Decades of accumulating fiscal imbalance have proven once again that deficits matter. Even a rich and stable nation like the United States cannot continue to spend beyond its income without dire consequences. Two of the more obvious are high interest rates and inflation -- the classic symptoms of financial turmoil. It is only a short step from financial turmoil to political turmoil.
That is why we must face up to the challenge of bringing runaway federal deficits under control -- in the only way they can be controlled -- through constitutional reform of the budgetary process. Put simply, we must outlaw deficits and limit the increase in spending and taxes to the growth of the economy. Nothing less will work.
Some will say that it is wrong to ''lock economic policy into the Constitution'' or that we should have faith in our elected leaders to do the job that needs to be done. (But which they have persistently failed to do.) Other objections will be heard. Quibbles about whether the deficit is really important. Claims that the real problem is the money supply. Or OPEC. Or some other thing. Better to leave well enough alone. And certainly don't call for a constitutional convention to solve the fiscal crisis. Do that, and before you know it, the Moral Majority would ban lipstick. Or the Second Amendment would be repealed.
Those who argue that way have failed to grasp the nature of our fiscal problem. It is not trivial. It is not self-correcting. It arises from the basic dynamics of the legislative process. Politicians are rewarded for spending on behalf of small, organized constituencies at the expense of the large and unorganizable body of citizens. A program that takes a dime from every taxpayer could yield thousands to each member of a small group. That group will work hard to gain and keep the money. No one will work hard to save a dime. From this imbalance of incentives ever-increasing government spending has resulted.
Of course, the money to pay for this spending has to come from some place. Even nickels and dimes add up. The people who are asked to pay through ever-increasing taxes don't want to. The politicians attempt to compose this hopeless contradiction by resorting to deficits. That's why we have a trillion-dollar national debt and direct and indirect federal borrowing is absorbing almost 90 percent of total savings in the current fiscal year.
Deficits at the current level cannot continue without driving the nation into bankruptcy. Yet even the recognition that the system is headed for bankruptcy will not necessarily reduce the pressure to spend. To see why, consider this analogy. Simply pick any 435 people off the street and give each an American Express card with the same account number. Every cardholder would be liable for 1/435th of the total bill each month. Under those circumstances, how would the rational person behave? He would spend like a congressman. He would buy everything in sight, even if he recognized that the whole group was headed for the poorhouse. Anyone who refrained from spending would gain nothing. He would be no less bankrupt than the others. He would simply enjoy fewer benefits along the way.
So it is in Congress. As long as congressmen respond rationally to incentives , overspending is the only outcome to be expected, with deficits mounting to disastrous levels.
We cannot depend upon congressmen to behave irrationally by ignoring the incentives in the system. The only way fiscal order can be restored is by constitutional reform which limits the ability of Congress to spend and borrow money. This is exactly the kind of measure which belongs in the Constitution. It was first proposed by Thomas Jefferson. The legislatures of several states, including New York, asked that such a limitation be made part of the Bill of Rights at the time the Constitution was adopted.
Indeed, the reason that we have a Bill of Rights is that our Founding Fathers recognized that it is folly to depend upon the ordinary legislative process to preserve freedom of speech. Or freedom of the press. Or freedom in its other essentials. By the same token, we cannot depend on ordinary legislative processes to maintain fiscal responsibility. It simply doesn't work.
We have been lucky in being able to preserve popular government as long as we have. In the last 190 years many people from other parts of the globe have come along and borrowed carbon copies of the US Constitution. And set about the business of self-government. Most of these arrangements have been unstable, lasting no more than 20 years. What these other nations have lacked which we have enjoyed is not the outer forms of constitutional government -- but the economic stability to make it work.
Today, our long-term economic stability is no longer beyond question. Staggering deficits stretch out on the horizon as far as the eye can see. Deficits which mean high interest rates. Or high inflation. Or both. We would be fools if we attempted to prove that America would be the exception to the rule that protracted financial turmoil weakens and eventually destroys free institutions.
That is why thinking citizens should support the call by the state legislatures for a limited convention. Not to maul the Constitution, but to preserve it -- by drafting an amendment to bring runaway federal deficits under control.