Historically, each generation of Americans could hope for significant improvements in their income and wealth compared to their parents’ generation. For many families, this dream is fading. Inflation is putting the dream of prosperity out of reach for many, if not most, of our children and grandchildren.
We have experienced double-digit inflation, which affects the prices of food, clothing and gasoline. The most damaging effect of inflation has been on home ownership, which has been the pathway to prosperity for most American families. Inflation is putting homeownership out of reach for many. The income required to buy a home has increased from $59,000 in 2020 to $106,500 today.
Many homeowners have benefited from the inflationary increase in home prices, especially if they took out mortgages at low mortgage rates. But homeowners now face another threat: a record-setting increase in real property taxes driven by rapidly escalating property values. In Colorado, for example, since 2022, property tax costs have increased from 30 percent to 60 percent, far outpacing inflation. Many homeowners are now finding it difficult to pay higher property taxes. For some, the higher property taxes are driving them from their homes.
Inflation is also destroying the dream of small businesses and family farms. When inflationary increases in costs cut into tight margins, many small businesses and family farms face bankruptcy. A recent Gallup poll paints a grim picture, with 63 percent of U.S. adults reporting financial hardship due to escalating prices and 17 percent experiencing severe difficulties that jeopardize their standard of living.
As we learned during the 1970s, inflation is a government failure. When the federal government increases spending more rapidly than the growth of the economy and finances the expenditure by borrowing, the debt growth is not sustainable. And when the Federal Reserve accommodates that spending by pumping more dollars into the economy, eventually the outcome is high rates of inflation. Over the next decade, we are likely to experience stagflation just as we did during the 1970s.
The fatal flaw is the absence of fiscal rules in the Constitution. From the very outset of the republic, the Founding Fathers recognized this flaw. Thomas Jefferson stated that if there was one thing that he would change in the Constitution, it would be to prohibit federal debt. Congress relies on statutory fiscal rules that are routinely circumvented and suspended.
States recognized flaws in the U.S. Constitution early on. Beginning with the Virginia application in 1788, states have submitted resolutions to Congress calling for an amendment convention under Article V. When federal debt began to grow at an unsustainable rate after World War II, many states submitted resolutions calling for a fiscal responsibility amendment to the Constitution. Recent research discovered that more than the required number of states called for such a convention of states in 1979, and yet Congress failed to act.
High rates of inflation and dramatic increases in interest rates have triggered a push for restoring prosperity by the chair of the House Budget Committee. This proposal requires Congress to fulfill its obligation under Article V of the Constitution to certify and count state resolutions and call the convention if the “two-thirds” requirement had, as it appears, been reached. Importantly, to avoid our nation’s partisan divide and restore the democratic foundation of our Constitution, the proposal requires ratification by a vote of the people for Yes-pledged delegates to three-quarters (38) of state conventions.
A precedent for this approach to amending the Constitution was the ratification of the 21st Amendment. In 1933, delegates cast their ballots as instructed by a vote of the people in 39 of 40 state conventions, thus ratifying the 21st Amendment repealing prohibition. Just as citizens reached the end of their rope with Congress’ inability to repeal prohibition, they now demand that Congress count the resolutions calling for an Article V convention to propose a fiscal responsibility amendment in the Constitution.
State leaders are actively considering filing a declaratory judgment case against Congress to prevent what Erskine Bowles concluded is “the most predictable economic crisis in history.” The American Dream can be restored voluntarily by Congress or by the Supreme Court so the states can draft and We the people, can ratify the Prosperity for US Amendment.
