Larry Kudlow suggests a Constitutional amending limiting federal spending to 20% of GDP will "go a long way toward fixing the debt-bomb problem." 20% is based on the historical average upper-limit of the United States federal government's ability to collect tax revenue, as observed by Hauser's Law.
But such a cap would not, in fact, help. Here's why.
Federal spending in 2010 was just over $3.5 trillion, of which $1.7 trillion was deficit-spending (use the Treasury's Debt to the Penny report, not the "official" government report, which includes on-budget line items only and thus ignores off-budget deficits in Social Security for which the federal government will still ultimately be responsible). Assume GDP of perhaps $14.5 trillion. This limits federal spending to roughly $2.9 trillion, which saves $600 billion in deficit-spending. It does nothing to address the remaining $1.1 trillion in deficits.
The problem: GDP, itself, is indexed to deficit spending, as I document here. The "G" term (for government spending) in GDP is perfectly balanced out by reductions in money available for consumption ("C") and investment ("I") when the balance is budget; its impact on GDP is thus positively only the money is borrowed or printed. So cutting $600 billion in deficit-spending contracts GDP from $14.5 trillion to $13.9, reducing the federal spending cap to $2.78 billion and necessitating an additional $120 billion in spending cuts.
This, in turn, reduces GDP to $13.78 trillion and federal spending to $2.756 trillion, which requires a downward adjustment in deficit spending of an additional $2.4 billion. This continues in successively smaller increments until deficit spending and GDP converge.
That GDP is inseparable from deficit spending means such a cap would necessitate constant, disorderly, messy budgetary revisions throughout the year -- assuming they choose to recognize, at all, that the two cannot be separated. Since they don't recognize it now, there's no reason to expect they will in the future. Hence, the spending cap would be systematically violated, anyway, and deficit-spending would continue unabated -- albeit, perhaps, not as strongly.
The point is that if fiscal conservatives are going to expend any political capital at all, they had better do so fighting for a balanced budget amendment. They won't, of course, because only minority parties are ever fiscally conservative: deep in their black hearts, they know fiscal conservatism destroys (unsustainable, debt-based) GDP, so they only want it when the majority party can take the blame for the resulting recession.
Of course, the balanced budget amendment has different problems: namely, that tax revenue is also tied to deficit spending. Thus, there are no quick fixes here, and certainly none that foist the problem off on the judiciary. Congress simply has to pull out the budget knives and start cutting -- and cutting more than it apparently needs to, as their actions today will have direct and coercive impacts on future budgetary calculations.