Letter to the House Opposing the Balanced Budget Amendment to the Constitution

July 18, 2011

United States House of Representatives
Washington , DC 20515

Dear Representative:

On behalf of the millions of members and supporters of the National Committee to Preserve Social Security and Medicare, I am writing to express our strong opposition to two proposals that would establish a balanced budget amendment to the Constitution. H.R. 2560, the Cuts, Cap, and Balance Act of 2011, and H.J. Res 1, recently reported out of the Committee on the Judiciary, would impose an arbitrary and unrealistic spending cap of 18 percent of Gross Domestic Product (GDP), a level not seen since 1965; limit any increase to the debt ceiling unless approved by three-fifths of the whole number of the House and Senate; and prohibit any increases in revenue unless agreed to by two-thirds of Congress. As a result, these proposals would require draconian spending cuts of such a magnitude as to force policymakers to severely slash Medicare, Medicaid, and many other programs while opening the door to massive new tax cuts. What is most alarming to our members is that the amendment would negatively impact Social Security by essentially nullifying the trust funds as a source of funding for the payment of benefits.

The balanced budget amendment's requirement that spending in any year be offset by revenues collected in the same year would create serious problems for Social Security by preventing it from using the reserves in its trust funds to pay benefits. Under a balanced budget amendment, the budget would be considered to be balanced in a year only when total spending for that year, including Social Security benefit payments, and total revenues for that year, from all sources, were equal. Under such an arrangement, trust fund surpluses, which almost exclusively represent tax payments from prior years, could not be used to pay benefits unless the surplus used from the trust funds were validated by receipt of offsetting revenues from other sources. Since this seems to be a highly unlikely scenario, the only remaining option under a balanced budget amendment would be immediate and potential massive cuts in benefits for millions of Americans.

While the balanced budget amendment does not dictate any particular approach to deficit reduction, by altering established Congressional voting procedures it increases the likelihood that the fiscal policies adopted in coming decades will favor the well-off at the expense of middle and low income Americans. While the amendment would require a two-thirds vote of the full membership of the House and Senate to raise taxes, spending cuts, by contrast, would continue to require only a majority of those present and voting and could be passed on a voice vote. Not only would this essentially rule out any revenue contribution to deficit reduction, it also would mean that once a new tax cut was created, it would become virtually impossible to eliminate. These radical requirements would prevent policymakers from closing even the most outrageous tax loopholes while forcing them to make extreme cuts to programs such as Medicare and Medicaid.

A constitutional amendment requiring a balanced budget, especially one with an unrealistic and harsh spending cap, is fiscally irresponsible and forces cuts in important social insurance programs such as Social Security, Medicare and Medicaid. Again, the National Committee urges you to reject H.J.Res. 1 and H.R. 2560, and any other version of a balanced budget amendment.

Sincerely,

Max Richtman
President & CEO