Balanced Budget Amendment still a terrible idea

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  • The Balanced Budget Amendment has long been a popular idea. It is also a bad idea writes @RameshPonnuru

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  • The chief economic argument against the balanced budget amendment is that it would make recessions worse.

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  • The GOP has a lot of problems. A fight over the Balanced Budget Amendment, would solve one it doesn’t have.

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Frustrated by the persistence of large deficits, and alarmed by the long-term gap between spending and revenue, congressional Republicans are promoting a constitutional amendment to require balanced budgets.

Representative Trent Franks, an Arizona Republican, tells me that an amendment is a simple, easily understood way “to put this government back in its proper role.”

The amendment has long been a popular idea. It is also a bad idea, which is why it’s a good thing it isn’t going to come close to being ratified.

There are several competing versions. Some Republicans favor the “clean” amendment they supported in the 1980s and 1990s, which just requires balance. Others fear this would lead to tax increases. They want an amendment that requires balance and also caps spending at 18 percent of gross domestic product and requires a two-thirds vote of Congress to raise taxes. That’s the version that all Senate Republicans have agreed to co-sponsor. Some House Republicans have mused about yet a third version, which would require the government to balance its budgets over the course of an economic cycle rather than in any year.

Bad Economics

The senators’ amendment would make the federal government a smaller share of the economy than it has been since the 1950s. The chief economic argument against it is that it would make recessions worse. When recessions hit, they increase deficits: Revenue falls while spending on unemployment benefits (among other things) goes up. A strict balanced-budget rule would force spending cuts or tax increases at times of economic weakness. The Federal Reserve could theoretically offset these effects, but you’d want to be pretty confident beforehand that it would do the right thing.

The economic argument assumes the amendment would be enforced. It isn’t clear how it would be. If the government were projected to run a deficit, would the courts step in to cut spending or raise taxes? The senators’ amendment rules out judicial tax increases but leaves the door open for court- ordered cuts in defense spending or Social Security benefits. The result would be a major expansion of judicial power over American life, brought to us by the party that has rightly warned against the growth of that very power for decades.

When pressed on the enforcement question, proponents sometimes say that a sense of shame will keep Congress from violating the amendment. (Really, that’s what they say.) The Senate Judiciary Committee made a similar point in a 1993 report on a proposed amendment: “In their campaigns for re-election, elected officials who flout their responsibilities under this amendment will find that the political process will provide the ultimate enforcement mechanism.”

If shame and political pressure could solve our debt woes, they already would have. If the budget is unbalanced, any future congressman will be able to say that he supports a remedy: cutting this or that program or raising taxes. There’s nothing in the amendment that would force congressmen to agree on just which solution to adopt, or to pass any of them. Instead of blaming one another just for deficits, they would blame one another for deficits and for violating the Constitution.

The polls may also be misleading Republicans about the political merits of a campaign for an amendment. Democrats will say that the Senate Republicans’ version of the amendment would gut Social Security and Medicare (which would, after all, be one way to comply with it). Without any plan of their own to balance the budget right now, Republicans won’t be able to counter that attack.

Wasting Time

The other political risk for Republicans is that the time they waste making the case for an ineffectual amendment is time they don’t spend persuading voters that they have any ideas that would help families balance their own budgets.

And it would indeed be time wasted. All the Republicans and 22 of the Democrats in the Senate, plus all the Republicans and 56 of the Democrats in the House, would have to vote for the idea to send it to the states. Then three-quarters of the states, which have grown increasingly dependent on federal deficit spending to keep their own budgets in balance, would have to ratify it. The amendment isn’t going anywhere.

Voters already know that Republicans are concerned about the deficit. Exit polls during the 2012 presidential election showed that voters favored the Republican candidate, Mitt Romney, over President Barack Obama by two percentage points as a deficit-cutter. The 15 percent of voters who said the deficit was their top issue backed Romney 2 to 1.

The Republican Party has a lot of problems. A fight over the Balanced Budget Amendment would, at best, solve one it doesn’t have.

(Ramesh Ponnuru is a Bloomberg View columnist, a visiting fellow at the American Enterprise Institute and a senior editor at National Review. The opinions expressed are his own.)

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