Here are the six words that capture the essence of the Compact for a Balanced Budget:
Certainty: The Compact delivers certainty by pre-committing 38 states and simple majorities of Congress to everything involved in advancing, proposing and ratifying a federal Balanced Budget Amendment before an Article V convention is organized.
Safety: The Compact promises safety by limiting the Article V convention it organizes to a 24 hour up-or-down vote on a specific federal Balanced Budget Amendment, eliminating any realistic possibility of a “runaway convention.”
Speed: The Compact furnishes speed by consolidating into one bill everything the states do in the amendment process and everything Congress does into one resolution.
Restraint: The Compact’s Balanced Budget Amendment enforces a glide path to balanced budgets by limiting Washington’s borrowing capacity to 105% of the outstanding debt on ratification and otherwise restricting federal spending to revenue at all times.
Responsibility: The Amendment keeps all responsible revenue options on the table, but encourages spending reductions before tax increases to close deficits. It requires supermajority approval for new or increased income or sales taxes, while retaining the current simple majority rule for revenue measures that will cause the least harm, such as eliminating tax loopholes or replacing the income tax with a consumption tax.
Practicality: The Amendment handles national emergencies with four “release valves” that do not enable easy evasion:
The Amendment provides a 5% cushion of additional borrowing capacity above the outstanding debt on ratification to allow for a transition period to balanced budgets.
Washington can pay down the debt and free up borrowing capacity for emergencies.
The President can impound spending when a “red zone” of borrowing capacity is reached, subject to simple majority override by Congress.
Congress can request a majority of state legislatures to increase its borrowing capacity.