This article appeared in Upside Magazine (February 1995).
When future historians pick apart these first 100 days, they will focus on just one struggle--the battle over a Balanced Budget Amendment. Restructuring congressional committees and slashing their staffs is fine. A presidential line-item veto won't hurt. But procedural and legislative reforms are easily reversed. Only the adoption of an airtight Balanced Budget Amendment constitutes profound, permanent reform.
To appreciate the enormous implications of such an amendment, first consider the litany of problems that drove a furious American public to overthrow the New Deal/Fair Deal/New Frontier/ Great Society establishment they had kept in power since 1932: Runaway federal entitlement spending. Endless proliferation of intrusive regulations. Washington's nonstop imposition of unfunded spending mandates on state and local governments. A centralization of power that would have horrified the Founders. An entrenched (until now?) class of political incumbents impervious to influence by anyone other than the lobbyists and PACs who pay for their re-election campaigns. And nearly $5 trillion in acknowledged debt and trillions more in unfunded pension liabilities.
W. Edwards Deming, the late guru of the worldwide quality movement, taught that when reforming a diseased system beset by multiple symptoms, you must first identify and then eliminate the root cause. Reforms that fail to address the root cause are pointless, even damaging, because they destroy the credibility of the reformers. On the other hand, a decisive attack on the root cause cures problems even beyond the identified symptoms.
How many symptoms of America's diseased governmental system could have come about without continuous deficit spending by the federal government? Would unlimited entitlement programs have been enacted if lawmakers had to immediately raise the taxes to pay for them? Would the federal bureaucracy have grown so large if taxpayers had been forced to support it with hard cash? Would the PACs be so eager to fork over hundreds of millions in campaign money if politicians couldn't bestow on PAC sponsors tens of billions in pork?
All the major symptoms of U.S. political decay can be traced to one root cause--the severed constitutional feedback loop between spending and taxes. With the House of Representatives set up as ultimate source of all taxing and spending power, the Founders reasonably assumed that voters would keep federal spending on a tight two-year leash. In 1787, the very notion of a government that spent more than it taxed--except in times of war--was absurd.
But the Constitutional Convention completed its monumental work 150 years before John Maynard Keynes visited Franklin Roosevelt for a little lesson on the virtues of deficit financing. By arguing that an economy was like a mighty engine that needed the fuel of deficit spending to keep running at full throttle and create jobs for the Great Depression's unemployed masses, Keynes convinced Roosevelt to abandon his long-held belief in balanced budgets. It was the most pernicious economic advice ever given to a president.
Until 1930, federal spending had never exceeded 5 percent of GDP and deficits had occurred only during the War of 1812, the Civil War and World War I. By 1936, federal spending soared to 13 percent of GDP; today it's 23 percent. And in the 60 years since Keynes and Roosevelt met, the federal budget has been balanced just seven times--six of them in the years after World War II.
Somehow, Thomas Jefferson knew that a Keynes would eventually lead the nation astray. "I wish it were possible to obtain a single amendment to our Constitution," Jefferson wrote in 1798. "I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing." Two centuries before Americans became addicted to consuming more than they produce, Jefferson's advice would have been easy to follow. But no one else could foresee the need.
Soon we will learn whether the Republican Congress can produce a loophole-free Balanced Budget Amendment that--except in times of national emergency--bans disbursements in excess of receipts, bans the imposition of unfunded mandates and bans the creation of unfunded liabilities. Soon we will know whether we're living through a period of genuine reform or one more Beltway mirage.