Letter Opposing the Balanced Budget Amendment

December 13, 2011

United States Senate
Washington , DC 20510

Dear Senator:

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 S.J. Res 10 , which would establish a balanced budget amendment to the U.S. Constitution. Furthermore, I want to share our concerns about S.J.Res. 24 , a less draconian version of the amendment that would nonetheless harm our critical social insurance safety net programs

S .J.Res.10 would impose an arbitrary and unrealistic spending cap of 18 percent of Gross Domestic Product (GDP), a level not seen since 1965; require any increase to the debt ceiling be approved by three-fifths of the House and Senate; and prohibit any increases in revenue unless agreed to by two-thirds of each chamber. As a result, S.J.Res.10 would almost certainly necessitate massive and devastating cuts to vital safety net programs including Medicare, Medicaid, and Social Security. Indeed, 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 potentially 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 S.J.Res.10.

In addition, we have concerns about S .J.Res. 24. While we are pleased that this version of a balanced budget amendment exempts Social Security from consideration as receipts or outlays and does not require a supermajority to raise revenues, it still poses challenges that could endanger programs critically important to older Americans. S .J.Res. 24's requirement that all spending be equivalent to the revenues raised in a given year would virtually guarantee that in the event of any shortfall, vital safety net programs like Medicare and Medicaid would be subject to deep cuts.

Our members and older Americans everywhere acknowledge the difficult challenge of getting our nation's fiscal house in order, but doing so requires a real debate about the hard choices we need to make. The economic challenges facing our nation should be addressed in Congress though the authority lawmakers already have to control spending and revenue rather than the extreme measure of amending the U.S. Constitution.

For these reasons, we urge you to reconsider using a constitutional amendment to address our nation's fiscal problems. Thank you for your consideration, and we look forward to working with you on this extremely important issue.

Sincerely,

Max Richtman
President & CEO