Balanced Budget and Spending Limitations: Proposed Constitutional Amendments in the 97th Congress

Expenditures and revenue limitation proposals link Federal spending and taxation to some measure of economic performance, such as the rate of economic growth or percentage levels of GNP or national income. The report presents this issue brief reviews, the various approaches to balance the budget and to impose spending limitations offered as constitutional amendments’ in the 97 congress.

BALANCED BUDGET AND SPENDING LIMITATIONS: PROPOSED CONSTITUTIONAL AMENDMENTS IN THE 97TH CONGRESS iSSUE BRIEF NUMBER IB81056 AUTHOR: Allen Schick Government Division Daniel P. Stricklane Government Civision THE LIBRARY OF CONGRESS CONGRESSIONAL RESEARCH SERVICE MAJOR ISSUES SYSTEM DATE ORIGINATED 04/03/81 DATE UPDATED 01/14/83 FOR ADDITIONAL INFORMATION CALL 287-5700 0303 CRS- 1 ISSUE DEFINITION Several constitutional amendments have been introduced in the 97th spending Congress t o r e q u i r e a balanced F e d e r a l budget o r t o impose F e d e r a l o r revenue limitations. During t h e 97th Congress, one such measure, S.J.Res. 5 8 , p a s s e d t h e S e n a t e ; t h e House c o n s i d e r e d b u t failed t o pass a similar measure, H.J.Res. 350. Although d i f f e r e n t i n method and d e t a i l , balanced budget proposals seek t o prevent outlays from exceeding revenues. Expenditures and rsvenue limitation proposals link Federal spending and t a x a t i o n t o some m e a s u r e o f economic performance, such a s the rate of economic growth o r p e r c e n t a g e l e v e l s of GNP o r n a t i o n a l income. T h i s i s s u e brief reviews t h e various approaches t o balance t h e budget and t o impose spending l i m i t a t i o n s o f f e r e d as c o n s t i t u t i o n a l amendments i n the 97th Congress. The v a s t m a j o r i t y o f t h e amendments c o n t a i n provisions r e q u i r i n g a b a l a n c e d b u d g e t ; some o f t h e s e a l s o m a n d a t e s p e n d i n g o r revenue l i m i t a t i o n s o r repayment of d e f i c i t p m r t h e p u b l i c d e b t . B A C K G R O U N D A N D P O L I C Y ANALYSIS D e f i c i t spending h a s been a p e r s i s t e n t f e a t u r e of Federal budgeting for the past half century. The b u d g e t h a s b e e n b a l a n c e d i n o n l y n i n e o f the 51 f i s c a l years s i n c e 1930, and only twice s i n c e 1960. The F e d e r a l Government incurred a d e f i c i t i n every f i s c a l year during t h e 1970s. Recurring d e f i c i t s have been r e s p o n s i b l e f o r a s t e e p r i s e i n t h e d e b t of t h e United S t a t e s , from l e s s t h a n $300 b i l l i o n i n 1960 t o more t h a n $900 b i l l i o n in FY81. Deficit budgeting a l s o has been associated w i t n a s u b s t a n t i a l i n c r e a s e i n Federal o u t l a y s , from l e s s t h a n $100 b i l l i o n a t t h e s t a r t of t h e 1 9 6 0 s t o a b o u t $650 b i l l i o n i n FY81. In i n t e r p r e t i n g these budgetary trends, it is important t o note that a l t h o u g h t h e economy o f t h e U n i t e d States a l s o has grown, the relative e c o n o m i c s i z e o f t h e F e d e r a l Government i s s t i l l h i g h e r t h a n i t was 20 y e a r s ago. F e d e r a l o u t l a y s w e r e 1 9 . 5 % o f g r o s s n a t i o n a l p r o d u c t (GNP) i n 1 9 5 9 ; in is expected to take a F Y 8 0 , t h e y t o t a l l e d 2 2 . 6 % o f GNP. The FY81 b u d g e t higher share. Y e t , t h e t o t a l F e d e r a l d e b t i s a much s m a l l e r f r a c t i o n o f GNP t h a n i t o n c e was, d e c l i n i n g f r o m 6 0 . 8 % i n FY59 t o 3 5 . 6 % i n F Y 8 0 . Viewed f r o m t h i s p e r s p e c t i v e , t h e d e b t i s much l e s s o f a d r a i n o n the national economy t h a n o n c e was t h e c a s e . Congressional i n t e r e s t i n Federal spending l i m i t a t i o n s h a s b e e n s p u r r e d by t h e P r o p o s i t i o n 1 3 v o t e l i m i t i n g S t a t e and l o c a l t a x e s i n C a l i f o r n i a a n d b y t h e a p p l i c a t i o n o f many State legislatures f o r a c o n s t i t u t i o n a l convention t o consider a balanced budget requirement. A c c o r d i n g t o some c o u n t s , 30 o f t h e n e c e s s a r y 34 S t a t e s have applied t o Congress f o r a c o n s t i t u t i o n a l convention. P r o p o s e d B a l a n c e d B u d g e t Amendments d i f f e r e n t ways. Proposals t o balance t h e budget pursue t h i s o b j e c t i v e i n Some m e a s u r e s d o n o t s p e c i f i c a l l y p r o h i b i t d e f i c i t s p e n d i n g . S . J . R e s . 1 (De Concini) and H.J.Res. 45 ( H o l t ) s t a t e t h a t Congress " s h a l l s e e k t o a s s u r e " a balanced budget, b u t do n o t e x p r e s s l y f o r b i d a p p r o p r i a t i o n s or outlays to exceed revenues. ii.J.Res. 8 (Archer) s a y s t h a t t h e P r e s i d e n t must transmit t o Congress a budget i n b a l a n c e ; H.J.Res. 4 1 (George Hansen) proposes that CRS- 2 o u t l a y s n o t exceed r e c e i p t s " t o t h e end t h a t t h e l e v e l of t h e national debt permits i n t h e hands of t h e p u b l i c i s n o t i n c r e a s e d " ; H.J.Res. 1 8 1 ( F i t h i a n ) o u t l a y s t o e x c e e d r e v e n u e s by 2% a s l o n g a s deficits are repaid within 5 years. I n S . J . R e s . 7 ( L u g a r ) a n d H.J.Res. 66 a n d 89 (Solomon a n d B e a r d ) , all c o n c u r r e n t r e s o l u t i o n s on t h e b u d g e t c o n t a i n i n g a d e f i c i t would require a two-thirds vote f o r passage. B e c a u s e e c o n o m i c p e r f o r m a n c e may n o t l i v e u p t o e x p e c t a t i o n s a n d b e c a u s e c o n c u r r e n t r e s o l u t i o n s on t h e b u d g e t l a c k t h e force of l a w , a c t u a l o u t l a y s of t h e Government m i g h t exceed a c t u a l r e v e n u e s w i t h o u t a n y a c t i o n t a k e n by C o n g r e s s . Some m e a s u r e s i m p o s e r e s p o n s i b i l i t y f o r b a l a n c i n g t h e b u d g e t o n Congress; H. J.Res. 2 o t h e r s d e c l a r e g e n e r a l l y t h a t o u t l a y s must n o t exceed r e v e n u e s . ( C o l e m a n ) a n d o t h e r s s t a t e t h a t C o n g r e s s " s h a l l make n o appropriations for such year would any f i s c a l y e a r i f t h e r e s u l t i n g t o t a l of expenditures f o r exceed t h e t o t a l revenues of t h e United S t a t e s f o r such fiscal year." In t h i s c a s e , t h e e x e c u t i v e b r a n c h would n o t be prohibited from spending i n it had the budget authority to do so. excess of revenues, provided Furthermore, decreases i n revenue occasioned by an economic declirL4, o r c o n g r e s s i o n a l a c t i o n would c r e a t e d e f i c i t s . A s reported, S.J.Res. 58 (Thurmond) would h a v e r e q u i r e d C o n g r e s s t o adopt a s t a t e m e n t o f r e v e n u e s a n d s p e n d i n g i n which " t o t a l o u t l a y s a r e no greater Congress could approve a d e f i c i t by a three-fifths than c3tal r e c e i p t s . " that subject." Furthermore, the v o t e o f a l l Members ' * d i r e c t e d s o l e l y t o p r o p o s e d amenCment s t a t e d t h a t C o n g r e s s a n d t h e P r e s i d e n t " s h a l l e n s u r e that a c t u a l o u t l a y s do n o t exceed t h e o u t l a y s s e t f o r t h " i n t h e budget statement a n d " s h a l l m a k e s u c h a d j u s t n e n t s i n t h e r e v e n u e s l a w s a s may be appropriate to the total" set forth in the statement. to l i m i t receipts Revenue i n c r e a s e s would b e t i e d t o i n c r e a s e s i n n a t i o n a l income. However, with a m a j c r i t y v o t e i n each House, t h e i n c r e a s e i n revenues would be allowed to r i s e f a s t e r t h a n t h e i n c r e a s e i n n a t i o n a l income. c o n s i d e r a t i o n of S.J.Res. On J u l y 1 2 , 1 9 8 2 , t h e S e n a t e b e g a n f l o o r The S e n a t e d e b a t e d t h e m e a s u r e t h r o u g h o u t t h e r e m a i n d e r o f J u l y a n d i n t o f i r s t week o f A u g u s t b e f o r e p a s s i n g i t on Aug. 4 , 1 9 8 2 , b y a 6 9 - 3 1 v o t e . 58. the During floor consideration, the Senate rejected 29 of 31 proposed By a 9 7 - 0 v o t e , t h e S e n a t e d i d a d o p t a Domenici amendments t o S . J . R e s . 58. a m e n d m e n t t h a t i n s e r t e d new l a n g u a g e i n t o t h e t e x t a n d a d d e d a new s e c t i o n t o S.J.Res. 58. 1 language providing F i r s t , t h e Domenici amendment changed t h e Section t h a t Congress and t h e President " s h a l l ensure t h a t actual outlays do not e x c e e d t h e o u t l a y s s e t f o r t h " i n t h e s t a t e m e n t t o r e a d , '*The C o n g r e s s a n d t h e P r e s i d e n t s h a l l pursuant t o l e g i s l a t i o n o r through e x e r c i s e of their powers u n d e r t h e f i r s t a n d s e c o n d a r t i c l e s e n s u r e t h a t a c t u a l o u t l a y s do n o t exceed the outlays s e t forth" in the statement. S e c o n d , t h e Domenici amendment struck the phrase "last calendar year that Section 2 e n d i n g w from S e c t i o n 2 of S . J . R e s . 58 and a d d e d l a n g u a g e s o rate greater than p r o v i d e s t h a t s t a t e m e n t r e c e i p t s s h a l l n o t i n c r e a s e by a t h e r a t e of i n c r e a s e i n n a t i o n a l income i n t h e "year o r y e a r s ending n o t l e s s t h a n 6 months n o r more t h a n 1 2 months" b e f o r e t h e f i s c a l y e a r t o which the statement applies. Third, t h e D o m e n i c i a m e n d m e n t a d d e d a new S e c t i o n p r o v i d i n g t h a t Congress CRS- 3 IB81056 UPDATE-01/14/83 "shall enforce and implement this a r t i c l e by a p p r o p r i a t e legislation." T h e Senate a l s o adopted a n Armstrong a m e n d m e n t on Aug. 2 , 1 9 8 2 , by a 51-45 5 8 t h a t would vote. That a m e n d m e n t a l s o added a new S e c t i o n to S.J.Res. require a three-fifths vote "of the whole number of both h o u s e s w to a p p r o v e a n increase i n the permanent debt limit. T h e f u l l t e x t of S.J.Res. 58 appears a t the end of this issue brief. In May and August 1 9 8 2 , the Subcommittee o n Monopolies and C o m m e r c i a l L a w identical held hearings on H.J.Res. 350 (Jenkins, Conable et al.), a m e a s u r e t o S.J.Res. 5 8 a s reported i n the S e n a t e , a n d therefore n o t i n c l u d i n g t h e Domecici and Armstrong provisions added on t h e S e n a t e floor. O n May 4 , 1 9 8 2 , Representative Conable introduced H.Res. 4 5 0 , a resolution providing f o r t h e consideration of H.J.Res. 3 5 0 , allowing 1 0 hours of g e n e r a l d e b a t e a n d prohibiting amendment. On July 1 2 , 1982, R e p r e s e n t a t i v e C o n a b l e f i l e d a petition to discharge the Rules Committee from consideration of H.Res. 450; o n Sept. 2 9 , 1 9 8 2 , the House Rules C o m m i t t e e was discharged from consideration of H.Res. 4 5 0 by discharge petition. T h e H o u s e tabled that measure pursuant to another special rule. H - R e s . 6 0 4 , a d o p t e d by the House o n Oct. 1 , - 1 9 8 2 , provided for consideration of H.J.Res. 350. The House considered H.J.Res. 350 on Oct. 1 , 1 9 8 2 , and the measure f a i l e d to p a s s by a 236-187 roll c a l l vote. Some measures do not mention Congress a t a l l but ban d e f i c i t spending. . . s h a l l not H.J.Res. 3 (Neal) simply states that "total expenditures exceed the total revenues." Similarly, H.J.Res. 19 (Bennett) s a y s " t h e . . s h a l l not aggregate a m o u n t of expenditures made by t h e Government A s t r i c t r e a d i n g of exceed the net a m o u n t of revenue by the G o v e r n m e n t these amendments i s cnat if Congress appropriated i n e x c e s s o f r e v e n u e s , the executive branch would be barred from spending the excess. ..." . . Spending Limitations Two approaches characterize spending limitation amendments. One links spending to a constant measure of the size o f t h e e c o n o m y ; t h e o t h e r to economic performance. For example, S.J.Res. 26 (Harry B y r d , Va.) and calendar H.J.Res. 113 (Kramer) limit outlays t o 20% of G N P i n t h e preceding year. H.J.Res. 4 (McClory) limits outlays to the a v e r a g e of e x p e n d i t u r e s a s a percentage o f GNP for the previous three y e a r s ; H.J.Res 8 2 (Philip Crane) s t a t e s that Congress "shall a s s u r e w that t o t a l o u t l a y s n o t exceed 33.3% of a v e r a g e national income for the three previous years. T h e second method to limit spending i s to prohibit a n i n c r e a s e in expenditures a b o v e a proportionate rise i n GNP. S. J.Res. 45 (Heinz) , H.J.Res. 43 (George Hansen), and others propose that o u t l a y s "shall not increase by a percentage greater than the percentage i n c r e a s e i n t h e nominal G N P during the l a s t calendar year." Representative H a n s e n t s a m e n d m e n t , t a k e n from a proposal by economist Milton Friedman and t h e National T a x L i m i t a t i o n Committee, would further reduce the l i m i t o n the r i s e i n o u t l a y s by Thus, if nominal GNP were to rise one-fourth the rate of inflation a b o v e 3 % . by 1 0 % and prices by 7 % , the inflation penalty would p e r m i t o u t l a y s to r i s e by n o more than 9 % . Another measure, H.J.Res. 9 7 (Guyer), l i n k s o u t l a y s to the a v e r a g e a n n u a l percentage increase i n G N P during the preceding three calendar years. Spending limitations a r e a l s o implicit i n s o m e a m e n d m e n t s limitations. Because a number of tax l i m i t a t i o n measures proposing tax also prohibit CRS- 4 deficits, revenues. f o r t h e budget t o remain in IB81056 balance spending UPDATE-01/14/83 must not exceed -T a x L i m i t a t i o n s A number o f b a l a n c e d b u d g e t amendments i n c l u d e p r o v i s i o n s t o l i m i t taxes. any H . Y . R e s . 11 ( A s h b r o o k ) a n d o t h e r m e a s u r e s p r o h i b i t C o n g r e s s f r o m p a s s i n g law c a u s i n g " t h e t o t a l t a x a t i o n of t h e p e o p l e " t o exceed 15% of the GNP. W i t h n o n - t a x r e v e n u e s , s p e n d i n g c o u l d excee-d t h e 1 5 % l e v e l , b u t p r o b a b l y not by v e r y m u c h . Two o t h e r m e a s u r e s , S . J . R e s . 2 3 a n d 5 8 ( H e f l i n a n d T h u r m o n d ) r e q u i r e t h a t r e v e n u e s may n o t e x c e e d , a s a percentage of national income, T h i s would, i n e f f e c t , f r e e z e revenues those collected i n t h e previous year. t o a p r o p o r t i o n o f t h e GNP e x i s t i n g a t t h e t i m e o f r a t i f i c a t i o n . ( G u y e r ) would attempt t o curb revenues by requiring a H . J . R e s . 35 t w o - t h i r d s v o t e o f a l l Members i n e a c h H o u s e to pass any law increasing revenues. Another measure, H.J.Res. 100 (Rousselot), would have Congress reduce revenues " t o o f f s e t t h e e f f e c t s of i n f l a t i o n . " Repayment of D e f i c i t s and t h e P u b l i c Debt A number o f amendments p r o v i d e f o r C o n g r e s s to repay deficits incurred after ratification. S . J . R e s . 1 (De C o n c i n i ) a n d H . J . R e s . 45 and 166 ( ~ o l t and C h a p p e l l ) s t i p u l a t e t h a t a d e f i c i t i s t o be repaid by an income tax by the President without formal s n r t a x imposed in the following year A l l that is required is a Presidential message congressional approval. s e t t i n g t h e surcharge a t a r a t e t o cover t h e d e f i c i t . O t h e r p r o p o s a l s a l l o w more t i m e f o r repayment of the deficit, without specific references t o surtaxes. H.J.Res. 157 ( L e v i t a s ) requires repayment 41 (George w i t h i n two y e a r s , H.J.Res. 3 3 ( J a c o b s ) t h r e e y e a r s , a n d H.J.Res. Hansen) f o u r y e a r s . One m e a s u r e , H . J . R e s . 9 ( A r c h e r ) , f o r b i d s a p p r o p r i a t i o n s inexcess of outlays after two consecutive years of deficits without l e g i s l a t i o n t h a t would i n c r e a s e revenues t o c o v e r t h e p a s t d e f i c i t s . Some o f t h e p r o p o s e d a m e n d m e n t s r e q u i r e t h e r e t i r e m e n t o f t h e p u b l i c d e b t . the complete H . J . R e s . 2 ( C o l e m a n ) a n d many o t h e r s s e t f o r t h a s c h e d u l e f o r repayment of t h e d e b t i n 100 y e a r s , w i t h 1 0 % of t h e d e b t r e p a i d every decade. A few o t h e r s , H.J.Res. 4 2 (George Hansen) e s t a b l i s h e s a 50-year s c h e d u l e . 20 years H.J.Res. 1 0 a n d 33 ( D e r w i n s k i a n d J a c o b s ) , r e q u i r e that for the f o l l o w i n g r a t i f i c a t i o n r e v e n u e s must e x c e e d o u t l a y s by a n amount e q u a l t o 5% of F e d e r a l i n d e b t e d n e s s . Suspending t h e Constitutional R e s t r i c t i o n s Most o f t h e p r o p o s e d c o n s t i t u t i o n a l a m e n d m e n t s w o u l d a u t h o r i z e C o n g r e s s t o temporarily s e t aside constitutional restrictions. While the procedures d i f f e r , they usually provide for a concurrent resolution (a legislative his review) specifying measure which i s n o t p r e s e n t e d t o t h e P r e s i d e n t f o r t h a t conditions warrant d e f i c i t spending o r expenditures in excess of the A few r e q u i r e a P r e s i d e n t i a l declaration of constitutional limitation. emergency (H.J.Res. 43 --George Hansen, for example) and others a recommendation from the President before C o n g r e s s may act to suspend (H.J.Res. 110--Hinson), b u t most e n a b l e Congress t o a c t u n i l a t e r a l l y without the p a r t i c i p a t i o n o r approval of t h e executive branch. CRS- 5 IB81056 UPDATE-01/14/83 The p r o p o s e d amendments d i f f e r a s t o t h e c o n d i t i o n s t h a t would permit an override. Some r e f e r t o " n a t i o n a l emergency," others to "grave national e m e r g e n c y v ; some m e n t i o n w a r , w h i l e o t h e r s s p e a k i n more general terms. A few simply s t a t e t h a t p r o v i s i o n s " s h a l l n o t a p p l y d u r i n g war" (H.J.Res. A s long a s Congress can decide whether a particular 142--Hartnett). c o n d i t i o n meets t h e requirement, most d i f f e r e n c e s i n wording a r e of l i t t l e consequence. However, t h e s i z e o f t h e c o n g r e s s i o n a l m a j o r i t y required to The r e q u i r e m e n t r a n g e s f r o m a m a j o r i t y override could make a big difference. o f t h e v o t i n g Members o f t h e H o u s e a n d S e n a t e i n H.J.Res. 107 (Ginn) to in H.J.Res. 62 t h r e e - q u a r t e r s o f a l l t h e Members o f t h e H o u s e a n d S e n a t e (Coleman). S . J . R e s . 58 h a s a d o u b l e o v e r r i d e f e a t u r e : by m a j o r i t y v o t e when a declaration of w a r was in effect--or by three-fifths of the total membership of e a c h House. An override i s usually explicitly limited to e i t h e r t h e c u r r e n t f i s c a l year o r t o t h e d u r a t i o n of t h e two-year term of t h e Congress. The n u m e r i c a l s t a n d a r d c o u l d s p e l l t h e d i f f e r e n c e between victory and I t bears n o t i n g t h a t i n r e c e n t y e a r s most of defeat f o r an override attempt. the concurrent r e s o l u t i o n s on t h e budget u v e passed t h e House w i t h With House r a z o r - t h i n m a j o r i t i e s , sometimes fewer than a handful of v o t e s . Republicans l i n e d up i n v i r t u a l l y s o l i d opposition t o d e f i c i t spending, the r e s o l u t i o n s h a v e b a r e l y managed t o s q u e a k t h r o u g h . A high constitutional the bargaining threshold t o overriding the limitation is likely t o bolster p o s i t i o n s o f C o n g r e s s m e n who f a v o r s m a l l e r d e f i c i t s o r lower spending. By withholding t h e i r support u n t i l the d e f i c i t or spending l e v e l is brought c l o s e r t o t h e i r p r e f e r e n c e , t h e h o l d o u t s would be able to magnify their influence over the budget. Thus, while a high r e q u i r e m e n t would not necessarily rule o u t imbalanced budgets o r breaches of the spending l i m i t a t i o n s , i t might lead t o s m a l l e r d e f i c i t s and l e s s spending by Congress. Enforcing the Constitutional Limitations I n o r d e r t o e n f o r c e a c o n s t i t u t i o n a l r e s t r i c t i o n , i t would be n e c e s s a r y t o d e t e r m i n e what would b e covered. I n t h e c a s e of t h e F e d e r a l budget, t h i s is l i k e l y t o be a d i f f i c u l t , c o n t e n t i o u s t a s k . The q u e s t i o n o f what o u g h t t o be i n t h e b u d g e t i s by no means s e t t l e d ; current practice is a compound of w r i t t e n a n d u n w r i t t e n r u l e s , many o f w h i c h w e r e e s t a b l i s h e d b y t h e executive branch without t h e e x p l i c i t concurrence of Congress. While some o f the "boundaryw problems arise out of statutory efforts to exclude certain t r a n s a c t i o n s from t h e budget, most r e s u l t from t h e p l a i n f a c t t h a t t h e p u b l i c and p r i v a t e s e c t o r s i n t h e United S t a t e s a r e n o t c l e a r l y d e l i n e a t e d and that a n y a i r t i g h t d e l i n e a t i o n between t h e two would be impossible t o achieve. P u b l i c a n d p r i v a t e a r e e n t a n g l e d i n s o many w a y s , n o t o n l y b y c o n t r i v a n c e b u t b e c a u s e s o many p u b l i c o b j e c t i v e s now a r e p u r s u e d t h r o u g h p r i v a t e o r "quasiN g o v e r n m e n t a l means. In terms of p r e v a i l i n g p r a c t i c e , t h e e a s i e s t i s s u e t o resolve involves t h e a p p r o x i m a t e l y $ 1 5 - $ 2 0 b i l l i o n s p e n t by t h e h a l f - d o z e n " o f f - b u d g e t " agencies. C o n g r e s s h a s e x c l u d e d t h e t r a n s a c t i o n s of these agencies from t h e budget t o t a l s , but can r e t u r n the agencies to full budget s t a t u s by statute. A r g u a b l y , a c l e a r v i o l a t i o n of c o n s t i t u t i o n a l i n t e n t would occur i f monies were taken off-budget merely t o contravene a binding l i m i t a t i o n of deficits or outlays. O t h e r i s s u e s , h o w e v e r , a r e more difficult to resolve. Seven privately-owned but federally-sponsored corporations a r e e x c l u d e d from the b u d g e t a l o n g w i t h t h e i r m a s s i v e c r e d i t o p e r a t i o n s ( a m o u n t i n g t o more t h a n $ 2 0 billion per year). The p r i v a t e ownership test was developed by the CRS- 6 IB81056 UPDATE-01/14/83 President's Commission on Budget Concepts i n 1967; the rest has been challenged by the House Budget C o m m i t t e e , which (in a 1 9 7 6 report) noted t h a t investors do not consider " t h e government-sponsored enterprises to b e completely private n o r , in most cases, would a member o f the general public d r a w this distinction. Each of the government-sponsored enterprises i s subject to some greater or lesser measure o f federal direction, and s o m e implicit subsidy may be presumed to a r i s e whenever borrowing from the public i s undertaken.'' Although these enterprises have not been established a s a means of evading budget control, stringent constitutional restrictions might generate strong incentives for the creation of private organizations which perform public purposes but whose transactions were beyond the budget's pale. Such enterprises could be vested with "quasi-taxing" powers to f i n a n c e their operations o u t s i d e the budget. Another problem relates to guaranteed l o a n s , which a r e contingent (rather than direct) l i a b i l i t i e s of t h e United S t a t e s and for this reason a r e n o t counted i n the budget. When the budgetary status of these loans was considered by t h e 1 9 6 7 Budget Concepts Commission, Arthur Okun predicted that the different budgetary treatment accorded to direct and guaranteed loans "would lead to a s t r o n g preference in the budget process for guarantees o v e r direct loans," T h i s is exactly what h a s happened. Guaranteed l o a n s h a v e been among t h e fastest growing f i n a n c i a l activities of the federal government, with t h e total outstanding estimated to exceed $ 5 0 0 billion in FY881, an increase of a l m o s t $ 2 0 0 billion i n the course of four years. The increased use of g u a r a n t e e s i s especially significant because many proponents of balanced budgets w a n t to lessen the federal government's claim on t h e capital markets a s well a s the Federal Reserve Board's need to accommodate the money supply t o t h e government's borrowing plans. But in terms of t h e Zernand for c a p i t a l , i t doesn't make much difference whether the borrowing is generated by a budget deficit o r by loan guarantees. The placement of a budgetary restriction in the Constitution i s likely to stimulate attempts a t the creation of n e w off-budget devices. T h i s has occurred on a broad scale i n some State g o v e r n m e n t s with constitutional debt limitations. Many States h a v e estaalished numerous public corporations and quasi-governmental entities t h a t issue r e v e n u e -- "moral obligation" -- bonds outside the constitutional limit. One c a n n o t be certain of the methods which might be proposed to escape U.S. constitutional constraints, but a premium i s likely to be placed on irregular institutional f o r m s that enable the government to borrow (or spend) in excess o f t h e limits without technically violating the rules. T h e question of budgetary coverage c a n be definitively settled only by statute. No matter h o w detailed a constitutional limitation might b e , it could not possibly cover o r envision a l l of the circumstances and circumventions which might a r i s e i n the future. The meaning of a n y constitutional restriction will be the meaning given by law. Arguably, therefore, the whole issue o u g h t to b e l e f t for statutory determination, where it would be decided anyway. Whether a constitutional or statutory r o u t e were t a k e n , the i s s u e of which transactions a r e covered by budgetary restriction might have to be settled by t h e courts. The same consideration a p p l i e s to a n o t h e r enforcement question: what constitutes a n outlay? T h e i s s u e i s o f c r i t i c a l importance for all proposed spending l i m i t a t i o n s , but not a s pressing f o r the balanced budget proposals. At first glance, the definition of o u t l a y s seems to be straightforward and without complication: a n outlay occurs whenever the federal government makes a payment of funds. T h e i s s u e , however, i s not whether payments a r e o u t l a y s , but how outlays a r e computed for budgetary purposes. It is i n the counting of outlays that difficulties abound. CRS- 7 IB81056 UPDATE-01/14/83 basis. Direct One p r o b l e m a r i s e s b e c a u s e o u t l a y s a r e r e p o r t e d o n a n e t l o a n s (which a r e i n c l u d e d i n t h e b u d g e t ) a r e c o u n t e d on a n e t basis, t h a t i s , t o t a l new l o a n s i s s u e d m i n u s r e p a y m e n t s . T h i s method i s c o n s i s t e n t w i t h the d e f i n i t i o n of o u t l a y s i n t h e Congressional Budget Act a s "expenditures and n e t l e n d i n g of funds." The f i n a n c i a l a c t i v i t i e s o f p u b l i c enterprises such a s TVA a l s o a r e n e t t e d in the budget. These revolving funds conduct b u s i n e s s - t y p e o p e r a t i o n s f o r Which u s e r c h a r g e s a r e levied. The receipts, offset the however, a r e n o t computed i n t h e budget as f e d e r a l revenues, b u t gross expenditures of t h e public e n t e r p r i s e s . I n FY81, t h e o u t l a y s of the p u b l i c e n t e r p r i s e f u n d s w i l l t o t a l a b o u t $58 b i l l i o n , b u t w i t h $47 b i l l i o n i n I 2 a r e c e i p t s , t h e b u d g e t w i l l show o n l y a b o u t $ 1 1 b i l l i o n i n n e t o u t l a y s . 1977 r e p o r t , t h e C o m p t r o l l e r G e n e r a l recommended t h a t t h e s e f u n d s b e b u d g e t e d on a g r o s s r a t h e r t h a n a n e t b a s i s . He a r g u e d that changes i n accounting procedures and b u d g e t a r y d e f i n i t i o n can mask t h e t r u e magnitude o f federal expenditures and impair c o n t r o l of t h e purse. V a r i a n t s o f t h e n e t t i n g v e r s u s g r o s s i n g p r o b l e m o c c u r when receipts are c o u n t e d a s n e g a t i v e e x p e n d i t u r e s a n d e x p e n d i t u r e s a r e deemed t o be n e g a t i v e receipts. Thus, c e r t a i n t y p e s of revenue (such as b i l l i o n s of d o l l a r s from o f f s h o r e o i l a n d gas l e a s e s ) r e d u c e t h e t o t a l amount of o u t l a y s reported in the budget. T h e r e a p p e a r s t o b e no l e g a l u n d e r p i n n i n g f o r t h i s p r a c t i c e ; it i s d e f e n d e d on t h e a r g u m e n t t h a t t h e U n i t e d S t a t e s i s exchanging one asset for another. T h e s a l e o f l o a n a s s e t s -- d e b e n t u r e s h e l d b y t h e U n i t e d S t a t e s o r s p e c i a l i s s u e s known a s p a r t i c i p a t i o n certificates or certificates of b e n e f i c i a l o w n e r s h i p -- a r e a l s o t r e a t e d a s o f f s e t s t o e x p e n d i t u r e s . It is t h u s p o s s i b l e t o show l o w e r o u t l a y s m e r e l y b e s e l l i n g some " p a p e r " to the public. I f r e c e i p t s a r e sometimes counted as n e g a t i v e e x p e n d i t u r e s , the opposite also is true: e x p e n d i t u r e s a r e sometimes t r e a t e d as n e g a t i v e r e c e i p t s r a t h e r than a s t h e outlays of the United S t a t e s . S e v e r a l y e a r s a g o , t h e House a n d "earned income credits" Senate Sudget Committees wrangled o v e r whether -c a s h p a y m e n t s t o l o w - i n c o m e w o r k e r s -- s h o u l d b e reckoned as offsets t o For FY78, t h e committees decided to treat the r e c e i p t s o r as o u t l a y s . c r e d i t s as n e g a t i v e r e c e i p t s , b u t s i n c e t h e 1979 b u d g e t , t h e c o m m i t t e e s h a v e fast rules Counted them as o u t l a y s , t h u s d e m o n s t r a t i n g t h e l a c k o f h a r d a n d f o r these types of budgetary t r a n s a c t i o n s . The g r o s s i n g v e r s u s n e t t i n g a r g u m e n t a n d the e x i s t e n c e of offsetting r e c e i p t s and expenditure a r i s e o u t of the complexity and s p r a w l of the Federal budget. Even if no a t t e m p t w e r e made t o Circumvent budgetary c o n t r o l s , a g r e a t number of c o n t e n t i o u s a c c o u n t i n g i s s u e s would exist. C a r e f u l a n a l y s i s of t h e s e i s s u e s would be w a r r a n t e d i n t h e consideration of comtemplated c o n s t i t u t i o n a l r e s t r i c t i o n s . I n o r d e r t o be e n f o r c e a b l e , a b a l a n c e d budget requirement or a spending l i m i t a t i o n w o u l d h a v e t o b e a c c o m p a n i e d by statutory controls over annual outlays. The o u t l a y t o t a l s s e t i n t h e f i r s t a n d s e c o n d r e s o l u t i o n s on the b u d g e t d o n o t now h a v e t h i s e f f e c t . The r e s o l u t i o n s g u i d e C o n g r e s s i n its a c t i o n on a p p r o p r i a t i o n a n d o t h e r s p e n d i n g b i l l s , b u t have no legal force. The 1 9 7 3 J o i n t S t u d y C o m m i t t e e p r o p o s e d t h a t o u t l a y l i m i t s b e enacted for each appropriation bill, but t h i s i d e a was dropped during subsequent development of budget reform l e g i s l a t i o n as unworkable. is that The main p r o b l e m i n e s t a b l i s h i n g s t a t u t o r y C o n t r o l s on o u t l a y s o u t l a y s a r e s e n s i t i v e t o t h e p e r f o r m a n c e of t h e economy a n d e s t i m a t e s c h a n g e even i n t h e absence of c o n g r e s s i o n a l a c t i o n . The r i s e i n i n t e r e s t r a t e s , f o r CRS- 8 IB81056 UPDATE-01/14/83 example, added a b o u t $ 1 0 billion to the F Y 8 1 budget without any c o n g r e s s i o n a l action, LEGISLATION S.J.Res. 5 8 (Thurmond et al.)/H.J.Res. 350 (Jenkins et al.) Constitutional amendment. Prohibits the adoption of any budget in w h i c h outlays exceed total receipts, unless approved by a three-fifths vote of each House of Congress. P r ~ h i b i t sthe passage of any bill which would cause t h e total outlays f o r a n y year to exceed the total expenditures for such year. Prohibits the retention of receipts i n any year i n a n amount w h i c 3 e x c e e d s , as a proportion o f t h e national i n c o m e , the amount retained f o r t h e prior y e a r , unless a p p r o v e d by Congress. Provides for a waiver of such provisions with respect t o any year in which a declaration of war i s i n effect. S.J.Res. 5 8 amended o n Senate floor to strengthen enforcement provisions a n d to require a three-fifths vote on increasing the debt limit. S.J.Res. 58 introduced Mar. 2 7 , 1 9 8 1 ; referred to Committee o n the Judiciary. Hearings held by Subcommittee on the Constitution Apr. 9 ; reported to f u l l c o m m i t t e e May 7 ; approved by f u l l committee May 1 9 , 1 9 8 1 (S.Rept. 9 7 - 1 5 1 , July P O , 1989); passed S e n a t e amended Aug. 4 , 1982. H.J.Res. 350 introduced Oct. 29, 1981; referred to Committee on the Judiciary; hearings held by Subcommittee on Monopolies a n d Commercial Law May 5 and 1 9 , Aug. 3-5, 1982; discharge petition filed o n H.Res. 4 5 0 providing for its consideration July 1 2 , 1 9 8 2 ; petition achieved required signatures Sept. 2 9 , 1982. Considered under H - R e s . 6 0 4 Oct. 1 , 1 9 8 2 and not agreed to. HEARINGS U-S. Congress. House. Committee on the Judiciary. Subcommittee on Monopolies and Commercial Law. Proposed constitutional Hearings, 9 6 t h a m e n d m e n t s t o require a balanced budget. C o n g r e s s , 1 s t session. Mar. 2 7 , 2 8 , M a y . 1 7 , J u n e 1 2 , 1 3 , 3ct. 1 1 , 1 9 7 9 , a n d May 1 , 1980. Washington, U.S. Govt. Print. Off., 1980. 5 1 4 p. U.S. Congress. House. Committee on Rules. Task Force o n S p e n d i n g Limitations Proposals. Proposed limits on Federal spending. H e a r i n g s , 9 6 t h Congress, 1 s t session. Jan. 30; Feb. 6 , 1 3 , 20, 27, Mar. 5 , 1980. U.S. Congress. Senate. Committee on Budget. Balancing the budget. Hearings, 96th Congress, 1st session. Mar. 5 , 1979. W a s h i n g t o n , U.S. Govt. Print. Off., 1979. 1 1 4 p. U.S. Congress. Senate. Committee on the Judiciary. Subcommittee on the Constitution. Balanced budget -- tax limitation; constitutional amendment. Hearings, 9 7 t h C o n g r e s s , 1 s t session, on S. J. Res. 9 , 4 3 and 58. March 1 1 , April 9 , and May 20, 1981. Washington, U.S. Govt. Print. Off., 1981. 1 7 7 p. ----- Constitutional amendment to balance the Federal budget. Hearings, 96th Congress, 2d session, o n S.J.Res. 126. Jan. 14 and Feb. 2 2 , 1980. U.S. Congress. Senate. Committee o n the Judiciary. Subcommittee CRS- 9 IB81056 UPDATE-01/14/83 on the Constitution. Proposed constitutional amendments Hearings, 96th Congress, to require a balanced budget. 1 s t session. Mar. 1 2 , May 2 3 , Oct. 4 and 1 1 , and Nov. 1 , 1979. U.S. Congress. Senate. Committee o n the Judiciary. Subcommittee on Constitutional Amendments. Balancing the budget. Hearings, 94th Congress, 1 s t session. Sept. 2 3 , Oct. 7 , 1975. Washington, U.S. Govt. Print. Off., 1975, 2 2 2 p. REPORTS AND CONGRESSIONAL DOCUMENTS Consideration of House Resolution 2534. [ ~ e b a t eand Vote in the Senate] Congressional record [ d a i l y ed.] v. 1 2 5 , Mar. 2 7 , 1979: S3425-S3456. Consideration of House Concurrent Resolution 107. [ ~ e b a t ein the House] Congressional record [daily ed.] v. 1 2 5 , Apr. 3 0 , 1979: H2390-H2425. Consideration of Senate Concurrent Resolution 22. [ ~ e b a t ei n the Senate] Congressional record [ d a i l y ed.] v. 1 2 5 , Apr. 2 3 , 1979: S4414-S4420. U.S. Congress. House. Committee on the Budget. Report pursuant to P u b l i c Law 96-5 (Part 1). Washington, U.S. Govt. Print. Off., 1979. 106 p. (96th Congress, 1 s t Session. House. Report no. 96-96) ----- Report pursuant to Public Law 9 6 - 5 (Part 2). Washington, U.S. Govt. Print. Off., 1979. 77 p. (96th Congress, 1st session. House. Committee print 96-8) ----- Second concurrent resolution on the budget; report to accompany H.Con.Res. 186. Washington, U.S. Govt. Print. Off., 1979. (96th Congress, 1 s t session. House. Report no. 96-435) ----- Toward a balanced budget; r e p o r t , pursuant to P.L. 96-5. Washington, U.S. Govt. Print. Off., 1979. (96th Congress, 1st session. House. Report no. 96-96) U.S. Congress. Senate. Committee o n the Budget. First concurrent resolution on the budget; report to accompany S - C o n - R e s . 2 2 and S.Con.Res. 23. Washington, U.S. Govt. Print. Off., 1979. 393 p. (96th Congress, 1 s t session. Senate. Report no. 96-68) ----- Second concurrent resolution on the budget; report to accompany S.Con.Res. 36. Washington, U.S. Govt. Print. Off., 1979. (96th Congress, 1 s t session. Senate. Report no. 96-311) U.S. Congress. Committee o n the Judiciary. Balanced budget-tax limitation constitutional amendment; report to accompany S.J.Res. 58. Washington, U.S. Govt. Print. Off., 1981 (97th Congress, 1 s t session. Senate. Report no. 97-151.) U.S. Congress. Senate. Committee o n the Judiciary. Subcommittee on Constitutional Amendments. Report pursuant to S.Res. 7 2 , Section 5. Washington, U.S. Govt. Print. Off., 1 9 7 6 , p. 14-16. (94th Congress, 2d session. Senate. Report no. 94-1373) CHRONOLOGY OF EVENTS 10/01/82 -- 08/04/82 -- 07/10/81 -- 05/20/81 -- 05/19/81 -- The Senate Committee o n the Judiciary approved S.J.Res. 5 8 by a n 11-5 vote. 05/07/81 -- Senate Committee o n the Judiciary, Subccrnmittee on the Constitution, voted 3-0 to send to the full committee S.J.Res. 5 8 , a proposed constitutional amendment to require a balanced budget and tax limitations. 04/09/81 -- 03/18/81 -- 03/11/81 -- 03/18/80 -- Senate Committee on t h e Judiciary failed to a p p r o v e S.J.Res. 1 2 6 for reporting. 01/30/80 -- House Committee on R u l e s , Task F o r c e on Spending Limitations P r o p o s a l s , began hearings o n proposals advocating restricted growth of Federal spending. Hearings continued on Feb. 6 , 1 3 , 2 0 , 27, and Mar. 5 , 1980. H.J.Res. 350, identical to S.J.Res. 5 8 a s reported i n S e n a t e , failed to pass the House. S.J.Res. 5 8 passed Sy the Senate. S.J.Res. 5 8 reported by the Senate Committee on t h e Judiciary (S.Rept. 97-151) . Senate Committee on t h e Judiciary, Subcommittee on t h e Constitution, held hearings on S.J.Res. 5 8 , a proposed amendment to the Constitution sponsored by Senator Thurmond to require a balanced budget and impose t a x limitations. Senate Committee on the Judiciary, Subcommittee o n the Constitution, held hearings on S.J.Res. 5 8 , a proposed amendment sponsored by Senator Thurmond to balance t h e budget and impose a tax limitation. The House Committee on the Judiciary, Subcommittee o n Monopolies and Commercial L a w , held hearings on H.J.Res. 2 and related bills proposing a n a m e n d m e n t to the Constitution to require a balanced budget. The hearings continued on Mar. 19. Senate Committee on t h e Judiciary, Subcommittee on t h e Constitution held hearings on S.J.Res. 4 3 , a proposed amendment to balance t h e budget and impose a tax limitation. 01/14/80 -- S e n a t e Committee o n t h e Judiciary began hearings on S.J.Res. 1 2 6 , a proposed a m e n d m e n t to balance t h e F e d e r a l budget. Hearings continued o n Feb. 2 2 , 1980. 12/19/79 -- S e n a t e Committee o n the J u d i c i a r y , Subcommittee on t h e Constitution, reported to the committee a s a w h o l e , by a 5-2 v o t e , S.J.Res. 1 2 6 , a proposed balanced budget constitutional amendment. 09/19/79 -- 04/13/79 -- P r e s i d e n t Carter signed H.R. 04/12/79 -- By a vote of 209-165, House concurred with S e n a t e a m e n d m e n t s to H.R. 2534. 03/27/79 -- --- S e n a t e passed S.Con.Res. 3 6 , the second c o n c u r r e n t resolution on t h e budget f o r F Y 8 0 , by a vote of 62-36. T h e measure s e t t a r g e t s for a balanced budget i n FY81. 2 5 3 4 into law (P.L. 96-5). Hoyfe Committee on the J u d i c i a r y , Subcommittee o n Monopolies and Commercial Law began hearings o n reSOlUtiOnS proposing C O n ~ t i t u t i O n a la m e n d m e n t t o r e q u i r e a balanced budget. Hearings c o n t i n u e d o n Mar. 2 8 , May 7 , J u n e 1 2 a n d 1 3 , Oct. 1 1 , 1 9 7 9 , and May 1 , 1980. S e n a t e passed H.R. 2534 by a 61-33 vote. S e n a t e amended H.R. 2534. By 57-42 v o t e , a m e n d m e n t of Senator Long calling for the S e n a t e B u d g e t Committee to report a balanced budget for FY81. By 93-2 v o t e , amendment of Senator P a c k w o o d requiring t h e P r e s i d e n t , if he submits t o Congress a b u d g e t w h i c h , i f a d o p t e d , would result i n a d e f i c i t , to submit an a l t e r n a t i v e budget which i s in balance. 03/15/79 -- 03/12/79 -- S e n a t e Committee o n t h e J u d i c i a r y , S u b c o m m i t t e e on t h e Constitution held hearings o n proposed c o n s t i t u t i o n a l a m e n d m e n t s to r e q u i r e a balanced budget. T h e hearings continued on May 2 3 , Oct. 4 , 1 1 , Nov. 1 , 1 9 7 9 , and Feb. 2 2 , 1980. 03/05/79 -- S e n a t e Committee o n the Budget held hearings o n balancing the budget. 03/01/79 -- R e p r e s e n t a t i v e Ullman introduced H.R. 2 5 3 4 , a bill t o provide for temporary i n c r e a s e in t h e public d e b t l i m i t , and f o r other purposes. Committee of referral: House C o m m i t t e e on Ways and Means. 10/11/78 -- P r e s i d e n t Carter signed H.R. 09/28/78 -- 09/25/78 -- H o u s e passed H.R. 2 5 3 4 by 212-195 vote. 9 2 1 4 into l a w (P.L. 95-435). H o u s e agreed to conference report on H.R. a 238-138 vote. S e n a t e agreed to c o n f e r e n c e r e p o r t on H.R. 9 2 1 4 by 9214. 07/31/78 -- Senate passed H.R. 9 2 1 4 , a s amended, to mandate a balanced U.S. budget by FY81. 02/23/78 -- House passed H.R. 09/20/77 -- Representative Neal introduced H.R. 9 2 1 4 , a bill t o amend the Breton Woods A g r e e m e n t Act to a u t h o r i z e the United S t a t e s to participate in Witteveen Supplementary Financing F a c i l i t y to International Monetary Fund. 9214. ADDITIONAL REFERENCE SOURCES American Enterprise Institute for P u b l i c Policy Research. Proposals for a constitutional c o n v e n t i o n t o r e q u i r e a balanced budget. Washington, American E n t e r p r i s e I n s t i t u t e , 3 8 p. 1979. ** Anderson, John W., Cairie J o h n s o n , a n d J a m e s Clayton. The budget and the Constitution. Washington post, Feb. 1 2 , 1979: A19; Feb. 14: A23; Feb. 16: A15. Bork, Robert H. Would a balanced budget a m e n d m e n t work? Street journal, Apr. 4 , 1979: D20. Trying t o kick t h e spending habit. Cohen, Richard E. journal, Apr. 21, 1979: 632-636. Wall National Conte, Christopher R. Balanced budget: political scramble. Congressional quarterly weekly r e p o r t s , v. 3 7 , Feb. 17. 1973: 267-270. Ellwood, John. Making a n d enforcing F e d e r a l spending limitations: issues and options. Public budgeting and f i n a n c e , S p r i n g 1981: 28-42. T h e a m e n d m e n t i s not a f a k e . Lugar, Senator Richard G. Washington post, Mar. 2 6 , 1981: A27. Schick, Allen. Congressional c o n t r o l o f expenditures. Prepared for the House Budget Committee, U.S. House of Representatives. W a s h i n g t o n , 1977. 1 2 6 p. U.S. ----- Library of Congress. C o n g r e s s i o n a l Research Service. Constitutional convention applications: a d d r e s s i n g the controversy o f c o u n t i n g s t a t e a p p l i c a t i o n s r e l a t i n g to a deficit spending a m e n d m e n t [ b y ] David C. Huckabee. Feb. 2 8 , 1979. 3p. Appears in the Congressional r e c o r d [ d a i l y ed.] v. 1 2 5 , Mar. 6 , 1979: E904-E906. Constitutional limitations on t h e budget [ b y ] Allen Schick. Feb. 2 1 , 1979. 7 p. Appears i n the Congressional r e c o r d [ d a i l y ed.] v. 1 2 5 , Mar. 8 , 1979: S2445-S2451. ----- --------- F e d e r a l expenditure limitation proposals: some probable e c o n o m i c and budgetary implications [ b y ] G r e g g A. Esenwein 18 p. a n d P h i l i p Winters. [ W a s h i n g t o n ] Apr. 3 0 , 1980. Legislation to limit Federal expenditures: p a s t and [ W a s h i n g t o n ] 1979. 23 p. present [ b y ] J o h n D. Fisk. C R S Report 79-l9E T h e balanced budget proposal: s o m e macroeconomic i m p l i c a t i o n s [ b y ] John B. Henderson. [ W a s h i n g t o n ] 1979. 4 p. I s s u e Brief 7 9 2 2 9 W i l d a v s k y , Aaron. H o w to limit G o v e r n m e n t spending. University of California P r e s s , 1980. Berkeley, A p p e n d i x t o IS 51056 Text of the Amendment ARTICLE - Resolved by the Senate and House of Representatives of the United States of America in Congress assembled (two thirds of each House concurring therein), That the following article is proposed as an amendment to the Constitution of the United States, which shail be valid to all intents and purposes as part of the Constitution if ratified by the legislatures of threefourths of the several states within seven years after its submission to the states for ratification: SECTION 1. Prior to each fiscal year, the Congress shall adopt a statement of receipts and outlays for that year in which total outlays are no greater than total receipts. The Congress may amend such statement provided revised outlays are no greater than revised receipts. Whenever threefrtths of the whole number of both Houses shall deem it necessary, Congress in such statement may provide for a specific excess of outlays over receipts by a vote directed solely to that subject. The Congress and the President shalI, pursuant to legislation or through the exercise of their powers under the first and second articles, ensure that actual outlays do not exceed the outlays set forth in such statement. SECTION 2. Total receipts for any fiscal year set forth in the statement adopted pursuant to this article shall not increase by a rate greater than the rate of increase in national income in the year or years ending not less than six months nor more than twelve months before such fiscal year, unless a majority of the whole number of both Houses of Congress shall have passed a bill directed solely to approving specific additional receipts and such bill has become law. SECTION 3. The Congress may waive the provisions of this article for any fiscal year in which a declaration of war is in effect. SECTION 4. Total receipts shall include all receipts of the United States except those derived from borrowing and total outlays shail include all outlays of the United States except those for repayment of debt principal. SECTION 5. The Congress s h d enforce and implement this article by appropriate legislation. SECTION 6. On and after the date this article takes effect, the amount of federal public limit as of such date shall become permanent and there shall be no increase in such amount unless three-fifths of the whole number of both Houses of Congress shall have passed a bill approving such increase and such bill has become law. SECTION 7. This article shall take effect for the second fiscal year beginning after its ratification.