By Barry Poulson
Politicians have basically given up on addressing our debt crisis. For decades, the national debt has grown at an unsustainable rate. Today, it stands at a mind-boggling $37 trillion.
Both political parties have thrown in the towel. But before we give up, we should understand how other countries have solved their debt crisis. Among the most successful of these countries is Switzerland.
In the early 1990s, Switzerland was experiencing unsustainable growth in debt that threatened economic stability and long-term economic growth. Swiss citizens had been successful in enacting debt brakes at the cantonal and municipal level. Swiss citizens asked the obvious question: if we have been successful in enacting effective fiscal rules at the cantonal and municipal level, why can’t we do so at the federal level?
The initiative and referendum gave Swiss citizens the power to amend the constitution at all levels of government. In 1991, they used the referendum process to incorporate a debt brake into the federal constitution, with support from 85 percent of the electorate. The debt brake imposes a cap on the growth in federal spending equal to the long-term rate of growth in the economy. The government may incur deficits in response to emergencies, but it must balance the budget over the business cycle. The Swiss maintain their version of a rainy-day fund to achieve these targets. With this debt brake in place, the Swiss reduced debt to 30 percent of national income.
America is at a turning point in addressing our debt crisis, much like the Swiss faced three decades ago. Since the tax revolt was launched in the 1970s, citizens have been successful in enacting effective fiscal rules in their state and local constitutions and charters. Since then, most states have been successful in balancing their budgets and limiting debt. If we can impose fiscal discipline at the state and local level, why can’t we do so at the federal level?
READ MORE: Of Nine Recent Presidents, the Champion of Spending Restraint Is... Ronald Reagan!
The Swiss had a major advantage over us in using a debt brake to solve their debt crisis. For centuries, the Swiss have relied on direct democracy to enact fiscal rules at all levels of government. While some U.S. states rely on the initiative and referendum processes to enact fiscal rules in their constitutions and charters, the U.S. Constitution does not provide for this form of direct democracy at the federal level. However, Article V gives citizens as well as Congress the power to propose amendments to the Constitution.
Citizens have been proposing a fiscal responsibility amendment to the U.S. Constitution through their state representatives for more than two centuries. In fact, in 1979, more than two-thirds of the states submitted resolutions calling for a fiscal responsibility amendment, but Congress failed even to count those resolutions, let alone call the convention, which the Constitution requires it to do.
Congress either blocks or preempts efforts by citizens to amend the Constitution through their state representatives. Efforts to enact a fiscal responsibility amendment using Article V appear to be at a standstill.
In effect, our debt crisis is also a constitutional crisis. State attorneys general could sue Congress for this failure to call the Convention, and while a few of them have expressed interest in such a lawsuit, no one has yet stepped up to file one. Perhaps it is time for citizens to take the bull by the horns to incorporate a fiscal responsibility amendment in the U.S. Constitution.
There is a precedent for this solution to our constitutional crisis. The 21st Amendment, which repealed Prohibition and overturned the 18th Amendment, was first proposed by citizen organizations in the states. Congress preempted this effort by proposing its own amendment. However, Congress mandated that the amendment be approved by conventions in each state. By doing so, Congress at least acknowledged the power of citizens at the state level to both propose and approve constitutional amendments.
Passage of the 18th Amendment could set a precedent for passage of a fiscal responsibility amendment to the U.S. Constitution, relying on citizens to propose and approve the amendment. This interpretation of Article V is closer to the original intent of the Founders in vesting power to citizens as well as Congress to amend the Constitution. This vision for Article V was best expressed by James Madison in Federalist 49: “(a)s the people are the only legitimate fountain of power, and it is from them that the constitutional charter, under which the several branches of government hold their power, is derived, it seems strictly consonant to the republican theory to recur to the same original authority… whenever it may be necessary to enlarge, diminish, or new-model the powers of government.”
Barry Poulson is a policy advisor with The Heartland Institute.
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