In response to the trillions of dollars in new debt that will result from the Big Beautiful Bill passed by Congress, Elon Musk has proposed a new American political party. It is not clear how a new political party will solve the debt crisis, but this appears to be a long shot at best.
Senator Ron Johnson and other legislators have suggested that Elon Musk focus on Article V, rather than a new political party. Article V gives citizens, as well as Congress, the power to propose amendments to the Constitution; however, it is not clear that Article V provides a path for solving the debt crisis either.
The founders envisioned that citizens would use direct democracy in proposing, ratifying, and modifying the Constitution. James Madison made this clear in Federalist 49: “(a)s the people are the only legitimate fountain of power, and it is from them that the constitutional charter, under which the several branches of government hold their power, is derived, it seems strictly consonant to the republican theory to recur to the same original authority… whenever it may be necessary to enlarge, diminish, or new-model the powers of government.”
Thomas Jefferson was the first of the founders to propose the referendum process to approve changes in the state constitution. When Georgia delegates drafted their constitution, they incorporated a requirement that the new constitution could only be amended when petitions secured by a majority of voters in each county called for the convention. This reliance on the petition process to change the constitution was never used and was eventually dropped from the constitution. However, the referendum process for approving and changing the constitution was incorporate in the Georgia constitution and other state constitutions as well. Congress mandated the referendum process for approving changes in the constitution in all new states entering the union after 1857. Today every state constitution now incorporates this referendum process.
In the 19th century Swiss experiments with initiative and referendum had a major impact on direct democracy in other countries, including the U.S. All Cantons incorporated direct democracy in their charters, and in 1891 the initiative and referendum were incorporated in the Swiss federal constitution as well. The Swiss rely on initiative and referendum to enact a wide range of legislation as well as constitutional change. Requiring citizen approval for new taxes, spending and debt imposes effective constraints on legislators. Especially important is the requirement that proposals for new taxes must originate at the cantonal level, rather than the federal level, and must be approved by a majority of the cantons as well as a majority of citizens. The Swiss federalist system is based on these stringent institutions of direct democracy.
The Swiss experiments with initiative and referendum had a direct impact on direct democracy in America. Karl Burkli, considered to be the founder of direct democracy in Switzerland, advised proponents of direct democracy in the U.S. At the turn of the 20th century the Swiss experiments gave a new impetus for direct democracy in the U.S. From 1898 to 1918, 24 states adopted the initiative and referendum in their constitutions. Many local governments adopted direct democracy in their charters as well. The launching of direct democracy in the federal constitution in Switzerland led to calls for this reform in the U.S. However, in subsequent decades interest in direct democracy waned in the U.S. It took another 40 years before another state incorporated an initiative and referendum in their constitution.
Two world wars, the Great Depression, and deglobalization were not conducive to experiments in direct democracy. Only after World War Two did states begin again to incorporate initiative and referendum in their constitutions.
A new era of direct democracy was launched with the tax revolt in California in the 1970s. Prop 13 is a constitutional amendment capping local property taxes; the Jarvis-GANN Amendment caps the growth in state revenue and spending. The tax revolt then spread to other states, especially states that provide for initiative and referendum. Currently 32 states have enacted tax and spending limits like those enacted in California.
While the tax revolt has given new life to direct democracy at the state and local level, Article V has failed to achieve this objective at the federal level. Over the years many resolutions have been introduced in Congress calling for a fiscal responsibility amendment, but none of these have received the requisite two-third vote required to submit the amendment for ratification. Representative Jody Arrington (R-TX) recently submitted HCR 24 calling for an Article V Convention for proposing a Fiscal responsibility Amendment to the U.S. Constitution, but this resolution has yet to be reported out of committee.
Citizens have been proposing a fiscal responsibility amendment to the U.S. Constitution through their state representatives for more than two centuries. In fact, in 1979 more than two-thirds of the states had submitted resolutions calling for a fiscal responsibility amendment, but Congress failed to even count these resolutions let alone call the convention, which the Constitution requires it to do. State Attorneys General could sue Congress for this failure to call the Convention, and while a few of them have expressed interest in such a lawsuit, no one has yet stepped up to file the lawsuit. Private organizations continue to urge that a states convention under Article V is urgently needed to enact a fiscal responsibility amendment in the U.S. Constitution. But efforts to enact a fiscal responsibility amendment using Article V appear to be at a standstill. With debt projected to continue to grow at an unsustainable rate incoming decade, the U.S. is at a crucial turning point.
A solution to our debt crisis may be found in the fiscal reforms enacted in Switzerland. Citizens in Switzerland faced a similar turning point in the early 1990s. Switzerland was experiencing unsustainable growth in debt that threated economic stability and long-term economic growth.
Swiss citizens responded by enacting debt brakes at all levels of government. The debt brake at the federal level was enacted as a constitutional amendment through a referendum with support from 85% of voters. The debt brake mandates that the federal government cap the growth in spending at the long run rate of growth in the economy. The government may incur deficits but must balance the budget over the business cycle. With the debt brake in place the Swiss reduced debt to 30 percent of gross domestic product, and increased income per capita significantly above that of the U.S.
The founders proposed Article V as the vehicle of direct democracy at the federal level, but it is time to acknowledge that Article V has to date failed to achieve this objective. When it appears that citizens, though their state representatives, are about to enact an amendment, Congress preempts the effort by proposing its own amendment, or by simply blocking the states. This happened with the 17th amendment calling for the direct election of Senators; and It happened with the 21st Amendment repealing prohibition. In the latter case Congress even mandated how the states must ratify the amendment through state conventions. This is certainly in conflict with the founder’s vision of the states as equal partners with Congress in proposing and ratifying amendments.
The challenge of solving our debt crisis requires institutions of direct democracy that have proven to be successful in the states and in other countries such as Switzerland. With the initiative and referendum in the U.S. Constitution citizens could regain control of federal fiscal policy, just as they have state fiscal policies. A debt brake enacted through citizens’ initiative could impose an effective constraint on federal fiscal policies and restore sustainable levels of debt.