HB 284-COMPACT FOR A BALANCED BUDGET  2:07:38 PM VICE CHAIR LYNN announced the next order of business would be HOUSE BILL NO. 284, "An Act relating to an interstate compact on a balanced federal budget." 2:08:09 PM CHAIR KELLER speaking as the prime sponsor of HB 284 stated that during his consideration of sponsoring the bill he reviewed the "debt clock" that totaled $17.1 trillion for the national debt in mid-January, and it was $17.4 trillion dollars yesterday; a difference of 3/10 of a trillion dollars which amounts to $300 billion dollars. For reference, he pointed out that $300 billion would carry the State of Alaska's total budget for 20-25 years. He reminded the committee of the slide shown during the last committee meeting that depicted the steep rising ramp of debt that equated to $55,000 for every man, woman and child [in the U.S.]. The bill uses a U.S. Constitution, Article V, state compact approach to amend the constitution and it proposes a cap to the debt limit. One of the proposals is that the balanced budget amendment be passed by 38 other states and become a constitutional amendment. The bill proposes a cap at 105 percent of the national debt at the time of the [effective date] of the amendment. He explained that instead of Congress controlling whether there is an increase in the cap, as is the current case, the cap could be increased by a simple majority of the states. Although the proposal is draconian in one sense as people are accustom to the continual increase, it is not draconian as it allows for creation of new taxes, reform type taxes. The compact puts the states back into the equation where, he opined, the states once were. He explained that HB 284 contains the specific text of the proposed amendment in the compact, the Article V application to Congress that is used as a call for a convention of which Congress may resolve to call the ratification convention, and the organization of the interstate commission. The compact includes delegate appointments and instructions, convention locations, rules, ratification referral for the congressional resolution, and the ultimate ratification of the amendment later. Theoretically, he opined, with the compact being defined in one piece of legislation it creates a system wherein the constitution could be amended in one year if the states are in agreement. He believes Alaska is very fortunate to be selected as a state wherein the Goldwater Institute is spending resources to provide technical support. Alaska is one of three to four states making progress. If Alaska is the first state to pass the compact there is an advantage of a leadership role in the compact, which is part of his motivation, he mentioned. 2:15:31 PM VICE CHAIR LYNN questioned whether the language in the compact could be amended. CHAIR KELLER replied no, and advised that due to the nature of the bill 38 states must act with identical language for the balanced budget amendment. Although as the states move forward, there is an allowance for some changes, all of the legislatures involved would have to agree to any change. Therefore, he opined that it would be more difficult to make any changes. 2:16:54 PM VICE CHAIR LYNN further questioned whether there is a provision allowing necessary increases in the budget to handle an unexpected national emergency or a natural disaster. CHAIR KELLER explained that the compact relies on the action of 51 percent, 26 states, to expand [the budget], which he opined is as efficient as is currently in place. A simple resolution by the states would be required to increase [the budget]. Since it is not a hard cap as it is up to 105 percent, [an emergency] requiring overnight response is unlikely, and there should be time leading up to [the emergency] for the states to respond intelligently and carefully consider [the matter], he opined. 2:18:40 PM NICK DRANIAS, Director, Constitutional Policy, Policy and Development, Goldwater Institute, noted that his 16 years as an attorney he has spent 8 years focused on the 10th Amendment and Article V Constitutional Law. He provided the following testimony: Representative Keller is essentially correct. On the first question ... whether the compact needs to be identical; the compact needs to be identical substantially at the point where any convention would be organized which is when 38 states join it. But up until that point, the compact can be tweaked as any compact is. If you look around the country you'll find about 200-plus compacts. The average state is a member of 20 or more and many of those compacts are tweaked from year to year in minor and substantial respects ... the key thing is for the initial compact to be formed with the initial 2 states to form it as a compact that would have to be substantially identical. Thereafter, until you reach the 38th state point of organizing the convention, it could obviously be tweaked with unanimous consent of all parties to the compact. 2:21:12 PM The committee took a brief at-ease due to technical difficulties. 2:21:53 PM MR. DRANIAS continued his testimony as follows: The second question was how to handle a crisis with this amendment. If the amendment were in place, it is important to recognize that the initial debt limit would be set with a 5 percent cushion, 5 percent in addition to whatever outstanding debt currently exists. So if we had a $20 trillion outstanding debt, that means there would be $1 trillion in additional borrowing capacity before the debt limit would kick in. Now that gives a current borrowing and spending rates of about $650 billion a year, that gives us just under 2 years or more to get a plan in order to deal with further increases in the debt if it were deemed necessary and sell it to the states to get 26 states to approve it. Now Congress could, in requesting an increase in the debt limit in that time frame, it could conceivably identify crisis contingencies for borrowing in the proposal that they would make to the states. And so, it is really up to Congress how they want to deal with crisis contingencies. They could specify them any increase in the debt limit, but it would be up to the states to make the call on whether or not that was a legitimate crisis exception or just a loop hole for more spending. So, the key thing to understand here is there is flexibility in this debt cap. What it reforms is who makes the ultimate call on that flexibility. The policy reason for that is we believe the real cause of the spiraling national debt is having the debtor retain sole and unilateral control over its own credit limit. We believe that any system in which the debtor maintains unilateral control over its credit limit will eventually crash because the debtor will give himself as much credit as he can get away with. So primary reform in this effort is to bring outside intervention from the states and to ensure that whatever proposal is made for more debt, whether it is for a crisis or whether it is for working capital, that an outside board of directors consisting of legislators just like you are making that call in 26 states. 2:24:34 PM CHIP DEMOSS, President, Compact for America, Inc., advised that Compact for America, Inc., is the sister organization working with the Goldwater Institute in order that the Compact for America is passed in the three states mentioned. He then noted his support for [HB 284]. With regard to changing the compact, he explained that provisions built into the compact allow states to make specific changes with regard to their delegates and "several other minor provisions," he opined. Therefore, the compacts do not have to be identical in those aspects. 2:26:11 PM MIKE COONS, Director, Citizens Initiatives, related his support of the balanced budget amendment embodied in HB 284. However, Article 1, Section 10, in part, says no state shall, without the consent of Congress, enter into any agreement or compact with another state. Therefore, he questioned how to "get around" that part of the U.S. Constitution. He then inquired as to the consequences if Congress determines it will not consent to the states entering into a compact or agreement. 2:28:23 PM REPRESENTATIVE GRUENBERG speaking to all witnesses asked whether any witnesses had received any legal memorandum suggesting there may be U.S. Constitutional problems with HB 284. He then requested that the attorney work-product privilege be waived and all such memoranda delivered to this legislature. 2:29:38 PM MR. DRANIAS explained that the Goldwater Institute has fully analyzed all legal issues and raised every conceivable legal question. He then reminded the committee of the 10 emails directed to each member of the House Judiciary Standing Committee regarding the compact approach to Article V amendments and the joint publication by the Goldwater Institute, States United for a Balanced Budget, American Academy for Constitutional Education, Coalition of Freedom, and Compact for America, Inc., entitled "Using a Compact for Article V Amendments: Experts Answer FAQs," herein (Experts Answer FAQs), dated January 24, 2014, which provides the analysis and opinions of Ilya Shapiro, Cato Institute Senior Fellow in Constitutional Studies; Shane Krauser, Director, American Academy for Constitutional Education; Dr. Kevin Gutzman, Attorney, Professor of History at Western Connecticut State University, and New York Times best-selling historian; Harold DeMoss, Senior Judge of the United States Court of Appeals, Fifth Circuit in his personal capacity and not to be regarded as an opinion of the United States Court of Appeals, Fifth Circuit; and Nick Dranias as the Goldwater Institute's Constitutional Policy Director. The publication includes critiques by various peer individuals of legal issues raised in every conceivable manner regarding Article V amendments. He emphasized that nothing is being hidden and the publication also reflects the critique of a peer debate opponent and addresses her concerns. Issues are specifically raised and then addressed in the analysis and, he opined, there is not a better source for analyzing the legal issues than the way the Goldwater Institute has addressed each of the 12 Experts Answer FAQs with detailed citations and analysis by multiple scholars, and at least one federal judge. 2:31:36 PM MR. DRANIAS, in response to Mr. Coons, offered that the Goldwater Institute is anticipating co-opting Congress into supporting this effort with a counter-part resolution that would give consent to the compact and simultaneously fulfill every role that Congress has in the Article V process, including both the call for the convention and the prospective ratification referral if the amendment is approved by the convention. In order to avoid repeatedly approaching Congress, one resolution would be passed once in Congress and because the Goldwater Institute uses conditional enactments in some states, contingent effective date in other states, the Congressional consent, the Congressional call for a convention, and the Congressional ratification referral is in one omnibus resolution with each of those components only going live at the time required by the text of Article V. He opined, in that manner the [state] can approach Congress and ask it to pass this resolution on its own timetable and there may only be 2, 3, 5, or 10 states in the compact. In the event a simple majority exists in both the House and Senate, the compact could basically achieve Congress's entire role in a single resolution, which would lay dormant until such time as it fulfills the requisites of the Article V process and triggers it. 2:33:46 PM REPRESENTATIVE GRUENBERG reiterated his question as to whether Mr. Dranias is in possession of any memoranda with the opposite position that has not been fully disclosed to the committee. He opined that individuals who come before the House Judiciary Standing Committee have an ethical obligation if they have opposing legal opinions to fully present these to this committee. MR. DRANIS stated that the analysis of the aforementioned publication "Experts Answer FAQs," is exactly what the Goldwater Institute analyzed and concluded internally. He further stated there is no contrary analysis, opinion, or conclusion that has been hidden from the committee. There is no issue the Goldwater Institute has internally spotlighted or with which was concerned about that is not analyzed and spotlighted in the aforementioned document. He said he would stake his reputation and licenses on his statements. The Goldwater Institute, Judge Harold DeMoss of the Fifth Circuit Court of Appeals, and himself take pride in taking on issues honestly, openly and transparently to determine that all issues are exposed, challenged, and debated. Most of the theories advanced, analyzed, and considered in the publication entitled "Experts Answer FAQs" have been part and parcel of a number of different postings with the National Constitution Center in Philadelphia and with the Law & Liberty web site. He noted that he has attended and participated in numerous federal society debates with opposing points of view to ensure that every [issue] has been tested and analyzed thoroughly. He stated he could not count the number of emails the Goldwater Institute has reiterating the analysis with various legislators and citizens across the country. Furthermore, there is absolutely not a single legal issue the Goldwater Institute believes even remotely significant that has not been analyzed and arguments on both sides disclosed, arguments on both sides which is evident within the publication. 2:37:56 PM MR. COONS requested a lay man's response to the question of what happens if Congress does not consent and asked whether there is an avenue of approach outside of this. He also asked how the compact will be passed with the Congress that is currently in place. MR. DRANIAS, in response to Mr. Coons, stated that as a first approach the Goldwater Institute designed the compact to co-opt Congress rather than conflict with Congress. If it proves impossible to co-opt Congress then it will fall to other Article V efforts that have chosen conflict with Congress as its primary model. He reiterated that the Goldwater Institute's philosophy is that it prefers to pursue co-option first, and that all of the Article V efforts that do not use compacts are available for back up and as a compliment to this effort because this is not a mutually exclusive effort. He related that the Goldwater Institute's political judgment is that if Congress would be willing to call a convention for a balanced budget amendment in any form, the political will for that is essentially the same political will needed for [Congress] to consent to this compact. Should Congress agree with the Article V process it will exist with a compact as everything is fully defined in advance and there are no questions or concerns about the process that might animate people in Congress. Again, if Congress will not consent and there are not simple majorities in the House and Senate to consent, the Goldwater Institute's hope is that its sister efforts on the left and right - if they are directed to good policy - will provide the backup needed to deal with conflict in forcing Congress to perform its constitutional duty. 2:41:31 PM REPRESENTATIVE GRUENBERG advised he is not entirely satisfied with Mr. Dranias's answer and believes there are arguments on the other side that have not been properly presented. In general, he stated, it is a matter of credibility and this committee is dependent on full and complete disclosure on these grave and weighty issues. He again offered Mr. Dranias an opportunity to set the record straight. MR. DRANIAS responded to that the Goldwater Institute has played devil's advocate to the best of its ability. Furthermore, the compact was peer reviewed by Andrew Schlafly of the Eagle Forum, and by Joe Wolverton of the John Birch Society, both of which oppose every form of an Article V convention. Mr. Dranias related that he debated with Mary Margaret "Meg" Penrose, Texas A&M University School of Law Professor who peer reviewed the fact document itself. He expressed that every substantive significant legal issue or argument that has been presented to the Goldwater Institute and that it could conceive has been raised and thoroughly addressed. Although there may be arguments it has not considered, he assured the committee that the Goldwater Institute did go after this issue, especially since the advisory council consisting of Professor Lawrence Lessig of Harvard Law School who has a different ideological slant than Mr. Dranias. The Goldwater Institute considered in every reasonable manner the opposing points of view which are the reason it uses a compact, which is a means to be as cooperative as possible in an effort to generate an amendment from the states, he opined. 2:44:27 PM VICE CHAIR LYNN questioned Chair Keller if he was aware of any negative communications. REPRESENTATIVE KELLER replied no, although he acknowledged that there have been questions. He then challenged Representative Gruenberg to bring forward any opposing views on this approach so that it can be addressed. VICE CHAIR LYNN pointed out that the committee meeting on HB 284 has been properly noticed and people can testify in favor or in opposition to the bill. 2:45:57 PM MR. COONS related that he disagrees with the terminology of the conflict in Article V, which calls for an application of the legislatures of two-thirds of the states to call for a convention to propose amendments. In the event the compact is not accepted and approved by Congress under Article 1, Section 10, the Citizens Initiative is pursuing an Article V application for a call for a convention of states to propose specific amendments. Citizens Initiative is prepared to do the same thing with the balanced budget amendment, and thus would be partners in the event Congress will not allow the compact, he opined. 2:47:33 PM ERNEST PRAX, Staff, Representative Wes Keller, Alaska State Legislature, explained that within each member's packet is the Goldwater Institute's publication "Experts Answer FAQs." He noted that one question specifically addresses the compact question and discusses the history of the Supreme Court rulings on this issue and within the footnotes are cites of lawsuits. 2:48:40 PM VICE CHAIR LYNN, upon determining no one else wished to testify, closed public testimony. 2:48:47 PM REPRESENTATIVE LEDOUX advised that originally she liked the whole idea of the compact, but at this point she would feel more comfortable reviewing opposing materials as a U.S. Constitutional Amendment is a big deal. 2:49:25 PM CHAIR KELLER commented that HB 284 is significant legislation and if members require more time to review the court cases or look at opposing positions he proposed that the bill be held over. 2:50:30 PM REPRESENTATIVE GRUENBERG questioned if any state has yet passed the compact. 2:51:27 PM CHAIR KELLER requested a [status] report from Mr. Dranias or Mr. DeMoss regarding the Compact for America. He opined that it is his understanding two state house legislatures passed the Compact for America. 2:52:32 PM REPRESENTATIVE LEDOUX related that in previous committee meetings regarding amending the Alaska Constitution, the committee heard impassioned testimony from both sides. Therefore, to not hear anyone in opposition to amending the United States Constitution seems strange, she expressed. 2:53:35 PM CHAIR KELLER indicated there is "really not much to hang onto to oppose it" as the compact is designed to attract 38 states. He opined there is not much in the bill to attack as people do not want additional national debt. 2:54:17 PM REPRESENTATIVE LEDOUX commented that in this legislature she has heard more passion on special orders at the end of the House floor sessions than on this very substantial bill. 2:55:36 PM VICE CHAIR LYNN announced that HB 284 would be held over.