Balanced Budget Amendment Is Ludicrous Idea

The Republicans are losing their battle over the debt ceiling. The president has refused to make massive cuts without at least some tax increases (for the rich). And Wall Street is pressuring the right-wing Republicans to increase the debt ceiling whether they get any agreement with Obama or not. Even a large part of their own party thinks it would make sense to accompany cuts with at least a small tax increase.

But many of these right-wingers were nominated and elected by teabaggers, and they are terrified that giving in and raising the debt ceiling would be the end of their political career (because the same teabaggers that elected them would replace them with someone else who probably understands economic policy even less than they do). What are these right-wing Republicans to do? They are stuck between the wishes of Wall Street (their contributers) and the teabaggers (their base).

What some of them are doing is reviving the ludicrous idea of a balanced budget amendment. They'll vote to raise the debt ceiling (they really have to eventually), but they are trying to soothe their base by pushing the idea of getting a balanced budget amendment passed. Even presidential candidate Mitt Romney has jumped on board the balanced budget amendment express. At a campaign event in New Hampshire Romney said:

The answer for the country is for the president to agree to cut federal spending, to cap federal spending,and to put in place a balanced budget amendment.

Romney has been trying to avoid the debate over the debt ceiling, but he must be feeling the pressure from the growing popularity of Michele Bachmann in the Republican right-wing base. He is obviously now just pandering to the teabaggers in a desperate attempt to look like a right-winger (because his business sense has to be telling him this is a dumb idea). It is one thing for a state to be required to have a balanced budget, but it is quite another to require this of the federal government. Sometimes deficit spending can be a good thing, like when it is necessary to boost the economy or create jobs.

I have written before about what a bad idea a balanced budget would be, but I think conservative writer (and former member of the Reagan and Bush I administrations), Bruce Bartlett, puts it very well with his eight reasons to not pass a balanced budget amendment. Here are those eight reasons:

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?