Fiscal advocates seek constitutional cap on federal debt

Steve Hanke and David M. Walker are urging states and Congress to pursue a constitutional amendment that would limit federal debt as a share of the economy. In a Fortune commentary, they said debt held by the public has reached $31.68 trillion, slightly above gross domestic product, and argued Congress has failed to control borrowing through regular budget laws.

The Congressional Budget Office projects that debt held by the public will rise to 175% of GDP over the next 30 years if current policy patterns continue, according to Hanke and Walker. They said historical evidence links public debt above 90% of GDP with slower economic growth and financial stress.

Interest costs drive the argument

Hanke and Walker pointed to the cost of servicing existing debt as a central concern. They said 36.5% of individual income tax collections in fiscal 2025 went to interest on the national debt, leaving less of those receipts available for federal programs, services and transfers.

They also argued that current taxpayers are paying interest on borrowing used to fund earlier spending decisions. Citing CBO projections, they said interest costs could consume 50.6% of individual income tax dollars by 2036.

The authors reviewed earlier attempts by Congress to curb deficits, including the Budget Enforcement Act of 1990 and its pay-as-you-go rule, the Budget Control Act of 2011 and the Gramm-Rudman-Hollings law of 1985. They said each statutory approach ultimately failed, noting that Congress delayed the Gramm-Rudman-Hollings targets in 1987 and dropped them in 1990.

Article V route

Hanke and Walker said Article V of the Constitution gives states a way to force consideration of amendments. Under Article V, Congress must call a convention to propose amendments if two-thirds of the states, or 34 states, submit applications.

They cited the Federal Fiscal Sustainability Foundation as saying that 39 states had active applications in 1979 for a convention limited to a fiscal responsibility amendment. The foundation documented that finding in September 2025, according to the commentary. The authors said public debt held by the public was $640 billion in 1979, about 2% of the current level.

The authors said Congress has not acted on what they describe as a constitutional obligation to call a convention. They also said 28 current active state Article V applications are limited to fiscal responsibility, which they argued supports convening a limited convention on that subject.

Proposed debt limit

Hanke and Walker said their preferred amendment would cap federal debt held by the public at 110% of GDP, with an exception for a formal declaration of war. Their proposal would require debt to fall to no more than 90% of GDP by the end of fiscal 2040, with limited exceptions for war or a temporary national emergency approved by two-thirds of both chambers of Congress and the president.

Their suggested framework would require Congress to pass implementing legislation within one year of ratification, set gradual debt-reduction targets and include automatic enforcement mechanisms. It also would make members of the House and Senate ineligible for re-election if they were in office during a year when the amendment was not fully followed.

The authors cited a June 3 American Enterprise Institute forum that included current and former officials and fiscal-policy advocates, including Florida Gov. Ron DeSantis, House Budget Committee Chairman Jodey Arrington, former Sen. Max Baucus, Sen. Steve Daines, former Ohio Gov. John Kasich, former Sen. Joe Manchin, former New Hampshire Gov. Christopher T. Sununu and Walker.

Hanke is a professor of applied economics at Johns Hopkins University and a board member of the Federal Fiscal Sustainability Foundation. Walker is a former U.S. comptroller general and chairs the foundation’s board.

This story draws on original reporting from Fortune.