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Protecting citizens' rights in the courts
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  PUBLIC CITIZEN LITIGATION GROUP BEFORE THE COMMITTEE ON THE JUDICIARY UNITED STATES SENATE REGARDING THE BALANCED BUDGET CONSTITUTIONAL AMENDMENT Mr. Chairman, Members of the Committee, thank you for the invitation to appear before this Committee to testify regarding the Balanced Budget Constitutional Amendment. It is my understanding that the Amendment being considered is the same as the text of S.J. Res. 1 as reported by the Senate Judiciary Committee in 1995. Accordingly, this statement will, from time to time, refer to S.J. Res. 1 and to certain of its sections to illustrate the problems that I foresee if any such Amendment becomes law. I am now and have been for nearly 25 years an attorney with the Litigation Group of Public Citizen, an organization of more than 100,000 members that was founded by Ralph Nader. There are 10 lawyers in our office who principally litigate cases in the federal courts. Among our areas of specialty are administrative law, separation of powers, and the Supreme Court. With regard to the subject areas covered by this hearing, we have litigated impoundment questions both prior and subsequent to the passage of the Impoundment Control Act of 1974, and we were counsel for the successful plaintiffs challenging the constitutionality of the Gramm-Rudman-Hollings Act. I was also lead counsel for the more than 100 Members of the House of Representatives who challenged the President's authority to commit U.S. Armed Forces to the escort tanker operations in the Persian Gulf, without complying with the War Powers Resolution, but whose case was dismissed when the courts refused to decide the merits. I am currently one of the counsel for the congressional plaintiffs challenging the constitutionality of the Line Item Veto Act of 1996 in the case of Byrd v. Raines, No. 97-0001 (D.D.C. filed January 2, 1997). My testimony today will not deal with constitutional theory regarding what does and does not belong in the United States Constitution, nor will I deal with matters of economics or political science. Those subjects have been amply dealt with by others in earlier hearings, although I would note that, if a Balanced Budget Amendment does become law, we will undoubtedly see many of the gimmicks that I discuss from pages 17 to 23 of this statement in describing what issues are likely to arise and will require resolution by the courts or some other institution. Today I want to focus on the question of how the Balanced Budget Constitutional Amendment, if it becomes law, will be enforced. Every Member of Congress and every Officer of the United States, from the President on down, takes an oath to support and defend the laws of the United States, which includes the Constitution, but that oath applies equally to statutes, rules, and court decisions. Some supporters of the Amendment have argued that, by placing the obligation for a balanced budget in the Constitution, there will be a significant increase in the willingness of Congress and the President to enact balanced budgets that would not occur if the same words were in the statute books. As I understand the argument, the moral suasion of placing this command in the Constitution would make a major difference in compliance. But legally, the obligation and the oath of office make no such distinction, and I personally doubt that Government officials regardless of branch would treat a command for a balanced budget differently if it became part of the Constitution. But if Congress disagrees, that only reinforces my point that Congress should make it clear that conscience and the oath of office are to be the sole means of enforcing the Amendment. There are three methods by which this Amendment could be enforced: the courts, Presidential impoundment, and the three-fifths vote to increase the debt of the United States. As former Attorney General William Barr testified, Hearings before the Committee on the Judiciary, United States Senate on S. J. Res. 1, January 5, 1995 at 121-22 ("1995 Hearings"), the requirement in Section 2 that three-fifths of the whole number of each House must approve an increase in the debt limit is largely self-enforcing since the Treasury Department will never attempt to sell bills or notes, representing obligations of the United States, unless authorized to do so, and if such an end run were attempted, Wall Street would almost certainly refuse to purchase it. I will return to that problem later in my testimony (pp 25-27), but for now I want to focus on the issues of judicial review and impoundment. It has often been said that war is too important to be left to the generals, and so here, the question of the judicial reviewability of compliance with S.J. Res. 1 is too important to be left to federal judges. It is up to Congress to state loudly and clearly, in the Amendment itself, whether it wishes to make compliance with it subject to judicial review. It is vital for everyone who is asked to vote on this Amendment in Congress, and in the States if they called upon to ratify it, to know precisely the extent to which the Judicial Branch will be involved in its interpretation and implementation. When I first looked at this issue several years ago, I thought that perhaps its sponsors had simply not focussed on the issue of judicial review. Perhaps, I thought, they might have believed that there was a ready and satisfactory answer so that there was no need to say anything on the topic in the Amendment itself. I also thought that perhaps, because many of its sponsors were not lawyers, let alone lawyers who litigated cases involving constraints on the federal budgetary process, they had not thought through the consequences of what would happen if there were judicial review, or if there were not. There is no longer any doubt that the issue is a real one and that the principal reason that there is no answer in the Amendment itself is that there is no consensus on what the answer should be. The issue was thoroughly debated before this Committee in 1995 and on the floor of the Senate in both 1992 and 1995, and yet there is not a word in S. J. Res. 1 on how Congress wishes to decide it. In fact, the 1995 version, that came within one vote of being approved in the Senate, contained a provision dealing with judicial review, sponsored by Senator Nunn, although the House-passed version did not. Much of the 1995 testimony before this Committee given by an array of distinguished legal scholars concerned what the courts would do on the issue of judicial review in the absence of any direction in the Amendment itself. I respectfully suggest that that is the wrong question. Because this is the Constitution that is being amended, the sponsors have the power -- and, I submit, the obligation -- to spell out precisely whether there will be judicial review or not, and if so, on what terms. The availability of judicial review, or lack thereof, in other comparable situations may inform the Committee on how it wishes to decide the issue here, but nothing done in the past prevents those who are amending the Constitution from providing whatever type or level of judicial review they want for decisions made under a Balanced Budget Amendment. The same is true for enforcement through impoundment. For many years, Presidents have claimed various powers to impound (refuse to spend) appropriate funds under a variety of circumstances. In general, the courts rejected such claims in the absence of a statute specifically granting the President (or some other official) discretion not to spend all the funds that were appropriated for a particular program. But the passage of a Balanced Budget Amendment would change all of that rather radically. As then-Assistant Attorney General Walter Dellinger testified at the 1995 Hearings, if the Amendment became law, and if it appeared that the command for a balanced budget in Section 1 was about to be violated, he would advise the President that he not only had the right, but also the constitutional obligation, to step in and prevent the violation by impounding money before the budget became imbalanced (pp. 81-84, 70, 75). Although there is no clear answer, I believe that, especially with no explicit judicial review provision, the President would probably prevail. That would mean not only that he could refuse to spend appropriated funds, but that he alone would decide which programs to cut and which to spare. His power would not be confined to certain categories of spending or limited to discretionary items; it would extend to entitlements such as social security, medicare, and the highway trust fund. A power to impound in this manner would make the Line Item Veto Act look like a child's plaything. Congress could attempt to control the President's discretion by implementing legislation, if it could reach agreement and if the President were willing to surrender his unlimited discretion. Even then the President might argue that any attempt to restrict his enforcement powers violated the Amendment since it jeopardized a balanced budget, although I think he should not prevail on that claim, but the courts might disagree. Indeed, if there were no judicial review at all, that might be seen as a decision to deny judicial review to the decisions of the President to impound, even in violation of enabling legislation. There may be legitimate grounds for debate on whether, as a matter of policy, there should or should not be judicial review and whether there should or should not be impoundment by the President, if a Balanced Budget Amendment is enacted. But there is no reasonable basis to debate that these choices are among the most significant that will be made in constructing such an Amendment, and it is the height of irresponsibility for this Committee, or for the Congress as a whole, to refuse to take a stand on both issues. Guessing what the courts might do is not a substitute for accepting responsibility for deciding how to deal with judicial review and impoundment. Former Attorney General Barr was candid when he said that he thought that the Amendment itself should take a position on judicial review, but then explained quite poignantly why there is no such clarification in S. J. Res. 1: "But if I felt that that would mean killing the amendment because I lost support, I would seek to put it forth with clear legislative history . . . " (1995 Hearings at 139). In other words, if Members had to make a choice, or if they knew what they were voting for, this Amendment would never pass! Given the consequences of both judicial review and no judicial review, I can understand why the sponsors would prefer to sweep the question under the rug, but I cannot agree that such an approach is proper. Indeed, although the Amendment is part of what the Contract With America calls the "Fiscal Responsibility Act," it would be the height of legislative irresponsibility for Congress to duck this vital question, and the related question of Presidential impoundment, before turning the Amendment loose on the states and the public. If Congress nonetheless remains silent on judicial review, it is my opinion that neither taxpayers, legislators, nor citizens generally would have standing to go to court to enforce the spending limits in this Amendment. On the other hand, in the absence of a clear statement to the contrary in the Amendment itself, it is likely that parties who claimed that, for example, the requirements for revenue increases in Section 4 had not been satisfied, could show sufficient injury to meet the case or controversy requirement in Article III of the Constitution. The same is also true for those objecting to a Presidential impoundment. Thus, those seeking greater spending or reduced taxes could have their claims adjudicated, whereas actions to assure lesser spending will be thrown out of court for lack of standing. The end result will be that this litigation bias will further increase the deficit, precisely the opposite of what the proponents of the Amendment are seeking. It is also possible that other reasons for the courts refusing to hear suits, such as the political question doctrine, would preclude judicial review of alleged violations of this Amendment. Therefore, unless Congress intends to foreclose review, it must act affirmatively to provide for it now, in the Amendment, and not just in its legislative history. Nor should Congress assume that implementing legislation can solve the problem. It would have to be enacted over a near-certain Presidential veto, and the courts might conclude that Congress lacks the power to confer jurisdiction in the federal courts to resolve disputes under this Amendment. Thus, unless modified in this Amendment, the requirements of an Article III case or controversy would still control and could not be changed by Congress. Predictions regarding the legality of possible Presidential impoundments are also hazardous, but my present view is that, especially if there is no express judicial review provision, the courts would uphold presidential impoundment (assuming the courts would entertain a challenge to it). My opinion is based on the clear statements by the Administration of its intent to use the power, the failure of Congress to prohibit him from doing so, and the assumption that major constitutional provisions should not be entirely unenforceable, absent highly unusual circumstances. As noted above, these predictions are relevant principally to delineate the consequences of no action on these crucial issues, not to suggest that they are satisfactory answers to the questions or a valid excuse for inaction. Once Congress recognizes that it must take a position regarding judicial review, it has three choices. All actions taken in purported violation of the Amendment could be subject to judicial review, no such actions could be subject to judicial review, or some of them could. The last alternative is the least attractive. Besides having the problems discussed below that are associated with the two polar positions, it has the further disadvantage of producing litigation over whether a given claim is litigable, a debate which profits no one save the lawyers who are being paid to litigate it, and it leaves to the unelected Judiciary the crucial job of deciding which cases it will hear and which ones it will refuse even to consider. I can think of nothing less appropriate in this area than to turn the issue of reviewability over to the federal courts. (See Footnote 1) I first want to discuss the non-justiciability option and then discuss what living with the Amendment would be like if Congress opts for full judicial review. In theory, there is nothing wrong with precluding judicial review of constitutional provisions. For instance, each House decides, pursuant to Article I, Section 5, Clause 3, whether its journal of proceedings shall be made public, and its decisions are not subject to judicial review. Similarly, if the government ever conferred a title of nobility, contrary to Article I, Section 9, Clause 8, no one could challenge that in court, but that would not be such a serious matter. More significantly, Article I, Section 6, Clause 1 specifically insulates the speech and debate of Members of Congress from being questioned in any other forum. While conduct involving these and other provisions in the Constitution is immune from judicial scrutiny, none of these activities has so fundamental an effect on the well-being of the country as would this Amendment. One way to examine the effect of making S.J. Res. 1 judicially unenforceable is to look at two statutes for which there is essentially no judicial review. The first is the Gramm-Rudman-Hollings Act, which is the statutory precursor of S.J. Res. 1. I do not intend to debate the impact of that statute; it probably has had some effect, but not nearly as much as its sponsors had promised. It has one feature that has substantially eliminated the need for judicial review and that is the automatic sequestration. While there is a broad anti-judicial review provision in Gramm-Rudman-Hollings, if the President failed to issue the sequestration order as the statute directs him to do, a court would almost certainly order him to carry out that largely ministerial act. On the other hand, there is no review of any of the crucial estimates under the statute that determine whether the budget targets will be met or not. I would also note that the statute is much longer, is far more detailed, and thus gives much less to litigate, than does the less than a page and a half in S.J. Res. 1. Most important of all, unlike a statute that can be fine-tuned from time-to-time, the Balanced Budget Constitutional Amendment is cast in stone, or at least until the time-consuming amendment process can correct it. As the Congress has shown several times in the past, Gramm-Rudman is amendable, if the votes of both Houses are there to pass a change. Perhaps more poignant than Gramm-Rudman is the effect of non-enforcement on the War Powers Resolution. This statute, which was passed by two-thirds of the Senate and House over the veto of then-President Richard Nixon in 1973, when he was at one of his weakest moments in his relationship with Congress, was the great congressional hope for controlling the President and the war-making power. As we all know, that hope was quickly dashed, and it is now apparent to all that the War Powers Resolution has no teeth. This became absolutely clear to me when I was counsel for more than 100 Members of the House of Representatives who sought to require President Reagan to do no more than to send to Congress the statement required by the Resolution regarding the activities that he had undertaken in the Persian Gulf to protect Kuwaiti tankers. Our lawsuit did not seek to stop the escort operations or to require the President to do or not do anything other than submit a simple report to Congress that met the statutory requirements of the War Powers Resolution. Indeed, the President never defended his refusal to comply with the statute on the merits, but simply said that the courts had no business getting into this controversy. Eventually, the courts agreed and dismissed the case. While one can read the published opinion of the district court and the brief unpublished order of the court of appeals and debate their legal meaning, the Judiciary's message to Congress is quite clear: keep these cases out of our courts because we are not going to rescue you. As a result, the War Powers Resolution has no impact whatsoever. It leaves Congress in the position that it was in before the Resolution: if both Houses can muster two-thirds of the Members, Congress can prevent the President from engaging in war-making activities, but it cannot do so without those votes. Obviously, the War Powers Resolution is not needed to achieve that end. But perhaps worse than being ineffective, it has prevented Congress from making other efforts to control the President. The matter has gotten so bad now that, when war-making activities commence, the popular press now believes that it is Congress that must "invoke" the War Powers Resolution, by trying to stop the President, rather than the President who must comply with the Resolution by sending the necessary reports and meeting the statutory deadlines. It seems to me that the experience under these two statutes makes clear the real danger of no judicial review; if the Amendment is enacted, and then it is routinely disregarded, it will make the situation worse than if there were no Amendment at all. When I have raised the specter of a toothless Balanced Budget Amendment, the usual response is that Congress and the President will honor it anyway because it is in the Constitution. Would that it were so. Does anyone believe that the First, Fourth, Fifth, Tenth or Fourteenth Amendments, to mention just a few, would be respected by our governments if the federal judiciary were not there to back up the words with court orders? The President is no less obligated to follow the dictates of the War Powers Resolution than he would be of the Balanced Budget Constitutional Amendment, but no President has complied with the former, despite its clear mandates, and there is no reason to believe that any President will follow the latter, unless it suits his or her political objectives at the time. And given Congress's failure to meet various deficit reducing requirements over the years, I would be very surprised if Congress did not join the President in routinely disregarding the Amendment if their actions are immune from judicial review. To be sure, the President, but not the Congress, could be impeached for violating his constitutional obligations to have a balanced budget, but he is only one actor in the process. As for Members of Congress, they can be voted out, after the fact, although there is no indication of any willingness on the part of the electorate to do so when Members have failed to live up to their budgetary responsibilities under Gramm-Rudman and elsewhere. More importantly, balancing the budget does not seem to be the kind of single issue on which Members of Congress lose their right to return to Washington, especially for Senators who are elected only once every six years. In discussing the litigation option, I want to describe the steps envisioned by the Amendment and then point out some of the questions that the courts would almost certainly be called upon to resolve. Section 3 of S.J. Res. 1 requires that "[p]rior to each Fiscal Year, the President shall submit to the Congress a proposed budget for the United States Government for that fiscal year in which total outlays do not exceed total receipts." First, Section 3 leaves open the critical issue of when the President must transmit his proposed budget to Congress. Would it be proper for him to send the budget on September 30th for the Fiscal Year starting October 1st? Normally, the budget precedes the State of the Union Address which is given in January, but the absence of any explicit requirement suggests that the President need not submit his budget at the time of the State of the Union and hence would be free to submit it when he thought it was convenient. The Section also requires that, in the President's budget, "total outlays do not exceed total receipts." Does this mean that the numbers must simply add up (I assume that, for political as well as other reasons, the President could not say that two plus two equals five, or three), or does it mean more? Could the President optimistically project a 2 or 5 or 10% growth in the economy, from which the tax revenues will increase accordingly, or is he stuck with last year's figures? Would the President comply if his budget included a "saving" from "fraud, waste, and abuse" of $250 billion this year, especially if there are similar (and unrealized) savings for each of the last five years? Would it be proper for the President to include the savings from the demise of 50 programs that Congress has repeatedly refused to eliminate in the past? Or must the budget have some aura of reality to it? Turning to Section 1, which is the heart of the Amendment, it provides that "Total outlays for any fiscal year shall not exceed total receipts for that year, unless three-fifths of the whole number of each House shall provide by law for a specific excess of outlays over receipts by a rollcall vote." The first question is, what is the impact or effect of such a provision? Reading the first part of the provision, it appears that the Amendment is simply announcing a result, without any direction to anyone as to how the result is to be achieved. What if the budget turns out to be out of balance at the end of the year, which is the first time that actual outlays and receipts will be known? Can anyone do anything about it at that late date, or is it grounds for impeachment of the President or removal of Members of Congress from office? Or would it operate like the carryover provisions of the Internal Revenue Code, such that a shortfall in one year would have to be offset by further cuts the following year? The second part of Section 1 suggests a possible alternative reading. It provides that an excess of outlays can occur if three- fifths of each House approves it. Under that reading, both parts of Section 1 would be directed to the President and Congress, in essence forbidding them to vote for an unbalanced budget. But is voting for a balanced budget all that is required, or must the balance actually occur? It is difficult to fathom how the first phrase in Section 1 can mean both, yet unless it does, it is hard to see how the Amendment could have the practical impact that its sponsors seek. If the courts have to sort that out, they will probably conclude that actual balance, not phony accounting, is what the sponsors intended. But suppose that, despite approving a budget that was in balance when enacted (again assuming reasonable estimates and good faith), unemployment increases dramatically -- raising expenses and reducing tax receipts -- and that money is being spent at a rate that, by the end of the year, will result in the Constitution being violated. A lawsuit is then brought, presumably to enjoin the excess spending, and the parties and the courts are left in the position of having to determine, at a fixed point in time, whether the Constitution is going to be violated later that fiscal year. If such a lawsuit were allowed to go forward, the federal courts would be in the business of having to review all of the complicated budget data to decide whether the spending laws were in compliance with the Constitution, on a highly accelerated schedule, with new data coming in all the time, with conflicting opinions on the meaning of that data from experts retained by the various parties (plus the many others who are likely to want to join in the battle), and with the extraordinary time pressures that the inevitable end of the Fiscal Year places upon the litigants and the trial judge, let alone the judges in the courts of appeals and the Supreme Court. Presumably, this would call upon the courts to enter temporary restraining orders and preliminary injunctions regarding spending, since awaiting the end results for that Fiscal Year would obviously be inconsistent with the purpose of the Amendment, which is to prevent spending in violation of its terms. Assuming that these problems could be surmounted (which I rather doubt), there would be the question of remedy. One of the virtues of Gramm-Rudman is that, when cuts had to be made, the statute was quite clear as to how they should be carried out. This Amendment says nothing on that issue. Thus, if spending must be cut, will all appropriations be reduced on an across-the-board basis, or will some other method be employed? If Congress attempts to establish such a method, will that be upheld, or will the Constitution be read to mandate something else? What about the protections for the President and federal judges against salary reduction? Will they continue to apply, and even if they do, what will happen to their staffs? Will the departments have discretion to furlough employees, or will everyone have to work at reduced pay or reduced hours, or some of each? And how will the federal courts decide all of these questions? So far, I have not dealt with what is probably the biggest problem which S.J. Res. 1 attempts to answer in Section 7, by its all-inclusive definitions of receipts and outlays: <blockquote>Total receipts shall include all receipts of the United States Government except those derived from borrowing. Total outlays shall include all outlays of the United States Government except those for repayment of debt principal.</blockquote> Initially, I would note that the accounting method used for both receipts and outlays is cash, unlike most large entities which use the accrual method. Thus, it is not the obligations of the government that matter, but only the amount of money actually spent in the sense of checks written. This fact makes manipulation easy, by postponing payment of admitted obligations that any sensible person would believe ought to be counted toward the fiscal year in which they occurred and in which the benefits were received. The question will undoubtedly arise as to whether payments that are plainly late may be counted in the next fiscal year, rather than in the one in which they were due. Moreover, the focus on actual receipts and outlays will require very close scrutiny of thousands of expenditures to determine when the actual payment was made or received. For example, will the operative date be when the check is written, deposited, or received for collection by the Treasury of the United States? A number of witnesses in prior hearings, as well as the sponsors of this Amendment, have indicated that items such as the social security trust fund, the money set aside for the RTC, and the highway and airport trust funds would all be included within this broad definition. (See Footnote 2) I see no reason to disagree with that assessment, but believe that it is simply the beginning of the inquiry. For instance, what about entities such as AMTRAK, the Smithsonian, and the Legal Services Corporation which receive some, but not exclusive federal funding? Are they part of the Government of the United States for these purposes so that their budgets are counted in the balance? The same could be asked of the Postal Service, which used to be part of the government and still receives substantial government subsidies. But suppose that it runs a deficit; will that be counted against the total? Other quasi-government entities, which are not agencies for many purposes, might or might not be counted against the federal budget. Included in these would be the Corporation for Public Broadcasting, the National Academy of Sciences, and government sponsored entities such as Fanny Mae and Sally Mae. There is more than ample ground for litigation over each of these entities, and given the size of their budgets, it may well be that the questions will be quite significant, at least in some cases. And, assuming that some of them are covered, will they be treated identically to all other government agencies if there is overspending, or will some other method of expense reduction be used, and if so, who will devise it and on what basis? And if any of these quasi-government entities turns a profit, can that be used to offset a loss elsewhere? Then, of course, there is the possibility of a whole new generation of entities -- no one heard of the RTC when Gramm-Rudman became law -- for which there will be a whole new generation of litigation, not to mention negotiations in Congress over their status when they are created. Undoubtedly, at some point the budget crunch will start to be felt, and Congress will be creative, as it has been in the past, in finding ways to avoid this Amendment. I fully envision new meaning given to the term "off-budget," as Congress attempts to shift to the states, or more likely private parties, obligations that were formerly undertaken by the federal government. Take the issue of health care, in particular the cost of Medicare and Medicaid. A creative Congress might well direct the private health care system to pick up Medicare and Medicaid patients, allowing increased premiums to cover costs, but with no government funding whatsoever. This would be rather like the ultimate assigned risk pool for automobile insurance. There would, of course, have to be a complex regulatory scheme to see that the law was administered in a reasonably fair manner, but the cost of that system would be far less to the federal government than the Medicare and Medicaid costs that would be shifted to employers in what is essentially a hidden tax on the businesses or on other entities who must pay health insurance premiums. Surely, some clever lawyer would argue that this scheme is in fact a tax, that it was not voted on in accordance with Section 4 of this Amendment, and that the imposition of the hidden tax violated the Constitution. The Supreme Court has recognized, in a somewhat analogous area, that not only physical takings are covered by the Fifth Amendment, but that the Takings Clause applies when the government so substantially regulates a person's property that it has no use left at all. Thus, it could easily be argued that this kind of law would be "regulatory spending," as opposed to governmental spending, and it too should be outlawed by the Constitution. Do you want the courts to decide that question, or should the entire issue be immune from judicial review? Moreover, if the privatization precedent works in the health care area, Congress might well apply it to efforts to clean up the environment and to protect workers, and even to replace social security pensions with a private pension system, all mandated by law, none of which would "cost" the federal government anything, in order to assure that it has a balanced budget. Undoubtedly, some types of regulation will be upheld, but there will be good grounds for litigation in some of the more extreme cases. Another area for litigation is created in Section 1 by the three-fifths requirement "for a specific excess of outlays over receipts." Leaving aside the question how specific a "specific excess" vote must be (must it be on an item by item basis or is an overall vote satisfactory), what if five Senators wanted an excess, but refused to go along with the budget without it, so that there were neither 50 votes for the budget nor 60 for the excess? Or suppose the House had 50% and the Senate 60%, and neither of them would budge? Similar kinds of questions and problems exist with respect to the provision in Section 2 requiring a three-fifths vote to increase the public debt (assuming that the term can be defined without an excessive amount of litigation), and to increase revenue, as required by Section 4. And, of course, it is unclear what would happen if the various provisions of the Amendment result in conflicts that prevent either the raising of revenue or spending it because outlays and estimated receipts do not coincide. Most intriguing of all is Section 5, which provides that "Congress may waive the provisions of this article for any fiscal year in which a declaration of war is in effect." Perhaps this would be a means of reviving the War Powers Resolution, by putting pressure on the President to ask Congress to declare war in order to avoid the consequences of an unbalanced budget. That effect might be a cute way of controlling the President's war-making activities, but is it a sensible one? Surely, it would not have been advisable in August 1990 to have declared war on Iraq simply to enable additional money to be spent on the pre-war build-up. More importantly, most wars are not fought based on a congressional declaration, and even those that are, need money for preparations before the war begins. Indeed, this provision seems to invite Congress to refuse appropriations and demand as a price the request of the President for a declaration of war. If this is not what this Section means, the courts will have to sort it out. It might be useful to look at the other end of the war process as well, focusing on the question of when a declaration of war ceases to be "in effect." Would Congress have to vote to "undeclare war," or would a declaration of war, like the temporary emergency court of appeals, continue for more than 20 years because no one had ever revoked it? Could the war be a permanent cold war that existed from 1945 until 1991, or would the courts require that a war be a shooting war in order to constitute an exception, and then would judges be in the business of deciding when hostilities began and/or ended to assure that there was no violation of this Section? There is another area that will certainly cause lawsuits and is probably unwise from a policy perspective as well. S.J. Res. 1 focuses solely on the cash flow of the government, more or less like an individual's checkbook. But no sensible person looking at the finances of any entity would examine simply the income statement without looking at the balance sheet as well. Moreover, no properly run business would operate without a capital as well as an operating budget. Yet, since S.J. Res. 1 limits only cash flow, that is likely to encourage a number of dubious practices that either make no economic sense, or be subject to litigation, or both. For example, it will always be "cheaper," from an annual cash flow perspective, for the government to lease a building than to purchase it, although in the long run the cost will often be much higher by choosing the lease option. Yet the focus on short-term outlays will inevitably drive the government into leasing rather than purchasing, unless the court forbids that subterfuge or encourages the opposite by allowing the President and Congress to "count" only a percentage of this year's purchase price, a result that would be hard to justify given the broad definition of outlays, since the only exception is for debt repayments. Second, the government could easily sell assets, either because they are not producing revenue, or because the receipts would generate cash that would alleviate some of the budget problems. Perhaps Congress would not attempt to sell the White House to a private developer, who would lease it back to the President, nor would it dispose of Glacier National Park to an outdoor recreation company, but there are other dispositions of assets that would be less of a national disgrace and hence a greater temptation to those who were worried about staying within the constitutional budget limitations for a given year, but not worried about the ultimate future of our country. Of course, for each of these attempted subterfuges, someone would surely argue that they violate the spirit, if not the letter, of this amendment, and the courts would have to decide the legality of each of them. In 1992 the Senate adopted an amendment offered by Senator Danforth to S.J. Res. 41, under which there would be judicial review, in at least some cases, but under which the courts could only issue declaratory relief unless Congress specifically authorized another form of relief through implementing legislation. Senator Nunn sponsored a similar provision again in 1995, and a modified version became part of the final version of Section 6 of H.J. Res. 1 that came within one vote of passage in the Senate: "The judicial power of the United States shall not extend to any case of [sic] controversy arising under this Article except as may be specifically authorized by legislation adopted pursuant to this section." 141 Cong. Rec. S. 3312 (March 2, 1995, daily ed.). If the Nunn addition were to be included, it still leaves open the vital issue of standing by not saying who can sue to enforce the Amendment. In fact, its reference to "case or controversy" suggests, if it does not require, that the usual standing rules would apply, even if Congress passed full enabling legislation. That would probably mean that only those whose taxes were improperly increased, or whose funding was unlawfully cut off, would ever have standing. Thus, if a taxpayer or legislator claimed that the budget was not properly in balance, and even if Congress provided standing for them in enabling legislation, the Nunn addition would probably not permit that person to sue over an alleged violation. Accordingly, while I applaud the willingness of Senator Nunn to address the issue of judicial review, and recognize that his amendment eliminated some of the problems that the Danforth amendment contained, it did not answer the most fundamental issue regarding judicial review: would anyone be entitled to sue when a budget was not in balance, assuming Congress passed a statute permitting such a lawsuit? (See Footnote 3) I am deeply troubled by the prospect of judicial review and Presidential impoundment, and by the fact that S.J. Res. 1 refused to deal with either of them. But in some ways the most troubling aspect of the Amendment is what is contained in Section 2: "The limit on the debt of the United States held by the public shall not be increased, unless three-fifths of the whole number of each House shall provide by law for such an increase by a rollcall vote." As the Committee knows, it is virtually impossible to have an unbalanced budget without having to raise the debt ceiling. And, unlike the budget itself, whose status as being in balance or not is always subject to reasonable debate, especially at the start of a fiscal year when Congress must rely on estimates, it is generally quite clear when the debt ceiling must be raised. To be sure, Secretary of Treasury Rubin engaged in some maneuvers that delayed the matter for a couple of weeks, but even he soon ran out of tricks, and the ceiling had to be raised or the Government could not finance its operations. The necessity to raise money outside the Government will become, as former Attorney General Barr observed, a self-enforcing method of assuring that the budget does not go out of balance. The problem is that this power is given to two-fifths of either House, and there is absolutely nothing that the remainder of Congress, the President, or the courts can do about it. Surely, no one would attempt to sell billions of dollars of debt unless they were authorized to do so, and even if someone tried, there would be no buyers. The Committee will recall the near chaos in 1995 when the Government was twice shut down, and how close we came to not getting it open again, when all that was needed was a majority. But suppose that those opposed to increasing the debt ceiling were not the majority party, and they were willing to shut down the government to assure that the budget was in balance, as they saw it. This Amendment would, in essence, turn over control of our Government to 41 Senators or 175 Representatives, virtually ending the principle of majority rule. As frightening as are the prospects of full judicial review or unlimited presidential impoundment, I am even more frightened by the idea that we will be allowing two-fifths of either House to halt an increase in the debt ceiling. Indeed, their reasons for objection to the increase may have nothing to do with a balanced budget. Rather, they may simply seize the debt ceiling increase as an opportunity to insist on cuts or even increases in some specific programs, not to mention holding the debt ceiling as a hostage to demand that the President withdraw a treaty or a Supreme Court nomination. Of course, such strong-arm tactics can always be tried, but having to muster only 40% of either House makes it much more likely that they will succeed. The Framers established a government of majority rule, and this is no place to alter that basic assumption. In conclusion, I want to urge the Committee again to consider how the Balanced Budget Amendment will be enforced, to answer the questions relating to judicial review and impoundment in the Amendment itself, and to eliminate the ability of two-fifths of either House to bring the Government of the United States to a halt. I thank the Committee for the invitation, and I stand ready to answer any questions that you may have. ;
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