On the contrary, the process of amending by Convention is characterized by fundamental uncertainties that yield to no ready mechanism of resolution. In an area demanding confidence and certainty, those issues stand as overwhelming obstacles to both.
The objection to calling an Article V Convention is based not on misgivings at the prospect of unchecked democracy, nor on any vague apprehension about unsealing a Pandora's box, nor on a reflexive preference for the familiar over the unknown. Inherent in the Article V Convention device is the focused danger of three distinct confrontations of nightmarish dimension-confrontations between Congress and the Convention, between Congress and the Supreme Court, and between the Supreme Court and the states. However democratic an Article V Convention might be in theory, such a convention would inevitably pose enormous risks of constitutional dislocation-risks unacceptable while recourse may be had to an alternative amendment process (the congressional initiative) that can accomplish the same goals without running such serious risks.
A. The Risk of Confrontation Between Congress and the Convention The primary threat posed by an Article V Convention is that of a confrontation between Congress and the Convention. Upon Congress devolves the duty of calling a convention on application of the legislatures of two-thirds of the states, and approving and transmitting to the states for ratification the text of any amendment or amendments agreed upon by the convention. The discretion with which Congress may discharge this duty is pregnant with danger under even the most salutory conditions.
Specifically, consider the wholly incidental yet critical disagreements that could arise as Congress endeavored in good faith to discharge its Article V duties. With no purpose whatsoever of avoiding its duty, Congress might nevertheless decide procedural questions arguably within its discretion in a manner that frustrated the desire of the states to call and conduct a convention-hy treating some applications as invalid, or by withholding appropriations until the Convention adopted certain internal reforms, or by refusing to treat certain amendments as within the Convention's scope. As a result, the nation might well be subjected to the spectacle of a struggle between Congress and a Convention it refused to recognizea struggle that would extend from the Convention's own claim of legitimacy to disputes over the legitimacy of the Convention's proposed amendments. Such a struggle would undoubtedly be judicial as well as political, and thus draw the Supreme Court into the fray. See Sections B and C infra. Considering the seriousness with which Congress and the Convention would take each other's challenge in light of the monumental stakes-constitutional power-it is unlikely that either side would surrender before the context had deeply bruised the nation. Such a contest between Congress and the Convention, which could flare from a single proredural dispute in the balance of which hung the Convention's fate, the nation could ill afford.
B. The Risk of Confrontation Between Congress and the Supreme Court In the event of a dispute between Congress and the Convention over the congressional role in permitting an Article Convention to proceed, the Supreme
11 See the Federalist No. 85, at 593 (J. Cooke ed. 1961) (Hamilton).