Balancing the Budget? Or Adding A National Sales Tax To The Income Tax?


The stated purpose of Compact for America, Inc. is to get a balanced budget amendment (BBA) ratified. Here is their proposed BBA. State Legislators recently introduced it in Arizona.
1

The gap between what this BBA pretends to do - and what it actually does - is enormous. It has nothing to do with "balancing the budget" – it is about slipping in a new national sales tax or value-added tax in addition to the existing federal income tax.

We have become so shallow that we look no further than a name – if it sounds good, we are all for it. We hear, "balanced budget amendment," and think, "I have to balance my budget; they should have to balance theirs." So we don't read the amendment, we just assume they will have to balance theirs the same way we balance ours – by cutting spending.

But that is not what the BBA does. In effect, it redefines "balancing the budget" to mean spending no more than your income plus the additional debt you incur to finance your spending. To illustrate: If your income is $100,000 a year; but you spend $175,000 a year, you "balance" your budget by borrowing the additional $75,000. See?

Under the BBA, Congress may continue to spend whatever it likes and incur as much new debt as it pleases - as long as 26 States agree. And since the States have become major consumers of federal funding, who doubts that they can't continue to be bought? Federal grants make up almost 35% of the States' annual budgets! The States are addicted to federal funds – who thinks they won't agree to get more money?

The BBA enshrines Debt as a permanent feature of our Country; gives it constitutional approval; does nothing to reduce spending or "balance the budget"; authorizes a new national tax; and wipes out the "enumerated powers" limitation on the federal government.

Let's look at the BBA, section by section, using plain and honest English. And then let's look at how our Framers wrote our Constitution to strictly control federal spending.

Compact for America's BBA

Section 1 says the federal government may not spend more than they take from you in taxes or add to the national debt. [Yes, you read that right.]

Section 2 accepts debt as a permanent feature of our Country – the "Authorized Debt." This is the maximum amount of debt the federal government may incur at any given point in time.

  • Initially, when the Amendment is ratified, the "authorized debt" may not be more than 105% of the then existing national debt. So! If the national debt is $20 trillion when the Amendment is ratified, the federal government may not initially add more than 105% of $20 trillion [or $1 trillion] to the national debt.
  • After that initial addition to the national debt, the "authorized debt" may not be increased unless it is approved by State Legislatures as provided in Section 3.

Section 3 says whenever Congress wants, it may increase the national debt if 26 of the State Legislatures agree. [Yes, you read that right.]

Section 4 says whenever the national debt exceeds 98% of "the debt limit set by Section 2," the President shall "impound" sufficient expenditures so that the national debt won't exceed the "authorized debt." And if the President doesn't do this, Congress may impeach him!

This is a hoot, Folks! I'll show you:

  • No debt limit is set by Section 2! The national debt can be increased at any time if Congress gets 26 State Legislatures to agree. Can 26 States be bought?
  • Section 6 defines "impoundment" as "a proposal not to spend all or part of a sum of money appropriated by Congress". Who believes Congress will impeach the President 2 for failing to "impound" an appropriation made by Congress?

Section 5 says any new or increased federal "general revenue tax" must be approved by 2/3 of the members of both houses of Congress.

Now pay attention, because this is a monstrous trick to be played on you: Section 6 defines "general revenue tax" as "any income tax, sales tax, or value-added tax" levied by the federal government.

And when you read the first sentence of Section 5 with the definition of "general revenue tax" in place of "general revenue tax," you see that it says:

"No bill that provides for a new or increased income tax, sales tax, or value-added tax shall become law unless approved by a two-thirds roll call vote…"

Do you see? This permits Congress to impose a national sales tax or value added tax in addition to the income tax, 3 if 2/3 of both houses agree. [Yes, you read that right.]

But the trickery of the drafters of this evil piece of work is even worse. Section 5 also says that any bill for a new sales tax which would replace the federal income tax need only be approved by a simple majority of the members of both houses.

This makes most readers believe that the income tax would be replaced by a sales tax.

But the Amendment does not require Congress to introduce a sales tax to replace the income tax. [Remember, that sales tax requires only a simple majority to get passed.]

Whereas it authorizes Congress to impose a sales tax or value-added tax in addition to the income tax! [This sales tax requires a 2/3 majority to get passed.]

Do you see? Are they tricky or what!

And which option will Congress choose?

Section 6 sets forth the definitions for the amendment. As you see, you must always read the definitions and apply them to the text.

Section 7 says the Amendment is "self-enforcing." Rubbish! No Constitution or amendment is "self-enforcing." There is only one way to enforce our Constitution: WE THE PEOPLE, who are "the natural guardians of the Constitution" (Federalist No. 16, next to last para), enforce it by learning it and by throwing out politicians who ignore it. We must always be on guard against the wolves who seek to destroy it.

Nick Dranias, on the Board of Directors for the Compact for America , is a constitutional lawyer. History professor, Kevin R. C. Gutzman, on the Advisory Council, is a lawyer. Other prominent lawyers and a 5th Circuit Court Judge, are on the Council. They all know what their BBA does.

How Does Our Constitution Control Federal Spending?

Our Constitution lists – itemizes – every power WE THE PEOPLE delegated to the federal government when we ratified the Constitution. These are the "enumerated powers." Article I, §8 lists most of the powers delegated to Congress for the Country at large: 4

  • immigration office (Art. I, §8, cl.4)
  • mint (Art. I, §8, cl. 5)
  • a few criminal laws (e.g., Art. I, §8, cl. 6)
  • post offices & post roads (Art. I, §8, cl. 7)
  • patent & copyright office (Art. I, §8, cl. 8)
  • federal courts (Art. I, §8, cl. 9)
  • military and citizen militia (Art. I, §8, cls. 11-16)

Various other Articles, sections, and clauses list additional objects of Congress' spending, such as payment of the salaries of persons on the civil list (Art. I, §6, cl.1; Art. II, §1, next to last clause; and Art. III, §1).

Do you get the idea? The Constitution lists what Congress is permitted to spend money on. Its spending is limited to the enumerated powers, and the salaries of those on the civil list. If you will go thru our Constitution and highlight every power delegated to Congress and the President, you will see ALL the objects on which Congress has constitutional authority to appropriate funds. THAT is ALL – ALL – they may lawfully spend money on.

We have a debt of $17+ trillion (plus unfunded liabilities) because WE ignored our Constitution for 100 years; and Congress spent money on objects outside the scope of the enumerated powers.

This one page chart depicts the Constitution We established, and most of what Congress may lawfully spend money on. Is it not a thing of beauty? Do you want it back? Then Restore it!

Understand this: All versions of a BBA eliminate the enumerated powers limitations on the federal government. Under all versions, the Constitution is "fundamentally changed" to permit the federal government to do anything they want and to spend money on anything they please.

Amendments are a tricky business. And tricksters abound in our Land.

Endnotes:

1 Compact for America is also trying to use the "compact of the states" provision & is calling for an Art. V convention. Red Flag, Folks! But for now, let's look just at their dishonest BBA.

2 Congress always had authority to impeach and remove a President for usurpations of power - see this short Primer.

3 Section 5 also says Congress may reduce or eliminate existing income tax exemptions, deductions, or credits by a simple majority vote.

4
This paper lists all the powers delegated to Congress by our Constitution. You can learn them!

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About Publius Huldah
Lawyer, philosopher & logician. Strict constructionist of the U.S. Constitution. Passionate about The Federalist Papers (Alexander Hamilton, James Madison & John Jay), restoring constitutional government, The Bible, the writings of Ayn Rand, & the following: There is no such thing as Jew & Greek, slave & freeman, male & female, black person & white person; for we are all one person in Christ Jesus. She also writes legal and Constitutional commentary at her site: Publius-Huldah
  • Lewis Citrenbaum

    If you take a look at the Compact For America's BBA, and if you know the constitution, its obvious that "Publius Huldah" is either a) a very poor "lawyer, philosopher, & logician," or, more likely, b) does not respect the readership and is not seeking to inform.

    Publius argues that, because increases in taxes and borrowing are still possible under the BBA, the goal of the BBA is inceased taxes and borrowing. This is absurd. The BBA makes it harder for the fed to increase taxes; it makes it harder for the fed to borrow.

    I suggest getting "facts" from somewhere else.

    Here's a new article that dispels some other misconceptions about the CFA BBA: http://blog.constitutioncenter.org/2014/02/did-george-washington-tell-a-lie-about-state-control-over-article-v-amendments/

  • M. J. "Zeb" Blanchard

    It is important to research in the background of any initiative of this nature.
    If it is pear review medical research then it is important to find out who is funding the research, if any one, and someone (Big Pharma) usually is. When that fact is known it is pretty easy to guess in whose favor the research will come out.
    In the case of the Art V Con (con) and here on the BBA it is ALEC, and others. ALEC is the penultimate clandestine mega lobbying group for the GOPers political elite. If ALEC is behind it you know it is being pushed by the Goper half of the Demopublican Party that now "rules" the county.

  • M. J. "Zeb" Blanchard

    " . . . but the states should have a voice for the same reason that the U.S.
    Constitution originally gave state legislatures control over the U.S.
    Senate."
    The 17th only changed how U.S. senators come to be in office not who they report to. State Reps need to realize this and take back control of their U.S. Senators from K Street. Several parts of the Constitution reference the function of Senators, i.e. advocates for the states. Speaks to enforcing the provisions of the existing Constitution before fussing with irrelevant changes.

  • Patriotsam

    The only BBA needed is to repeal Art. 1 Sec. 8 Clause 2. It should be
    real simple in wording so everyone can understand it for example.
    "Article 1 Section 8 Clause 2 is hereby repealed." If you can't borrow
    money you have to balance your budget.

  • John Stephens

    Do you want to balance the federal budget? Allow the federal government to only spend funds on things specifically enumerated to it. We could then cut taxes abd still run a surplus. The danger with these so-called balance budget amendments is that although they sound good, the Constitutionalize unconstitutional spending. Spending does NOT need to be tied to GDP or what have you, it should be tied directly to an enumerated power. And to tie the raising of a debt limit to States that are drunk on federal funds doesn't sound too good to me. Seems to me it would just be another way for the feds to get States to be complaint in their unconstitutional spending. IMHO, what we need is to enforce the Constitution, not amend it with good sounding things that will have unintended consequences. Or maybe the promotion of unconstitutional spending under the guise of controlling federal spending is the objective? And that is without even getting into the constitutionality of the 'compact method' being promoted by Compact For America and the Goldwater Institute. Talk about potentially opening up a can of worms.

    • Nick Dranias

      Here's what the Chairman of the Philadelphia Convention and first President of the United States of America, George Washington, said about Article V: "It should be remembered that a constitutional door is open for such amendments as shall be thought necessary by nine States."

      George Washington did not tell a lie.

      On June 6, 1788, Patrick Henry raged against ratification at the Virginia convention, spending a huge chunk of his argument asserting that the state origination of amendments under Article V was completely unworkable and unwieldy. In response, leading Federalist and advocate of ratification, George Nicholas, observed that state legislatures may apply for an Article V convention confined to a “few points;” and that “it is natural to conclude that those States who will apply fo...r calling the Convention, will concur in the ratification of the proposed amendments.”

      Later, this public understanding of Article V was further confirmed by the last of the Federalist Papers, Federalist No. 85, in which Alexander Hamilton concluded, “We may safely rely on the disposition of the State legislatures to erect barriers against the encroachments of the national authority” by using their amendment power under Article V.

      That was not just pillow talk.

      The Compact for a Balanced Budget takes the Founders at their word and enforces the public understanding they promoted.

      The Balanced Budget Amendment also supplies what Thomas Jefferson called the "Missing Amendment." On Nov. 26, 1798, Thomas Jefferson wrote his friend, John Taylor: “I wish it were possible to obtain a single amendment to our constitution; I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its constitution. I mean an additional article taking from the federal government the power of borrowing.”
      Unlimited debt was the cause of deviations from the enumerated powers FROM the BEGINNING.
      Let's strike at the root.

      Jonathan Elliot, The Debates in the Several State Conventions of the Adoption of the Federal Constitution, vol. 3, pp. 102-03 (Virginia) (1827), available at http://files.libertyfund.org/files/1907/1314.03_Bk.pdf

      Federalist No. 85 in The Federalist (The Gideon Edition), Edited with an Introduction, Reader’s Guide, Constitutional Cross-reference, Index, and Glossary by George W. Carey and James McClellan (Indianapolis: Liberty Fund, 2001), available at http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=788&chapter=108727&layout=html&Itemid=27

      The Writings of George Washington, collected and edited by Worthington Chauncey Ford, Vol. XI (1785-1790), p. 249 (New York and London: G. P. Putnam’s Sons, 1890), available at http://files.libertyfund.org/files/2415/Washington_1450-11_Bk.pdf

      The Works of Thomas Jefferson, Federal Edition (New York and London, G.P. Putnam’s Sons, 1904-5). Vol. 8, http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=805&chapter=87116&layout=html&Itemid=27

    • The Blue Tail Gadfly

      George Washington was a good man and gave us this warning in his Farewell Address:

      "Toward the preservation of your government and the permanency of your
      present happy state, it is requisite not only that you steadily discountenance irregular oppositions to its acknowledged authority, but also that you resist with care the spirit of innovation upon its principles, however specious the pretexts. One method of assault may be to effect in the forms of the Constitution alterations which will impair the energy of the system, and thus to undermine what can not be directly overthrown."

      http://www.wjmi.org/DOCS/farewell.htm

      Which is precisely what your BBA does, impairs the energy of the system.

      Re: "The Balanced Budget Amendment also supplies what Thomas Jefferson called the "Missing Amendment.""

      Are you trying to assert that Thomas Jefferson would have supported your badly written amendment both then and now?

    • Nick Dranias

      The BBA is EXCELLENTLY written. Powerfully so. And way, way better than what you find in state constitutions and congressional proposals. So, yes, I think it is precisely the kind of thing that Jefferson had in mind. We have the benefit of hindsight Washington did not. We now understand that you can't give elected officials unlimited borrowing authority. If you want a really good analysis of the BBA read this new column: http://grumpyelder.com/2014/02/its-time-to-fix-the-debt-with-the-compact-for-a-balanced-budget/

    • John Stephens

       Yes, I am familiar with the writings of our Founding Fathers. Yes, I also know that part of the beauty of our Constitution is the amendment process. As Hamilton said in Federalist 85, "I never expect to see a perfect work from imperfect man." The Framers knew there were defects and errors in the Constitution, slavery comes to mind as an example. So they built in a way for the people and the States to fix errors. 

       That doesn't mean it's a good idea to pass amendments all the time, hence the difficulty in passing them (3/4 States ratification regardless of where they originated.) Just like how we can have a convention for amendments when 2/3 States apply for one, it does not mean it is a good idea to have one in todays political environment.

       There are better ways, in my honest opinion, to control federal spending then passing an amendment that can and will be easily misconstrued. Like holding the federal government to only constitutional spending. Hate to break it to you, but even the States have allowed the federal government to run amok because it likes receiving those federal funds.

       We would do very well by taking another cue from Jefferson in his draft of the Kentucky Resolutions. Not only about the federal government borrowing money, but on everything it does, borrowing, spending, taxing, etc. "...in questions of power then, let no more be heard of confidence in man, but bind him down from mischief by the chains of the constitution..."

      Jefferson's draft of Kentucky Resolutions found here: http://jeffersonpapers.princeton.edu/selected-documents/jefferson%E2%80%99s-draft

      Federalist 85 found here: http://www.constitution.org/fed/federa85.htm

    • Nick Dranias

      That was a refreshingly clear and thoughtful reply. I agree amendments should not be made "all the time." But the truth is that the Founders represented it would be "easy," just not extremely easy to obtain amendments. I agree with you that it will be a battle to hold the federal government to any constitutional provision. It is a battle I welcome without any hands tied behind my back. I'm willing to fight to preserve what's there and also to layer-on new protections as needed. I want to keep the fight dynamic and not to unilaterally disarm when it comes to amending the constitution. However, I disagree with your claim that the amendment "can and will be easily misconstrued." The amendment is actually very simple and very easy to construe if you are familiar with fiscal policy and the typical language used in balanced budget amendment proposals. I suggest you visit http://www.compactforamerica.org, go to the education page and scroll down to the bottom and look at the cross-comparison between the CFA-BBA and congressional BBAs. I think you will be impressed with the clarity and simplicity of our approach. Lastly, the whole point of the amendment is that the structural problem of the constitution is putting control over a credit limit in the debtor's hands. Requiring a state referendum on any increase in the federal debt limit will remedy that defect. Sure, states are indirectly vested in borrowing because between 20 to 40% of their budget arises from federal borrowing, but their interest is far less than the federal government's own interest in borrowing. Also, the states are more responsive to the people, who in poll after poll object to borrowing beyond one debt limit after another. Introducing a state referendum will be a powerful check and balance on abusive national policy not seen since the 17th Amendment.

  • http://publiushuldah.wordpress.com/ Publius Huldah

    So now, Nick Dranias turns FROM misrepresenting what his phony "balanced budget amendment" would do TO misrepresenting what our Framers said about amendments to the Constitution.

    1. His BBA is phony because it isn't about "balancing the budget". It is a subterfuge to impose a new national sales or VAT tax on top of the existing income tax (which Dranias provides may be increased while exemptions are reduced or eliminated). And the national debt? It will continue to grow as long as 26 money hungry States clamor for more and more federal funds.

    2. And what did our Framers REALLY say about amendments to the Constitution? I prove it here: http://publiushuldah.wordpress.com/2013/09/15/mark-levin-refuted-keep-the-feds-in-check-with-nullification-not-amendments/
    And be sure to click on the hyperlinks which lead you to the original source documents.

    in a nutshell, our Framers at the Federal Convention of 1787 understood that the purpose of amendments is to remedy defects in the Constitution [slavery]; and that the novelty and difficulty of what they were doing would require periodic revision [the 11th, 12th, & 27th amendments]. Hamilton said in Federalist No. 85 (13th
    para) that useful amendments would address the “organization of the
    government, not … the mass of its powers”. Madison said in Federalist No. 43 (at 8.) that “useful alterations will be suggested by experience.”

    Thomas Jefferson & James Madison said that when the federal government usurps powers not delegated to it in the Constitution, "a nullification of the act” is “the natural right, which all admit to be a remedy against insupportable oppression.” See e.g., Thomas Jefferson, The Kentucky Resolutions of 1798, 8th Resolution; and James Madison, Notes on Nullification (1834). Madison's quote is near the end. Use “find” function.

    Yet these Conspirators Against Our Constitution tell the lie that our Framers said the remedy against a federal government which usurps powers is to amend the Constitution!

    That is idiotic! How do you draft an amendment to say the federal government can't do what it did and what the Constitution already prohibits it from doing?

    But their end game is not to get new amendments ratified. Make no mistake: Their plot is to replace Our Constitution, and that can only be done at a "convention". And a clue as to what this new constitution would be like is shown by the tyranny inherent in Dranias' phony BBA: MORE FEDERAL GOVERNMENT POWER, MORE TAXATION, AND A FEDERAL GOVERNMENT WITH UNLIMITED GENERAL POWERS (instead of the limited & enumerated powers in our present Constitution).

    THIS is the War over our Country. You should be seeing how the sides are lining up in this battle over our Country and Constitution. Here is the Constitution our Framers gave us
    http://publiushuldah.files.wordpress.com/2013/08/chart-showing-federal-structure-3-1-part-a2.pdf Learn it. Defend it. Restore it.

  • Nick Dranias

    Unlimited borrowing capacity is the cause, not the symptom, of unlimited government.
    Here's what Thomas Jefferson wrote in 1798:
    "I wish it were possible to obtain a single amendment to our constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of it’s constitution; I mean an additional article, taking from the federal government the power of borrowing. I now deny their power of making paper money or anything else a legal tender. I know that to pay all proper expences within the year, would, in case of war, be hard on us. But not so hard as ten wars instead of one. For wars would be reduced in that proportion; besides that the State governments would be free to lend their credit in borrowing quotas. For the present, I should be for resolving the alien & sedition laws to be against the constitution & merely void, and for addressing the other States to obtain similar declarations; and I would not do anything at this moment which should commit us further, but reserve ourselves to shape our future measures or no measures, by the events which may happen. It is a singular phenomenon, that while our State governments are the very best in the world, without exception or comparison, our general government has, in the rapid course of 9 or 10 years, become more arbitrary, and has swallowed more of the public liberty than even that of England."

    http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=805&chapter=87116&layout=html&Itemid=27