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30 Second Briefing


The Compact for a Balanced Budget is an agreement among the states that advances and ratifies a federal Balanced Budget Amendment in a single state legislative bill. It is activated by a single congressional resolution. In essence, the Compact pre-commits 38 states (the ratification number) to the entire constitutional amendment process in advance, so that a specific, pre-drafted federal Balanced Budget Amendment is voted up or down within 24 hours at the convention it organizes. The Compact’s amendment process is set in motion by a congressional resolution, which can be passed with simple majorities and no presidential signature. The congressional resolution both calls the 24 hour convention contemplated by the Compact and pre-selects legislative ratification, avoiding a second trip to Congress.


The Compact’s Amendment provides a glide path to balanced budgets, stops intergenerational injustice, and prevents unsustainable spending and future taxes by strongly limiting the borrowing capacity of the federal government and otherwise restricting spending at all times to cash on hand. The Amendment keeps all revenue options on the table, but ensures that spending reductions will be considered before tax increases to close deficits. It does this by requiring 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 and replacing the income tax with a consumption tax.

The Amendment includes three “release valves,” which can handle national emergencies: (1) the ability to pay down the national debt to free up borrowing capacity; (2) a referendum initiated by Congress requesting a simple majority of state legislatures to approve a proposed increase in the debt limit within 60 days; and (3) an impoundment process requiring the President to designate necessary spending delays and reprioritizations when a “red zone” of borrowing capacity is reached, subject to simple majority override by Congress.

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