Friday, February 25, 2011

The Insanity Of A Balanced Budget Amendment

There is little doubt that Sen. Rand Paul (pictured above) is one of the nuttiest Republicans in Washington. He's ready to get rid of nearly all federal programs -- except the ones that send him checks. And he'd also love to rescind many federal laws, like the health care reform bill, the Americans With Disabilities Act, and the Civil Rights Acts. But one of his absolute stupidest ideas is to amend the U.S. Constitution to mandate a federal balanced budget.

Paul would like to have the amendment to force Congress (and the president) to spend no more than the government takes in each year. It would take a 3/5 majority of both Houses to spend any money above that. The only exception would be in a time of war, when a simple majority could suspend the requirement.

He's having a little trouble finding people in Congress crazy enough to go along with him though. Although Republicans like to talk about a balanced budget amendment, even most of them know it just couldn't work in the real world. That's why they just use it to snow their teabagger base during a campaign and then drop the idea after the elections are over. After all, the Republicans are traditionally the biggest spenders in Washington (they just do it to help the rich rather than Americans who actually need help).

But Paul is a true believer, and he's dumb enough to believe a balanced budget amendment could actually work. So when he couldn't get enough support in Washington, he decided to take his case to the states. He wants the states to call for a constitutional convention to pass a balanced budget amendment. But it looks like he's striking out there also. The  Kentucky teabagger gubernatorial hopeful Phil Moffett, who Paul has endorsed and who introduced Paul at CPAC, doesn't even like the idea -- being afraid of what a constitutional convention would do.

It doesn't look like us progressives are going to have to worry much about this crazy idea. The conservatives are doing a pretty good job of killing the idea all be themselves. One of the most coherent arguments against a balanced budget amendment is offered by conservative writer Bruce Bartlett, who worked in the administrations of both Ronald Reagan and George H.W. Bush. Here are his eight reasons why a balanced budget amendment is a very bad idea:

1. It will take forever to get an amendment enacted by Congress and approved by three-quarters of the states, if it can be done at all. Back in the 1980s, Republicans expended enormous effort to get such an amendment but could never muster the two-thirds majority necessary in both houses.

2. The simplistic amendment being proposed − the budget must be balanced except in times of war − was rejected by most Republicans in the 1980s on the grounds that it would likely force a tax increase, which is by far the easiest way to bring the budget into balance quickly. Instead, they favored some sort of spending limitation amendment. Furthermore, a balanced-budget amendment would pretty much make it impossible to ever cut taxes.

3. It’s one thing to require a balanced budget when starting from a position of balance or near-balance. It’s quite another when we are running deficits of over $1 trillion per year for the foreseeable future. Even if we were not in an economic crisis and fighting two wars, a rapid cut in spending of that magnitude would unquestionably throw the economy into recession just as it did in 1937.

4. It’s doubtful that BBA supporters really understand the composition of federal spending. In fiscal year 2009, we would have had to abolish every discretionary spending program, including national defense, to balance the budget and that still wouldn’t have been enough without higher revenues. We would have had to cut more than $300 billion out of Medicare and Social Security as well.

5. A BBA would force the federal government to make economic recessions worse. Since federal revenues fall and spending rises automatically in economic downturns, it would force spending cuts and tax increases at precisely the point when the economy is reeling, potentially turning a modest downturn into a depression.

6. There is no explanation for how a balanced budget amendment would be enforced. Perhaps Republicans just assume that public opinion will be sufficient. But the reality is that for such an amendment to be operational and not just a meaningless expression of intent,  there has to be a point in the budgetary process when the federal courts can enjoin spending or force tax increases. This is obviously a very bad idea in principle, but it’s also impractical. As a legal matter, we would have no way of knowing that the budget was in fact unbalanced until the fiscal year had ended. Even a federal court can’t make people give back federal funds that have already been paid out for interest on the debt, Social Security and Medicare benefits, wages and salaries for government workers, payments for goods and services, etc. Thus a balanced budget amendment of the sort Republicans propose is effectively unenforceable.

7. In practice, Congress operates primarily on the basis  of budget estimates provided by the Congressional Budget Office and the Office of Management and Budget. Many seemingly obvious terms like “revenue” and “outlay” lack a legal definition. Consequently, key decisions about whether a budget is balanced or not will be in the hands of government bureaucrats.

8. Finally, I can easily foresee the U.S. in a perpetual state of war to avoid the necessity of balancing the budget. This being the case, Republicans should ask themselves if they really want the Constitution of the United States to be treated in such a frivolous manner. If we pass an amendment that we know in advance is unenforceable, doesn’t that debase the Constitution itself?

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