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Alabama should pass the Compact for a Balanced Budget to rein in National Debt (Opinion)

Debt Statue of Liberty
(Image above: A visual illustration of America’s debt piled up around the Statue of Liberty. The full visualization can be found here.)

There are few things as outrageous to Americans as taxation without representation; it started a war. But it is a fact that our children and grandchildren will be taxed for most of our current $18.5 trillion national debt. It is also a fact they had no representation when that obligation was imposed on them.

Our descendants should not be stuck with a bill for federal spending that mostly does not benefit them – but that is exactly what Washington is doing.

Soon Congress will be voting to lift the federal debt limit yet again—as it has done dozens of times in the past. The debt limit debate and temporary shutdowns in Washington have always been pure political theater. The overspending continues.

But why should we expect anything else?

Unlike Alabama, which is constitutionally required to balance its budget every year, the federal government can run deficits, print money, and borrow without limit. They promise ever-expanding programs of federal goodies, and borrow on the backs of our children to fund these leviathan programs that are strangling our economic freedom.

But the irresponsible spending cannot go on forever.

Today, our $18.5 trillion national debt exceeds the value of our annual Gross Domestic Product (GDP), which measures our nation’s annual economic output. The U.S. national debt comparatively is worse than that of Argentina, Brazil, Mexico, Spain and France. In fact, our debt to GDP ratio is as bad as Greece’s in 2007.

As Greece knows all too well, a nation built on excessive debit is living on borrowed time. At any point, our creditors (China, and the like) could come to their senses and cut us off. We are close to the point of soaring interest rates, massive spending cuts, or tax increases to fund bloated federal programs. It is a grave threat to our national security to put such destructive power in the hands of China, which is the largest foreign holder of our national debt.

That’s why the Alabama Senate just joined Alaska, Georgia, Mississippi, and North Dakota in an effort to seize the wheel before Washington drives us over the cliff. On May 28, Republican state senators overwhelmingly passed the Compact for a Balanced Budget, which I sponsored.

The Compact is an agreement among the states to fix the national debt. It advances a powerful balanced budget amendment that would impose three critical reforms.

First, the amendment would limit Washington’s borrowing capacity to a specific amount and otherwise restrict spending to revenue at all times. By freezing the national debt, it would force Congress to live within its means.

Second, the amendment encourages spending reductions before tax increases to close deficits, while still keeping responsible revenue options on the table. It would do so by requiring super-majority approval for new or increased income or sales taxes, while retaining the current simple majority rule for revenue increases that are politically difficult and less harmful to our economy such as eliminating tax loopholes.

Third, the amendment would furnish three “release valves” that would allow emergency borrowing in times of war or national disaster. Congress could pay down the national debt and free up borrowing capacity under the debt limit, or the President could delay less urgent spending when a “red zone” of borrowing capacity is reached (subject to simple majority override by Congress to prevent abuse). If all else failed, Congress could ask a majority of state legislatures to approve an increase in its borrowing capacity. These three release valves would provide Washington with all the flexibility needed to deal with the uncertainties of the real world—but without the absurdity of giving a bankrupt debtor the power to borrow whatever it wishes.

These reforms would force the politicians in Washington to focus on the constitutional priorities of the federal government. Once spending reductions were exhausted, they would encourage long overdue pro-growth tax reforms to close deficits. At long last, the days of kicking the fiscal can to future generations would be over.

By passing the Compact for a Balanced Budget, our State Senate has proudly declared that Alabama will join with its sister states in furnishing the fiscal leadership that Washington lacks.

I urge the State House of Representatives to pass this important legislation and send it to the Governor for his signature.


Senator Gerald Allen represents Tuscaloosa, Pickens, and Lamar Counties in the Alabama State Senate. He is chairman of the Senate Transportation & Energy Committee.

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