Editor's Note: This column was co-authored by William Owens.
In the dustup with President Zelenskyy last week, President Trump made it clear that the U.S. cannot sign a blank check to ensure the security of Ukraine. This marks the end of ‘Pax Americana’, and possibly beyond Europe to others such as Japan and South Korea.
Throughout the Post World War Two era the U.S. provided leadership in the free world, both economically and militarily. The 1990s marked the peak of this ‘Pax Americana.’ With the collapse of the Soviet Union, the U.S. captured a ‘peace dividend.’ We should not underestimate the importance of this ‘peace dividend’ in allowing Congress to restore sustainable fiscal policies in those years. The quid pro quo to cutting defense spending was enacting reforms to lower costs in non-defense programs. By the end of that decade with bi-partisan support, the U.S. was able to balance the budget and stabilize debt. The statutory fiscal rules enacted in those years were effective in constraining federal spending, putting fiscal policies on a sustainable path.
Over the past two and a half decades, however, the U.S. has again ramped up defense spending in response to a series of military challenges, most recently the war in Ukraine. The quid pro quo for this increased defense spending was increased non-defense spending; indeed, this Faustian bargain was formalized as part of the budget process. The statutory fiscal rules designed to constrain spending were circumvented or suspended. But these fiscal policies are not sustainable, there is almost universal agreement among economists that debt is now accumulating at a rate that will end in crisis, perhaps sooner than later.
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Signs of this impending debt crisis are already clear. The interest rate on U.S. debt, which was among the lowest in the 1990s, is now among the highest, compared to that in other developed countries. The interest rate on U.S. debt now exceeds the rate of economic growth; this is like the canary in the mineshaft, signaling an impending crisis. The interest cost on U.S. debt now exceeds defense spending. The U.S. no longer has the fiscal space to respond to military conflicts as it has throughout the post-World War era. Pax Americana is at an end.
To restore fiscal responsibility, we can no longer rely on the statutory fiscal rules enacted by Congress. A fiscal responsibility amendment to the U.S. Constitution is now required to restore fiscal sanity. A fiscal responsibility amendment would require Congress to bring expenditure into balance with revenues, just as it did in the 1990s. And we believe that this would stabilize our dollar and our fiscal balance.
Congress has proposed a number of fiscal responsibility amendments to the Constitution, but none of these proposed amendments has received the two thirds vote in Congress required to submit the proposed amendment to the states for ratification.
This Constitutional crisis was anticipated by the founding fathers who viewed the power of the states to propose amendments under Article V as a crucial check on the powers of Congress. By 1979, two thirds of the states had submitted applications for a fiscal responsibility amendment to circumscribe Congress’ power to tax and spend. But Congress has failed to count these applications and call the Convention. Congress is now trapped in a prisoner’s dilemma in which it is unable to impose fiscal discipline and is unwilling to allow the states to propose a fiscal responsibility amendment. This constitutional crisis could send us over a fiscal cliff.
It is left to citizens to enact a fiscal responsibility amendment using an Article V amendment convention. With effective fiscal rules in the Constitution, citizens could bind Congress to pursue prudent fiscal policies in the long term. With effective fiscal rules in the Constitution, Congress could restore the ‘Peace Dividend’ and launch a new era of prosperity for the American people.
In this constitutional crisis citizens have two options. One option is for Congress to see the error of its ways. Congress could fulfill its duty under Article V by counting applications and calling the convention. This is the approach taken by House Budget Committee Chairman Jody Arrington (TX). He recently introduced H. Con. Res. 15, which would require the House Clerk to count the state applications for a fiscal responsibility amendment and set the time and place for the convention. Thus far, Congress has not voluntarily fulfilled its obligations under Article V. Citizens are left with one recourse; they can petition the Supreme Court to issue a Declaratory Judgement compelling Congress to fulfill its duty to call a convention for proposing amendments.
Barry W. Poulson is professor emeritus at the University of Colorado, Boulder Colorado, and on the Board of the Prosperity for US Foundation
William Owens is a former vice chairman of the Joint Chiefs of Staff. He is on the Board of the Prosperity for US Foundation
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