▶ 0:23:38The subcommittee will come to order. Without objection, the chair is authorized to declare a recess at any time. We welcome everyone to today's hearing on balancing the federal budget. I will now recognize myself for an opening statement. Today, our national debt is at $ 38 trillion and counting. In the time it took me to read that first sentence, the debt increased by over $200,000. By this time tomorrow, we'll add $6 billion more.
▶ 0:24:06By any calculation, our nation's debt is staggering. For generations, politicians here in Washington have shunned hard conversations about spending, choosing to max out our national credit card and leaving the next generation to foot the bill. Families across our nation have to balance their budgets, and there's no reason their elected leaders shouldn't. as well. Americans know that debt comes with strings attached. It's no different for government. Every dollar we spend beyond our means today is a dollar and change we must repay tomorrow.
▶ 0:24:35The more America borrows, the more expensive every next borrowed dollar becomes. Indeed, annual federal spending on interest, the price we pay for the last generation's fiscal indiscretion, is now one of the largest line items we have in the budget. We spend more on interest than we do on national defense. We spend more on interest than we do on Medicare. Republicans and Democrats will have different policy ideas and priorities, but surely we can agree that a budget hamstrung by huge interest payments benefits nobody.
▶ 0:25:05Our fiscal trajectory is alarming and unsustainable. Make no mistake, a reckoning will come. Indeed, America's already long down the road to a debt crisis. Financial markets have already grown great has shown grave concerns about America's long-term debt load. Higher thanex expected interest rates or other challenges could trigger a debt spiral. It's happened to other countries throughout history. It could happen to us and without changes, it will happen to us. When that day of reckoning comes, it will be ugly.
▶ 0:25:33Spending cuts will be drastic and immediate instead of targeted and phased in over a longer period. Massive tax hikes will take money out of your pocket, not to fund new services, but to pay for services already rendered. It is a matter of when, not if, unless we make changes now while we still can. That's why we're having a hearing today on a balanced budget amendment. A balanced budget amendment would be a possible tool to beat back a future fiscal crisis.
▶ 0:26:01It could reduce the cost of living here and now. The enormous federal debt load is already driving up borrowing costs for all Americans. Your mortgage, your car payment, and your student loans. And we saw the dis disastrous effects of budget busting deficit spending during the catastrophic four years of the previous administration. With the eager support of my Democratic colleagues in Congress, the Biden Harris administration approved $4.7 trillion in new deficit spending, racking up $8.5 trillion in new debt.
▶ 0:26:31And now we've got we had the worst inflation in 40 years. When Biden and Harris took office in January 2021, inflation was at just 1.4%. And by the middle of their term, it was over 9%. Inflation is a tax on everyone, but we all know who it hurts the most.
▶ 0:26:46The poor, the working class, seniors on fixed incomes, and American families who saw their expensive expenses explode, but no similar increase in their A balanced budget amendment is a long debated tool that if properly structured could limit Washington's inflationary overspending and ensure that future federal outlays are funded with actual revenue, not debt and money printing. Indeed, the a balanced budget amendment could build on the work we started with the one big beautiful bill.
▶ 0:27:16We fought hard to ensure that we kept our promises of fiscal discipline. A balanced budget amendment could force Congress to kick the habit of spending money we don't have once and for all. I hope my colleagues on the other side of the aisle will join us in calling for a full debate and a full consideration of a balanced budget amendment to get our fiscal house in order. Believe it or not, there's a long history of Democrats supporting balanced budget amendments, including former California Governor Jerry Brown. I hope that's still the case today.
▶ 0:27:47Let's have a good and honest debate on various proposals. Some proposals allow Congress to approve deficit spending only by a supermajority vote, and some delay the amendment's effective date to allow for a softer landing. I hope that we'll explore these finer points today with our expert The concept of a balanced budget amendment is simple and powerful. It's important that we get the details right. Many states have requirements that they must balance their budgets. The federal government should be similarly situated.
▶ 0:28:17But I will note, and I know some of my colleagues on both sides of the aisle will raise appropriately the questions that if you have a balanced budget amendment with exceptions, will Congress not drive a truck through those exceptions just as they currently do every time we vote on a debt sealing increase? I say that to say that I'm not here to say that a balanced budget amendment is a panacea for irresponsible members of Congress on both sides of the aisle that continue to blow our budget to smitherines.
▶ 0:28:48We have to have responsibility in Congress and a balanced budget amendment will not make up for irrespons irresponsible members of Congress who will exploit any loophole to spend money that we don't have and mortgage our children's future. The reason we're here to talk about a balanced budget amendment is because something has to change. If we're going to do something, structure it properly. If we're going to do something, do something to actually put brakes on what Congress does.
▶ 0:29:17That's what I hope we will debate today and have a full conversation about because we've been talking about a balanced budget amendment for years. But every year or every other year or every few years, we literally disregard the current limit on our spending when we lift the debt ceiling. And we do it with regularity and with impunity. So whatever we do today, whatever discussion we have today, whatever debate we have on a balanced budget amendment, let's recognize that we're $ 38 trillion in the whole with no end in sight.
▶ 0:29:47I think that we should have a full third of debate on this and look forward to having a discussion about a balanced budget amendment. And with that, I will yield to the ranking member for her opening statement.
▶ 0:29:57Thank you, Mr. Chair, and thank you to our witnesses for testifying today. It's an interesting topic and one that has certainly at least superficial appeal, but the devil as always is in the details. The decisions that Congress makes about the economy, about taxes, spending, and budgets are or should be decisions about our values, who we're fighting for, what kind of country we are or want to be, and the future we're trying to create for our children.
▶ 0:30:25Which brings us to the topic of today's hearing, a balanced budget constitutional amendment, which at least in the proposals we've seen so far, seems to be a misguided proposal about how to address the often competing values and interests that have to be taken into account when crafting our national budget. We all share the goal of developing smart, efficient fiscal policies and budgets.
▶ 0:30:49But for decades, Republican presidents and members of Congress have talked a big game about fiscal responsibility while enacting policies that have exploded the federal deficit and the national debt.
▶ 0:31:02It wasn't that long ago, not generations as the chair suggested, but only about 25 years when under the Clinton administration, the US had a balanced budget for multiple years, fueled in part by a combination of tax increases, spending cuts, and reduced military spending.
▶ 0:31:21But since then, in the early 2000s, and again during the first Trump administration, Republicans have handed the ultra-wealthy huge tax breaks, eroding the federal government's revenue base and threatening our ability to fund essential programs that Americans rely upon. Time and again, these policies have failed to produce the broader benefits for all Americans that the advocates of trickle down economics have promised.
▶ 0:31:47And instead, these Republican policies have exploded the deficit, adding 10 trillion to the national debt. Despite this, this summer, Republicans once again doubled down, permanently extending the Trump tax giveaways from his first administration, extending those giveaways to the wealthy in their one big ugly bill, further expanding the deficit, and ballooning the national debt, as was just noted. Now, after voting for that policy, our Republican colleagues are making a show of caring about fiscal responsibility.
▶ 0:32:17But don't be fooled. Today's hearing is part of a decadesl long orchestrated political effort to help corporations and the wealthiest people avoid paying their fair share. It's based on a theory that tries to convince people that reckless tax giveaways to the ultra wealthy somehow stimulate investment and economic growth for everyone for the greater good.
▶ 0:32:38But that's a lie that's been debunked again and again and again for more than 50 years now and one that's led to skyigh income inequality and the enshrinement of a corporate oligarchy in our society. These tax policies, these giveaways have fueled the greatest re rise in income inequality that our country has known at least since uh the robber baron days, resulting in a continuing transfer of wealth from working and middle class Americans to the wealthiest
▶ 0:33:09among us. And we need look no further than the fact that the top 1% in our country pay a lower tax rate than all other Americans. This pathological dedication to trickle down economics is outrageous. It betrays the values this country should stand for and which our budget should reflect.
▶ 0:33:27If we want to shrink the deficit and lower the nation's debt, we should be talking about a tax policy that gives relief to working families and makes the rich and corporations pay their fair share rather than allowing them to reap even more profits by imposing the costs of their business on the American people.
▶ 0:33:45Whether [snorts] by paying substandard wages that force workers to rely on food stamps or subsidized health care to survive or that force Americans to pick up the costs of industrial waste, dangerous products, or unsafe working conditions. A tax policy that makes sure that everyone pays their fair share isn't a radical idea and should be the starting point of any serious discussion about bringing the two sides of the budget equation.
▶ 0:34:12taxes and revenue on the one hand, spending, including military spending, on the other, but it takes a different kind of politics than what we're hearing today. One that believes that the purpose of government is to serve all Americans, not just the wealthy and well-connected. And the programs that our Republican colleagues have been only too ready to slash in their big ugly bill and with the political scam of a balanced budget amendment they're that they're pushing here. the these programs are critical to the health and well-being of the American people.
▶ 0:34:42The majority of our yearly spending is mandatory. That is funds not subject to congressional appropriation and which must be paid, including Medicare, Medicaid, Social Security, veterans benefits, retirement programs for military service members and uh retired federal employees. These are vital programs that help our government keep its promises to the American people.
▶ 0:35:06Less than half our budget goes to discretionary spending, which is spending that Congress appropriates every year, and half of that money goes to defense spending. We can make sure our national debts on a sustainable path by investing wisely in the American people and taxing fairly. We can work to build an economy that grows from the middle out, not the top down. We can provide affordable healthcare and child care, affordable housing, and make sure that every child gets a world-class public education. But that's not the focus of today's hearing.
▶ 0:35:36Instead, the solution to the deficit problem they helped create is to propose constitutional amendments that force Congress to balance the budget on the backs of working and middle class families, forcing cuts to essential benefits like Medicare and Social Security. House Republicans have introduced at least six different proposed balance budget amendments. Though they don't all share the same features, they have the same common goal.
▶ 0:36:00To continue to put their thumb on the scale to favor big business and billionaires over working and middle class people, seniors, and our most vulnerable Americans. A balanced budget amendment would shackle Congress and limit our flexibility to respond to changing economic conditions or crises with appropriate fiscal and budgetary policies. As the chair mentioned, many of these proposals would require a supermajority in Congress to raise revenue or raise the debt limit, but not to cut spending.
▶ 0:36:31The framers of our Constitution rejected the principle of requiring a supermajority for basic government functions because they believed it would shift power away from the American people's popular will to a determined minority. balanced budget proposals requiring a supermajority would allow an extremist minority to hold our nation's economy and financial stability hostage. And you only need to look at the chaos of the current Republican majority in the House to see what might be in store under such a proposed amendment.
▶ 0:37:01We've seen political brinksmanship over the debt ceiling and government funding. We've seen speakers dethroned and federal budgets that slash health care and food assistance for Americans while giving more handouts to billionaires and big business. A balanced budget amendment would only make things worse and this dysfunction would then be baked into our constitution and democracy. I don't think that's what the American people want or need. The bottom line is we don't need to amend the constitution to balance the f federal budget.
▶ 0:37:32Our colleagues need to get their heads out of the sand and be willing to look at the revenue side of the equation. During the 90s, under a Democratic president, and a Republican controlled Congress, the federal government ran budget surpluses without a balanced budget amendment. Our Republican colleagues control the House, the Senate, and the White House. If they wanted to do this, they could. But instead, they've chosen to make their number one legislative priority this year a trillion dollar handout to their billionaire buddies.
▶ 0:38:01Our budget is not just numbers on a spreadsheet. It's the choices we make to invest in our neighbors, our communities, to provide opportunities for young people, to take care of the elderly and the most vulnerable, and to invest in American prosperity. If we really want a prosperous economy where everyone can get ahead, we need to abandon the misguided orthodoxy of trickle down economics.
▶ 0:38:25Instead, we need to focus on policies that support children, family, communities, and our wider economy. We don't need a balanced budget. We just need Congress to do the job the American people sent us to do. Thank you, Mr. Chairman, and I yield
▶ 0:38:41I thank the ranking member, and I would now recognize the chairman of the full committee, Mr. Jordan, for his opening
▶ 0:38:46Uh, thank you, Mr. Chairman. I'll be brief. Uh, the the ranking member just said, and I quote, "A balanced budget amendment would shackle Congress." I think there are 30ome trillion reasons why that might not be a bad idea, frankly. And that's what this is about. She also said that the answer is to increase revenue, better known as raise taxes. That seems crazy to me as well. So, I look forward to hearing from our witnesses. I appreciate the chairman for having this hearing and I yield back.
▶ 0:39:16I thank Chairman Jordan. I would now recognize the ranking member of the full committee, Mr. Rasin, for his opening statement. And thank you, Chairman Roy, and thanks to our witnesses for joining us today. Uh, our Republican colleagues have convened this hearing to discuss a constitutional change to solve a problem that they have created legislatively, which is gigantic, runaway federal budget deficits. We don't need a constitutional amendment to legislatively balance the budget.
▶ 0:39:46We just need some old-fashioned fiscal discipline. In the 1990s, President Clinton worked with a Republican controlled Congress to eliminate the deficit. And they ran huge surpluses without the aid of a contrived balanced budget constitutional amendment or even rhetoric about a balance budget uh amendment. They just did it.
▶ 0:40:09Why can't Republicans who control the House of Representatives, the US Senate, and the White House do the exact same thing today with control of every part of the government? If they want to balance the budget, just do it. They could just take action on their own to make the hard decisions.
▶ 0:40:27But instead they say, "No, the real problem is we need to go out and get twothirds of the House and twothirds of the Senate and 3/4 of the states to do it instead of just passing it by a majority in the House, in the Senate, in the White House.
▶ 0:40:43Obviously, they lack the political will or the fiscal discipline to do it." Um, and they think that maybe they can distract everybody now with this extremely stale and tired rhetoric about passing a constitutional amendment. We can't even get reporters to come and cover uh this charade anymore.
▶ 0:41:03They're practicing spectacular fiscal irresponsibility and budget recklessness and then try to cover it up with uh the pathetic paperiermâché of a balanced budget amendment. The problem of ballooning deficits returns whenever Republicans enjoy complete control of the political branches. This is one of the great ironies of our political rhetoric. When they are in control, the budget deficits sore.
▶ 0:41:30And it's the Democrats who always bring the deficits down. But they pass giant giveaways for wealthy corporations and billionaires. It was the policies of President George W. Bush and a GOP Congress that squandered the record budget surpluses of the Clinton years in the 1990s on tax cuts for the wealthy even as the country was waging the staggeringly uh expensive uh no-end wars in
▶ 0:42:01Iraq and Afghanistan. In 2017, President Trump and a Republican Congress passed his so-called Tax Cuts and Jobs Act, a law that increased the federal deficit by $1.9 This year, they passed uh the uh obscenely ugly proflegate law, which will add a jaw-dropping $4 trillion to the national debt because of its giveaways for corporations with political
▶ 0:42:31insider influence. and billionaires at the same time that they're stripping health insurance and food assistance uh from tens of millions of Americans to offset just a small part of the enormous cost of the tax breaks that they cut for wealthy elites. So, we don't need to start fingerpainting on the Constitution to accomplish what our colleagues in the majority simply don't have the political discipline and will to do.
▶ 0:42:59If you want a a balanced budget, present a balanced budget and pass it. And after voting for the most uh reckless recent increase um in federal spending, it's just uh to me way too little, way too late to have one more hearing on uh the idea of a balanced budget constitutional amendment.
▶ 0:43:21something by the way which uh I think no other country in the world or maybe it's a handful but the vast majority of the countries in the world don't need this uh in order to uh run uh their their fiscal systems. I yield back to you, Mr.
▶ 0:43:40I thank uh Ranking Member Rascin. Without objection, all of their opening statements will be included in the record. We [clears throat] will now introduce today's witnesses. The Honorable David M. Walker. Mr. Walker is the chair of the Federal Fiscal Sustainability Foundation, a nonprofit organization that supports statutory and constitutional approaches to fiscal responsibility. He previously served as the comproller general of the United States, a public trustee for social security and Medicare, and as the chairman of the independent audit advisory committee for the United Nations. Mr. Kurt Couchman.
▶ 0:44:11Mr. Couchman is a senior fellow in fiscal policy at Americans for Prosperity, a nonprofit organization that advocates for economic opportunity, fiscal responsibility, and limited government. His work focuses on solutions to federal and state budget and government challenges. He previously worked for the Committee for Responsible Federal Budget as well as several other nonprofits and is a House staffer. Miss Brittany Madden.
▶ 0:44:35Miss Madden is the executive vice president of the Economic Policy Innovation Center, a nonprofit organization that advocates for policies that promote freedom and prosperity. Prior to joining EPIC, she served in a variety of roles with members of the House and with the House Budget Committee. Mr. Brendan Duke. Mr. Duke is the senior director for federal fiscal policy at the Center on Budget and Policy Priorities, a nonprofit organization that advocates for policies that expand economic opportunity and health security.
▶ 0:45:02He previously served as a senior policy adviser on the National Economic Council and the Biden Harris administration. We thank our witnesses for appearing today and we'll begin by swearing you in. Would you please rise and raise your right hand? Do you swear or affirm under penalty of perjury that the testimony you are about to give is true and correct to the best of your knowledge, information, and belief so help you God? Let the record reflect that the witnesses have answered in the affirmative. Thank you. And you're already seated.
▶ 0:45:34Please know that your written testimony will be entered into the record in its entirety. Accordingly, we ask that you summarize your testimony in 5 minutes. Reminder to have your microphones on before you begin. And uh with that, Mr. Walker, you may begin.
▶ 0:45:49Chairman Roy, uh Ranking Member Scandlin, members of the Constitution Subcommittee, thank you for the opportunity to testify on this important issue today. Let me start at the outset. The federal government's financial condition is much worse than advertised. Many people focus on the level of federal debt, which now exceeds $ 38 trillion. However, the debt is just the tip of our financial iceberg.
▶ 0:46:13Total federal liabilities and unfunded obligations exceed $125 trillion and are growing faster than the economy. Our current level of debt to GDP is 123%. Which is greater than the end of World War II. But the difference is is at the end of World War II it was coming down. Now it's going up. Today over 75% of the annual budget is on autopilot mandatory spending.
▶ 0:46:42We've written a blank check. In addition, net interest is now the second largest and fastest growing expense in the federal budget for which we get nothing. In my view, we must adopt a fiscal responsibility constitutional amendment if we want to restore and sustain fiscal sanity over time.
▶ 0:47:06A constitutional amendment is the only way to force Congress and the president to make the tough choices needed on both sides of the ledger uh in order to reduce overall debt burdens to a reasonable lower level of debt to GDP over the next 10 to 15 years and have mechanisms in place to make sure that we do not spin out of control again. There are several approaches to taking uh to deal with that constitutional need.
▶ 0:47:36Some advocate for a traditional balance budget approach by the ones like the ones employed by the states. Others advocate for a principlesbased balanced budget approach designed to achieve balance over a stated period of time. I and others prefer a debt to GDPbased approach which is progrowth and does not dictate to the Congress how to solve the numerator challenge but it says you got to solve it. The latter two approaches have been used successfully by other countries.
▶ 0:48:06Importantly irrespective of the approach that is employed it must contain very limited exceptions and effective enforcement mechanisms. As you know, there are two ways to achieve a constitutional amendment under article five of the constitution. Twothirds of the house and senate can can um pass an identical proposed approach and threequarters of the states must ratify it.
▶ 0:48:29Alternatively, twothirds of the states can file an application for a convention of states to propose one or more amendments to the constitution and article 5 says the congress shall call the convention. It is non-discretionary ministerial duty. uh and then if the states can come up with an amendment then threearters of the states have to rat ratify it.
▶ 0:48:51The federal fiscal sustainability foundation which I chair discovered over three years ago that enough states had filed applications for a convention dedicated solely to proposing a fiscal responsibility amendment as far back as 1979. enough applications existed for 25 years and most recently in 2016 and 2017 and yet Congress failed to call the convention.
▶ 0:49:18Shockingly, the Congress never assigned responsibility to any party to receive, store, and count the applications until January of 2015 when it was assigned to this committee. To this committee's credit, began steps to update its records earlier this year. The National Federalism Commission, which is an official interstate governmental body, worked with the committee to bring its records up to date.
▶ 0:49:40They issued a report on Constitution Day of this year, which confirms what our uh foundation found that there are enough applications existed. Congress should have called the convention many, many years ago. uh that was attended by chairman Jody Arrington, budget committee chair, uh the honorable Bruce Lee, who is with us here today, who's head of the National Federalism Commission. Uh and I spoke at that press briefing. Mr.
▶ 0:50:05Chairman, with your permission, I would like to enter into the record of the National Federalism Commission's report and an illustrative call u uh resolution.
▶ 0:50:14Without objection.
▶ 0:50:15Thank you. HCR15, which is sponsored by House Budget Committee Chairman Jody Arrington, is designed to write this wrong and to call the related limited convention. I expect the states will sue if the Congress fails to act within a reasonable period of time. This issue would then have to be addressed by the Supreme Court. If that happens, it would be the biggest federalism case in the history of this great nation. In closing, let me be clear.
▶ 0:50:41In my view, we must adopt a constitutional amendment if we want to restore and sustain fiscal sanity at the federal level. If the Congress can achieve the necessary support to pass a credible proposed amendment, then it should do so in a timely manner. If not, Congress needs to call a limited convention to propose a fiscal responsibility amendment and allow the states to exercise their constitutional right under article 5. Doing nothing is not an option. Thank you, Mr. Chairman.
▶ 0:51:11Thank you, Mr. Walker, for your testimony. Mr. Couchman, you may begin.
▶ 0:51:16Chairman Roy, ranking member Scanland, members of the committee. Thank you for inviting me to discuss uh balanced budget amendments to the constitution and related statutory upgrades. I am senior fellow in fiscal policy at Americans for Prosperity. We are the premier grassroots adv advocacy organization transforming policy around the country to empower every American to pursue their version of the American Congress should be the federal government's premier policymaking body.
▶ 0:51:45The best practices I'll discuss, including a BBA, are neutral, practical tools to help Congress improve budgeting, governance, and the exercise of legislative powers generally. Weak federal budgeting hurts us. Higher inflation and interest rates, lower worker pay, polarized politics, and the risks of debt crisis and default. The budget process is usually just something to survive, not a robust and inclusive framework for considering trade-offs.
▶ 0:52:13Many countries and US states have gotten into debt trouble and got back out with policies to reduce borrowing and with better governance, including debt constraints. Nearly all US states and prosperous countries now have balanced budget rules. I'll discuss BBA design, statutory compliments, and how the House passed a BBA in 1995. Most constitutional provisions are broad principles. Congress applies those principles to modern modern circumstances through normal legislation.
▶ 0:52:42Any new provision should apply indefinitely as well. Annual balance is the original sin of most BBA proposals. Revenue varies a lot from year to year. So locking spending, especially outlays, to revenue would mean major uncertainty or more likely push Congress to wave the rules a lot. Many BBAs try to compensate for annual balance but create other problems.
▶ 0:53:07A simpler BBA, such as the principles-based BBA from Representative Moran and Senator Houston, may attract the most consensus. It would first require balance, quote, which may occur over more than one year. Second, let twothirds of Congress approve emergency spending. And third, allow 10 years to reach full or primary balance after Primary balance requires about half as much deficit reduction as full balance.
▶ 0:53:35Implementing legislation for a principles-based BBA could start with Representative Emmer and then Senator Brun's responsible budget targets act to support stable, predictable, neutral, and flexible policym. It would set up annual revenue-l spending targets for structural primary balance, balancing the budget except interest over the medium-term. Emergency spending would usually be offset over the following six years. The spending caps uh would adjust for automatic stabilizers, revenue changes, and more.
▶ 0:54:06Automatic enforcement would help Congress stay the course. Instead of the ineffective sequester model, however, a more sophisticated incremental approach would be more reasonable, politically sustainable, and A real budget that includes all committees and empowers all members would help Congress meet targets and do so much more.
▶ 0:54:25In addition to appropriators diligently stewarding their 26% of spending, 16 committees responsible for direct spending and revenue, including this one, could manage their portfolios as well. Representative Blake Moore's comprehensive congressional budget act is a roadmap to effective annual budgeting. Finally, Representative Arrington and Petta's Prevent Government Shutdowns Act would support a more bottom-up Congress that can more easily trim the fat.
▶ 0:54:53In 1995, the House of Representatives passed and the Senate nearly passed an annual balance BBA. The special rule for the House floor set up a Queen of the Hill competition. The most popular BBA would be the text for final passage. Substitute amendments began with more ideological versions and finished with the consensus BBA that passed 300 to 132. Despite flaws, it failed by just one vote in the Senate.
▶ 0:55:22Better BBAs exist now, and reviving BBA competition on the House floor can show the way A well-crafted BBA would encourage sound budgeting and would help Congress take up the additional tools to strengthen fiscal democracy. Thank you for the opportunity to share these thoughts and I look forward to the discussion.
▶ 0:55:43Thank you for your testimony, Mr. Couchman. Miss Madden, you may begin. Chairman Roy, Ranking Member Scanland, and members of the subcommittee, thank you for inviting me to testify today. It is a particular honor to be before this subcommittee given the critical moment in our nation's conscience when we are called upon to address a growing fiscal crisis that threatens our constitutional prerogatives. We are $ 38.4 4 trillion in debt.
▶ 0:56:07To put this into context, our debt translates to approximately per household across America. More than 60% of this total occurred over the past 18 years. We have added more debt during and since the Obama administration than over the prior two and a half centuries, including the Revolutionary War, the Civil War, and two world wars. This is wildly unsustainable. our founding fathers would be a gasast.
▶ 0:56:37They just fought a war because the Kingdom of Great Britain didn't know how to balance its books and Mad King George wrongly thought that the solution would be to raise taxes on the colonies. I'll spoil the story for you. It didn't end well for the British or the tea What the founding fathers learned in a tangible way is that debt is dangerous. It is dangerous because it removes the ability of the government to adjust in times of need or respond to an existential threat.
▶ 0:57:06It leads to squeezing the pocketbooks of the people beyond reason. It is inflationary. It is dangerous, perhaps most interestingly to the subcommittee because it implies that government has gotten so large, so unwieldy, so involved in people's daily lives that the only way to sustain it is to bankrupt future generations. not only through excessive taxation but through excessive intervention and personal lives.
▶ 0:57:31I want to tie the com the committee's constitutional jurisdiction to its limited government jurisdiction by encouraging members to think holistically about a balanced budget amendment not just as a means of balancing the budget on paper or staving off the debt crisis my colleague Dr. Paul Winfrey warns us is coming but most importantly of making government spending match the people's priorities. This is inherently American and it's inherently tied to the principles of limited government and individual liberty.
▶ 0:58:00We all know the federal budget is bloated. It's rife with waste, fraud, and abuse. For example, GAO recently reported that the federal government has made nearly $3 trillion in improper payments since 2003. Over just the past decade, we estimate that Medicaid alone issued more than $1 trillion in improper payments. Not all government waste or spending is blatantly corrupt or wasteful or fraudulent, though. Much of it is just not necessary. Which means it's not necessary for Congress to take money from the American workers to fund.
▶ 0:58:30Is every dollar the federal government spends improving individual liberty within the bounds of limited government? This is the foundational budget question Madison reminds us to consider in Federalist 41. According to the Federal Register, there are 444 federal agencies right now, all funded by the taxpayer. Not only does all of that spending come out of Americ's paychecks, it often works against them with regulations and distortionary government subsidies.
▶ 0:58:58Given the purpose of our mission, balance must be designed for the sake of the people, not simply as an accounting mechanism. This year, the federal government will take $5.2 2 trillion in revenues from the American people and spend $7 trillion, passing 1.9 trillion in debt to future taxpayers. A major part of the problem is that mandatory spending has grown from 33% of outlays in 1964 to 73% in 2024. That means Congress does not actually review 73% of what it spends each year.
▶ 0:59:29It's on autopilot and it's unacceptable. The cost of our debt is rising exponentially. Interest payments this year will equal 1.22 22 trillion or $9,200 per household. Our $1.22 trillion interest payment is larger than the GDP of most countries. It's about the size of Saudi Arabia's entire economy. Our debt is out of control because spending is beyond reason.
▶ 0:59:53A balanced budget amendment would require lawmakers to regularly examine whether spending matches Americans priorities or not. Why do I believe a balanced budget amendment is necessary? because I was here a decade ago as a staffer, brighteyed and bushy tailed, believing we could get this done. I was wrong. In early 2016, I was working for a member of the subcommittee, Mr. Mcccleintoch. He charged me with working on a memo on ways to restore budget discipline.
▶ 1:00:21I would like to read to you from that memo that he published in 2016 and sent to his colleagues. He said, "The budget now before us, remember this is 2016, spends $1.07 trillion and balances in but only if we summon the discipline to stick to the budget in future years that has eluded us again this year.
▶ 1:00:47Maintaining budget discipline becomes particularly crucial given the deteriorating economic picture. Well, Congress certainly did not maintain budget discipline. It's 2026 and our deficit is not zero dollars, but $2 So, a balanced budget amendment is an important safeguard for Congress to consider building into the Constitution itself. And you should consider three main priorities when doing so. One, do not abdicate your article one powers.
▶ 1:01:16Two, remember that we have a spending problem, not a revenues problem. And three, it must have an effective enforcement mechanism. Thank you and I look forward to your questions.
▶ 1:01:25Thank you for your testimony, Miss Madden, Mr. Duke, you may begin.
▶ 1:01:29Thank you, Chair Roy, Ranking Member Scandlin, and members of the subcommittee. My name is Brendan Duke, and I'm senior director for federal budget policy at the Center on Budget and Policy Priorities. CBVP is a nonpartisan research and policy institute that advances federal and state policies to help build a nation where everyone has the resources they need to thrive and share in the nation's prosperity. Any constitutional amendment to require annual balance budgets would be a highly ill- advised and risky way to address the nation's long-term fiscal problems.
▶ 1:01:58It would threaten significant economic harm while raising a host of problems for Social Security and Let me first begin with an overview of our fiscal outlook. Allen analyses typically focus on government spending and revenue as shares of the economy. In 2024, revenue was 17% of GDP, which is around the same level as in 1984. Programmatic spending, on the other hand, grew one and a half percentage points since 1984.
▶ 1:02:24But Social Security and Medicare are responsible for more than 100% of the increase in spending because the country has gotten older. That's nobody's fault. I'm sure everyone on this committee wishes they had the same knees or back they did 40 years ago. Similarly, we all wish we had the same demographics and ratio of working age Americans to retirees that we had 40 years ago, but we don't.
▶ 1:02:44The combination of population aging and basic arithmetic means we will face a choice between raising revenue past the 17% of GDP levels set when the country was much younger or making drastic cuts to programs. The past several months have shown how much harm would be caused to vulnerable Americans and how difficult it would be if the government relied solely on massive spending cuts to balance the budget. The Trump administration has attempted, often illegally, to close whole agencies, engage in mass layoffs, and refuse to spend congressionally appropriated funds with little or no savings to show for it.
▶ 1:03:15Similarly, the giant mega bill passed this summer adds 3.4 trillion to the deficit as it extends tax cuts tilted to the wealthy despite cutting SNAP and Medicaid by about 20% by 2034. This will cause millions of low-income families to lose the ability to afford the high cost of groceries or go to the doctor when they're sick. cuts that a vast majority of the public staunchly opposes.
▶ 1:03:38The retirement of the baby boom was a predictable and predicted development, but at the beginning of the 21st century, we had a fiscal system that would deliver adequate projected revenue to meet our needs. Round rounds of unpaid for tax cuts ruined that. Take a look at CBO projections for 2025 that were made right before most of the Bush tax cuts were made permanent in 2012 and before anyone even thought of the Trump tax cuts and compare them to the actual 2025 values.
▶ 1:04:04The 2025 deficit is much higher than projected in 2012 despite programmatic spending being lower than projected. The reason the deficit rose is revenues come in far lower than projected as a result of those unpaid for tax cuts. Importantly, Social Security, Medicare, and other health programs such as Medicaid and premium tax credits also came in below CBO's 2012 projections.
▶ 1:04:25What all of this ultimately shows is it's entirely possible to meet our commitments to seniors while ensuring millions of low and moderate income Americans have healthcare and can afford food if we are willing to raise the revenue to do so. The most serious concern about a balanced budget amendment, aside from any cuts to critical programs, is it would exacerbate and prolong recessions. During economic downturns, consumers and businesses spend less, which in turn causes further job loss.
▶ 1:04:49The drop in tax collections and increases in unemployment insurance and other benefits that occur automatically cushion the blow to the overall economy and individuals involved by keeping purchases of goods and services from falling more. A constitutional balance budget amendment, however, effectively suspends this automatic stabilization. That would launch a vicious spiral. A weak economy would lead to higher deficits, forcing more spending cuts and tax hikes, which would weaken the economy further.
▶ 1:05:14It would also be unconstitutional for Social Security and Medicare to draw down their reserves to pay promised benefits without running a surplus in the rest of the government because that's still deficit spending, spending money that was not collected in the same year. So, we would immediately likely face their funding cliffs now instead of in the 2030s. In other words, a balanced budget amendment would serve as an effective back doorway to immediately cut Social Security and Medicare benefits.
▶ 1:05:38Rather than than spend time on an unworkable and economically calamitous amendment to the Constitution, policymakers should focus on policies that improve the fiscal trajectory while meeting the public's wise priorities about what government should do. I thank you and I yield back the balance of my time.
▶ 1:05:54Thank you, Mr. Duke. We will now proceed under the five-minute rule with I'll now recognize the gentleman from California, Mr. Mcccleintoch.
▶ 1:06:05Thank you, Mr. Chairman. Um, you know, the Democrats spent quite a bit of time telling us the debts balloon because of Republican tax cuts. Let me put their concerns to rest. Three numbers tells you everything you need to know about the federal deficit. 46, 64, and 94. The Democrats blame excess of spend 46% by the way is the percentage of uh increase in inflation in population combined over the last 10 years. 46% increase of inflation in population.
▶ 1:06:37is the increase in revenues in the same period. That's after the Trump tax cuts, after the big beautiful bill. We're taking in 64% more revenue than 10 years ago with only a 46% increase of inflation in population. The third number is what's killing us. 94. That's the increase in spending in the same period.
▶ 1:06:58The the Democrats like to blame Republicans for excessive spending, but the only opposition I have ever heard from the Democrats on spending issues is that we're not spending enough money fast enough. At the end of World War II, our nation staggered under a a similar debt relative to GDP that we have today. As Mr. Walker noted, uh we'd exhausted our resources then fighting the most terrible war in in human history. And h question occurs, how do we get out of that?
▶ 1:07:27Well, not by tax increases as the Democrats proposed. Quite the contrary. In fiscal year 1946, Democrat Harry Truman cut the federal budget from $85 billion a year down to $30 billion a year, almost twothird. He slashed federal income tax rates. He abolished the excess profits tax. He fired 10 million federal employees. It was called war demobilization.
▶ 1:07:54The Keynesians at the time predicted a 25% unemployment rate in a second great depression. Instead, we had the post-war economic boom. So, we already know how to fix the economy. The problem is summoning the the the discipline to do so. Um, for the last uh eight sessions, I've introduced a constitutional amendment on this subject. It's 27 simple words.
▶ 1:08:21The United States government may not increase its debt except for a specific purpose by legislation adopted by three4s of the membership of both houses of Congress. U to me that is the simplest way of addressing the issue and is essentially what Thomas Jefferson had suggested uh we needed in the constitution at the time of its adoption.
▶ 1:08:42Um, such an amendment taking effect 10 years from ratification would would naturally require both a balanced budget and a prudent reserve to to accommodate fluctuations of revenues and routine contingencies. It would trust that three4s of Congress will be able to recognize a genuine emergency when it sees one and that 1/4 of Congress will be strong enough to resist borrowing for for light or transient reasons. But whether it is this or some other mechanism, it seems to me that it's absolutely crucial.
▶ 1:09:12We have a modern-day example of this and that's Switzerland. Switzerland um adopted a debt break in its constitution almost 25 years ago. Um 85% of Swiss voters approved it. Um and today Switzerland's total debt is 30% of GDP. Mr. Walker, what is the percentage today in the United States?
▶ 1:09:37Well, debt held by the public is about 100%. But if you take the total debt, which includes the uh debt held held by the trust funds, yeah,
▶ 1:09:47it's 123% and rising. And as you properly pointed out, we were going down after World War II. We're now going up and we're not at war
▶ 1:09:57because we we we cut spending dramatically and we cut taxes and that produced an economic expansion as it did under Democrat of John F. Kennedy and as it did under Republican Ronald Reagan and Republican uh Donald Trump. Um so anyway, 100% just debt held by the public 100%. Switzerland is 30%. Uh, and Switzerland's running a slight budget surplus this year, I understand.
▶ 1:10:26Um, what are we to take away from this Well, Switzerland and certain other countries, including Germany and and uh Sweden have recognized that they need a constitutional constraint um in order to maintain fiscal sanity.
▶ 1:10:44And and I might note the debt ceiling is a bad joke. It's done done nothing to be able to constrain the growth of government or mounting debt burdens. It's a political football and statutory approaches to try to be able to bring fiscal discipline whether it be grand rubman or anything else have not stood the test of time. The only thing that can bind current and future congresses and presidents is is is a constitutional amendment.
▶ 1:11:09Um, and remember what Washington said among other things, avoid excessive debt.
▶ 1:11:18We have not we have not heeded his
▶ 1:11:22Thank you.
▶ 1:11:24Thank gentleman from California. I'll now recognize the ranking member of the judiciary committee, Mr. Rascin.
▶ 1:11:29Thank you very much, Mr. Chairman. And yes, it was Democrat Harry Truman who did all that uh who made the requisite cuts in federal spending after World War II. And it was Democrat Bill Clinton who gave us record surpluses in the 1990s. All of this is possible with the proper political focus uh and discipline. Uh Mr.
▶ 1:11:50Duke, say you've got a lawless president who wages war without a congressional declaration of war, takes amaluments from foreign kings and princes and governments without congressional consent, impounds money appropriated by Congress for certain purposes, and uses them illegally for other unauthorized purposes.
▶ 1:12:11Is there anything in the proposals for a balanced budget constitutional amendment that would prevent a reckless president who disregards the constitution from bulldozing the budget and just going right through those barriers and spending us into oblivion?
▶ 1:12:29Not that I have seen. So if there's not any real constitutional uh guard rail there, it seems to me like this is symbolic politics, a kind of window dressing to cover up the fact that people just have not had the political discipline and will to balance the budget.
▶ 1:12:49Um, is it true uh that as in the case raised by the gentleman from California with uh President Truman and President uh Clinton, is it true that the budget deficits have gone down more under Democratic presidents and the budget has been balanced more often than it has been with Republican presidents?
▶ 1:13:13Certainly in the post-war period.
▶ 1:13:15Um, okay. So what what is it that we should be doing in order to get our friends focused on actually balancing the budget and not adding trillions to the debt as President Trump did in his first administration and as he's uh been doing uh again with the the massive tax break to the wealthy.
▶ 1:13:37So the first vest would to get into a time machine and not do the bill that they passed last July. Uh so that would be the first best. Second best would be repealing it um and starting from scratch. So I think that would be where we could start. One idea, for example, there was that um you could cut the cost of the expiring tax cuts in half by just not extending them for households making over $400,000.
▶ 1:14:00Then you could offset that cost, that $2 trillion remaining cost for the tax cuts under $400,000 by raising taxes on the wealthy incorporations. So that's just one approach for dealing with the fiscal cliff that you know basically President Trump and the Republican Congress set up in 2017.
▶ 1:14:18Well, what do you make of the notion that um President Trump's tariffs, which may be struck down as unconstitutional, of course, but that in the meantime they will make up um the problems in the federal budget deficit for us. They will reduce the deficit. Um does that make
▶ 1:14:36Yeah. I mean, look, they're big and they are raising real money. CBO thinks they raised about $2.5 trillion, which is less than the $3.4 trillion cost of one big beautiful bill. But I note that the extent to which, you know, Donald Trump has done any sort of work on deficit reduction, the cuts to SNAP and Medicaid, as large as they are, are smaller than the increases in tariffs, which shows that even President Trump is kind of admitting that revenue is the solution here.
▶ 1:15:04We should just have smarter taxes than ones that cause people to pay more at Costco and Walmart and ask the wealthy to pay their fair share instead of, you know, doing illegal tariffs.
▶ 1:15:13Yeah. What do you think about the notion that we should have an article 5 constitutional convention to pass this uh balanced budget amendment?
▶ 1:15:24I think you put it best yourself. Why go through that rigamroll? And why can't Congress and the president just do that right now? They have the power to do it. Aren't there special dangers with causing uh or calling a uh an article 5 constitutional convention? Uh I mean the the our we of course haven't had an article 5 convention. We've always done it by a two-thirds vote in the house and the senate and threequarters of the states.
▶ 1:15:49ratifying calling constitutional convention like the one we had in Philadelphia would lead to potentially every other manner of uh amendment that our colleagues have favored in including you know an anti- uh constitutional choice uh human life amendment, a school prayer amendment, a flag desecration amendment and so on. Um would there be any way to control it?
▶ 1:16:15Um, I mean once we're back in the Rsian original position of a constitutional convention.
▶ 1:16:21No, I think it's a whole bag of worms.
▶ 1:16:25Uh, well, thank you for that and I yield back to you, Mr. Chairman.
▶ 1:16:29Thank ranking member Rasin. I'll now recognize a gentleman from Kentucky for five minutes.
▶ 1:16:35I I'm all for balanced budgets. Um, I built this debt badge and I wear it to try and instill at least some sense of urgency among my colleagues. Uh, I gave one to every freshman member of Congress and the only member who wears one is a Democrat because he wants to show how much the debts going up under the Republicans and he has a fair point.
▶ 1:16:57Um, you know, I think the balanced budget amendment is one of those things that sounds good on the surface, but it's the exceptions that are written into it that get you. Uh, in fact, I voted against the balanced budget amendment when it came to the floor uh several years ago. And I'll tell you why. It said that if uh Congress if both chambers of Congress vote it with at least 60% of the members, they can undo the balanced budget amendment. That was the exception.
▶ 1:17:27Well, just a few legislative days prior to voting on the balanced budget amendment, we had just passed an omnibus with over 60% of the House voting for it and obviously over 60% of the voting of the Senate voting for it. So when uh Mr. Biggs, our colleague on the judiciary committee, uh offered a balanced budget amendment, he suggested the thresholds should be 2/3.
▶ 1:17:52So I went back and looked from 2016 until 2026 at all the CRs that have passed the House and the Senate and all the omnibus bills that have passed the House and the Senate. And it turns out that 11 of the 16 CRs passed with more than twothirds vote in the House and 14 of the 16 uh CRs passed with more than twothirds vote in the Senate. The results are similar for the omnibus bills, but I believe my colleague here, Mr.
▶ 1:18:23Mcccleintoch, has suggested a threequarters threshold. So, what does a 3/4 threshold get you? Well, in 2024, the CR passed with 77% of the House and uh 77% of the House in the next CR, 72% of the House, 74% of the House, 78% of the House, and finally in 2025, not too long ago here, uh the American Relief Act, the second CR of 2025, 84% of the House
▶ 1:18:53voted for that. That sucker wasn't balanced. What about in the Senate? 85%. There's literally almost no threshold you could put in there that they couldn't override and haven't overridden already. So, uh, Mr. Walker, do you want to address that?
▶ 1:19:09Yes. Uh, thank you, sir. Number one, you have to define what type of unexpected can cause there to be a potential exception to the rule. And then you have to have a high enough threshold combined with those unexpected events uh to be able to limit it. And in addition to that, you have to say it's for year by year. In other words, you don't just get a pass. It's yearbyear.
▶ 1:19:38With regard to the convention, this is not a constitutional convention. The federalist papers make it very clear that the founders intended there to be article five limited conventions. There are several safeguards to deal with your uh question, Mr. Raskin. Number one, a majority of the applications back in 79 and today are fiscal responsibility only. There's state delegate
▶ 1:20:04Let me let me follow up. Yes, sir. On on something you said. Do you have to specify the exemptions? And one of those is war. I have tongue and cheek remarked that at least this would get Congress to declare wars again because there's an exception if you declare war. U this gives me some concern because I've watched them play budget gimmicks here with something called oo overseas contingency operation.
▶ 1:20:30It's supposed to be for emergencies or for things that came up, contingencies not expected, but they have used it to fund the basic defense of the United States to replenish stock piles and whatnot. And I'm I'm forgive me if I'm very suspicious of specific exemptions because I've seen those, you know, they were statutory, not constitutional, but I've seen them abused here in the House of Representatives.
▶ 1:20:56I think the only thing that really works is you got to elect people who are serious about balancing the budget. The uh the result of the big beautiful bill and the CR and everything that's passed since then is that this year we've increased spending $200 billion and next year we'll increase spending over more than $200 billion.
▶ 1:21:18But I mean my colleagues are my Republican colleagues and especially my Democrat colleagues, but this whole place is unserious about balancing the budget. And the re and if you give them any exemption, they'll use it. And the reason honestly they're not that serious about it is because they can get reelected every time by telling people they can cut their taxes and increase spending and things are going to turn out fine. Well, that is not the case. And with that, I see my time is expired.
▶ 1:21:51Uh, with that, I think the gentleman from Kentucky, and I now recognize the gentle lady from Washington.
▶ 1:21:56Thank you, Mr. Chairman. Um, I love following Thomas Massie because he's very consistent. Um, and I appreciate that because we can disagree on a whole host of things, but if you're consistent, it makes sense. Um, I just find it really interesting that we're spending our time in the Constitution subcommittee talking about a balanced budget amendment right after everyone on the other side except for Mr. Massie voted for a bill that dramatically increased the national debt.
▶ 1:22:27And so I think there's lots of other things that this committee should be working on um rather than this. And the last time I think the the uh ranking member of the full committee said this, the last time there was a balanced budget was in uh the 1990s under a Democratic president, Bill Clinton.
▶ 1:22:46And that was achieved both by increasing taxes and revenue, taxes on the wealthiest and revenue and decreasing spending, cutting defense spending. This last big beautiful betrayal bill actually did the opposite.
▶ 1:23:05It reduced revenue by giving massive tax breaks to billionaires and corporations and it increased defense spending and it did all of that on the backs of cutting health care for tens of millions of Americans. So when we talk about this issue, I think we should remember that in his first term, President Trump followed Republican presidents like George W. Bush. He increased defense spending.
▶ 1:23:32He passed steep tax cuts for billionaires and corporations under his 2017 tax scam. In fact, in 2023, Americans for Tax Fairness reported that the richest 748 Americans wealth topped a record high $5 trillion, up 77% since those tax cuts were passed, and that the debt caused by those Trump tax cuts were then used by Republicans as an excuse to cut
▶ 1:24:02services. And then this year, instead of letting those tax cuts for the wealthiest expire, what did Republicans do? They made those tax cuts permanent and then added some more in. So that gave the wealthiest Americans another 5 trillion in tax giveaways. And as I mentioned, defense spending went up by another $150 billion.
▶ 1:24:26more enormous amounts of money poured into the Department of Homeland Security to send all these masked ICE agents into our streets to kidnap and deport people and terrorize communities and give massive profits to forprofit detention centers. That bill, the big bad betrayal bill is what I call it.
▶ 1:24:45Betrayal of the American people, betrayal of working families, increase the deficit by $3.4 4 trillion over the next 10 years on the backs of working families while slashing 1.1 trillion for Medicaid, food assistance, other critical health programs.
▶ 1:25:01And now, Republicans have refused to extend the ACA tax credit so 22 million Americans can afford health insurance even though doing so would cost less than 4% of the cost of the tax cuts for the for the wealthiest. So, just make this make sense for me. I'm going to turn to you, Mr. Duke. Um, deficits are made up of two parts, right? Is that correct?
▶ 1:25:27That is correct.
▶ 1:25:28Revenues and expenses.
▶ 1:25:30You got them.
▶ 1:25:30Okay. Just [clears throat] wanted to make sure. Can the balanced budget, can a balanced budget be achieved by the federal government just by decreasing Uh, it could be done mathematically by dramatically increasing poverty, causing millions of Americans to lose health insurance and not be able to afford groceries. So, it's mathematically possible, but it's very unwise.
▶ 1:25:53And do we need, to Mr. Massiey's point, do we need a constitutional amendment to create a balanced budget?
▶ 1:25:58Bill Clinton certainly didn't.
▶ 1:26:00Bill Clinton didn't. And yet, Republicans have done the exact opposite. As I mentioned, they've increased the deficit, handed out tax breaks, um, and now they want a, this is really rich, a supermajority vote to increase revenue or raise the debt limit, but not a supermajority vote to decrease revenue or lower the debt limit. So, what effect would this one-way ratchet have on the payment of federal benefits like Social Security?
▶ 1:26:30Sure. So anytime a Congress comes that wants to cut spending, they can do it. And any Congress that then tries to reverse it by raising revenue would not be able to do it. So it would be a one-way ratchet where benefits, services, eventually Social Security, and Medicare finds themselves on the chopping block because there's just not much room left.
▶ 1:26:52People feel like this is a rigged economy because it is a rigged economy. It is rigged for the wealthiest. And people across the country are seeing this now. That's why Donald Trump's poll ratings are as low as they've ever been in this term and almost as low as right after January 6th because people can't afford health insurance. They can't afford basic food. They can't afford to live. And meanwhile, a very small group of people at the top are just having it big.
▶ 1:27:20And this is just another way to continue that cycle. I oppose it and I yield back. Thank the gentle lady from Washington. I now recognize the gentleman from North
▶ 1:27:31Thank you, Mr. Chairman, and uh thanks to all of you on the panel for your expertise and uh for being a part of this hearing, a very very important issue that I think a lot of us have talked about and shared for a long time. We all know that unsustainable debt has placed this country on a collision course with financial disaster and that a balanced budget amendment might save us from that fate.
▶ 1:27:54And I would really like to hear our witnesses on what factors they think make a strong balanced budget amendment that does not bear any unintended consequences. As a freshman here, I've had the opportunity to look at six different uh constitutional amendments that have been introduced in this 119th Congress. And I I want to start by addressing the issue of when a balanced budget ought to take effect. And Mr. Couchman.
▶ 1:28:18Um, what are the pros of a balanced budget amendment taking effect for the budget year immediately after it's ratified?
▶ 1:28:27To require balance of the budget immediately would require relatively large changes in spending and revenue policies. Uh, it would not give people as much time to adapt and plan, which is why I recommend uh 10 years uh a glide path of 10 years after ratification, which would probably take two to three years. Okay.
▶ 1:28:46And because I understand of the of the uh six that have been introduced, only one gives Congress time to to pass the balanced budget and the other five require Congress to pass the balanced budget the fiscal year after the amendments adopted. Um and some balanced budget amendments have provisions that allow deficit spending during a declared war, national security threats, or natural disasters. And Mr. Couchman, should a balanced budget amendment contain these exceptions in your opinion? Yes sir.
▶ 1:29:16Every balanced budget requirement or debt limit requirement must have a safety valve. There are emergencies of many types that come up. Uh twothirds is the standard supermajority for congressional action in the constitution. Three force does apply but that's only in the context of ratifying proposed amendments.
▶ 1:29:31Okay. And Mr. Walker, what about you?
▶ 1:29:36Clearly it cannot be effective immediately. U in my view I prefer a debt to GDP approach where you do two things. One, you set a credit card limit, which is constitutional, not the debt ceiling, which is a bad joke. Secondly, you have a target of lower debt to GDP than today because we're already too high 10 to 15 years out with specific targets, triggers to be able to make sure that we get there. But doing it immediately makes no sense.
▶ 1:30:04Uh we need to really have a phased in
▶ 1:30:07Okay. And uh we all know and this has already been alluded to today that there are two ways to balance the budget, raise taxes or cut spending. And Mrs. Madney, you could you explain you made a great point in your opening uh comments about um the spending uh not revenue as a problem that needs to be addressed. Can you expand on that a little more?
▶ 1:30:31Absolutely, sir. I think that the answer is quite simple. Um, when we're looking at the math, we know that revenues are not catching up to where we are in terms of outlays. To me, that indicates that the federal government is spending more than we bring in. Every constituent that you have sits around their dinner table and is expected to balance their budget and figure out what they can actually spend um within their means. We are quite simply not doing that as a as a country.
▶ 1:31:00And the result of that is that our deficit is ballooning. we're increasing our debt year after year. There are several instances of rampant waste uh that I think that the average American would be astounded to to learn about. For example, uh there are uh several billion dollars worth of waste going to things like um green energy projects in Honduras, climate resilience in Honduras. I think it's about $24 million.
▶ 1:31:30simple items like this actually do stack up. Um, and then when you start to think about the last major welfare reform, which your colleague missipal pointed out was a significant part of Mr. um of the president's uh 1996 balance. What you see there is that he actually did also uh contribute significant energy to reducing spending. It has to be a part of the picture.
▶ 1:31:58Then uh it was about a hundred billion dollars in today's dollars worth of spending cut to welfare. Now in the one big beautiful bill act about a trillion dollars of that is what we're seeing. And it's really important to note that Medicaid is still growing after the one big beautiful bill act there's a a significant impact. In fact it grows 31% even after the reforms in the one big beautiful bill act. So it's not that revenues are the problem.
▶ 1:32:25It's that the spending trajectory of the country is continuing to go far beyond the pace of what we could ever bring in.
▶ 1:32:33Gotcha. Well, thank you very much. And I think we saw some of that in the first uh few months of this administration when Doge began to do its work where the American public was rising up and uh and saying that these cuts were were something that needed to happen. So with that, Mr. Chairman, I yield back.
▶ 1:32:49Thank the gentleman from North Carolina. I'll now recognize the gentleman from
▶ 1:32:53Thank you, Mr. Chairman. Thanks for convening this hearing. Thank you to all the witnesses for your testimony, both written and uh your answers to the questions that have been propounded so far. Uh Miss Madney, I wasn't planning on asking this question of you, but I I want to follow up on the comment that you made just recently and I think your summation kind of focus on spending.
▶ 1:33:14Every academic, every economist that I have come across in the last six months have all agreed that the Republican tax bill, the so-called big beautiful bill, increased the deficit. I assume you don't dispute that. Actually, let me read this to you, then you can you can answer.
▶ 1:33:37The Committee for Responsible Federal Budget, right, has estimated that that bill will add three or excuse me, $2.4 trillion to primary deficits over the next decade and $3 trillion to the deficit, including interest. So, do you contest
▶ 1:33:55Thank you for your question, sir. I actually reject the premise of this question because when you're adding to the deficit, you also have to think about what are the mechanisms doing so. As I mentioned in my opening statement, it's not just about balance on paper. This is not a simple accounting mechanism. You also have to take into account the economic impacts of the choices Congress is making.
▶ 1:34:15Sure. So I understand that argument. Republicans on the dis here have made that argument. What you are essentially saying is that Elon Musk, the committee for responsible federal budget, Mr. Massie, any Republican critics in good faith of this bill are wrong that this calculation that the Committee for Responsible Federal Budget has delineated and produced is inaccurate and incorrect. And I don't know how you can make that argument.
▶ 1:34:43I I suspect that your colleagues here uh you know sitting alongside you would not make that argument. But maybe I'm wrong. Uh Mr. Couchman, I assume you you're not I've I have seen some of your material previously in which you have amplified the Committee for Responsible Federal Budget. I don't think you've taken issue with them in the past. You don't
▶ 1:35:03Do you contest their analysis here? They're wrong.
▶ 1:35:05I worked at the Committee for Responsible Budget before this and uh there are times that I agree with them and sometimes I disagree on this matter. It really comes down to how you think about the statutory baseline and whether you think that was realistic. And as we saw from the bond market, the public and policy makers, that was not an accurate reflection of where folks expected revenue policy to be.
▶ 1:35:24So how far off are they? $2.4 trillion over the next decade. What's your saying that this bill didn't increase wouldn't will not increase
▶ 1:35:31relative to the statutory baseline? Yes. But relative to what the, you know, bond markets and policy makers were projecting, no, it actually decrease deficits. Um, Vice President Harris proposed extending most of these tax provisions as well to prevent the largest tax increase on the American people in history.
▶ 1:35:47Well, I think again that it is rich in my view for organizations who predicate their existence on making the case for deficitneutral policies and for decreasing the debt so on and so forth to enthusiastically endorse a bill in which a variety of experts including conservative ones all attest that that particular legislation actually increases the deficit.
▶ 1:36:14It is quite convenient now for Americans for Prosperity, just by way of example, to now conclude that the Committee for Responsible Federal Budget is wrong and that in the case of Trump's so-called big beautiful bill, no. You've you've called it incorrectly, this in fact decreases the deficit. I I just I think that that argument is disingenuous, frankly, sir. I I really um in any event, I you're entitled to your opinion, obviously, but I I concur with Mr. Massie, and I applaud Mr.
▶ 1:36:42Massie for having the courage among Republicans to actually make an intellectually honest argument and to stand by his principles and vote against the bill because of what it will do to the deficit. So again, that that's my view.
▶ 1:36:56Sound budgeting is important to American prosperity. There's no question about it. Sound budgeting is important to American prosperity.
▶ 1:37:02It doesn't feel like it. If it was important to you all, then you would have opposed this bill. you would have said, you know what, we ought to make the case for an extension of these various different tax uh credits and tax breaks that were embedded in that bill. But supporting the bill wholesale, I I just I think your colleagues at the Committee for Responsible Federal Budget, your former colleagues, I should say, I suspect that they're very disappointed uh because I think that they put forward a very honest treatise on this bill's impact.
▶ 1:37:30And I I I can see uh that your colleague here, Mr. Walker, would like to jump in. So,
▶ 1:37:35um, I used to be on the board of the committee for responsible federal budget. Um, it all depends upon what assumptions you use, but there are more people that believe that it added to the deficit than not. Okay.
▶ 1:37:46Uh, and let me just note that things
▶ 1:37:48I appreciate you concinged reality, sir. I mean, that's all I was asking of the other two witnesses.
▶ 1:37:53One last thing. Things have been out of control since 2002.
▶ 1:37:58And both parties have controlled the Congress since 2002. And both parties have had presidents since 2002. I hear you. This is a bi-artisan
▶ 1:38:08But here's the difference, Mr. Walker, and I appreciate that cander and I appreciate the chairman's indulgence for just a few seconds because I I completely appreciate that point. And you, sir, have spent a great deal of time in your career making the case that both parties have to ultimately help bring their fiscal house into order.
▶ 1:38:26The issue I take umbrage with are witnesses who advocate solely on the basis that Democrats are responsible and they do that simultaneous to supporting a bill that increases the deficit by $2.4 trillion over the next decade so that my daughter and future generations to come are saddled with debt for the next 25 years. In any event, I digress. Thank you, Mr. Chairman.
▶ 1:38:48I thank the gentleman from Colorado. I'll now recognize the gentleman from Missouri, Mr. Honor.
▶ 1:38:53Thank you, Mr. Chairman, and thank you to all the witnesses for being here today. Republicans have warned for years about the dangers of unchecked federal spending. But because of the Biden administration's unprecedented spending spree and the Democrats refusal to return spending to precoid levels, even after adjusting for inflation, we're now at a defining crossroad. Um, this first chart shows a simple overview of our federal debt to GDP ratio.
▶ 1:39:20Within just a few years, debt held by the public will suppress suppress every previous record in our nation's history, even the levels reached during during World War II. Here we are. We're up here at World War II levels of debt to GDP ratio. Uh the second chart breaks down the annual federal spending by category.
▶ 1:39:43One one change that I believe should alarm every American is down here in the orange at about 6 7:00 is the slice of our federal budget that is devoted to paying interest on our debt. We're now at 13%. So at 881 um billion dollars, which I think is even it's even larger than that today. That exceeds the defense budget. It exceeds Medicare and the ACA. And it I'm sorry, Medicaid and the ACA.
▶ 1:40:12and it exceeds Medicare. This is this is truly a warning sign. Uh two years ago um yeah we two years ago we passed up the defense budget and our interest um spending um you know and it's just a few questions.
▶ 1:40:33Um, Miss um, Madmi, um, you mentioned Medicaid spending increasing um, even after the one big beautiful bill and the reforms there such as uh, removing uh, requiring work work, keeping illegal aliens off of welfare, checking eligibility.
▶ 1:40:53I I believe we really should keep that in mind as we as we think about extending enhanced COVID uh ACA credits two and a half years after the official end of COVID. Um could you could you explain how how our growing deficit in debt is is affecting I I believe Mr. Walker pointed out uh that Moody's downgraded America's credit rating uh this year.
▶ 1:41:23Can you explain how the growing debt and deficit crisis affect our credit rating?
▶ 1:41:29Sure. Absolutely. I'll take the the first question first and then and we'll go from there. Keep me on track if I miss something from you. Um, yes. To go back to your question on on Medicaid spending after OBBB, uh, following the One Big Beautiful Bill Act, I would just say that to describe Medicaid reforms included in that bill as cuts, that's just Washington math, plain and simple.
▶ 1:41:52only in DC does continued increasing spending constitute a cut.
▶ 1:41:57Absolutely. Um, in fiscal year 2024, uh, we were spending $618 billion on Medicaid, a 31% increase over the budget window after the One Big Beautiful Bill Act would get us to $87 billion. Um, so that's actually nearly double what our Medicaid spend was from the precoid level of $49 billion. Um, so that's incredible question.
▶ 1:42:23So it's just factually wrong,
▶ 1:42:26correct? that we cut we cut Medicaid in the one big beautiful bill.
▶ 1:42:29That's correct.
▶ 1:42:30No matter what the Democrats tell us, no matter what the hospital lobbyists tell
▶ 1:42:35If you believe that math is math, you were right. Right.
▶ 1:42:39Um I I think that it's also important that we talk a little bit about the other part of the One Big Beautiful Bill Act because I was uh criticized by by your colleague and I didn't have a chance to respond here. When I say that I reject the premise that the tax cuts included in the one big beautiful bill act don't increase the deficit, what I was trying to tell the congressman is
▶ 1:43:00those are not new tax cuts.
▶ 1:43:03These are things that the American people are already experiencing. So what the one big beautiful bill act was prevent a tax hike on the American
▶ 1:43:10Exactly. And you know and I think sometime to some extent we Republicans that are messaging largest tax cut in American history. That's not exactly true. What we did is prevented a multi-t trillion dollar tax increase, which is what my Democrat colleagues seem to
▶ 1:43:26That's correct, sir.
▶ 1:43:28And then you asked me as well uh I recognize you only have a few seconds left. Go ahead. Um you asked me as well about how our interest payments are negatively impacting uh our standing in terms of our credit. Well, that couldn't be more clear. You pointed out that our interest payments are outpacing uh our payments for defense. They're outpacing our economy. They're outpacing everything that's sustainable. We're making a $1.22 trillion interest payment in the next fiscal year.
▶ 1:43:56And that alone, as I mentioned at the at the beginning of this Congress, is larger than the GDPs of every country in the world except for 16, excepting the United States, of course. That's going to naturally have an impact when uh credit rating agencies are considering whether or not we can actually meet our obligations. And no wonder young people can't afford to buy buy homes because they're competing with the federal government for borrowing. Thank you very much for your testimony.
▶ 1:44:22I yield back.
▶ 1:44:23Thank gentleman from Missouri and I'll recognize the gentle lady from Vermont.
▶ 1:44:28Thank you, Mr. Chair. You know, we're talking today about a constitutional requirement that spending has to equal revenue. But what Republicans are not saying, but which we all know is that this means you're going to have to cut Social Security, Medicare, food assistance, and other programs that regular people rely on. And as a member of the budget committee, I have spent three years, three years on conversations like this.
▶ 1:44:56And all the while watching Republicans continue to balloon the national debt to finance tax cuts for people who don't actually need them. Can we all finally admit once and for all that tax cuts do not trickle down? And all you have to do is ask regular people who can't afford their groceries right now. Mr. Duke, thanks so much for being here. I I want to talk about what Republicans mean when they talk about a balanced budget.
▶ 1:45:28From my perspective, they mean that you're going to have to make steep cuts to benefits while rewarding the wealthy with additional tax cuts. And a balanced budget amendment always sounds so simple, but the federal budget is not actually like a household budget. It's not. It doesn't matter how many times we say it. It's not. Mr. Duke, is it possible that this proposed constitutional requirement would endanger Social Security? Absolutely it would.
▶ 1:45:56Tell me a little bit more how how would it do that? So um you know we had the we have the baby boomers they worked a bunch of years they put and that created surpluses into the social security and Medicare trust funds right and now we are drawing them down as um you know they as they're retired and those trust funds are scheduled to exhaust in the 2030s but a balanced budget amendment would apply to the whole government and you know those accumulated surpluses you know from
▶ 1:46:261015 years ago wouldn't count anymore, right? So, basically what would need to happen for Social Security and Medicare to continue to pay 100% benefits is you would need to run a bigger surplus in the rest of the government, right? Which is really, really, really hard to do and frankly not realistic, right? And so, Social Security just can't tap its trust fund.
▶ 1:46:50And so that basically moves the problem you're going to face 10 years from now about social security and Medicare trust funds exhausting from the 2030s to now.
▶ 1:46:59Yeah. And it's very serious and and I can think of a simpler way to protect essential programs like social security. Uh is it true that we could just raise taxes on billionaires and corporations?
▶ 1:47:12Uh that certainly would be one way. It's an option. It certainly is an option. It's on the table. We already have that power. Is that right?
▶ 1:47:18Uh according article one. Yes.
▶ 1:47:19Yes. Exactly. According to article one, I'm going to get to that in just a minute. What worries me so seriously about this conversation is that this whole concept of a balanced budget amendment requires us to actually support the constitution that we have. You can't have this amendment if you don't have respect for the separation of powers. If you don't have respect for the powers of the purse.
▶ 1:47:48if you don't have respect for the Constitution as a whole. And under this Republican government, none of these things currently exist. My Republican colleagues have completely given up Congress's Article One powers, letting the president do whatever he wants. They have stepped back and let the executive branch run wild. We have invoked the founders a lot today and I can tell you they would be disgusted by the majority's willingness to seed their power to this president.
▶ 1:48:18President Trump and congressional Republicans have completely abandoned constitutional governance by three co-equal branches. They have allowed the president to illegally refuse to spend money as directed by Congress. They have conducted absolutely zero oversight of misconduct and open corruption across the agencies and the White House.
▶ 1:48:39We just spent a month out of session because the speaker would not stand up to our president and protect our article one powers. Why do I care so much about the article one powers? It's not because of our power. It's because we represent the people. we represent the people who want us to pass those policies that actually benefit them and we don't have that right now.
▶ 1:49:07So this whole conversation about going through this rigomearroll of an idea that has a snowballs chance in hell of ever coming to fruition when we could actually spend our time here protecting our article one powers. I appreciate you being here. I appreciate all the witnesses. I yield back. Thank the gentle lady from Vermont. I'll now rec recognize the gentleman from Wisconsin.
▶ 1:49:33First of all, I'd like to thank you very much for holding this hearing. We're kind of in the middle of appropriation bills here and it's shocking the degree to which my colleagues think that we're running huge surpluses rather than we have to deal with deficits. So, uh, it it'd be nice if we get a balanced budget out of this, but at a minimum, we can educate our colleagues as to what a dire situation we are in.
▶ 1:49:59Um, Miss Mney, we'll ask you a few questions as to where this ship is headed. Um do you know approximately right now maybe it's unfair to ask you without checking there uh the percentage of our budget that's
▶ 1:50:16the I'm sorry sir what the percent
▶ 1:50:17the percentage of our budget that's
▶ 1:50:19that's p powered
▶ 1:50:21borrow borrowed
▶ 1:50:23borrow oh borrowed I I apologize I couldn't quite hear you um far too much uh I think if you just look at our interest payments that's really what you need to start thinking about in terms of what we're borrowing our Our deficit spend um is $1.9 trillion.
▶ 1:50:41About a quarter of revenue is borrowed,
▶ 1:50:43right? 26%. Which is kind of shocking. Do you know how much uh we're spending on percentage of all of all of our budget? How much is already not on new need stuff, but just paying interest on the debt? We have
▶ 1:50:58the percentage for interest only, you're
▶ 1:51:01Yeah. Percentage of
▶ 1:51:04Yes, sir. So the percentage that we're paying on interest is 13%.
▶ 1:51:09Okay. So about a seventh of our budget already is going not to social security or tanks or wasting money on a Truman scholarship program. I was just in a different hearing. What a waste of money. Um but already 14% is interest.
▶ 1:51:28Could you c could you guys any one of you jump forward and tell me a obviously if you were an individual you couldn't keep borrowing 26% of every dollar you spend and obviously if a seventh of what you're spending is already interest you would just I mean they they'd send you to debt counseling or something or other how how long can we go at this rate and what's going to happen when we can't go this go any longer
▶ 1:51:57we'll start entering a fiscal spy spiral in the 2030s if we continue down this path. Um you mentioned earlier appropriations and the fact that we're underway in that fullyear discussion right now. One thing to keep in mind, of course, appropriations are only 27% of our federal budget.
▶ 1:52:14But even within that, the Senate's proposed appropriations bills right now, the remainder of them that were not already enacted are $50 billion or more because we haven't seen the full text of all of them than what the House appropriations bills proposed. So, that alone is something that you could do to deal with immediately the the trajectory that we're on. Obviously, $50 billion is not going to resolve our trillions of dollars uh that we're currently in the hole for just this year.
▶ 1:52:4238 trillion4 trillion dollars uh overall. But it is important to start building that muscle memory amongst your colleagues.
▶ 1:52:50And to build on that, the point of budgeting is to look at everything and see how we can do better. But that's not what Congress does. Congress does appropriations. It's important, but it's 26% of spending. We need to be looking at all spending, all revenue, including tax expenditures, getting all the committees involved like Wisconsin does.
▶ 1:53:05Just so you know, Mr. judgement. [clears throat] I I believe irresponsible people around here like to rattle on about all the mandatory spending and they're right except for the reason they rattle on about it is because they specifically don't want to do what they should do on discretionary
▶ 1:53:22Look at everything.
▶ 1:53:23Yep. Exa Exactly. Um I'm trying to think. Uh
▶ 1:53:30Congress, can I can I provide something that would be helpful? What what I found that resonates with the public is if you take the financial statements for the US government as of September 30, 2024, if Uncle Sam was a person, you drop eight zeros, here's what you get. $50,000 in revenue, $74,000 in expenses, $24,000 in a deficit, $1,240,000 in total liabilities and unfunded promises, $57,000 in assets.
▶ 1:54:00underwater Would you lend money to that person? By the way, the crisis is coming way earlier than the 2030s from from ba based on prominent econ economists on both sides of the aisle.
▶ 1:54:14Um I was standing on the floor a couple weeks ago and one of my colleagues who is a conservative by any standard, I had thought, still think he is, uh thought of that was inevitable. Eventually the US is just going to have to throw up their hands. Uh c can we get out of this? Do you believe given the people that are in Congress, a pretty mly crew?
▶ 1:54:38I think there are an extraordinarily number extraordinary number of talented people on both sides that are being held back by a broken process. And if we fix the process, then we'll get much more from Congress. Article one, I mean, Congress should be the strongest branch. It is not. Uh it's not co-equal branches. This is supposed to be the dominant branch. has been curious to hear so many members of Congress talking about the presidents. Why not talk about this institution and fixing this
▶ 1:55:05Well, this institution is horrible.
▶ 1:55:09Let's make it better.
▶ 1:55:09And it's not the process. It's the people. I believe
▶ 1:55:13you are part of it. [laughter]
▶ 1:55:15Not without a constitutional amendment. You won't solve this problem without a constitutional amendment.
▶ 1:55:24Thank you for giving me an extra 50 seconds. I thank the gentleman from Wisconsin and I believe the gentle lady from Vermont has some consent requests.
▶ 1:55:30I do. I ask you now consent to enter into the record three tweets. Uh the first um from Mr. Kurt Kurt Couchman. The claim that Trump's tariffs didn't cause inflation makes no sense. Also from Kurt Couchman. President Trump steel and aluminum tariffs are terrible for the metal using industry jobs in my rural Pennsylvania hometown. And a retweet.
▶ 1:55:52It'd be great if the Supreme Court saves Trump and the GOP from themselves and kills the president's ability to drive up costs on consumers by ending his unconstitutional tariffs. Thank you. I ask unanimous consent to enter them into the record.
▶ 1:56:04Well, that objection is banned in the record and I'll now recognize the gentle lady from Pennsylvania, the ranking member, Miss Kanlin.
▶ 1:56:10Thank you, Mr. Chair. Um, so clearly we have structural issues here with our our debt, with our budgets. Um, I wanted to focus on the revenue side because that's a side that doesn't seem to get enough attention. And I would start with something that you talked about, Mr. Duke, in this big bill that passed last summer. Um, our colleagues across the aisle have justified it as being necessary to avoid a tax cut on the American people.
▶ 1:56:40Um, when we know that most of it was going to um, wealthier folks. Um, you mentioned that if there'd been a cap on who got those or a floor on who got those tax cuts, it could have had a very different impact. Can you talk about
▶ 1:56:57Absolutely. So, um, you know, the full cost of the tax cuts, uh, that passed were about 4 and a half trillion, but extending the expiring tax cuts was 4 trillion. So, that's, you know, that's the pie we're working with here. Um the cost of extending them for households making under $400,000 on the other hand was less than half that amount according to analysis by the Treasury Department, right? And look, offsetting $4 trillion of cost would be really, really hard to do.
▶ 1:57:27$1.9 trillion, there's ways you can do that on the revenue side, too. So, I think, you know, that makes the job a lot easier is just making sure that the 2% of households making over $400,000 don't get a tax cut would have made the job a whole heck of a lot easier.
▶ 1:57:43Certainly not chump change. Um, another thing that we've seen under this administration and and it was mentioned by one of our colleagues is um the purported savings by Doge, but one of those big Dogeisms has been to radically cut the IRS.
▶ 1:58:02Um, the IRS which has a return on investment of 5 to12 I think for every dollar spent there and the laying off of people who were supposed to go after the big dollar tax cheats. Can you talk about how that would have an impact on our revenue?
▶ 1:58:16Yeah, I think you spelled it out right that, you know, we could have the perfect tax system that, you know, basically took care of our fiscal trajectory, you know, in the internal revenue code, but if there aren't the people to enforce it, it doesn't matter because nobody's going to pay their taxes, right? So, the key thing is having the IRS, and that was a key investment made under the Biden administration to increase IRS staffing, especially with a focus on households making over $400,000 and large corporations.
▶ 1:58:44But, you know, they've been systematically laying off those units that go after those groups. And so, that just obviously mechanically will make it easier for those groups to just not pay the taxes they owe. That increases the deficit. Shockingly, they canled the folks who were going to go after the big spenders.
▶ 1:59:03Um, programs like Social Security and Medicare are part of America's contract with our citizens and part of a long-held promise we've made to our country's seniors that people will contribute their wages over an over a lifetime um for earn an earned benefit that'll be available when they become older or if they're disabled.
▶ 1:59:26Um, can you talk about how the balanced budget amendment that is being propo amendments that are being proposed might threaten those social security benefits?
▶ 1:59:37Right. So, social security and Medicare outlays are part of the government, right? It's just part of it. And so, balance budget amendments would basically treat those payments as part of the federal budget as a whole and so would be limited. Now, we actually don't know a lot of the enforcement mechanisms behind a lot of these amendments. So, it's hard to say exactly what would happen. But the key thing is is those trust those programs are drawing down their trust funds they accumulated when the baby boom was working.
▶ 2:00:05And unless we are running a large enough surplus in the rest of the government, they would not be able to tap those reserves to pay out the benefits owed to people, right? So, I I mean, I guess you could just do massive cuts to other parts of the government to keep those parts flowing. I think that's very unlikely. Um, and so they would be just as much at risk as the rest of the government.
▶ 2:00:28And of course, the fact that the tax cuts we've seen over the last couple decades have radically increased income inequality, that also has undermined our social security system um because there are caps on who has to contribute. So once again, folks on the lower end of the economic scale are paying proportionally more than folks on the upper end.
▶ 2:00:50Um, I did want to request unanimous consent to enter into the record an article entitled, "How Doge's cuts to the IRS threatened to cost more than Doge will ever save."
▶ 2:01:00Without objection.
▶ 2:01:01Okay. Thank you. And I would yield back.
▶ 2:01:04I thank the ranking member. I will now recognize the gentleman from Texas for 5
▶ 2:01:09Thank you, Chairman Roy. thanks for holding this hearing and uh especially for your uh fights over the past several years to promote fiscal prudence in Washington and very boldly standing up uh for the American taxpayers. So, we really appreciate that. Um it's not surprising to me that uh our colleagues across the aisle are not in favor of a balanced budget amendment.
▶ 2:01:34would obviously stop them from spending money on their top priorities, but which we've learned this year. Things like transgender surgeries for foreigners, DEI scholarships in foreign countries, media outlets like NPR and PBS would stop them from funding the NGO industrial complex that's facilitated mass migration into our country.
▶ 2:01:58uh and all of the v various other uh wasteful government programs that we've been fighting to slash over the past uh year since I've been in Congress at least. Those are precisely the types of programs that I would like to see cut and why uh amongst other reasons I think that a balanced budget would in fact be prudent.
▶ 2:02:19um you know, every every dollar that we spend right now above what we take in in revenue is money that our children and grandchildren are going to have to pay back. Um and I for one don't want to and I don't think that it is in any way moral to saddle uh my children, my son or my daughter um with debt to finance uh ridiculous programs um as we have been. With that said, I want to thank the witnesses for being here. Um really appreciate y'all's time.
▶ 2:02:49Uh Miss Modney, um I agree that uh with you that achieving a balanced budget budget requires a significant decrease in spending. Um do you know what the deficit was in 2019?
▶ 2:03:03I'm sure that you have it in front of you, sir. So I'm going to consider billion. Do you know what the deficit is
▶ 2:03:11It's not good.
▶ 2:03:12Not good. A lot a lot more than that, isn't it?
▶ 2:03:15Yes. Absolutely, sir. How much do you know how much it is?
▶ 2:03:19Uh yes, we are There we go. $1.8 trillion.
▶ 2:03:27I think it's actually 1.9 now.
▶ 2:03:30Got it. Um and during that time, we've also seen uh we've seen spending balloon and revenue not be able to keep up, of course. Um that's resulted in nearly a doubling of the deficit in six years. Um, one of the things that that we worked on as part of the tax package that we p passed earlier this year was reducing wasteful spending. We cut spending by $1.5 trillion, the biggest uh mandatory spending reduction in our country's history.
▶ 2:04:00Would love to hear your thoughts on uh the work that we did as as part of that spending reduction. What portions of that do you think were uh the most uh most beneficial? It's a little difficult for me to choose just one piece of it that was the most beneficial, but I do think that there were some significant wins. Um, as we mentioned, we prevented a tax hike on the American people and specifically working families. So, I would be remiss not to mention that. But in terms of your your question on cuts, we eliminated $1.5 trillion in federal spending.
▶ 2:04:29That's going to reduce inflation significantly. Uh, one of the one pieces of the one big beautiful bill act that I am most uh in favor of is that we really started refocusing Medicaid on the vulnerable populations. And that included reforms that reduced the ability of Medicaid dollars, federal dollars from taxpayers, of course, it's the taxpayers money, not the governments, from going toward illegal immigrants.
▶ 2:04:55We also ensured that those who can work must work in order to access Medicaid dollars. That's really important, not just in terms of our fiscal health as a nation, but because these programs were designed as safety net programs for the most vulnerable, and this this helps refocus them.
▶ 2:05:11Yep. And there there's been some talk and we we've discussed possibly doing a second reconciliation bill. What are a few policy ideas that you think we should particularly focus on if if we do go in that direction? I'll stick with the Medicaid theme for a little while, sir. Um, one thing that we could do is lower or eliminate the federal match assistance percentage floor. Right now, there's a statutory floor of 50%.
▶ 2:05:35We could reduce that so that states who um under the formula would receive less from the federal government could that could save us $400 billion. We could also repeal the Medicaid FMAP increase to the states that initially declined expansion. that would save us over $13 billion. Another option would be reducing the enhanced FMAP match for uh expansion populations. That was from the Affordable Care Act.
▶ 2:06:02This of course is what gives the able-bodied working age adults $9 for every $1 for the traditional population. If we did that, it would save $700 billion.
▶ 2:06:13Thank you, Miss Bond. I thank the gentleman from Texas and I'll now recognize the gentle lady from Wyoming for five minutes.
▶ 2:06:21Well, thank you and first of all, I would like to correct one of the statements made by our colleague on the other side about who actually pays the income taxes in this country. The top 10% of earner earners bore responsibility for 76% of all income taxes paid and the top 25% paid 89% of all income taxes. Altogether, the top 50% of filers earned 90% of all income and were responsible for 98% of all income taxes paid in 2021.
▶ 2:06:50It's very clear that the people who earn the majority of the money are also the ones that are responsible for paying the income taxes in this country. Um the fiscal year 2025 national debt currently stands at around $1.78 trillion. That's what I was looking at just this morning. And the national debt is at $ 38 trillion in counting. In 2010, when I first started uh really kind of uh ringing the bell about that the the debt and deficit, the debt was uh $10 trillion.
▶ 2:07:20So, we've added another uh 28 almost $30 trillion just in the last 15 years. US now spends 13% of its budget on interest on the national debt and more than current annual spending on Medicare or the national defense. Mr.
▶ 2:07:38Walker, understanding that the successful adoption of a balanced budget amendment to the constitution would inevitably help re in future annual spending, factoring in our existing deficit and debt, I believe, merits some additional attention. With our deficit just shy of the $2 trillion, how would the implementation of a balanced budget amendment need to approach this growing figure? What would we do with that growing figure with the deficit?
▶ 2:08:06Well, first I believe that the debt to GDP is too high right now in order to promote future economic growth, individual opportunity, etc. And so I think you need to do two things. One, you need you need to limit how much debt as a percentage of the economy the country can take on absent limited and extraordinary circumstances, a credit card limit. All right? And then secondly, let's set a target for a lower debt to GDP that we want to get to in 10 to 15 years and have mechanisms that can get us there.
▶ 2:08:36uh if you will, the American people know that we have a problem here.
▶ 2:08:42They support that approach that I just articulated. Uh and in addition to that, they recognize the problem is both spending and revenue. And when you look at it, you have to look at it as a percentage of GDP. What percentage of spending to GDP? What percentage of revenue? And the American people support a 3:1 ratio. three parts projected spending reduction to one part revenue increase, but they believe that both are necessary.
▶ 2:09:09Okay. Well, should the enactment of a balanced budget amendment then provide for a transition period to achieve a balanced budget over time or could this be done immediately?
▶ 2:09:19No, it needs to have a transition there's no question.
▶ 2:09:22Do you know how long that transition should be?
▶ 2:09:25I would say 10 years as a as a general guideline. I think Kurt Couchman has said the same. So you also talked about exceptions. Um the CO night co 19 so-called public health emergency was initiated by HHS in January 2020. It was renewed 12 times and it finally expired in May of 2023.
▶ 2:09:47The CO 19 national emergency was initiated in March 2020 and terminated in April 2023 following finally the passage of a joint resol resolution of Congress. And according to the Treasury Department from fiscal year 2019 to 2021 federal spending increased by about 50% in response to the co9 pandemic. I believe that the Democrats spent over $5 trillion while Joe Biden was in the White House uh addressing some of this.
▶ 2:10:16Um according to usaspending.gov approximately 4.7 trillion in total budgetary resources was spent in response to co 19. Another point for content of contention for a balanced budget amendment is obviously the concept of exceptions such as spending for in times of war national security natural disasters and other emergencies. Mr. Couchman, one of my concerns is how those exceptions will be defined and implemented.
▶ 2:10:44Do you see that there could be potential abuses both by Congress as well as the White House by declaring national emergencies to circumvent any kind of budget constraints that we may adopt with a balanced budget amendment?
▶ 2:10:56Eternal vigilance is the price of liberty. And so Congress can't be content to simply pass a BBA and assume that it will fix all the problems. I once believed that. I was naive and young. uh and I now believe there has to be a robust suite of statutory uh mechanisms to help Congress exercise its legislative powers in order to check and balance itself but also the White House and in some cases perhaps the judiciary. One other quick note about balanced budget amendment design.
▶ 2:11:22It is critical to avoid annual balance because tying your revenue and spending together so closely when revenue is so volatile will create all kinds of problems. In fact, the way that Mr. Duke described, but there are other BBAs that don't have that problem and also don't rely on defining spending as outlays, which is when money leaves the federal government. If you define it in a general term, you can through implementing legis legislation avoid all the problems that Mr. Duke talked about with respect to business cycles and automatic stabilizers.
▶ 2:11:49And have you identified those and written them down?
▶ 2:11:52Yes, ma'am. And uh they have a big piece of that has been introduced as legislation by Representative Tom Emmer and uh then Senator uh Mike Bronn. Thank you. I yield back.
▶ 2:12:02Thank the gentle lady from Wyoming. I will now recognize the gentle lady from California for five minutes.
▶ 2:12:08Thank you, Mr. Chair. Uh, and before I begin, I want to make sure that the American people understand what we're talking about that the deficit is simply the gap between what the government spends and what it brings in each year. And when that gap grows, we add to the national debt. So balancing the budget would mean closing the gap so we stop adding more debt. And Republicans call themselves fiscal hawks.
▶ 2:12:38But the numbers tell a different story. Under President Trump's first term, the deficit jumped from 665 billion to three trillion, from a B to a T. And he's already added another two trillion this term. Republicans added $155 billion to the national debt in a single week.
▶ 2:13:01The national debt is now $ 38.33 driven by GOP tax cuts that will cost $3.4 trillion through 2034 and nearly $5 trillion if extended. And now we spend more than $1 trillion a year just on interest.
▶ 2:13:26So that is the real fiscal landscape that we are dealing with. And anyone who's managing their house budget would fall over backwards. Would fall over backwards if somebody was like, "Well, this is what you can't do. do have to cut. But this is what we are continuing to do. Spend like it's water out of a tap. So, Mr.
▶ 2:13:55Duke, nonpartisan analysis shows that the Bush and Trump tax cuts are the primary drivers of longterm debt. They will cost $3.4 trillion through 2034 and nearly 5 trillion if extended. So how central are these tax cuts to the debt trajectory we are on right now?
▶ 2:14:18Right. So basically the debt would not be growing anymore if we had not if we reversed those tax cuts or if they hadn't happened. So one analysis by a former colleague of mine calculated that of the increase in the debt to GDP ratio since in the 21st century over half is attributable to the Bush and Trump tax
▶ 2:14:38Over half. The rest is, you know, uh, emergency spending like COVID and things like that, but over half is attributable to those two policy choices.
▶ 2:14:47Okay. So, Mr. Mr. Duke, while Republicans demand cuts to food assistance and health care and child care and housing support, President Trump and his officials have spent $300 million on a White House ballroom, more than $220 million on golf travel, up to $45 million on a birthday military parade, $473 million on National Guard deployments.
▶ 2:15:17Trump officials have also misused taxpayer resources, including a $60 million FBI jet that Cash Patel used for personal travel such as date nights and luxury hunting trips and a golf vacation in Scotland. And the Coast Guard purchasing up to $200 million in Gulfream G700 private jets for Secretary Christy Gnome.
▶ 2:15:46These folks are not using their mileage points for sure. Given these expenditures, Mr. Duke, how would you characterize the fiscal priorities reflected in these decisions? And at the very least, are they putting American taxpayers first?
▶ 2:16:04Yeah, I think the way I would think about it is that um we have done put into law enormous cuts to SNAP and Medicaid that help working families afford groceries and healthcare, right? And I think the way it's framed is there was no other choice. But, you know, I think just these tax cuts, the bill they just did shows that, you know, there was a choice and they decided to opt for that.
▶ 2:16:29budgets are about priorities and we can choose those priorities and essentially we've chosen um tax cuts for the largest estates worth over $30 million per couple over um you know families trying to buy food and
▶ 2:16:43Yeah. And you know, Mr. Duke, Republicans also approved a $40 billion bailout for Argentina, including a $20 billion US currency swap, even though Argentina has defaulted nine times. like a huge biggly credit risk. So, what financial risk does that create for American taxpayers?
▶ 2:17:05Uh, I I don't think it takes a financial wizard to know that investing in Argentina is uh not your best bet.
▶ 2:17:12A losing proposition. [clears throat] Absolutely. And thank you, Mr. Chair. I yield back.
▶ 2:17:18Thank the gentle lady from California. I'll now recogni recognize myself for up to five minutes. I first just want to appreciate the witnesses. Uh we've had a lengthy hearing with most of most of the members of the committee showing up. So I appreciate your time and your willingness to be here and for focusing on this issue. Now I'll note this has regrettably mostly turned into a budget committee hearing. Uh now recognizing it is a balanced budget amendment question. So it necessarily raises those issues.
▶ 2:17:45The question really before us is whether or not we should amend the Constitution of the United States to have some sort of structural uh changes to force Congress to be fiscally responsible recognizing that both sides as you just saw in its normal relatively petty way uh pointed at each other for being the cause of our deficit woes. And the fact of the matter is both sides, my Democratic colleagues and my Republican colleagues, past, present, and future, are responsible for this.
▶ 2:18:15I think some reporting was done that when Mr. Musk came to visit the Republican delegation in December, a year ago, almost to the date, probably this week, I'm guessing, if somebody Googles it, uh that uh Mr. Musk was talking about Doge and talking about the savings and many Republican colleagues went to the microphone and lauded the prospects of cuts and spending restraint. And I stood up and I said, "Mr. Musk, you're going to have no problem identifying things to cut.
▶ 2:18:44You're going to produce a great list and we should do most of it, but your problem is going to be everyone standing right next to me here, meaning all of my colleagues." Now, I would have said that it happened to be a Republican meeting. I would say that about my Democratic colleagues as well because uh as my friend from Kentucky said, we are constitutionally as as members of Congress uh hardwired unfortunately to want to effectively buy people's votes with a neverending uh array of spending programs whether they are uh meritorious
▶ 2:19:14or not. I often have people who come into my office who ask for cancer subsidies. As a cancer survivor, I am sympathetic. I often and almost always tell them no unless they come in with a payment. They tell me how they're going to pay for it. What else are they going to cut? Same thing with my farmers. My farmers come in and they are looking for something for uh extensions in the farm bill and so forth. And I say, "Well, you going to do anything about the 80% of the farm bill that is SNAP and and and the extent to which it is consuming the budget?" Well, no, I can't.
▶ 2:19:44Well, then I'm I'm not going to support it. Uh members of Congress have got to actually, to the gentleman from Kucky's point, do their job. The only thing I want to clarify here for the record because we are here trying to talk about whether we should amend the Constitution is I just want to go down the the the witnesses and say and I think I know the answer but it's yes or no. Do you believe that the Constitution of the United States can and should be amended to provide a mechanism to ensure that we are not spending more than is coming in as a general matter? Mr.
▶ 2:20:13Walker, do you believe it can and should be?
▶ 2:20:15Yes, but I believe it ought to be debt to GDP.
▶ 2:20:18Mr. Couchman,
▶ 2:20:19yes. as nearly every advanced country has already done.
▶ 2:20:22Miss Madden,
▶ 2:20:23yes, absolutely.
▶ 2:20:24Mr. Duke
▶ 2:20:25should not.
▶ 2:20:26Okay, Mr. Duke, you would you would maintain that position even if it were only tax increases that were suggested as the mechanism for ensuring that there was uh fiscal uh responsibility and that inflows and outflows were uh equitable.
▶ 2:20:46That's the job of Congress to do. I'm a 49ers fan. I wouldn't approve of a law that said 49ers win the Super Bowl each
▶ 2:20:52So, so I mean I at least appreciate the consistency that you're saying that it shouldn't be put in place even for tax increases as opposed to spending restraint. Uh but what I would question then is is and I don't I don't even debate the merits of whether or not Congress is sherking its responsibility on an annual basis. I would only point out that it has done so for effectively And so the question here is on behalf of the American people, what do we do about it? Because as Mr. Massie said, it's like we'll elect better people. Well, we never have.
▶ 2:21:23We elect 435 people to members of Congress who do the same thing every Congress, which is spend more money than we take in in revenues. So I think my question is is I mean again do you not believe that there should be some mechanism something in place perhaps for example a uh if you can't amend the constitution we don't think we should do that then should we have statutory restraints that say that members of congress should not get paid or members of congress shouldn't be able to hold chairmanships if they vote for budgets that are out of balance
▶ 2:21:53or that members of Congress in the NRCC or the N or the DC can't raise money with all of their special perks and benefits to raise money for incumbent members of Congress who are crapping all over the American people by mortgaging their children's future. Is there anything that we can or should do as Congress to restrain Congress from racking up deficits?
▶ 2:22:14I think Congress has to want it. I think your colleague, Mr. Massie, laid it out that it's on the members of Congress to do it. Uh, for example, I think of statutory PO, right, where we have a law that says if you increase the deficit, automatic across the board spending, it always gets waved. I get it. But we do this all the time and I and I'm I'm not going to go too far over my time. I'm trying to be indulgent to my colleagues. I'll give myself a few more seconds. But like we've done that over and over and over and over and over and over and over again. We I know. But that's that's why we're here. And I could sit here and I could ask these guys questions. I know what their answer is going to be.
▶ 2:22:44I know what your answer is going to be. The point here is we didn't have an actual debate about amending the Constitution to try to achieve something. or in the absence of amending the Constitution, is there something this body, the United States Congress, can do to stop doing what we're doing, which is killing our country with interest piling up around the ears of our children? And if the answer is only that we've got to look in the mirror and be better, I agree. But we never do. We don't.
▶ 2:23:10And those of us that are dying on the hill trying to fight on the spending restraint, it's literally like pulling teeth to get discretionary spending held flat while we try to grow the economy out of it and deal with the fact that mandatory spending has gone from what 4% in 1962 to what 24% now of the overall GDP and discretionary has gone from about 12% to 6% over that time. mandatory spending is consuming it.
▶ 2:23:39Now, I've gone a minute over. I would just say I look, I appreciate the witnesses coming in. I appreciate their expertise. I appreciate my colleagues. Uh I would suggest that we have got to do something to stop mortgaging our children's future. And we've got to stop pointing across at each other and saying, "Well, you did it and you did it." It's just simply not true. My Democratic colleagues give Clinton credit for the 90s but want to ignore welfare reform and ignore Republican Congress that came in in '94 95. So with that I've used up my time.
▶ 2:24:09Anybody have any consent request? Gentleman from Cal gentle lady from
▶ 2:24:13Well I don't have a consent request.
▶ 2:24:14Well that then
▶ 2:24:15but I just want to say something to you. Okay. Okay. Okay. Yeah. Um so a I just want to commend you on your comments and rules on the score act. Okay. And then second, I do want to say that I do think some districts try to elect better people. And I do I do think that, but really I want to commend you. You mentioned petty in your comments and I was thinking I want to commend you, Mr.
▶ 2:24:42Chair, for discouraging any petty, costic, childish outbursts in this hearing. I just want to thank you. I think I think the gentle lady I I do think we owe it to the future generations to actually solve this problem. And we're not. And so if we want amend the constitution, let's have that debate. If we don't, let's come up with another solution. With that, I will do whatever I'm supposed to do to conclude the hearing. This concludes today's hearing. We thank the witnesses for appearing before the subcommittee.
▶ 2:25:10Without objection, all members will have five legislative days to submit additional written questions for the witnesses or additional materials for the record. Without objection, the hearing is adjourned.