Research & Commentary: The Compact for a Balanced Budget

Published November 10, 2015

The U.S. national debt has reached a staggering $18.5 trillion. Several national entitlement programs are headed toward bankruptcy – some as soon as 2016 – and state and local governments face their own impending debt crises. This government debt threatens the economy, people’s savings, and the nation’s future.

The system of checks and balances established by the Constitution to restrain the federal government has been undone over time by a Congress and a Supreme Court unwilling or unable to stop the growth of the national government’s power to tax, regulate, and borrow beyond its means. Article V of the Constitution gives states a mechanism to call a convention to amend the Constitution when affirmed by two-thirds of the states. Any amendments proposed at the convention can be ratified by receiving approval from the legislatures of three-fourths of the states or by state ratifying conventions in three-fourths of the states.

Thus far in the 2015–16 state legislative sessions, 56 bills have been filed calling for an Article V convention for the purpose of enacting a federal balanced budget amendment, which shows how serious state legislators across the nation are taking the current national government budgetary crisis.

One option for states is to pursue the Compact for a Balanced Budget (CBB). This formal contract would streamline the amendment process by “condensing into a single enactment joined by 38 states ALL of the legislative acts involved in originating a constitutional amendment from the states under Article V,” according to the Compact for America website. It has been signed into law in Alaska, Georgia, Mississippi, and North Dakota.

The balanced budget amendment would put a fixed limit on the amount of federal debt and would ensure the national government could not spend more than the tax revenue being collected at any point in time, with the sole exception of borrowing under the fixed debt limit. By creating compulsory spending impoundments when 98 percent of the debt limit is reached, the amendment would ensure Washington, DC reduces spending long before borrowing reaches the debt limit, preventing any default.

If new sources of revenue are needed to avoid borrowing beyond the debt limit, the amendment ensures all possible spending cuts are considered first. For cases when borrowing beyond the debt limit proves necessary, the amendment would give states the power to impose oversight by requiring approval from a majority of state legislatures within 60 days when any increase in the federal debt limit is requested by Congress.

Imposing a fixed constitutional debt limit would increase transparency and be more likely to generate a balanced budget than the status quo of limitless debt spending. With the amendment in place, the federal government would no longer be able to set its own credit limit and write itself a blank check, and the states would become an active check on Washington, DC’s ambitions.

The states have an obligation to address the threat caused by the national government’s profligacy. A balanced budget amendment would be a big step in the right direction, and the CBB approach provides a workable Article V vehicle for advancing and ratifying it.

The following documents provide additional information on balanced budget amendment proposals and the Article V process.

The Article V Movement: A Comprehensive Assessment to Date and Suggested Approach for State Legislators and Advocacy Groups Moving Forward
This Heartland Policy Brief is a comprehensive overview of the most consequential social movement occurring in the United States today: the Article V movement. As attorney David Guldenschuh notes, “The desire for power and the influence of special-interest money has so utterly corrupted Washington, DC that citizens no longer feel their leaders and representatives are looking out for the nation’s best interests.” Fortunately, Guldenschuh notes, the nation’s Founders recognized the national government might someday overreach its authority. That is why they included Article V in the U.S. Constitution, providing a mechanism for states to propose constitutional amendments to rein in the national government. Guldenschuh describes four Article V advocacy groups—the Balanced Budget Amendment Task Force, Convention of States Project, Wolf-PAC, and Compact for America—and reports on educational efforts undertaken by those organizations and others.

Introducing ‘Article V 2.0’: The Compact for a Balanced Budget
In a report for The Heartland Institute, Nick Dranias, a constitutional law expert, asks the question, “[W]hat if the states could advance and ratify a powerful federal balanced budget amendment in just 12 months?” The Compact for a Balanced Budget could accomplish that task, “changing the political game almost immediately,” writes Dranias. The compact approach uses “the ‘secret sauce’ of conditional enactments” to consolidate and simplify convoluted Article V procedures. Dranias cites precedents and elucidates the intentions of the Founding Fathers to justify the constitutionality of the compact process.

The Constitutional Amendment Process and a Reform Proposal
This Cato Institute Policy Analysis argues the constitutional amendment procedure of Article V is defective. Because no amendment can be enacted without congressional approval, limitations on the federal government that Congress opposes are virtually impossible to pass. This has prevented the enactment of several amendments that would have constrained the government: balanced budget limitation, a line-item veto, and congressional term limits. The author argues Article V should be reformed to allow two-thirds of the state legislatures to propose a constitutional amendment that would then be ratified or rejected by the states, acting through state conventions or state ballot measures. The author says such a return of power to the states would militate against our overly centralized government by helping to restore the federalist character of our Constitution.


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit the Center for Constitutional Reform at, The Heartland Institute’s website at, and PolicyBot, Heartland’s free online research database at

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