In the debate over how to reduce the deficit—should we cut spending or raise taxes? should we do it now or later?—economists say we should spend now and save later. This is partly Economics 101: We’re still in a recession, so let’s stimulate our way out of it before turning to fiscal austerity. But it’s also a convenient way to put off hard choices. Regardless of whoever pays the economic price for deficit reduction, the consensus seems to be that future Congresses should pay the political price.
Indeed, many of the biggest pieces of legislation facing Congress put off political pain. For example, the Patient Protection and Affordable Care Act—otherwise known as health care reform—pays for itself with an excise tax on “Cadillac” insurance plans that doesn’t kick in until 2018. * Financial regulatory reform would put a consumer financial protection agency in place right away, but the panel wouldn’t reach full strength until 2020. Immigration reform, meanwhile, would require illegal immigrants to wait another eight years before they could apply for permanent residency.
In other words, each bill contains provisions that will be implemented sometime in the future—not by Congress, necessarily, but by the executive branch. But these policies will require enough continued congressional support that no future Congress tries to reverse them.
And there’s no guarantee they wouldn’t. The problem is partly legal, partly political. Courts have long held that Congress cannot “bind” future Congresses—that is, it can’t force a future session of Congress to carry on its own policies. That practice, formally known as “legislative entrenchment,” is seen as privileging one group of lawmakers over another, “binding” future to the priorities set in the present. In the 1996 case U.S. v. Winstar Corp., Justice David Souter quoted the British jurist William Blackstone, who said that “the legislature, being in truth the sovereign power, is always of equal, always of absolute authority: it acknowledges no superior upon earth, which the prior legislature must have been, if it’s [sic] ordinances could bind the present parliament.” The principle is more complicated in the United States, where the government is bound by the Constitution and any private contracts into which it enters. But as a general rule, any Congress can reverse the decisions of any past Congress. For example, Bob Dole repealed future tax cuts in the 1980s.
Our political system makes promise-keeping even harder. Congress always has the incentive to act in its own short-term interest at the expense of the country’s long-term interest, since spending is more likely to get you re-elected than saving. The result is that Congress always puts off hard financial decisions. That’s how we end up with policies like the annual “doc fix,” which adjusts the Medicare reimbursement schedule to keep payments high, or the annual “AMT patch,” which fiddles with the tax brackets so the middle class can avoid the Alternative Minimum Tax.
There are plenty of ideas for how to solve the binding problem. But, so far, none has worked. Obama’s debt commission, for example, is trying to break the cycle of never-ending red ink. If both parties commit to the commission’s goals, the theory goes, they’ll give each other political cover to keep their promises in the future. But say everything goes according to plan. The commission drafts a blueprint to reduce the debt * to 69 percent of GDP by 2020. (The debt is currently on track to reach 100 percent of GDP by 2022.) Congress begins whittling away at entitlement spending while sucking up the pain of major tax hikes. Even then, Congress still faces the conundrum of how to make sure that future Congresses stay on the path.
The strongest way for one Congress to bind another is by adopting a constitutional amendment. When it comes to reducing the deficit, for example, Congresses have tried to pass a balanced budget amendment. The first attempt was in 1936. Congress tried again in 1947, 1956, a couple of times in the 1980s, and twice during the 1990s. But passing any amendment requires two-thirds majority in both houses, plus ratification by three-quarters of the states. None of the budget-balancing efforts have cleared the bar. And even if they did, a future Congress could always repeal the amendment if there were enough political will. (Of course, a two-thirds majority is hard to get, making constitutional amendmentsas good as binding.)
But say Congress did pass a balanced-budget amendment. The federal government would still find loopholes that allow it to run a deficit. Just look at the states. Many states currently require that all spending be paid for. But they’ve found all kinds of workarounds, such as creating a separate entity to borrow money on behalf of the state that doesn’t show up in the annual budget. Even the balanced budget amendments proposed in 1990s included loopholes. Under one, for example, Congress could engage in deficit spending if the country were in a recession and three-fifths of Congress voted to override the amendment.
Then again, maybe it’s a good thing Congress can’t control its future self. Any Congress forced to carry out the desires of a previous Congress has less flexibility to respond to crises. For example, requiring a balanced budget could have all kinds of adverse consequences. It could push the economy even further into recession. It would risk political deadlock if Congress can’t reach an agreement. And it could make it harder for a Congress to make its own decisions about what’s best for the country, since it privileges balancing the budget over all other issues.
Then again, if you think about it, Congress binds itself all the time. As University of Chicago law professor Eric Posner points out: “Congress can already bind the future in uncontroversial ways. It borrows money, compelling the future to repay or suffer a loss of credit. It starts wars, compelling the future to finish them. Everything Congress does affects future generations, for good or for ill.” You might not be able to physically force a future Congress to cut costs. But you can pass laws and create political pressure to make it hard for them to wriggle out of something. In 2001, for example, Congress passed tax cuts with the explicit understanding that they would expire in 2010—that’s what the law said. But there was an implicit understanding that it would be pretty hard for the Congress of 2010 to allow them to expire.
Ultimately, the only way to ensure that a future Congress follows orders—whether it’s to eliminate the deficit or to punish banks or to implement immigration reform—is the old-fashioned way: Political pressure. Whether that pressure comes from K Street lobbyists or grass-roots campaigns, its purpose is to persuade Congress that this cause still matters. Deficit reduction will only happen if future Congresses are as scared of the issue as the present Congress. (The reasoning could go something like this: I don’t like these tax hikes, either, but we need to do something about the deficit, and, besides, I didn’t write this law.) Congress may not be able to bind itself, but politics can.
Correction, July 15, 2010: This article incorrectly stated that the “Cadillac” tax doesn’t kick in until 2013. (Return to the corrected sentence.)
Correction, July 15, 2010: This article stated that the presidential debt commission seeks to reduce the deficit to 69 percent of GDP by 2020. That is in fact the debt target. (Return to the corrected sentence.)