In testimony to a congressional committee in 1994, former Common Cause chairman and U.S. Solicitor General Archibald Cox characterized a proposed balanced budget amendment as “an act of supreme constitutional irresponsibility.”
Cox viewed a constitutionally-enforced balanced budget requirement as problematic for many reasons. He believed the Constitution was not designed and should not be used to determine fiscal policy and that enforcement of a balanced budget amendment would be problematic. Who would interpret the amendment? What court is equipped to enforce the amendment? A balanced budget amendment could also lead to a less transparent budgeting process. Cox concluded that the amendment would likely “undermine confidence in the Constitution by holding out an appearance of guarantees that would soon prove illusory.”
A federal balanced budget amendment would also have a major impact on the nation’s finances. The Center on Budget and Policy Priorities (CBPP), a Washington, DC-based think tank focused on budgetary issues relating to poverty, inequality, and fiscal responsibility, estimates a balanced budget amendment would trigger tax and program cuts that could spark an economic crisis and force significant cuts to Social Security, military retirement benefits, and other important public services. The CBPP also warns that the amendment could tie the hands of the federal government from responding to crises such as an economic downturn, a natural disaster, or war.
In 1997, when Congress seriously considered a federal balanced budget amendment, more than 1,000 economists issued a joint statement calling it “unsound and unnecessary.” A 2011 study by Macroeconomic Advisers, one of the most respected nonpartisan, private, economic forecasting firms, concluded that “recessions would be deeper and longer” with a balanced budget amendment in place, leading to economic uncertainty that could stifle economic growth.
The uncertainties surrounding a balanced budget amendment have not stopped some well-financed organizations and individuals from pushing the idea, and their plan to pass it via an Article V convention is a very dangerous path.
Perhaps no group has been more influential than the American Legislative Exchange Council (ALEC) in pushing for an Article V convention. Arguably the country’s largest and most powerful state-based lobbying organization, ALEC brings corporate representatives and state legislators together behind closed doors to write and vote as equals on model bills affecting everything from environmental protection, workers’ rights, healthcare, telecommunications policy, and criminal justice.
ALEC’s corporate members and funders include such major corporations as AT&T, Pfizer, UPS, Koch Industries, Comcast, Altria, and Chevron. ALEC also claims the membership of nearly one-quarter of the country’s state legislators, roughly 2,000 people.
As a 501(c)(3) charity, ALEC provides a tax deduction for its corporate supporters. Its charitable status also puts legal limits on ALEC’s lobbying – limits that Common Cause and other organizations allege ALEC routinely violates. Common Cause has filed a “whistleblower” complaint against ALEC with the Internal Revenue Service and is seeking an order requiring the payment of back taxes and penalties. More than 100 major companies have cut ties with the organization.
Although ALEC’s work to undermine workers’ rights, environmental protection, the Affordable Care Act, telecommunication regulations, and public education has been well documented, the group’s push for an Article V convention has largely escaped public notice. In recent years, ALEC has endorsed several “model” bills calling for a constitutional convention to propose amendments that would require Congress to obtain approval from two-thirds of state legislatures before imposing new taxes, increasing the federal debt or federal spending, or issuing federal spending mandates.
In addition to these proposals that would radically change how Congress legislates tax and fiscal policy, ALEC has advanced a two-pronged strategy in support of an Article V convention to draft a balanced budget amendment. The strategy includes:
The Center for Media and Democracy, a watchdog nonprofit, reports that the Jeffersonian Project – ALEC’s 501(c)(4) advocacy arm – has been working “behind the scenes” to push the ALEC model Article V bills. Through the Jeffersonian Project, ALEC has sent "issue alerts" to legislators urging support and votes for Article V balanced budget resolutions. Additionally, ALEC has conducted panels and workshops at its conferences to “educate” legislators about the Article V convention. In 2011, ALEC published the “Article V Handbook,” a 40-page manual to guide state legislators in proposing a constitutional convention. Written by conservative constitutional theorist Robert Natelson, the handbook includes talking points, model legislative language, and legal arguments supporting the use of Article V.
Natelson, a former law professor at the University of Montana, is well known within the conservative community. He is listed as a constitutional “expert” by the Federalist Society, ran for governor several times in Montana Republican primaries, and now works at the Colorado-based Independence Institute, a conservative think tank that is a member of the State Policy Network (SPN). The State Policy Network, a frequent ALEC partner, links conservative and libertarian “think tanks” in all 50 states and is funded by corporations including AT&T, Kraft Foods, and Philip Morris, as well as conservative donors such as industrialists Charles and David Koch, the Walton Family Foundation, the Bradley Foundation, and the Searle Freedom Trust. One of SPN’s most active affiliates, the Goldwater Institute of Arizona, has endorsed an Article V convention for a balanced budget amendment.
The Goldwater Institute’s former top lawyer, Nick Dranias, now heads a 501(c)(4) nonprofit group called Compact for America (CFA). This new organization, and the affiliated Compact for America Education Foundation, which received its 501(c)(3) tax-exempt status in 2014, is promoting a sample resolution, the “Compact for a Balanced Budget Amendment,” nearly identical to ALEC’s “Compact for America” model bill. Staffed and led by several former Goldwater Institute employees, business executives, and conservative activists and thinkers, Compact for America has attracted high-profile endorsements from conservative columnist George Will and former Congressman Allen West, among others. So far, only four states – Alaska, Georgia, Mississippi, and North Dakota – have adopted the Compact for America initiative.
Another group lobbying for an Article V constitutional convention is the Balanced Budget Amendment Task Force, registered as a 501(c)(4) under the name “Balanced Budget Amendment, Inc.” The Task Force was founded by conservative activists and state legislators, including Lew Uhler, President of the National Tax Limitation Committee, and Pete Sepp, Vice President for Policy and Communications at the National Taxpayers Union, which was one of the original groups to back an Article V convention for a balanced budget amendment in the 1970s. The Task Force’s tax documents reveal that most of its expenses have been dedicated to lobbying legislators and attending conferences, including ALEC meetings and gatherings hosted by the National Council of State Legislators (NCSL), to push for an Article V convention for a balanced budget amendment.
In December 2014, Ohio Gov. John Kasich launched a national tour supporting an Article V convention for a balanced budget amendment. Kasich, a founding member of ALEC in the 1970s, used the tour to promote his experience in working to balance the federal budget in the 1990s. Kasich traveled to Arizona, South Dakota, North Dakota, Montana, Wyoming, Utah, Idaho, Maine, South Carolina, and West Virginia – all states that are targets for an Article V balanced budget resolution. In Oklahoma, a target state he did not visit, Kasich lent his name to an op-ed pushing the resolution and explaining his support for an Article V convention.
To promote Kasich’s efforts, a 501(c)(4) nonprofit was formed: Balanced Budget Forever. Its incorporation papers show that the Columbus-based group was set up by a rural Virginia law firm, Holtzman Vogel Josefiak Torchinsky, that has gained a national reputation for representing high-profile secret money political groups. Holtzman Vogel’s clients include Karl Rove’s American Crossroads organization and several groups in the Koch brothers’ network of political organizations. The firm’s managing partner is Virginia State Sen. Jill Holtzman Vogel, former chief counsel to the Republican National Committee and an advocate of an Article V convention.
Kasich disclosed receiving gifts from Balanced Budget Forever on his 2014 personal financial disclosure form with the state of Ohio, but did not disclose the value of those gifts. Kasich has endorsed the Article V convention as a presidential candidate, stating in his economic plan that if Congress refuses to pass a balanced budget amendment, “he will work with the states to call a constitutional convention to craft an amendment that could be submitted to the states for ratification.”
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