House and Senate Republicans have rallied around the notion of a balanced budget amendment to the Constitution as a solution to the country’s dire fiscal straits. But over the weekend, the head of Standard & Poor’s sovereign ratings division dismissed the idea, arguing that it would be more harmful than helpful to the country’s creditworthiness.
“In general, we think that fiscal rules like these just diminish the flexibility of the government to respond” to crises, S&P managing director John Chambers told CNN’s Wolf Blitzer on Saturday when asked whether it’s important that Congress send a balanced budget amendment to the states in order to restore the country’s AAA credit rating.
Chambers made the remarks one day after S&P downgraded the U.S. credit rating from AAA to AA+ for the first time in the country’s history.
Since the start of the 112th Congress, Republicans in both chambers have voiced increasing support for a balanced budget amendment, and a pledge to “cut, cap and balance” the federal budget — first raised during the debate over raising the country’s debt ceiling — has become a rallying point among conservatives in the broader battle over the federal budget.
During the fight over the country’s borrowing limit, the push for a constitutional amendment became so strong that House Speaker John Boehner (R-Ohio) was forced to rework his original debt-ceiling plan after several House Republicans declined to support it unless it called for congressional passage of such an amendment.
Those members eventually succeeded in securing a vote on a balanced budget amendment as part of the debt-ceiling deal, although the final agreement calls only for an up-or-down vote in each chamber, not passage.
Some Democrats, too, have backed the idea, and a group of moderate Senate Democrats led by Sen. Mark Udall (D-Colo.) is preparing to release its own version of a balanced budget amendment in the fall. In March, 11 members of the Senate Democratic caucus joined all Republicans in expressing the “sense of the Senate” in support of a balanced budget amendment.
The plan put forward by congressional Republicans would require a balanced budget for each fiscal year and would cap spending at 18 percent of GDP, down from the current 25 percent.
Supporters of such an amendment argue that it is the best way to prevent future Congresses from running up massive deficits. They contend that if most states are forced to balance their budgets, the federal government should be, too.
Opponents point out that not all balanced budget amendments are created equal, and that the version currently proposed by House and Senate Republicans would restrict the government’s ability to raise revenue — and thus increase the likelihood of default — by requiring a two-thirds majority in both chambers to increase taxes or run a deficit in a particular year and a three-fifths majority to raise the debt ceiling.
Chambers did not comment specifically Saturday on the proposal put forward by congressional Republicans but argued more broadly that a balanced budget measure “would just reduce your flexibility in a crisis.”
He also said that Congress “has a long track record of trying to bind itself with various rules,” but that “when push comes to shove, [the rules] don’t bind very much.”
“Even if you had a balanced budget amendment, you have some questions about its credibility,” he said.
There’s also the matter of actually getting such an amendment enacted: A two-thirds majority in both chambers is needed in order to amend the Constitution, and the amendment would then have to be ratified by three-quarters of the states.
That’s a high bar, and Boehner indicated as much during a speech on the House floor when the chamber narrowly approved his debt-ceiling plan late last month.
Noting that Ronald Reagan used to keep a placard on his desk reading, “It can be done,” Boehner urged members to keep pushing for a balanced budget amendment.
“Let me tell you, members of this House, it can be done, it must be done and it will be done if we have the courage to do the right thing,” he said.