An exclusive excerpt from Sen. Mike Lee's new book, The Freedom Agenda: Why a Balanced Budget Amendment Is Necessary to Restore Constitutional Government.
"If we take the difficult, time-consuming step of adopting a balanced budget amendment, we need to ensure that it will actually fix the underlying problem and permanently end Congress’s practice of perpetual deficit spending. Crucially, because Congress is likely to resist efforts to restrain its spending authority, an effective balanced budget amendment needs to impose myriad spending restraints that minimize the chance that any restrictions could be circumvented.
"An ideal balanced budget amendment would contain at least five elements. While an amendment containing any of these elements would go a long way toward restoring the federal government’s fiscal responsibility, one containing all five of them would almost certainly resolve our fiscal crisis permanently.
"Element One: Equalize Revenues and Outlays
"The first element would prohibit Congress from spending more during any fiscal year than the federal government “earns” during that year by collecting tax and other revenue. Stated differently, Congress would be required to adhere to a budget each year in which federal outlays do not exceed federal revenue. This is what most people think of when they hear the term “balanced budget amendment,” and it closely resembles how most families, businesses, and state and local governments try to manage their finances. It is time that we demand nothing less from the federal government.
"Unfortunately, such a requirement is far from foolproof. Under almost any practical scenario, this mandate would require Congress to rely on estimates in calculating the federal government’s likely annual revenue (and to a lesser extent, likely outlays) for each fiscal year. Despite the efforts of our country’s best accountants and economists, estimates are likely to be wrong from time to time, and they could also be deliberately manipulated in order to enhance Congress’s spending power. Either way, we’ll need a backup plan. That’s where the other elements come into play.
"Element Two: Spending May Not Exceed a Fixed Percentage of GDP