In an effort to call attention to the age-old problem of budget reform, UR Professor David Primo recently released a new book, “Rules and Restraint: Government Spending and the Design of Institutions.” The book, released Monday by the University of Chicago Press, shows how government officials continuously flout budget rules in order to help their image and re-election hopes, despite an ever-increasing federal deficit.
The federal budget deficit requires the issuance of government deficit. At any given time there is an official debt ceiling that ostensibly puts a limit on the federal deficit. However, the limit is imposed by Congress itself, which means that it is routinely raised. There are often valid reasons to run deficits – Primo mentioned war – but, nevertheless, this results in an increasing national debt.
Primo cited an effort by Congress to abolish the deficit in the 1980s. The strategy was to continuously reduce the deficit by increments. However, when the time came to implement the plan, legislators simply changed the rules. Although they had a plan that a large majority of Congress could agree on, they could not achieve it because it conflicted with their short-term goals.
Primo said that this example demonstrates a major flaw with Congress – they can undo their own rules.
“Congress has no external enforcer,” Primo said. He explained how the constitution guarantees this and how there is only one way to bypass this loophole.
“A constitutional amendment is the only way to create rules that Congress cannot choose to ignore,” he said.
Primo discussed two programs that could ideally be reformed – Social Security and Medicare. There have been a number of potential solutions thrown around to fix Social Security – for example, transferring funds to private accounts.
“At the end of the day, we have to cut benefits, increase taxes or both,” Primo said. He explained that while these solutions would help deal with the budget deficit, they would be harmful to certain groups. Many beneficiaries of Social Security, who have been paying taxes their whole lives, are owed money. Cutting benefits would be unfair to them. Increasing taxes would also have mixed effects.
“The Social Security tax really hurts people at lower income levels,” he said. He noted that raising the tax would only make the situation worse.
In his book Primo says that even when legislators implement reforms, these reforms are often filled with loopholes. For example, many reforms only apply to new spending, allowing old spending programs to continue unchecked. However, he shows that states with strict and strongly enforced budget rules tend to spend less than other states.
Primo writes that legislators often respond to outside incentives that cause them to make collectively harmful decisions. They tend to be more concerned with obtaining government funding for their constituents than with sticking to a strict budget.
“Unfortunately, immediate, short-term temptations override long-term goals,” he said. “Members of Congress are just responding rationally to the re-election incentive.”
Because of Congress’ autonomy and its lack of incentive to implement budget reform, Primo comes to the conclusion that a radical solution might be called for. He brings up the point that, under the constitution, the states can call together a constitutional convention if two-thirds of the states propose it. At the convention, an amendment would pass if three-fourths of the states voted to approve it.
Primo said that there would be many procedural questions surrounding a convention, such as what it would look like and whom each state would send. Also, the organization of a convention would raise the question as to how much of the constitution would be opened up for debate. Ideally, the states would use this convention primarily to deal with budget reform. Primo maintains that it would not be a good thing if the entire constitution were opened up.
“Conventions should deal with one issue at a time,” Primo said.
Wrobel is a member of the class of 2010.
