As a document of the slow death of the moderate wing of the GOP, the joint Olympia Snowe/Jim DeMint op-ed calling for a balanced budget amendment as a condition of any debt deal is pretty fascinating. Of course, budget-balancing has been an obsession of Republican moderates for a long time, and Snowe, as she alludes to in the piece, voted for a balanced budget amendment back in the Clinton administration, when it almost passed. But the amendment she voted for then and the amendment the GOP is hawking now are very different animals. The 1997 amendment was still a bad idea, but it at least focused on its stated task of requiring a balanced budget. It required a three-fifths vote of the House and Senate to pass an unbalanced budget, or to raise the debt limit, and made it slightly harder (requiring a majority, rather than plurality, vote) to increase taxes. Given the necessity of deficit spending in a recession — and the unlikelihood of supermajority support for it — this was a pretty terrible plan, but at least it did more or less what it promised. And given that the filibuster has created a de facto supermajority requirement in one house, it’s actually only slightly worse than the current system.
The amendment the GOP is currently pushing goes much further. It requires two-thirds majorities in both houses — as opposed to three fifths in the 1997 amendment — to pass an unbalanced budget, as well as two-thirds majorities to raise taxes, a requirement that, as Ezra noted the other day, has paralyzed California’s budget process for years. And it adds something the 1997 didn’t have at all: a spending cap. It caps spending at 18 percent of GDP. Spending has averaged 21 percent of GDP in recent years, which, using the 2010 GDP of $14.7 trillion, means annual spending will have to fall by about $441 billion. Actually, because the amendment limits spending in a given fiscal year to 18 percent of the GDP in the previous calendar year, spending would have to be cut much more than that. As Donald Marron notes, this sets a cap based on the GDP from 21 months previous; during that time, the economy will have likely grown quite a bit, but the cap doesn’t grow with it. Marron notes that this means the cap is actually 16.7 percent, rather than 18 percent. So the actual fall in spending is, based on 2010 figures, $632.1 billion from average levels.
No one, and I mean no one, is proposing annual cuts that big. The current debt limit talks have revolved around the figure of $2 trillion in deficit savings over 10 years, which, even if achieved entirely through spending cuts, amounts to only $200 billion a year. Rand Paul’s plan, which only six other Republican senators supported allowing a vote on, and involves eliminating large swaths of the federal government, proposes annual cuts of $500 billion. So the balanced budget amendment is more radical than the most radical GOP budget plan offered. And Olympia Snowe — ostensibly the left-most Republican in the Senate, the only Senate Republican to vote for the Affordable Care Act, albeit in committee — is supporting it.