Reps. Jeb Hensarling and Mike Pence recently called for a constitutional amendment limiting federal spending “to one-fifth of the economy.” Bruce Bartlett, a former official in the George H.W. Bush administration, promptly denounced the idea as “dopey,” one “terrible… on so many levels that it is hard to know where to begin to dissect it….”
Now, the Constitution is intended to constrain majorities generally, and the federal government in particular. Why? Because politicians have shorter time horizons than taxpayers, and therefore incentives to spend and tax at levels higher than those preferred by those they purportedly represent. That problem is compounded by that political clout of concentrated interests.
Given the government’s strong incentives to spend too much and weak incentives to use resources productively, and given the vital role of the Constitution as a check on federal power, the proposed Constitutional limit on spending is scarcely something to dismiss as “dopey.” Moreover, unlike several alternative “spending limit” proposals (such as linking spending to inflation and population growth), a spending constraint linked to the size of the economy would have the supreme virtue of forcing Congress to consider the impacts of legislation on economic growth.