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Converging on the Solution: State Oversight over Any Federal Debt Increase

Compact for America Educational Foundation and Restoring Freedom have long advocated restoring the states to a position of oversight over the use of the federal debt. It is the core policy solution of the Balanced Budget Compact's Balanced Budget Amendment, which five states have committed to ratify. It was captured in the 18 words of the National Debt Relief Amendment, which was the first Article V effort to garner the support of more than one state in the 21st Century.

The basic concept is that any increase in the federal debt should require approval from a majority of state legislatures. It is premised on the recognition that, while a reasonable Balanced Budget Amendment must have flexibility to deal with emergencies, the federal debtor cannot be in control of its credit limit. It is natural to restore states to a position of oversight over any increase in the federal debt limit because such oversight was part of the original design of the Constitution - when state legislatures controlled the U.S. Senate. Diffusing the debate over any increase in the federal debt to 50 state capitols will also ensure the debate is transparent and allow ordinary citizens to have more direct influence; giving our currently non-voting children and future generations (who lack a time machine) a better chance of their rights being protected.

The idea is fast gaining support, as evidenced by retired law professor Rob Natelson's effort to incorporate it into a recently proposed discussion piece balanced budget amendment. Surprisingly, the idea of states serving as a sort of board of directors over federal borrowing capacity was also recently well-received in the halls of Congress. This is evidenced by the reaction of Congressmen and women to the testimony of Compact for America Educational Foundation President Nick Dranias before the U.S. House Judiciary Committee. And with 10 sponsors and growing, it is further evidenced by the recent introduction of HCR73 - the congressional resolution that commits Congress to partnering with the states in advancing the Balanced Budget Compact.

In light of such encouraging developments, it is especially important that Mr. Natelson has invited debate over his draft amendment proposal, because further discussion can only strengthen the insights underlying the core policy solution of state approval over any increase in the federal debt.

In Compact for America's latest policy report, economist and budget policy expert Dr. Byron Schlomach has accepted Mr. Natelson's invitation. And he's the right guy to do it.

Dr. Schlomach was directly involved in the earliest development of this idea. It all began in 2009, when a couple of Texas entrepreneurs randomly walked through the doors of the Goldwater Institute and picked an argument with the Institute's policy team, including Dr. Schlomach, constitutional scholar Nick Dranias, and constitutional litigator Clint Bolick, over the root cause of the runaway federal debt. They argued from their business experience that the source of the problem was giving the debtor control over his credit limit. They argued that nothing short of dividing control over the federal government's borrowing capacity could stop abuse of the federal debt. They also argued that anyone or anything given the power to check and balance the federal government had to be comparably powerful to withstand the worst manifestations of power politics. Only the states fit the bill.

These two Texas entrepreneurs won the argument that day. That debate spawned the National Debt Relief Amendment effort, which was later fully-fleshed-out and incorporated into the Balanced Budget Amendment of the Balanced Budget Compact.

Dr. Schlomach's Policy Report No. 17 - Converging on the Solution; Diverging on Efficacy commends Mr. Natelson for his support of the state oversight solution to the federal debt problem.

But Dr. Schlomach's Policy Report also explains why the Balanced Budget Compact's state-of-the-art Balanced Budget Amendment (which was not unveiled until after many months of research and development by a multidisciplinary team), is vastly superior to Mr. Natelson's otherwise welcome draft discussion piece.

It is not an accident that the Balanced Budget Compact's amendment is the only Balanced Budget Amendment that has garnered ratification commitments from any state, let alone the five member states of the Balanced Budget Compact. State legislators understand from practice what it takes to make a Balanced Budget Amendment or constitutional debt limit work. Hundreds of them liked what they saw. And now increasing numbers of Congressmen and women do as well.

With sufficient resources, there is a huge opportunity to commit Congress to the core solution of state oversight over the federal debt. Will you commit to a generous contribution to the effort?

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