How Florida can help defuse the nation’s debt bomb
It’s fair to say that many people in Florida and around the country are experiencing a crisis of confidence when it comes to their trust in the federal government. Regardless of political persuasion, recent history has offered no shortage of issues to strain the faith of citizens in their federal government and our national leaders on both sides of the political aisle.
Arguably, the biggest abuse has been Washington’s out of control spending, combined with fiscal and monetary policies that have resulted in trillion-dollar plus annual deficits, over $34 trillion in federal debt, over $125 trillion in total federal liabilities and unfunded obligations, and excess inflation.
This legacy of recurring deficits and increasing debt burdens has become a powerful force for creating huge generational inequities.
Addressing the federal debt crisis will require a significant public education and engagement effort to achieve broad bipartisan support for a range of federal fiscal restraints.
Everything will need to be on the table, but all things are not equal. It will take a bipartisan statutory Fiscal Sustainability Commission to make this a reality.
Fortunately, bipartisan bills to create such a commission have been introduced in both the House and Senate, and the House version was recently passed out of the House Budget Committee with bipartisan support. Speaker Mike Johnson has also noted his support for such a commission.
In contrast to the federal government, state and local governments have been more successful in maintaining sustainable debt levels. A good example is Florida, which is one of the most fiscally responsible states in the nation. Florida has stabilized debt at about 10% of state income as compared to over 120% of gross federal debt to national income.
The explanation for the success of Florida, as well as other states, is that citizens have imposed stringent fiscal rules on their state and local governments. Florida has some of the most effective fiscal rules in the nation, including a balanced budget requirement, debt limit, tax and expenditure limit, rainy day fund and significant gubernatorial veto authority.
Florida is a conservative state, so it is not surprising that state and local governments pursue prudent fiscal policies. But over the years, Florida citizens have enacted stringent constitutional and statutory rules imposing more effective constraints on fiscal decisions. With this combination of fiscal rules, Florida state and local governments have balanced their budgets and stabilized debt at reasonable and sustainable levels.
Florida’s leaders also have the power under Article V of the U.S. Constitution to address federal fiscal irresponsibility as well. Two-thirds of the states can call a convention of states to propose fiscal restraints on the federal government. Any resulting fiscal responsibility amendment proposed by a convention must be submitted for ratification by three-quarters of the states, preferably by a vote of the people.
Florida submitted an application for an Article V convention to propose a fiscal responsibility amendment in 1976, and it reaffirmed its desire for such a convention as recently as 2014. Recent research discovered that more than the required number of states called for such a convention of states in 1979 and yet Congress has failed to act.
H.C.R. 24, which was introduced by House Budget Committee Chair Jodey Arrington (R-TX), is designed to bring light to this issue. Utah has noted its willingness to step up and demand that Congress set the time and place for such a convention as required under Article V if Congress fails to act in a timely manner. Florida needs to join Utah, since it had an application for a convention of states to propose a Fiscal Responsibility Amendment that remains active today.
Florida and other states must now step up. If the states fail to assert their rights under Article V, Congress will continue
to mortgage the future of our country and future generations. This is irresponsible, inequitable, and immoral, and it must stop. The time to hold Congress accountable and to take steps to restore fiscal sanity and sustainability is now.
Barry W. Poulson is professor emeritus of economics at the University of Colorado Boulder. David M. Walker is the immediate former comptroller general of the United States.