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Post Partisan
Posted at 04:20 PM ET, 07/18/2011

A balanced-budget amendment: Bad idea, for many reasons


Can we review, once again, why a balanced-budget amendment (BBA) is a rotten idea? It is not that a balanced budget — when we’re near “full employment” — is a bad target. It’s a good target, and the fact that we abandoned it in the 1960s helps explain why there have been only five budget surpluses since 1961 (1969 and 1998-2001) and why the federal debt is so large. Budget balancing imposes discipline: Politicians have to weigh the pleasures of more spending against the pain of more taxes.

The trouble with a constitutional amendment is that it would probably fail — in the sense that it would not discipline government — while having undesirable side effects. For starters, it would inspire evasion. States and local government balanced-budget requirements have “driven a lot of activity into independent authorities,” says economist Rudolph Penner, former director of the Congressional Budget Office. Sure enough, the country had 37,381 “special districts” in 2007, up 27 percent from 20 years earlier.

Presidents and Congress might evade a constitutional mandate in many ways. They might create off-budget entities (shades of Fannie Mae and Freddie Mac!); they might increase loan guarantees; they might put some spending “off-budget” (technically, Social Security is now “off-budget”).

Another danger is that a balanced-budget amendment could force the government to worsen an economic slump. Recessions spontaneously cause tax revenue to fall (incomes decline) and spending to increase (unemployment insurance and other benefits rise). These “automatic stabilizers” can turn budget surpluses into deficits. If Congress had to remedy them by raising taxes or cutting spending, it might prolong or deepen the recession.

True, the version of the BBA favored by many Republicans has an escape clause. A two-thirds vote of Congress can waive the constitutional mandate. But this is hardly automatic. There are also exceptions for combat operations: With a declaration of war, a simple majority can suspend the BBA; in other circumstances “involving military conflict,” different proposals impose varying voting hurdles for overriding the balanced-budget amendment. All these details indict the BBA in a deeper way.

The Constitution is the repository of the nation’s basic political principles. This is why it commands public respect. What the Constitution is not (and should not become) is a handbook for the day-to-day operations of government. The fatal flaw of the BBA is that it would take the Constitution in precisely this direction. It not only says the budget should be balanced, but one Republican version says it should be balanced at 18 percent of the economy (gross domestic product). That’s not a principle; it’s an instruction. Why not 17 percent or 22 percent of GDP?  What happens in a national emergency?

All this threatens to turn many budget disputes into constitutional crises, as one side or the other takes to court to prove the other side violated the nation's Magna Carta. Do we really want to force unelected judges to make what are fundamentally political decisions? Didn’t we learn anything from Bush v. Gore? Even when disagreements don’t go to court, politicians’ efforts to manipulate or avoid the BBA will deepen public cynicism, because these acts will be seen not just as routine partisan maneuvers but also as assaults on the Constitution.

The BBA is another example of congressional evasion. “It’s showcasing. It plays to the public,” says political scientist Allen Schick of the University of Maryland. What it does not do is balance the budget, now or ever. Only unpopular decisions to cut spending, including Social Security and Medicare, and raise taxes can do that. The BBA distracts from this and, if ever adopted, would undermine the Constitution. Could this really be a “conservative” idea?

By  |  04:20 PM ET, 07/18/2011

 
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