1863 Leadership · Issue Paper No. 1
The Conservative Case for a Balanced Budget Amendment
We inherited a country whose credit was built by people who paid their bills. We are spending that inheritance and calling it prosperity.
Abstract
In fiscal year 2026 the federal government will spend roughly one trillion dollars on interest — more than it spends on national defense, more than on Medicaid, and second only to Social Security. That money buys nothing. It builds no road, trains no soldier, and treats no patient. It is the price of decisions already made, charged to people who did not make them. This paper argues that the failure is structural rather than partisan; that a legislature cannot be relied upon to bind itself by ordinary statute; that two amendments are needed rather than one, since a line item veto was struck down as unconstitutional in 1998; that the strongest objections are serious and deserve answers rather than dismissal; and that the party which has campaigned on this question for forty years has, when given power, done the opposite — a failure that belongs to us before it belongs to anyone else.
Key findings
- Interest on the debt will reach approximately $1.0 trillion in FY2026 — 3.3 percent of GDP, exceeding the previous record set in 1991, and more than the $885 billion projected for national defense.1
- Net interest has risen from $223 billion in 2015 to $345 billion in 2020 to roughly $971 billion in FY2025. Over the coming decade it is projected to total $16.2 trillion.2
- Interest now consumes 18.6 percent of federal revenue, projected to reach 25.8 percent by 2036. By 2048 it is projected to become the single largest item in the federal budget.1
- Debt held by the public stands near 100 percent of GDP and is projected to reach 120 percent by 2036. GAO projects 200 percent by 2047 under current policy.3
- 49 states already operate under some form of balanced budget requirement. The federal government is the exception.4
- In 2025, with unified control of Congress and the presidency, the party that has campaigned on this question for forty years enacted a law CBO scores at $3.4 trillion in added deficits over ten years — roughly $4.1 trillion with interest.5
Section 1The question before us
A trillion dollars a year now leaves the Treasury and produces nothing. It is not a program. It does not build a bridge, staff a hospital, or equip a soldier. It is rent paid on decisions made by people who will not be alive to see the bill come due, charged to people who had no vote in making them.
That is the plainest description of federal interest expense, and it is the reason this paper exists. Everything else — the constitutional mechanics, the economic modeling, the objections and our answers to them — follows from the fact that the largest growing line in the federal budget is a line that buys nothing at all.
1.2 Our own share of the failure
It would be easy to describe this as something done to the country by the other party. It was not, and we will not pretend otherwise.
A balanced budget amendment has been introduced in some form in nearly every Congress for four decades and reintroduced more than a hundred times since 1999, making it among the most frequently proposed amendments of the century.4 It has been a fixture of conservative platforms, conservative fundraising, and conservative speeches for a generation.
In 2025, with the presidency and both chambers of Congress, that same coalition enacted a law the Congressional Budget Office scores as adding $3.4 trillion to deficits over ten years — approximately $4.1 trillion once interest on the new borrowing is counted, and near $5 trillion should its temporary provisions be made permanent.5
That is not a difference of degree from what we have criticized in others. It is the same act. A movement that spends forty years demanding a rule against deficits and then, holding every lever of power, produces one of the largest deficit increases in modern legislative history has not been defeated. It has been discredited by its own hand.
We state this first because the argument that follows cannot be made credibly by anyone unwilling to state it. And because it points to the paper's actual thesis: if a party that campaigns on balanced budgets will not balance a budget when it can, the problem is not which party holds the pen. The problem is that nothing binds the hand that holds it.
Section 2What the interest actually costs
2.1 The size of the payment
Interest is now the second largest item in the federal budget, behind only Social Security. In FY2026 it is projected at approximately $1.0 trillion, against $885 billion for national defense and $708 billion for Medicaid.1 It is projected to exceed Medicare spending beginning in 2028 and to become the single largest federal expenditure by 2048.6
| Fiscal year | Net interest |
|---|---|
| 2015 | $223B |
| 2020 | $345B |
| 2024 | $881B |
| 2025 | $971B |
| 2026 (projected) | $1.0T |
| 2036 (projected) | $2.1T |
Sources: Congressional Budget Office; Committee for a Responsible Federal Budget; Peter G. Peterson Foundation.2
Relative to the economy, interest costs reach 3.3 percent of GDP in 2026, eclipsing the previous high set in 1991, and are projected at 4.6 percent by 2036.1 Over the coming decade the total comes to $16.2 trillion — the largest ten-year interest figure in the nation's history.
2.2 What it crowds out
Interest now consumes 18.6 percent of federal revenue, above the prior record set in 1991, and is projected to reach 25.8 percent by 2036.1 One dollar in four collected from an American taxpayer would go to servicing borrowing already done.
This is the part that ought to trouble a conservative most. Every discussion of federal priorities — defense readiness, veterans' care, basic research, tax relief — is a discussion of the shrinking remainder. Interest is not one priority competing among others. It is the claim that is settled before the competition begins, and it grows whether or not anyone votes for it.
Section 3The moral argument
This argument stands independent of every figure above. If the economics were favorable, it would still hold.
We did not build the credit of the United States. We inherited it. It was built across generations by people who paid for their wars, retired their bonds, and treated an obligation as something a person keeps rather than refinances. The full faith and credit of the United States is not a natural feature of the world. It is an accumulated reputation, earned by conduct, and it can be spent.
What we are doing is spending it. We are consuming today and presenting the invoice to people who cannot vote, cannot object, and in many cases are not yet born. We have arranged matters so that the benefit accrues to those who voted and the cost falls on those who could not.
There is a plain word for that, and it is not economics. It is character. A man who runs up debts and leaves them to his children is not judged by whether the arithmetic worked. He is judged by what kind of man does that. We should be willing to be judged the same way.
Conservatism claims to be the disposition that thinks in generations — that treats institutions as inheritances held in trust rather than assets to be liquidated. That claim cannot survive a balance sheet like this one. Either we mean it about the debt or we do not mean it anywhere.
Section 4The market argument
Deficit spending on this scale does not leave markets undisturbed. It distorts them, and it distorts them in the direction of the government.
When the Treasury borrows at this volume, it competes with private borrowers for the same pool of savings. Federal debt absorbs capital that would otherwise reach businesses, and does so at a price no private borrower can match, because no private borrower can tax. A review by the Cato Institute of forty academic studies on the relationship between federal debt and economic growth found that thirty-six identified a statistically significant negative relationship.7 CBO's own modeling reflects the same dynamic, estimating that stabilizing the debt-to-GDP ratio would raise economic growth.
The distortion runs further than crowding out. A trillion dollars a year in interest is a transfer — from taxpayers to holders of Treasury securities. Those holders are disproportionately institutions and households with capital to lend. We have built, without ever debating it, one of the largest transfer programs in the federal government, and it flows toward those who already have assets.
There is a further risk that ought to concern anyone who distrusts concentrated power. When debt service grows large enough, pressure builds on the central bank to hold rates down or absorb government paper — what economists call fiscal dominance. Monetary policy stops answering to price stability and starts answering to the Treasury's financing needs. That is not a market. It is a market whose most important price is set by the largest borrower in it.
Section 5The economic argument
The third argument concerns what happens if confidence goes. Here we will be careful, because this is where fiscal argument most often overreaches and the overreach is what lets opponents dismiss the whole case.
5.1 What the risk actually is
The United States borrows in a currency it issues. It cannot be forced into the position of a household that runs out of money, and anyone who tells you a default is imminent is not describing the mechanism correctly.
The real risk is repricing. CBO defines a fiscal crisis as "a situation in which investors lose confidence in the value of the U.S. government's debt," producing an abrupt rise in interest rates and associated disruption.8 Rising Treasury rates would reduce the market value of outstanding government securities, and the resulting losses would fall on the institutions that hold them — banks, insurers, pension funds. A fiscal crisis, in CBO's assessment, could become a financial crisis.9
The mechanism compounds. Loss of confidence raises yields; higher yields raise interest costs; higher interest costs require more borrowing; more borrowing further strains confidence. Once that loop begins it is not obvious what stops it short of measures nobody wants to contemplate.
5.2 What honesty requires us to add
CBO states plainly that it cannot reliably quantify the probability of such a crisis, that no tipping point can be identified beyond which one becomes likely, and that the near-term risk appears low — mitigated by features of the financial system that sustain demand for Treasury securities.9
We report that because it is true and because our argument does not need the alternative. A case for prudence that depends on predicting a date is a case that expires on that date. The honest form is this: the risk cannot be quantified, no one can name the threshold, and we are approaching it without knowing where it is. That is not a reason for calm. It is the reason a prudent person does not run the experiment.
GAO has been more direct about one particular hazard, and it bears repeating in a paper of this kind: debt limit impasses themselves increase the risk of default and diminish the perception of Treasury securities as safe assets.3 Section 8.4 returns to this, because it bears on a tactic frequently proposed by people who share our goal.
Section 6 · The strongest case against
6.1 It forces the wrong policy at the worst moment
This is the serious objection and it deserves to be stated at full strength. Revenues fall in a recession while unemployment and related spending rise, which means a hard annual balance requirement compels spending cuts or tax increases precisely when the economy is contracting. In 2016, 273 national organizations wrote to Congress arguing that requiring policymakers to cut spending or raise taxes when the economy slows is the opposite of what stabilizes a weak economy, and risks turning a slowdown into a recession.10
This is not a partisan talking point. It is standard macroeconomics, and any amendment that ignores it will make downturns worse. Section 8.1 addresses it directly; an amendment that does not is not worth passing.
6.2 Who enforces it?
A constitutional requirement is only as good as its remedy. If Congress passes an unbalanced budget, who has standing to sue? And if a court takes the case, the remedy is a judge ordering spending cuts or tax increases — federal judges writing budgets, which is a graver separation-of-powers problem than the one being solved. Most drafts leave this unresolved, and a rule with no enforcement mechanism is an aspiration in constitutional clothing.
6.3 It will be gamed
Governments subject to balance requirements move spending off-budget, reclassify operating costs as capital, lean on special funds, and declare emergencies. States do all of this under their own requirements. A federal amendment would face the same pressure with vastly more sophisticated accounting available to it.
6.4 War and genuine emergency
The country borrowed to fight the Second World War and was right to. Any rule must accommodate genuine emergencies, and every escape hatch built for a real war becomes a door available in an ordinary year.
6.5 What we concede, and what we do not
We concede that a rigid annual balance requirement would be procyclical and would deepen recessions. We concede that enforcement is genuinely unresolved and that no serious version can leave it so. We concede that any rule will be gamed at the margins, and that emergency provisions are the obvious point of attack.
We do not concede that these are reasons to do nothing. They are the design specification. An amendment written without them fails; an amendment written with them in view is the object of Section 8.
Section 7Why the ordinary route has failed
Statutory restraint has been tried repeatedly and repeatedly repealed, waived, or evaded, because one Congress cannot bind the next by statute. This is the structural fact that makes the question constitutional rather than legislative.
The closest the country came was 1995. The House passed a balanced budget amendment 300 to 132, clearing two thirds. In the Senate the recorded vote was 65 to 35 — with true support at 66, one short of the 67 required, the majority leader having switched his vote to preserve the right to move for reconsideration. A second attempt in 1996 failed 64 to 35, and a third in 1997 fell one vote short again.11 When that vote was taken, gross federal debt stood near $4.9 trillion.
Meanwhile 49 state constitutions impose some form of balance requirement on their own governments.4 The federal government is not merely undisciplined relative to its own past. It is the exception among American governments.
Section 8Recommendations
8.1 Write it to survive Section 6
A serious amendment must answer the procyclicality objection in its own text rather than in its advocates' speeches. That means, at minimum:
Balance measured over the cycle, not the year. A requirement that outlays not exceed receipts averaged across a multi-year window permits deficits in a downturn and requires surpluses in an expansion. It preserves the automatic stabilizers while removing the option of permanent deficits, which is the actual disease.
A supermajority escape, with a sunset. Deficits above the limit should require a three-fifths vote of both chambers and expire automatically after a fixed term unless renewed by the same margin. A waiver that does not expire is a repeal.
A phase-in of not less than five years. Closing a deficit of 5.8 percent of GDP in a single year would be an economic event in its own right. A glide path is the difference between a rule and a shock.
An explicit enforcement mechanism. Rather than leaving remedy to litigation, the amendment should provide an automatic, across-the-board sequester triggered by a shortfall, with no exempted accounts. The point of automaticity is that it requires no judge and no further vote — and that it is unpleasant enough that Congress prefers to legislate.
8.2 A line item veto, by amendment
We support a line item veto and we are explicit about what that requires. It cannot be enacted by statute. It was tried.
The Line Item Veto Act of 1996 gave the president authority to cancel individual spending and tax provisions after signing a bill. In Clinton v. City of New York (1998) the Supreme Court struck it down 6 to 3, holding that it violated the Presentment Clause: the Constitution permits the president to approve or reject a bill entire, not in parts, and the Court read constitutional silence on unilateral amendment as prohibition.12
Any proposal that treats a line item veto as ordinary legislation is therefore proposing something already forbidden. We advocate instead for a second constitutional amendment, drafted alongside the first, granting the president authority to strike individual items of appropriation subject to congressional override on the same terms as a full veto.
The two amendments answer different problems and both are needed. A balance requirement governs the total; a line item veto governs the composition. Without the first, a president can strike items and Congress simply spends the savings elsewhere. Without the second, a balance requirement is met by cutting whatever has the weakest lobby rather than whatever is least defensible. Forty-four governors already hold some form of this authority in their own states.
An interim step that needs no amendment. Expedited rescission would let the president propose cancellations that Congress must vote up or down on a fast track. Because Congress still acts, the Presentment Clause is satisfied, and it can be enacted by ordinary law today. It forces recorded votes on individual items, which is most of what the line item veto was meant to accomplish — and a Congress unwilling to pass even that has told you something about its appetite for the amendment.
8.3 Scope: the federal budget
This paper addresses the federal budget and nothing else. Proposals sometimes extend a balance requirement to every level of government; we do not, for two reasons.
The first is that the work is largely done. Forty-nine states already operate under some form of balance requirement, adopted by their own citizens through their own constitutions.4 The arguments in Sections 3 through 5 apply with equal force to a state or a city, and a future paper may take them up. But the federal government is the American government that has not accepted the discipline, and it is the one that can borrow in a currency it prints.
The second is that a federal command directing state fiscal policy would invert the federalism this amendment exists to defend. It would also hand opponents an objection that has nothing to do with the merits, at the price of solving a problem forty-nine states have already solved for themselves.
8.4 On withholding votes to force the issue
One tactic recurs among people who share our aim: refuse to vote on any legislation until a balanced budget amendment passes. The frustration behind it is legitimate. The tactic is not, and we say so plainly because it will otherwise be attributed to us.
A blockade that stops appropriations or a debt limit increase does not demonstrate fiscal seriousness. It threatens the payment of obligations already incurred — and GAO identifies debt limit impasses as increasing the risk of default and diminishing the perception of Treasury securities as safe assets.3 That is precisely the loss of confidence described in Section 5. A movement cannot credibly warn that faith in American credit is fragile and then use that fragility as leverage.
The honest path is slower and harder. Make the case in public, in detail, until it is understood — and in the meantime pass budgets that balance without a rule compelling it. A coalition that demonstrated restraint while holding power would not need to threaten anyone. Its difficulty is that it has not yet done so, and no blockade substitutes for that.
Section 9The argument you can carry
The paper compressed to what a person can remember and repeat. Each point stands on its own.
And the one that is ours rather than theirs. In 2025, holding the presidency and both chambers, the coalition that has demanded this amendment for forty years enacted a law scored at $3.4 trillion in added deficits. We were not outvoted. We were in charge. Until that is said plainly, nothing else we say on this subject will be believed — and it should not be.
Section 10Conclusion
The full faith and credit of the United States is the most valuable asset the country owns, and it is the only one that appears on no balance sheet. It was accumulated slowly, by generations who did unglamorous things: retired their bonds, paid for their wars, and left the ledger in better order than they found it. It made possible a bond that the world treats as the definition of safety, and everything built on top of that assumption — the mortgage rate, the pension, the price of capital for every business in America.
It is not permanent. Reputations of that kind are held on trust and can be spent by the people holding them, which is what we are doing. We are consuming an inheritance and describing the consumption as growth.
The remedy is not complicated, though it is difficult. Bind the hand, because the hand has demonstrated across forty years and both parties that it will not bind itself. Write the rule so it survives a recession, so it cannot be waived without a supermajority and a sunset, and so it enforces itself without a judge. Then live under it.
And before asking anyone else to accept that discipline, demonstrate it. The argument for a balanced budget amendment has never failed for lack of evidence. It has failed because the people making it have not been believed, and the reason they have not been believed is that when handed the pen, they did the opposite. That is a problem no constitutional amendment can fix. It is ours to fix, and it comes first.
Notes
- Peter G. Peterson Foundation, "Interest Costs on the National Debt Are Reaching All-Time Highs," February 2026, pgpf.org; American Action Forum, "Highlights of CBO's February 2026 Budget and Economic Outlook," americanactionforum.org. Both draw on the Congressional Budget Office's February 2026 baseline; cite CBO directly where possible.
- Committee for a Responsible Federal Budget, "Interest on the Debt to Grow Past $1 Trillion Next Year," crfb.org; Peter G. Peterson Foundation, monthly interest tracker, pgpf.org.
- U.S. Government Accountability Office, "Federal Debt Management: Treasury Is Meeting Borrowing Needs but the Deteriorating Fiscal Outlook Poses Risks," GAO-26-107529, gao.gov.
- Congressional Research Service, "A Balanced Budget Constitutional Amendment: Background and Congressional Options," 2019; Harvard "Amend" project, Balanced Budget Amendments, harvard.edu. [Add a direct CRS link.]
- Congressional Budget Office, "H.R. 1, One Big Beautiful Bill Act (Dynamic Estimate)," June 2025, cbo.gov; Bipartisan Policy Center, "What Does the One Big Beautiful Bill Cost?", bipartisanpolicy.org.
- American Action Forum, "Interest Payments on the National Debt: the Near- and Long-term Outlook," americanactionforum.org, drawing on CBO's long-term projections.
- Jack Salmon, Cato Institute, literature review of forty studies on federal debt and economic growth, as summarized by the House Budget Committee, "The Consequences of Debt," budget.house.gov. [Cite the Salmon review directly; the House Budget Committee is a partisan body and is used here only as a pointer.]
- Congressional Budget Office, definition of a fiscal crisis, as quoted in House Budget Committee, "The Consequences of Debt," budget.house.gov. [Replace with the direct CBO source.]
- Congressional Budget Office, The Long-Term Budget Outlook: 2025 to 2055, cbo.gov.
- Letter of 273 national organizations opposing a balanced budget amendment, April 2016, house.gov, citing a 2011 analysis by Macroeconomic Advisers.
- U.S. Senate Report 105-3, "The Balanced-Budget Constitutional Amendment," congress.gov.
- Clinton v. City of New York, 524 U.S. 417 (1998), justia.com; Congressional Research Service, "Line Item Veto Act Unconstitutional: Clinton v. City of New York," Report 98-690, everycrsreport.com.
A note on the author
Issue papers are published under the name of 1863 Leadership rather than an individual byline. Where this paper speaks in the first person, the author is its founder, who served in the United States Marine Corps as a cryptologic Arabic linguist and spent fourteen years building and operating a multi-unit restaurant enterprise.
A note on sources
Budget figures in this paper originate with the Congressional Budget Office, the Government Accountability Office, and the U.S. Treasury. Where we have cited an intermediary — the Peterson Foundation, the Committee for a Responsible Federal Budget, the American Action Forum, or a congressional committee — it is because that source assembled the CBO data conveniently, and the notes say so. Congressional committee publications are partisan documents and are used here only as pointers to primary material, never as authority.
Recommended citation
1863 Leadership. "The Conservative Case for a Balanced Budget
Amendment." Issue Paper No. 1. Originally published December 2016; revised
September 2026. 1863leadership.org
Corrections: This revision corrects the December 2016 edition in two respects. It proposed enacting a line item veto by legislation; the Supreme Court held such an act unconstitutional in Clinton v. City of New York (1998), and Section 8.2 now advocates a second constitutional amendment instead. It also proposed extending a balance requirement to every level of government; Section 8.3 now limits the proposal to the federal budget. Errors of fact are corrected on this page within one business day of notice, with a dated note describing the change.
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