Introduction to, and Comments on, an Enforceable Balanced-Budget Amendment to the United States Constitution I want to join my fellow

Americans to add a balanced budget amendment to the federal Constitution. However, considering California's disappointing experience with such an amendment since 2004, I want the federal amendment to have more safeguards than California's to ensure compliance in both letter and spirit. More positively and specifically, I am proposing a rough draft of a federal balanced budget amendment with some tough safeguards. I have expressed it in eleven sections. The first eight sections would set nine safeguards. The ninth section would define and require a balanced budget with an initial deadline for balance after ratification. The tenth section would maintain a minimum downward trajectory on federal debt and on federal guarantees not covered by proportional reserves. The eleventh and last section would allow emergency exceptions and require them to contain clear financing, "exit plans" and repayment plans. I do not know how to express these safeguards in fewer words; some detail is necessary. I would insist on putting these safeguards in the Constitution, where the Congress cannot directly dilute or remove them, than in any statute laws, where the Congress can dilute or remove the safeguards directly. SUMMARY: Purpose of Section 1: Introduce one or more new budget bills at the start of every Congressional business year (already customary, but necessary to require here). Purpose of Section 2: Safeguards #1 and #2: (1) Set an early deadline for the enactment of the annual budget law. My suggestion: two weeks after the first introduction. (2) If the date for no-signature enactment (Article I, Section 7) of this law would fall after the deadline for enacting this law (this section), set the former equal to the latter, for this law only. Purpose of Section 3: Safeguard #3, the most powerful: As the penalty for failure to enact an annual budget law by the deadline, set an immediate national recall election for all of the Congress, the President, and the Vice President, with a defined set of necessary changes in Constitutional requirements for this special election. My suggestion: two weeks after the missed deadline. Set a new budget deadline and start over. Purpose of Section 4: Safeguard #4: Prohibit all new lending and borrowing, even for emergencies, within the federal government (such as from the Social Security

Trust Fund), including the federally chartered and owned corporations (FDIC, NCUSIF, etc.) and the federal government sponsored enterprises (Fannie Mae, Freddie Mac, etc.), and require all such outstanding loans to be honored and repaid in due course. Allow one exception to this prohibition: the relationship or relationships between the United States Treasury and the central bank or functionally central banks, when such a charter or charters exist or exists. Allow the Congress to appropriate funds directly (instead of borrowing) from any of these chartered sources for emergency purposes. Purpose of Section 5: Safeguard #5: Require Congress to establish proportional minimum cash reserve levels for all existing and future guarantees extended by federally chartered and owned corporations and federal government sponsored enterprises. The FDIC and NCUSIF already satisfy this (as I understand), but some other guarantee programs do not at the time of this writing. Purpose of Section 6: Safeguard #6: Require the Treasury to issue daily reports not only on the public debt, but also on internal federal debts (loans from the Social Security Trust Fund, etc.), on the known obligations to disburse funds (Social Security, Medicare, Medicaid, the other social welfare disbursements, guarantees that the federal government is paying because the covered parties have defaulted, pensions for federal employees, etc.), and on the unactivated but outstanding guarantees issued for all other entities and individuals (Fannie Mae, guaranteed student loans, FDIC, NCUSIF, etc.) and their reserve funds. Purpose of Section 7: Safeguards #7 and #8: (7) Specify the minimally required components of the annual budget law. (8) Specify on which categories of items to install minimum or maximum limits of spending or reservation. These limits may not be exceeded in federal government operations. Include federal guarantees and other known present and future federal financial obligations. Purpose of Section 8: Safeguard #9: Permit and define a process for the executive branch to reallocate unspent funds within a fiscal year, with repayment of both the federal public debt and the internal federal debts being the first priority always. Purpose of Section 9: Define a balanced budget, require it, and require the arrival at balance within a certain period after ratification. My suggestion: require the budget to balance no later than the end of the third year after ratification, and require balance to be achieved at the end of each calendar quarter after that. Purpose of Section 10: Require that all outstanding federal public and internal debt amount to at least one dollar less in fact at the end of the fiscal year, and require all continuing federal financial guarantees and obligations in excess of their allocated reserve

proportions (which can no longer be borrowed against!) to amount to at least one dollar less in fact at the end of the fiscal year. Purpose of Section 11: Specify how to allow and enact any emergency exceptions to a balanced budget, and require that the exceptions include specific plans for financing, termination, and ultimate repayment, within the restrictions set by this amendment and the Constitution (e.g., Safeguard #4, no borrowing within the federal government even for emergencies, except between the central bank or banks and the federal Treasury if such a relationship or set of relationships is chartered). MISCELLANEOUS OBSERVATIONS ABOUT THE SAFEGUARDS: The harshly-enforced requirement to enact the budget law quickly at the beginning of each calendar year (sections one through three) would encourage more-substantive discussion of policy details during election campaigns and reduce the opportunity for "gridlock" over funding to maintain government operations while Congress is in session. Indeed, this quick and general recall election would resolve a gridlock incident and memorably discourage it for the next few election cycles. The ban on borrowing within the federal government (section four) would restore the existence of the Social Security Trust Fund in fact (fictional since the LBJ administration?) and help us reform Social Security. The exception to allow the Federal Reserve System or any Congressionally-chartered central bank to lend to the federal government would allow some flexibility in near-emergencies. I do not wish to abolish the FRS or eliminate the role of a central bank, though I do believe that we need to reform the FRS significantly. Still, I phrased the central bank's existence as hypothetical because I prefer that any central bank institution(s) not be established in the Constitution but by statute (easier to change). The requirement to report the levels of any federal guarantees and maintain cash reserves for them would shine daily sunlight on any federal guarantee system in operation (section five and portions of sections six and seven). I do not think this would increase the financial "moral hazard" for the guaranteed debts beyond the hazard already created by the guarantees, and I do think this would improve the faith and credit of the United States. I defined the specific procedure for reallocating unspent funds (section eight) as constitutional law in order to maintain the good faith and credit of the United States. I also defined the details to make unspent funds more difficult for anyone to misuse until there are "leftovers" after allocations toward debt repayment.