America's Fiscal Constitution Read Online Free PDF Page B

are federal functions that cannot simply be performed by state and local governments. A requirement that tax revenues be reserved to pay forinterest and some level of defense should remove the temptation to fund other items first and then claim that the United States must borrow to pay its creditors or defend itself. A tax-financed federal funds budget that preserves essential federal functions would make the legal debt ceiling a far more realistic tool for enforcing fiscal discipline.
    The president and Congress would have to define the appropriate scope of security-related activities worth funding with tax dollars. That funding is likely to encompass programs within the Department of Defense, nuclear weapons programs in the Department of Energy, and various intelligence activities. The president and Congress would likely give priority to the use of taxes for defense-related functions such as homeland security. 3
    Reform 3: Votes on Debt-Financed Appropriations
    Congressional procedures now divorce votes on spending from votes on how to pay for that spending. Congress considers amendments to the debt ceiling only after it has voted to spend more than available tax revenues. As a result, debates on the debt ceiling have become a form of bad political theater, a bizarre combination of tragedy and farce.
    Votes to authorize debt should accompany votes to spend any amount greater than available revenue. Congress should require separate record votes on the portion of any appropriation expected to be financed with debt. Citizens would then be able to determine the amount and purposes of debt voted for by each member of Congress. The total of debts approved to pay for all appropriations would, in essence, constitute a more visible debt-financed budget.
    Congress constrained debt more effectively when it voted to incur debt only for specified purposes. Before World War I, each bond issue could be traced to a defined purpose, such as financing the Civil War, the Spanish-American War, and the Panama Canal. Congress established an overall ceiling on debt used to fund World War I, and the level of that provided a context for the amount of ceiling for debt incurred during the Great Depression. Congress raised the limit on authorized debt for the clear purpose of financing World War II. The final wartime debt ceiling, $300 billion, was never exceeded until after the 1961 Berlin Crisis. 4 In contrast, after 2000 it has been far more difficult to identify the rationale for new debt.
    The use of a total debt ceiling unrelated to congressional appropriations is misleading as well as ineffective. To understand why, consider thefact that the executive branch could not borrow at all if Congress repealed what is commonly called a “ceiling.” Some members of Congress would prefer to characterize votes on the debt ceiling as a fight with the president, and presidents are accustomed to asking Congress to authorize more debt. In fact, the executive branch does not have an independent constitutional power to borrow a dime, and only money Congress votes to spend can be paid for with debt.
    A legal debt limit established apart from specific appropriations breeds cynicism and hypocrisy, since many members of Congress have voted against higher debt ceilings after first voting for a level of spending greater than the revenues produced by their tax legislation.
    The House and Senate each vote annually on about thirteen appropriations bills—legislation funding various functions of the federal government—and again for related appropriations following compromises in conference committees. Every session, subcommittees of the Appropriation Committee in the House and Senate prepare the details of those bills within the allocated spending ceilings or “marks.” A tax-financed federal funds budget could be implemented by giving each appropriations subcommittee two ceilings, one for an amount financed with tax revenue and another for any use of