Testimony of Alan B. Morrison Balanced Budget Constitutional Amendment (House)


H.J. Res. 1
JANUARY 10, 1995

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Mr. Chairman, Members of the Committee, thank you for the invitation to appear before this Committee to testify regarding the Balanced Budget Constitutional Amendment, H. J. Res. 1. While it is similar in many respects to other proposed amendments, there are a number of rather significant differences between it and the current Senate proposal, S.J. Res. 1, that I have noted in the brief time that I have had to review it since it was first made available to me on Monday morning January 9, 1995.

I am now and have been for nearly 23 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 my testimony, 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. Moreover, and perhaps as pertinent as anything else for this hearing, we were the lawyers who represented 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.

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. Today I want to focus on the question of what to do about potential litigation that is certain to arise regarding the Balanced Budget Constitutional Amendment, if it becomes law.

Congress Must Decide on Reviewability

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 H.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.

I now know that omissions on the issue of judicial review are by clear design and not inadvertence. I testified at length on the issue before the House Budget Committee in 1992 where one of the leading sponsors of the amendment, Rep. Charles Stenholm of Texas, was present and asked me a number of questions. I have written about the issue in the Washington Post, discussed it with Members and staff of its supporters, and appeared on It's Your Business last year with Senator Orrin Hatch, where I attempted to press him on his views on the issue and the need for a clear congressional statement about it. Indeed, in the floor debates last year in the Senate, an addition to section 6, introduced by Senator John Danforth, was approved on the floor, which would have dealt explicitly with judicial review. 1 As I explain at the end of this statement, that solution would not resolve the problems that I discuss below, but at least it had the virtue of recognizing the need for Congress to decide the question of the appropriate role for the courts in the enforcement of this amendment.

But now it appears that the sponsors of the Balanced Budget Constitutional Amendment are unwilling even to go that far and state their position on judicial review. That became most clear to me from the hearing before the Senate Judiciary Committee last Thursday on S.J. Res. 1, where I and others testified at great length about the issue of judicial review, and not a single sponsor of the amendment suggested that anything should be added to clarify the issue. At one point former Attorney General William Barr, a supporter of the amendment who believes that there will only be limited judicial review, was asked whether he favored including clarifying language. His reply on the issue (paraphrased since I do not have the transcript) is telling: "Yes, but not if it would cost any votes." Translated, that means, "don't tell Members of Congress, State legislators, and the public what we mean because some of them may disagree and vote against the amendment."

It is no longer plausible for the sponsors of this amendment to claim that the absence of mention of judicial review is an oversight, nor that the issue is of no significance. The only explanation is that the issue is deliberately being avoided, in the hope that no one will notice until the amendment is ratified. 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 before loosing the amendment on the states and the public. Moreover, another part of the Contract, the mislabelled "Common Sense Legal Reform Act," would mandate a legislative check list for each bill being considered by Congress, one of whose items is the availability of judicial review. For all of these reasons, the sponsors of this amendment should include a specific provision in the amendment itself, stating precisely the role, if any, that they envision for the courts.

However, if H.J. Res 1 remains silent on judicial review, it is my opinion that neither taxpayers, nor legislators, nor citizens generally would have standing to go to court to enforce the spending limits in this amendment. Thus, in the absence of a clear statement to the contrary in the amendment itself, it is likely that the only parties who could show sufficient injury to meet the case or controversy requirement in Article III of the Constitution would be those seeking greater spending or reduced taxes, whereas actions to assure lesser spending will be thrown out of court on standing grounds. If, as I discuss below, the President attempts to exercise the power to impound, as the current Administration claims would exist under the amendment, those whose funds were reduced or eliminated would have standing, but those who wanted less spending would not if the President chose not to impound any funds to bring about a balanced budget. The same result is likely to occur for the doubtless myriad of challenges to increases in receipts, all of which must be approved by a three-fifths majority under Section 2. 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. The inclusion in Section 1 of a requirement that Congress and the President, but not the courts, ensure compliance with the requirement that actual outlays do not exceed those in the budget, increases the likelihood that the courts will abstain. 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, perhaps over a Presidential veto, and the courts might conclude that Congress lacks the power to confer jurisdiction on the federal courts to resolve disputes under this amendment.

Once Congress decides that it wishes to take a position regarding judicial review, it has three choices. All actions taken in purported compliance with 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 disadvantages of producing in 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.

If I am not assuming too much by supposing that Congress will not refuse to make its wishes on this important issue as clear as possible, 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.

The No Judicial Review Option

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 H.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 H.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 two pages in H.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 forever, or at least until the time-consuming amendment process can correct it. As 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 the President to do no more than to send to the 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 that preclude virtually all litigation makes clear the real danger of no judicial review; Congress passes the amendment, and then it is routinely disregarded, making 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.

I recognize that judicial review is not the only remedy. The President, but not the Congress, could be impeached for violating the constitutional requirements for a balanced budget. As for Members of Congress, they can be voted out, although there is no indication of any willingness on the part of the electorate to do so for having failed to live up to their budgetary responsibilities under Gramm-Rudman and elsewhere. And, as we know, balancing the budget does not seem to be the kind of single issue on which Members lose their right to return to Washington, especially for Senators who are elected only once every six years.

The Litigation Option

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 1 requires that "Congress shall, by law, adopt a statement of receipts and outlays for [each] fiscal year in which total outlays do not exceed total receipts," unless Congress, by a three-fifths vote "of the whole number of each House" provides otherwise. It also requires that "Congress and the President shall ensure that actual outlays do not exceed the outlays set forth in such statement." The latter provision is not contained in S.J. Res 1, and it appears to apply only to outlays not receipts, where a shortfall based on optimistic revenue projections (such as from capital gains tax reductions) is often the cause of increased deficits.

The first question that arises is, what happens if Congress and the President cannot reach agreement on a budget? Does that mean that no money can be appropriated for that fiscal year? And what if a majority of Congress (and the President) vote for a deficit, but the three-fifths requirement for an unbalanced budget is not met? And how is Congress supposed to "ensure" that the budget targets are actually met, especially if the President claims that there is no problem, and Congress cannot muster the two-thirds vote necessary to pass a bill changing the spending levels already enacted? And what if both Congress and the President insist that all is well, but that others think that the budget will be far out of balance? And what will happen if the required three-fifths of each House does not vote to increase the national debt, as mandated by Section 6, but there is a projected deficit that cannot be avoided? Do the sponsors really intend to hold the entire government hostage to 40% of each House, who could insist on wholly unreasonable demands, including those unrelated to the budget, as the price of increasing the debt limit?

I assume that Section 1 must mean more than that the numbers must simply add up (for political as well as other reasons, the President and Congress could not say that two plus two equals five or three). But could the budget optimistically project a 2 or 5 or 10% growth in the economy, from which the tax revenues will increase accordingly, or is it stuck with last year's figures? Would the law comply with Section 1 if the 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 budget 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? And 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 Internal Revenue Code, such that a shortfall in one year would have to be offset by further cuts the following year?

Presumably, the courts will sort that out, and 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), it later appears 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 (and there are likely to be many who will 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 H.J. Res. 1 attempts to answer in Section 5, by its all-inclusive definitions of receipts and outlays, which is identical to that in S.J. Res. 1, except for variations in punctuation: Total receipts shall include all receipts of the United States Government except those derived from borrowing, and total outlays shall include all outlays of the United States Government except those for repayment of debt principal. 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. I see no reason to disagree with that assessment, but that 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 at the time 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 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 and other entities that must pay health insurance premiums. Or, at least for Medicaid, Congress might attempt to shift the entire cost to the States, or an increased percentage of them, as a means of eliminating a projected shortfall.

Surely, some clever lawyer would argue that this scheme is in fact a tax, that it was not voted on in accordance with 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 vote requirement "for a specific excess of outlays over receipts by a vote directed solely to that subject." The underscored portion is not contained in S.J. Res. 1, but it raises the possibility of litigation over both its meaning and the effect of non- compliance. Furthermore, 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 was neither 50 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 6 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 2. 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 estimated outlays and receipts do not coincide.

Ironically, one of the consequences of all of this might be a substantial increase in the President's power over the purse. The Executive Branch would undoubtedly argue, as it did last week before the Senate Judiciary Committee, that only the President can control the budget situation and that he has a sworn obligation to enforce the Constitution. The President's position is greatly strengthened by the final sentence in Section 1, which requires him to "ensure that actual outlays do not exceed the outlays" in the budget. This is virtually an open invitation for the President to impound appropriated funds and to decide for himself which funds to cut, including making cuts that Congress specifically rejected in that very fiscal year. Those cuts could include the military, social security, and the pay of federal employees (other than the President and federal judges who have other constitutional protections), with the result that the President would become, as a practical matter, the real controller of federal spending. Such power would vastly exceed that of the line item veto which, until now, Congress has consistently (and wisely) refused to grant to the President. There will undoubtedly be an enormous amount of litigation over that issue, especially where entitlement programs are concerned and the President seeks to cut the programs which he does not support as his preferred means of balancing the budget.

Most intriguing of all is Section 4, which provides that "Congress may waive the provisions of this Article for any fiscal year in which a declaration of war is in effect" or "in which the United States faces and imminent an serious military threat to national security and is so declared by a joint resolution, adopted by a majority of the whole number of each House, which becomes law." 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, or even to have demanded a vote on whether there was am "imminent and serious threat to national security," 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. Moreover, given the conditions in this provision on when, short of a declaration of war, Congress may waive the requirements of the amendment, will the courts be asked to decide whether there is a serious threat to national security, and how will they do so? If they decline, will this be a loophole for avoiding the effect of the amendment entirely?

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 it mean Congress would 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? And as for the serious threat alternative, could Congress make such a declaration effective for all future fiscal years until it is revoked by another joint resolution?

There is another area that will certainly cause lawsuits and is probably unwise from a policy perspective as well. H.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 only examine 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 the focus of H.J. Res. 1 on cash flow alone 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, with the only exception 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.

One of the more likely scenarios is a sale of a government office building to a private owner, with a leaseback to the government, and perhaps an option to buy at the end of the term. As a short-term solution to a budget crunchy, the idea is almost irresistible, but it surely makes no economic sense, especially since the tax breaks for depreciation would all go to the private party, thereby increasing the long-term cost to the government. Surely, someone would catch on, and the courts would then be thrown into the middle of it all, in the end either creating a huge loophole or finding themselves entangled in the minutiae of federal property management.

The Danforth Amendment

As noted above (p.3 and note 1), last year 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. Although that addition would resolve the issue of whether the courts would be free to abstain entirely, it raises as many questions as it solves, if not more.

First, it ducks the issue of standing entirely 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 here, which would mean that only those whose taxes were improperly increased, or whose funding was unlawfully cut off, would have standing. Thus, if a taxpayer or legislator claimed that the budget was not properly in balance, the Danforth amendment would probably not permit that person to sue over that alleged violation.

Second, it would plainly outlaw preliminary injunctive relief, which means that there would be a tremendous incentive for those defending the budget to delay the case until the year's end, when a declaration would be of no significance at all. Indeed, once the year was over, the controversy would almost certainly be moot, which would mean that the courts would probably not even be able to rule of the validity of the budget of the just-concluded year, unless the plaintiff could show that the same controversy was likely to recur. In recent years the courts, especially the Supreme Court, have generally declined to uphold claims for such exceptions to the mootness doctrine, even in relatively simple cases, let alone in ones as complex as those under this amendment.

Third, the authorization for implementing legislation extends only to remedies and, by its terms, does not appear applicable to attempts by Congress to cure standing and other problems. More importantly, it seems highly unlikely that such legislation will pass or that it would provide for meaningful interim relief. And if it does, then we are right back to where we were under the full litigation option described above. Accordingly, while I applaud the willingness of Senator Danforth to address the issue of judicial review, his solution turns out to solve very few of the problems plaguing the whole question of judicial review and the balanced budget amendment.

Mr. Chairman and Members of the Committee, if my testimony has frightened you, that was my intention. Each of you should ask yourselves whether you really want the federal courts to control the federal budget. Do you really think that litigation is a preferable solution to negotiation between the Congress and the President? Or do you so abhor litigation, that you are willing to disregard all of these attempts to conduct an end run on a constitutionally balanced budget, and thereby keep the courts out of the process entirely, making this amendment into the budgetary equivalent of the War Powers Resolution and thereby turning over to the President the effective control of the entire federal budget? While some of these problems can be fixed by better drafting, most cannot, and those that are fixed now will resurface later in another form.

I respectfully suggest that both the litigation and the no litigation options are terrible ideas because the Balanced Budget Constitutional Amendment is a terrible idea. Unbalanced budgets may be bad for the economy, but this solution is plainly worse for everyone, except perhaps for the lawyers who will be handling the litigation. I thank the Committee for the invitation, and I stand ready to answer any questions that you may have.

FOOTNOTE 1:It provided as follows: "The power of any court to order relief pursuant to any case or controversy arising under this Article shall not extend to ordering any remedies other than a declaratory judgment or such remedies as are specifically authorized in implementing legislation pursuant to this section."

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