The author does not believe himself as talented or blessed with intellect as the authors of the first 85 Federalist Papers. But the time has come to renew the discussion about the powers and extent of our government. And it is our government, not the government of the people who live within 50 miles of the Capital building. (The author would also like to apologize for the length of the following discussion, but some issues don't lend themselves to brevity.)
The bureaucracy, the organs of government, continues to expand, both in reach and in shear size. It would be one thing if this expansion followed from a serious and sustained public discussion as to the positive and negative impacts of an increasingly large, increasingly powerful and increasingly pervasive government, and a general acceptance that the benefits to be accrued from an increase in size clearly outweighed the costs and the risks. But there has been little real debate. In fact, much of this expansion has been without regard and without serious debate as to the effect their actions will have on the people’s liberties or to our posterity. It would seem that it is now time to, at the very minimum, ask whether it is best to definitively restrict the bureaucracy so that the people may remain both safe and secure and also free. It is to this end that the following is offered in an effort to stimulate this discussion and help to promote the changes necessary to keep our nation strong and free and our Constitution vital.
You will find discussions on three separate proposed amendments, one to limit federal spending, one to limit the creation of federal, that is bureaucratic, regulations, and one to limit taxation. These are serious subjects that require serious debate. The answers are not easy or simple and require that we all commit some of our time to studying how best to address these issues and preserve our nation. The following is offered to help fuel this debate.
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The three proposed Amendments are:
Amendment 28 – Limits to Federal Spending
1. The Government of the United States shall have a budget no greater than 12.5 percent of the previous year’s gross individual income.
2. The Government of the United States shall not spend – inclusive of all federal outlays – more than it collects.
3. In the event of a national emergency, as declared by the President and agreed to by a super majority (2/3rds) of both houses of Congress, this spending limit may be exceeded. The emergency must be reconfirmed every 12 months by the President and by a vote of 2/3rds of both houses of Congress.
4. Following any declared emergency the Government must return spending to no greater than 12.5% within two years and eliminate any incurred debt with five years.
5. This spending limit will be met within 3 years of the approval of this amendment.
Amendment 29 – Limits to Federal Regulation
1. The Government of the United States shall pass no law or departmental regulation without establishing the cost to personal liberty, private property and to commerce of such action, and publishing these findings prior to final enactment of the legislation or regulation.
2. The appropriate House and Senate Committee will conduct a yearly review of each regulation passed by agencies within their purview. Regulations which have been challenged by the citizenry will be suspended until an impact statement has been provided by the appropriate agency and approved by the proper House and Senate committee.
3. Any regulation that is not reviewed by the appropriate committee in both the House and Senate within a year of being placed in force will be suspended and cannot be reissued until considered by the appropriate committee.
4. This amendment will be in force immediately upon approval.
Amendment 30 – Limits to the Income Tax, Amendment 16 is amended as follows:
1) The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
2) The federal income tax shall be a no more than 12.5% of total unadjusted income.
3) No exemptions, allowances or other exclusions are to be provided to any one citizen unless they be provided to all.
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In Detail
28th Amendment
Concerning Federal Spending and whether there should be limits on the ability of the federal government to raise revenue, raise debt, and spend the people’s money; and if there are to be limits how might those limits be defined.
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A Proposal:
Amendment 28 – Limits to Federal Spending
1. The Government of the United States shall have a budget no greater than 12.5 percent of the previous year’s gross individual income.
2. The Government of the United States shall not spend – inclusive of all federal outlays – more than it collects.
3. In the event of a national emergency, as declared by the President and agreed to by a super majority (2/3rds) of both houses of Congress, this spending limit may be exceeded. The emergency must be reconfirmed every 12 months by the President and by a vote of 2/3rds of both houses of Congress.
4. Following any declared emergency the Government must return spending to no greater than 12.5% within two years and eliminate any incurred debt with five years.
5. This spending limit will be met within 3 years of the approval of this amendment.
There is little room for debate that there needs to be some limit to the federal government’s ability to tax and to spend. Limits on taxation are necessary in order both ensure a stable business environment in which jobs can be created, the people can find employment and the nation as a whole grow rich, as well as to limit, at least to a certain extent, the ability of the federal government to intrude into every sector of the economy.
Further, economists have long noted that the greatest amounts of revenue will be raised by what would be interpreted as low tax rates, in the vicinity of 10 to 12% of total economic activity. This is because low (and stable) tax rates allow for the maximum amount of economic growth, which will then generate the greatest amounts of both income and tax revenue.
Nevertheless, simple limits to tax rates do not and have not prevented governments, both the Federal and state, from spending more than they have gathered, the difference being made up by raising debt. These debt totals have now reached crisis levels in certain states, and threaten to do so with the Federal government, if it has not already done so, particularly when we consider the size of the unfunded annuities that the nation is now charged with supporting.
Several questions now emerge: Should the Constitution limit the Federal Government’s ability to Tax? Should there be a limit on raising Debt and on Deficit Spending? Should there be a limit on spending? If there is to be a limit on Taxation or Spending, how could the nation deal with a Crisis? What Standards should be used to ensure that these limits are met and not exceeded? Who would certify the Standards? What is the proper definition of budget? We will discuss each in turn.
1) Should the Constitution be amended to limit the Federal Government’s ability to tax?
The Founders established a government with the intent of providing it – the Federal government – only limited powers. Nevertheless, the Constitution specifically states that the Congress has the authority to raise taxes and that authority is not further limited. Further, through the powers granted by 16th Amendment, Congress was granted the authority to directly tax income in order to raise revenue.
The history of the debate to amend the Constitution and create the income tax is revealing: at the time of the debate on the 16th Amendment there was considerable discussion as to whether the amendment should provide for an upper limit of the rate for the income tax. This upper limit was rejected because it was argued at the time that to do so would be to invite future governments to raise the rate to limit, where as leaving the amendment without a specific upper limit would allow sane minds to rule and the tax would be kept lower. The limit which had been proposed was 15%. Within just a few years the tax rate was increased to 15% and just a few years after that to substantially higher then 15%.
In the intervening decades the income tax rate has been changed repeatedly, and many exemptions and exceptions added to the tax code. At times the top tax rates have exceeded 70%, while at the same time there is now a large segment of the population who pay no income tax at all. Further, there have been regular discussions about the federal government instituting a Value Added Tax (VAT), a national sales tax, as a means of raising additional revenue. This is, of course, in addition to the federal government’s authority to raise revenue from various duties and licenses.
In short, the federal government has a wide range of means to raise revenue, the income tax being just one of them. Placing a restriction on the income tax rate would not limit the size and scope of federal spending or the reach of the government, it would simply mean that the government would need to use other means to expand.
Therefore, any limit to taxation, if it is to limit the federal government’s total ability to raise taxes must address all possible taxes, not simply the income tax.
2) Would limiting the federal government’s ability to tax provide a limit to the size of the federal budget, that is would it limit the ability of the federal government to spend?
The federal government has the power to raise debt. That seems a reasonable and prudent authority, when used wisely. In fact, virtually every war that the US has fought, from the Revolution to today, has had to rely on debt to fund the war effort. Certainly, use of debt during a crisis is justifiable, assuming the crisis is severe enough. However, when used without regard to consequence the result can be staggering amounts of debt. The current federal debt has risen to more than $13 trillion dollars, and the unfunded annuities that the federal government, and ultimately the taxpayers, are now responsible for exceed more that $110 trillion. We have seen other countries with proportionately even larger debt. We do not wish to follow their course. But, both our federal debt and our unfunded annuities will continue to grow for the foreseeable future. This unlimited power to raise debt may well represent a destructive power in the hands of the federal government. But, limiting the federal government’s ability to tax would in no sense limit the government’s ability to continue to raise either debt or unfunded annuities.
Further, an ever-expanding debt provides the federal government with an incentive to sustain an inflation rate that can trivialize debt by continually making the currency less valuable. While this process works on the federal balance book, it also trivializes the work and savings of the average citizen – the people who grant power to the government.
It would seem that limiting taxation while not limiting spending therefore actually provides the federal government the incentive to do the wrong thing: to continue to raise debt and maintain inflationary growth at the expense of the very people who pay the taxes that support the government.
3) Should there be a limit on raising Debt and on Deficit Spending?
The normal purpose of borrowing money, whether by private citizens, businesses or state and federal governments, is to make long-term capital investments and defray the cost of that capital investment over the long term. While this is in fact the case with citizens and businesses, whether in the buying of a home or in the expansion of a business, governments have used debt – deficit spending – as a means to fund programs despite an inability to fully fund that program, and then extend that program into the indefinite future, at the expense of future taxpayers. While there are certain government programs that could be clearly labeled as capital investments, such as highways or ports, they represent only a small percentage of federal spending. In fact, little of the federal government’s debt has been raised to fund long-range, capital investments. It seems therefore that, at the very least, the people need to consider at least some restrictions on the government’s ability to raise debt.
What then should be that restriction? The federal government (and multiple state governments and local governments) has shown itself to be willing to live with ever increasing debt and equally willing to push that debt off onto the backs of future generations. (In that it is impossible for the ‘future to vote now,’ there is a reasonable philosophical argument that doing so represents an usurpation of power by the legislature, seizing freedom from future generations.) In fact, the nation has not been free of debt since the administration of President Jackson (1835), and Congress has shown itself, with one brief exception during the mid-1990s, more willing even then the Presidents to continue to spend money it does not have. Certainly there seems to be a need to limit the government’s ability to spend (at the federal state and local levels), but should government still have the power to raise debt?
It would seem that, given both the propensity of government to spend without feeling bound by simple prudence and the added incentive to ‘defray’ debt through continued inflation, while actually using very little of the debt for the purpose of anything that might be termed capital improvement, that the only reasonable course for the people is to limit the use of debt by government to addressing extreme emergencies, and then only when clearly recognized as such by an overwhelming majority of the Congress.
4) Should there be a limit on Spending?
If we cannot achieve the goal of control of government spending through limits to taxation, then the obvious course is to limit spending. The most reasonable course therefore is to set a firm mark that limits federal government spending. Following this course, the government would be limited to spending no more than a certain amount each year, and would therefore be forced to ‘live within its means.’ Only in the event of a true national emergency, such as a war, would the nation – the federal government – be allowed to raised debt. This would, of course, require the clear support of the majority of the people and, therefore, a veto proof vote, a super majority – 2/3rds, of both the House of Representatives and the Senate, should be required for its passage. Despite the veto-proof vote, the concurrence of the Executive should also be required as the Executive must be willing to use the extra resources to aggressively address the emergency.
Such an action would have several real consequences. In as much as the Constitution requires Congress to authorize and appropriate money each year, this would mean that each year Congress would have to revalidate the emergency. Thus Congress would be forced to go on record each year, with a 2/3rds majority, certifying that the emergency remains.
In the event of a war, which would seem to be the only national emergency that would be likely to gain and maintain a 2/3rds majority, this would essentially force Congress to declare war, rather then avoiding it as has happened repeatedly during the last sixty years.
5) How do we define spending?
It is certain that, with Congress making the rules, the definition of spending would be modified to the benefit of Congress, but not necessarily the people. Accordingly, it would seem that the optimum path, if we really wish to limit government, is to make the definition as clear and as inclusive as possible. Therefore, let us define government spending, within the constraints of this amendment, to include all federal government outlays, whether discretionary or non-discretionary, to include debt servicing, social security outlays, health care payments and all other programs known as entitlement programs, any non-budgetary payments, and any and all other federal transfers of moneys.
6) What would be the basis for spending?
Congress must have a limit that is defined and understood by the general populace. Figures such as the ‘Gross Domestic Product’ (GDP) have merit, but the definition of GDP, or any other such figure, could be changed by simple bureaucratic process. Accordingly, a method must be identified to ‘safeguard’ the definitions. It would seem, in fact, that the best course is to use a figure which will be considered of personal interest to the average citizen, one which he or she will be intimately concerned with keeping both visible and, for purposes of this amendment, low. Therefore, the obvious choice is to limit federal spending based on gross, that is unadjusted, personal income. This exclusion of corporate income in defining the baseline from which government spending will be drawn inhibits further bureaucratic chicanery that would seek to redefine corporate incomes so that the federal spending limit might be increased. This would not limit corporate income from taxation, simply exclude it when computing the federal spending limit.
7) If there is a limit on spending, what should that limit be?
While we seek to limit the profligate federal spending that has left us with a massive debt structure, we must not so constrict the government that it has inadequate funds to act. Therefore, the spending limit must be high enough to suit the purposes we have already assigned government, first among them being the requirement to provide for the common defense.
In fact, the nation is now overtaxed and government taxation and spending policies are actually constricting the size of the economy. As has been demonstrated repeatedly in the past, substantive tax cuts have invariably led to both massive growth in the overall economy and real income, as well as to significant growth in government revenues. What has not happened is an increase in government discipline in controlling rampant spending policies. Economic analysis has routinely indicated that the maximum government revenue will actually take place at a spending (and taxation) level of between 11 and 12%. Accordingly, by fixing the upper limit of federal spending at 12.5%, there would actually be an increase in federal revenue over current levels.
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29th Amendment
Concerning Federal Regulations and whether there should be a specific limit on the ability of the Federal government, both the Legislature and the Executive, to create and enforce laws regulations; and if there is to be a limit how might that limit be defined.
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A Proposal:
Amendment 29 – Limits to Federal Regulation
1. The Government of the United States shall pass no law or departmental regulation without establishing the cost to personal liberty, private property and to commerce of such action, and publishing these findings prior to final enactment of the legislation or regulation.
2. The appropriate House and Senate Committee will conduct a yearly review of each regulation passed by agencies within their purview. Regulations which have been challenged by the citizenry will be suspended until an impact statement has been provided by the appropriate agency and approved by the proper House and Senate committee.
3. Any regulation that is not reviewed by the appropriate committee in both the House and Senate within a year of being placed in force will be suspended and cannot be reissued until considered by the appropriate committee.
4. This amendment will be in force immediately upon approval.
Discussion: The federal government has already imposed such limits on the people in the form of environmental impact statements and the like, forcing the citizens to explain to the government the impact of certain actions before they are allowed to proceed. The justification for this is simple: the federal government, in particular the specific agencies, are acting on behalf of all the nation to ensure that the actions of a few do not have consequences damaging to the many. However, there is no similar check to the various offices and agencies of the executive branch save concerted action by the citizenry to keep the federal agencies from actions whose consequences have not been equally studied. This amendment places a similar requirement on both the Congress and, as importantly, on the bureaucracy, thereby preventing the bureaucracies from circumventing the issue of law by passing thousands of regulations that are never debated by the people’s elected representatives.
The rights and liberties of the people are limited whenever government passes a law or the bureaucracy creates a new regulation. Laws are, however, visible and the members of Congress are subject to recall by the electorate. Such is not the case of those who create the overwhelming bulk of the regulations that restrict the every day lives of the citizenry.
Recent health-care legislation is a good case in point: while it is possible, albeit difficult, to fully understand the basic law that establishes the current federal government oversight of the health-care industry, the legislation creates a number of new offices and agencies, each of which will have the authority to create their own regulations without any direct oversight from elected officials. The process to correct or redress any overreaching regulation will be long and tedious and almost certainly beyond the means of the average citizen. Yet there is nothing in the law which provides for a direct check to the bureaucrats who daily create this increasingly complex web of rules and regulations. Prudence would suggest that an amendment to the Constitution might be constructed to force the executive branch to provide for an analysis of the consequence of various rules and regulations before they come into force. How might this be done and how might it be done without creating both an even large bureaucracy and one that is hopelessly encumbered by administrative procedures?
1) While Senators and Congressman are charged with acting on behalf of those who elected them, there is nothing in the process of drafting, passing and funding a law that requires that they consider the consequences of their actions. Yet it is this very issue that led Congress to enact legislation that led to what are now know as Environmental Impact Statements, detailed estimates of the impact of this or that action on the environment. It would seem prudent that Congress be required to do the same, that Congress be required to provide at least the beginning of both a justification for a given law as well as a defense of it, showing how proposed legislation would address one issue without causing unintentional harm in another area.
Certainly, there would always be the opportunity for Congress to short-circuit such a law with poorly constructed and poorly thought out defenses, comporting to the letter but not the spirit of such an amendment. But, such is always the case, and it is the citizenry that must always hold the elected officials to task. Passage of such an amendment would give the citizenry a powerful lever to force compliance by the elected officials.
2) While there is a concern that various federal agencies do not act precipitously, it is recognized that they are charged with carrying out laws that have been passed and funded by Congress. No Amendment should be passed that inhibits the executive from executing the laws of nation. Yet the concern remains that the agencies create regulations without attempting to work through the consequences of specific regulations. If, however, regulations were subject to automatic review by the appropriate oversight committee in both houses of Congress, there would an increased possibility that poor or dangerous regulations would be stopped before they create harm.
To ensure that the various offices do not attempt to circumvent this amendment by continually reissuing regulations and restarting the yearly review timeline, it would be necessary to include that any reissued regulation does not go into force until it is considered by the appropriate committees.
3) One obvious issue of concern is that any effort to force the bureaucracy to develop a consequence assessment or impact statement for any regulation would both dramatically slow the implementation of any law and would increase the administrative costs of every office and agency in the federal government. To address this it will be necessary for the Legislature to develop a reasonable means of both evaluating the impact of various actions and of streamlining the review process. While there might be a concern that placing this requirement in the hands of the Legislature is risky, the fact is that it is in the Legislature’s interest to develop a streamlined procedure and in the people’s interest for it to be slow and difficult, so as to inhibit, per the original intent of the Constitution, the drafting of hasty legislation.
4) By placing a one-year time-line on all Executive branch rules and regulations there is an automatic stop placed on any regulation which has had expensive or extensive unintended consequences. This requirement to review within the appropriate House and Senate committees would force them to discuss these unintended consequences and go on record that they intended to cause such developments and accept responsibility for it, or having recognized the unintended consequences as unacceptable, modify the overarching legislation to redress the problem.
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30th Amendment
Concerning Federal Taxation and whether there should be specific limits on the ability of the federal government to tax the citizenry; and if there are to be limits how might those limits be defined.
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A Proposal:
Amendment 30 – Limits to the Income Tax, Amendment 16 is amended as follows:
1) The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
2) The federal income tax shall be a no more than 12.5% of total unadjusted income.
3) No exemptions, allowances or other exclusions are to be provided to any one citizen unless they be provided to all.
This amendment amends the current income tax amendment, the 16th. It does not in any other way restrict the federal government’s ability to tax. There are two avenues of thought that attach to such an amendment: one would consider that such an amendment must be able to stand alone, the other that it must be passed in concert with an amendment limiting the authority of the government to spend. If it is passed in concert with a proposal to limit the Federal Government’s authority to spend, then the tax limit of this amendment would work in conjunction with that amendment and prevent Congress from enacting a wide range of other taxes such as a Value Added Tax (VAT) or various tariffs and licenses.
Conversely, if the amendment were passed in isolation, then Congress would retain not only the power to levy other taxes, but also to continue deficit spending. Accordingly, this amendment might be considered to be secondary to an amendment that limits total Federal spending, if the intention is to limit the ability of the bureaucracy to spend the nation into financial difficulties.
1) Under this proposal, Congress would be limited in exacting an income up to 12.5 percent. If this limit were passed on it’s own, Congress would be limited only in levying an income tax to this limit. Doing so would have the benefit of defining for future economic growth the ability of the government to reach into both individual and business income streams and provide to the free enterprise system a clear boundary beyond which they would be free to plan and expand.
However, this amendment, in isolation, does not prevent the Congress from raising other revenues, either through additional taxes, fees and tariffs, or through the sale of bonds or the printing of money and does not in and of itself further restrict the spending habits of Congress.
If this amendment were passed in conjunction with an amendment to limit spending, particularly one that limited spending to 12.5% of total individual (unadjusted) income, it would act as an effective break against other taxes as well as various fees and tariffs. In as much as the bureaucracy would likely wish to retain some fees and tariffs for purposes more of control then to raise revenue, the actual tax rate would in fact be less than 12.5%.
2) On the matter of exemptions, several points must be considered. The argument for exemptions is that they reflect the primacy of care and feeding – that Congress recognizes that before a citizen pays his or her tax he must first eat and care for self and family. However, if this is the case, then there should be an identical series of payments (food, housing, clothing,) that each receives. But, would that be based on household, or per person? Should it include transportation? Should it include power and water? This discussion leads to an ever-expanding series of exceptions, which are also known as ‘loopholes’ to those who cannot utilize this or that exception.
While exemptions began as a series of ‘obvious’ expenses that should be recognized before the payment of taxes – food and housing in particular – the fact is that exemptions have grown to include thousands of special cases. For those who benefit, an exemption has come to be considered a right and a demonstration of the just concerns of government for the general welfare. For those who do not benefit exemptions have come to be seen as loopholes in the tax code and subsidies from one segment of society to another. What one sees as a right and proper exemption that in the end all benefit, is seen as little more than a special interest loophole and ‘insider’ chicanery to others.
We might also consider simply whether it is the role of the federal government to be involved with the granting of exemptions in any way. Under what provision in the Constitution is Congress granted the authority to consider one segment of the citizenry as apart and warranting special behavior? The answer of course is that it does not provide that authority. Every article of the Constitution and every amendment has been written o make it more evident that all are to be treated equally. Yet, the tax code is constructed to create thousands of exceptions to that concept.
While there are rational justifications for every single one of the tens of thousands of exemptions within the massive tax code, the question that needs to be asked is where is the justification within the Constitution for Congress for singling out what subset of society for a benefit, when by definition, to do so means to place the expense on another subset. The Constitution speaks to all citizens equally; nowhere does it speak of subsidizing one group, or in any way benefiting one group at the expense of another. While there may seem to be reasons – rationale – for doing so from time to time, every such effort has, over the entire history of this nation, resulted in unequal treatment of one at the expense, often great expense of many. While the intentions may have been good, the result has been injustice.
Governments must act with equanimity to all the citizenry. When it does not do so the citizenry should act to ensure that it does so. To do otherwise is to establish a de facto special minority, one that has more rights then the others, one that receives special treatment that is not available to all. It places one group in oppositions to another, separating the society into smaller special interest groups that generate conflict and consume the energy of the citizens. Such an idea is anathema to the sustained survival of the republic. It would seem that the only way ahead, as unpleasant as some may suggest it will be in the first few years, to end all such exemptions and move to consistent and equal relationship between all citizens and the government. The establishment of an income tax with no exemptions is a necessary step in that direction.
