The United States could be on the verge of calling its first constitutional convention since 1787, and the American Legislative Exchange Council, or "ALEC," has been working behind the scenes to make it happen, including through its new lobbying arm, the Jeffersonian Project.
ALEC is urging state legislators to pass state resolutions calling for a constitutional convention in order to pass a federal balanced budget amendment.
The campaign has attracted little media attention, but the pieces of legislation that could trigger a convention are moving forward much more quickly than many have anticipated. Although there are many unanswered legal questions about the constitutional convention strategy -- and fears on both the right and left of an out-of-control "runaway convention" -- if a balanced budget amendment were eventually enacted, it would cripple the federal government's ability to spend, likely forcing steep cuts in earned benefit programs such as Social Security and blocking Congress from responding to economic downturns or natural disasters.
Article V Constitutional Convention Could be Nearing
Article V of the U.S. Constitution provides that thirty-four states (two-thirds) can trigger a convention to propose amendments, which must then be ratified by 38 states (three-fourths).
According to some counts, resolutions calling for a constitutional convention to create a balanced budget amendment have been passed in at least 24 of the necessary 34 states. In just the past seven months, twelve states have proposed such resolutions -- in most cases sponsored by ALEC members -- and six of those measures have passed.
Because a constitutional convention has never been triggered under Article V, a cloud of uncertainty hangs over the effort. It is not clear whether a state's resolution calling for a convention can expire, nor is it clear whether a state can rescind its demand after it is made. U.S. Rep. Duncan Hunter (R-CA) has asked Congress to resolve these issues, although it is unclear whether House Speaker John Boehner will take up the effort.
ALEC Behind the Scenes of the Balanced Budget Push
ALEC has promoted a model resolution calling for such a convention for decades. But it has recently made the effort a top priority. In 2011, ALEC published a handbook for state legislators on how to use Article V of the U.S. Constitution to push for a balanced budget amendment.
As the Center for Media and Democracy (CMD) has previously reported, at its last two meetings ALEC has hosted workshops on the amendment strategy from the group "Citizens for Self Governance." The group is led by Tea Party Patriots co-founder Mark Meckler, and its board includes Wisconsinite Eric O'Keefe, who was subpoenaed in the "John Doe" criminal probe into Scott Walker's 2012 campaign activities. After ALEC's meeting last December, around one hundred state legislators convened to discuss the Article V convention process.
Following that meeting, resolutions calling for an Article V convention have been proposed in sixteen states, in most cases by ALEC members; six have passed.
The sponsor in Louisiana, state Rep. Joe Harrison, was even named ALEC Legislator of the Year 2014 for "his efforts on Louisiana’s unanimous passage of the Balance[d] Budget Amendment."
When the resolution was introduced in Wisconsin, Rep. Chris Taylor, a Wisconsin Democrat who attended ALEC's summer 2013 meeting, said that the proposal "comes right out of the 'Convention of States' workshop and materials presented at ALEC where state legislators were promised bundled campaign contributions and grassroots support if they joined this effort to amend the federal constitution."
Two of the right-wing political advocacy groups lobbying for the bill in Wisconsin, Americans for Prosperity and the National Federation of Independent Business, are ALEC members with close ties to the Koch brothers: David Koch founded and funds AFP, and NFIB has received millions from the Koch political network. NFIB was recently added to ALEC's corporate board, where it sits with a representative of Koch Industries.
Jeffersonian Project Used to Lobby for BBA
ALEC's new lobbying arm, the Jeffersonian Project, appears to have been used to lobby for the bills.
According to a memo written by ALEC lawyer Alan Dye and reported by The Guardian, the new 501(c)(4) group was created in 2013 to resolve "questions of ethical violations made by our critics and state ethics boards." Groups like Common Cause, CMD, the Voters Legislative Transparency Project, and others alleged in IRS complaints that ALEC was violating its 501(c)(3) charitable status by engaging in excessive lobbying. Although ALEC publicly dismissed the complaints, the formation of the 501(c)(4) Jeffersonian Project indicated that behind the scenes, ALEC was taking the threat of an IRS audit seriously.
The memo advises, "Any activity that could be done by ALEC may be done by Jeffersonian Project if legal counsel advises it would provide greater legal protection or lessen ethics concerns."
A key element of Common Cause's 2012 IRS complaint was evidence of ALEC sending hundreds of so-called "issue alerts" to legislators urging the passage or defeat of particular pieces of legislation, but never registering as a lobbyist in any state, and repeatedly telling the IRS that it engaged in zero lobbying.
Soon after the IRS complaint was filed, ALEC appeared to stop sending "issue alerts."
Yet with the 501(c)(4) Jeffersonian Project up-and-running, the "issue alert" lobbying messages have once again begun to flow.
In March 2014, for example, the Jeffersonian Project sent an "issue alert" to state representatives in Utah asking them to support HJR 8, Utah's balanced budget bill. The alert highlights the ALEC connection, noting, "The American Legislative Exchange Council (ALEC) has adopted a model resolution calling for an Article V Convention to propose a Federal Balanced Budget Amendment."
Documents obtained by CMD show that the Jeffersonian Project has also sent "issue alerts" to legislators in Arizona, suggesting that the BBA is the focus of a nationwide lobbying effort.
Balanced Budget Amendment Would Result in Fiscal Disaster
The convention of states strategy is unprecedented. The U.S. Constitution has only been amended through a two-thirds majority vote in both houses of Congress on a specific amendment, which is then ratified by two-thirds of state legislatures. In contrast, the Article V strategy triggers a full constitutional convention, and it is unclear whether the delegates could be confined to only passing one amendment. This fear of a "runaway convention" has led critics on both the right and left to oppose the Article V strategy.
"Even if [a constitutional convention] managed to be limited to a balanced budget amendment," said Michael Leachman, Director of State Fiscal Research at the Center for Budget and Policy Priorities (CBPP), "that would be very damaging to the country, the economy, and our future."
A strict requirement to balance the federal budget each year would prevent the government from using deficit spending to blunt the impact of a recession. Tax revenues decline during a recession, at the same time that demand increases for spending on items like unemployment benefits, job training, and food stamps. Similarly, natural disasters can wreak havoc on the economy, and disaster relief can also require deficit spending.
Many economists and the non-partisan Congressional Budget Office have agreed that short-term deficit spending shortened the post-2008 recession and prevented it from deepening into a depression.
A recent report by the CBPP explains that deficit spending during a recession functions as a sort of "automatic stabilizer" to cushion the economy. By forcing legislators to respond to a weak economy by raising taxes, cutting spending, or both, a balanced budget amendment "would launch a vicious spiral of bad economic and fiscal policy," according to the report.
Requiring spending to be matched by revenue each year could also make it impossible for Social Security and the military and civil service retirement systems to pay out benefits, the CBPP points out. Even though these programs have built up trust funds over decades, their spending would count against each year's federal revenue, meaning that payments to retirees would have to be offset elsewhere in the federal budget.
"Balanced Budget" Supporters Have Their Own Shortfalls
Ironically, many of the groups that have been insisting the federal government balance its budget each year have had their own problems with revenue.
In December 2013, The Guardian reported that ALEC was experiencing a budget shortfall of $1.4 million after losing dozens of corporate sponsors in the wake of the Trayvon Martin case, which sparked public outrage over ALEC-sponsored "Stand Your Ground" laws.
Another group in the coalition pushing for an amendment is the Balanced Budget Amendment Task Force, which has lobbied legislators in Utah, Ohio, and elsewhere to vote for constitutional convention bills. It ended FY2013 $153,660 in the red. Coincidentally, some of its expenses included $2,500 for hosting a legislator reception at ALEC's Chicago meeting and $3,870 for another ALEC seminar and reception in Washington, D.C.
Apparently deficit spending is just fine as long as it's for canapés and corporate lobbying.