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SUMMARY
Joe Brown discusses the persistent US fiscal crisis, highlighting the unsustainable growth of federal deficits and the failure of traditional interventions. He outlines the constitutional path for states to enact a balanced budget amendment without congressional approval, emphasizing that only six more states are needed to initiate this process.
MAIN POINTS
- The US fiscal deficit has worsened over the past 50 years, and a potential solution exists that does not require congressional action.
- Recent Treasury buybacks intended to lower bond yields failed, underscoring the need for more sustainable fiscal reforms.
- A large portion of federal spending is mandatory, making it nearly impossible for Congress to balance the budget through discretionary cuts alone.
- A constitutional amendment for a balanced budget could be enacted through an Article V convention initiated by two-thirds of state legislatures.
- Currently, 28 states have called for a convention, meaning only six more are needed to potentially force a balanced budget amendment.
DETAILED ANALYSIS
The United States has experienced a worsening fiscal deficit for decades, with annual government spending consistently outpacing tax revenue. This persistent gap has led to a mounting national debt, which in turn drives up interest rates on long-term government bonds. Recent efforts by the Treasury, such as doubling the scale of bond buybacks to support market liquidity, have proven ineffective in curbing rising yields.
The structural issue lies in the federal budget composition: the vast majority of spending is mandatory, covering programs like Social Security, Medicare, and net interest on the debt, leaving only a small fraction as discretionary spending. Even eliminating all discretionary spending would not close the budget gap, as mandatory obligations far exceed annual tax collections. Political incentives further complicate reform, as members of Congress face electoral risks if they reduce spending that benefits their constituents.
Recognizing the improbability of congressional action, attention turns to the constitutional process outlined in Article V. This provision allows two-thirds of state legislatures to call for a convention to propose amendments, bypassing Congress entirely. For a balanced budget amendment, 34 states must initiate the call, and 38 are required for ratification.
As of now, 28 states have already passed applications for such a convention, meaning only six more are needed to trigger the process. While the likelihood of success remains uncertain, this path represents a viable mechanism for imposing fiscal discipline on the federal government without relying on congressional cooperation.
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