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Debate: Balanced budget amendment to US Constitution

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Should the US government be required to balance its budget annually?

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Pro

  • Politicians can't make hard choices; budget amendment necessary. Senate Minority Leader Mitch McConnell: “The time has come for a balanced budget amendment that forces Washington to balance its books. If these debt negotiations have convinced us of anything, it’s that we can’t leave it to politicians in Washington to make the difficult decisions that they need to get our fiscal house in order. The balanced budget amendment will do that for them. Now is the moment. No more games. No more gimmicks. The Constitution must be amended to keep the government in check. We’ve tried persuasion. We’ve tried negotiations. We’re tried elections. Nothing has worked."[1]
Edward Glaeser. Balanced Budget Suddenly Looks More Appealing." Bloomberg. Aug 1st, 2011: "It would be far better if we could just count on Congress to live within its means, but the fiscal experience of the last decade has made such optimism untenable."
  • General statements in favor of balanced budget amendment. Missouri’s U.S. senators, Democrat Claire McCaskill: “This is a responsible, commonsense plan that would hold Congress accountable, get the country’s fiscal house in order and make sure everybody has some skin in the game, all while protecting Social Security and not forcing an end to Medicare as we know it."[2]
  • States have balanced budget amendments, why not US govt. Republican Roy Blunt: “A majority of states, including Missouri, already operate under a balanced budget requirement. Why shouldn’t Washington be forced to do the same thing?”[3]
  • Spending limits creates certainty for job creation. Ohio Republican John Boehner said that adoption of a balanced budget amendment would help ensure "that spending restraints are set in stone, and the certainty it provides will help create a better environment for job creation across the country. The House bill that we’ll consider would require the government to spend only what it takes in, and would include limitations on our government’s ability to raise taxes and to increase spending. I voted for a Balanced Budget Amendment in the past and I'll support it again now."[4]
  • Balanced budget amendment will reduce wasteful spending. Edward Glaeser. Balanced Budget Suddenly Looks More Appealing." Bloomberg. Aug 1st, 2011: "The best argument for balanced budgets is that forcing governments to pay for their spending with current taxes will produce less wasteful spending. The past decade has done much to illustrate the allure of spending without taxation in Washington. The rotation of the parties was supposed to cycle gently back and forth between Democratic generosity and Republican thrift, but that model disappeared in the 1980s. Instead, Democratic taxing and spending is succeeded by Republican spending and not taxing."
  • Balanced budget will bring fed spending in line with states'. Edward Glaeser. Balanced Budget Suddenly Looks More Appealing." Bloomberg. Aug 1st, 2011: "Another reason to favor more federal fiscal restraint is that we could use a better balance between state and federal spending. Over the past 50 years, the federal government has become heavily involved in financing infrastructure, even when those projects overwhelmingly serve in-state users and could be funded with user fees. Why is it so obvious that the federal government has a role in funding rail between Tampa and Orlando, or a big tunnel in Boston? Washington’s prominence is explained primarily by the federal government’s ability to borrow, and not by any inherent edge it has in infrastructure development. Federalizing expenditures breaks the connection between the projects’ funders and the projects’ users. Any instance when we’re spending other people’s money is an invitation for waste. States and localities saddled with balanced-budget rules are relatively parsimonious and spend a fair amount of time debating even relatively modest public investments. That’s far more desirable than the federal government’s freedom to distribute billions without imposing taxes on voters."
  • Balanced budget could allow for debt during recession/war. Edward Glaeser. Balanced Budget Suddenly Looks More Appealing." Bloomberg. Aug 1st, 2011: "Any federal balanced-budget amendment should allow the government to spend more than it collects in taxes during wars and recessions, with the understanding that it will spend less during peaceful times of plenty. If the budget is to be balanced, it should be balanced over the business cycle, not year by year."


Con

  • Balanced budget amendment undervalues loans and debt Kathy White. "Guest Commentary: A federal balanced budget amendment would hurt the economy." Denver Post. July 24th, 2011: "Traveling back in time is no way to prepare for the future. You meet the future by making investments that will pay off. Families take long term loans to buy homes and pay for college. Businesses borrow to take advantage of modern technologies and more efficient facilities. State and local governments borrow to build and maintain roads, dams, schools and prisons. Denying the United States government that same basic tool would jeopardize generations of progress. Indeed, a balanced budget amendment would be like forcing a family to pay the entire cost of a house up front, or making a college student pay a year's tuition entirely with money earned that same year. At the federal level, unless exempted as Senator Udall's proposal does, it could mean that the Social Security Trust Fund could pay out to current retirees only what it took in through taxes on current workers. Too bad if there are more retirees than workers."
  • Constitution gives govt power to run-up deficits. Doug Kendall and Dahlia Lithwick. "Off Balance The Balanced Budget Amendment would make the Framers weep." Slate. July 15th, 2011: "It's fairly certain that George Washington and the other Founders gathered in Philadelphia in 1787 would be appalled by the Lee amendment. It is not an accident that the first two enumerated powers the Constitution vests in Congress are the power "to lay and collect Taxes … to pay the Debts and provide for the common Defense and general Welfare of the United States" and "to borrow money on the credit of the United States." The Constitution's broad textual grant of power was a direct response to the Articles of Confederation, which had imposed crippling restrictions on Congress's power to borrow and tax. These restrictions plagued the Revolutionary War effort and made a deep and lasting impression on Washington and other war veterans. Lee and the other proponents of shrinking the federal government to restore freedom misapprehend that the Constitution recognized there would be no freedom without a strong federal government to promote it."
  • Balanced budget Amend violates intended flexibility of Const. Davis Merritt. "Balanced-budget amendment is unworkable." The Wichita Eagle. August 2nd, 2011: "Our Constitution outlines in the broadest terms how the federal system works. It contains few numbers, is by design remarkably flexible, and assumes that underlying comity and good intentions will prevail despite strong partisan passions. Amending it is a complex process for good reason, and we should do it precisely and with foresight and caution. A balanced-budget amendment violates those criteria."
  • Balanced budget Amend makes fighting recession harder Kathy White. "Guest Commentary: A federal balanced budget amendment would hurt the economy." Denver Post. July 24th, 2011: "Requiring a balanced federal budget every year, no matter how the economy is doing, would force big cuts in services, increases in taxes - or both. That's because when the economy slows, federal revenues go down and spending on unemployment insurance and other programs needed to spur recovery go up. If the government can't run a deficit, even temporarily, many Americans have nothing to cushion their fall. If a balanced federal budget were compulsory, we'd suffer a vicious spiral of bad policy that would push weak economies into recession and make recessions last longer, potentially costing millions of jobs. The last time a balanced budget amendment was proposed, in 1997, more than 1,000 economists, including 11 Nobel laureates, condemned the idea as "unsound and unnecessary." They called it "a proposal that mandates perverse actions in the face of recessions."
  • Balanced budget measured by 18% GDP is unworkable. Simon Johnson. "Is a Balanced Budget Amendment a Good Idea?" NYTimes. August 2nd, 2011: "The first issue, which has been forcefully identified by my fellow Economix blogger Bruce Bartlett, is that there is no way to make this amendment work. The language proposed would, as part of the “balance,” limit federal government spending to 18 percent of gross domestic product, and only a two-thirds majority in both houses of Congress could waive that limit. On the table, in effect, is a balanced budget amendment with a spending cap. G.D.P. is not a legal concept but an economic measure, the details of which change all the time, subject to the prevailing view of best practice among statisticians. To take one example, the flow value of housing services for people who own their houses is imputed to create a number that is roughly equivalent to what renters pay."
  • Unworkable to measure and define balanced budget. Davis Merritt. "Balanced-budget amendment is unworkable." The Wichita Eagle. August 2nd, 2011: "Our Constitution outlines in the broadest terms how the federal system works. It contains few numbers, is by design remarkably flexible, and assumes that underlying comity and good intentions will prevail despite strong partisan passions. Amending it is a complex process for good reason, and we should do it precisely and with foresight and caution. A balanced-budget amendment violates those criteria."
  • Amend would create Const. crisis, court battle w/ each budget. Davis Merritt. "Balanced-budget amendment is unworkable." The Wichita Eagle. August 2nd, 2011: "Since arguments over whether a budget is truly and honestly balanced are endless, a constitutional requirement of balance would make resolving the argument the province of the federal court system, raising two critical problems. Timing: The president proposes a budget to Congress around Feb. 1 to take effect Oct. 1. At any point in that process, lawsuits could be filed by members of Congress and other citizens and interest groups. Typically it takes two or three years to get a case to the U.S. Supreme Court, and there likely would be thousands of cases annually, many frivolous. Thus we could never be sure that any budget actually met the constitutional requirement until it was far too late. Power: In resolving the conflict, federal judges would have the unwanted power to decide how to balance it — what to cut and what revenues to raise. As lifetime appointees, they would be beyond the reach of citizens or Congress if their decisions were unacceptable or inadequate. The primary power of the legislative branch — the purse — and the primary power of citizens — the vote — would be nullified."
  • 18% spending rule would not fit w/ other timeless Amendments. Doug Kendall and Dahlia Lithwick. "Off Balance The Balanced Budget Amendment would make the Framers weep." Slate. July 15th, 2011: "in a Constitution filled with broad principles of governance, the amendment's arbitrary spending limit of 18 percent of GDP—an awkward and unworkable figure—would stick out like a sore thumb. Contrary to Chief Justice John Marshall's warning in the landmark decision of McCulloch v. Maryland (1819), Lee's arbitrary spending limit 'partake[s] of the prolixity of a legal code,' and would be out of place in a document that is designed to 'to endure for ages to come … to be adapted to the various crises of human affairs.' We face a high duty when amending the Constitution: to match the Framers' maturity and foresight. By every measure that would have mattered to the Founders, Lee's proposed amendment easily flunks this test."
  • Balanced budget takes/diminishes important programs from people. Kathy White. "Guest Commentary: A federal balanced budget amendment would hurt the economy." Denver Post. July 24th, 2011: "And there's another reason why a constitutional amendment is unwise: people. Contrary to trending tweets, the federal government actually provides a lot to average folks from every walk of life. Pregnant women learn good nutrition through the Women Infants and Children program. Young children hit school ready to learn through Head Start. College is affordable to many because of federal Pell Grants. Social Security and Medicare keep older Americans from poverty. The list goes on and on. If you can't think of something that benefits you, think again. Whatever it is, you stand a good chance of losing it under a balanced budget amendment."
  • Formulaic balanced budget amend ignores circumstances. Kathy White. "Guest Commentary: A federal balanced budget amendment would hurt the economy." Denver Post. July 24th, 2011: "Some of the balanced budget amendment proposals don't just ban the federal government from ever spending more than it takes in. Most also require that if taxes ever are raised it would take a two-thirds vote of Congress rather than a majority. And they cap total spending at some arbitrary level even if revenues exceed that amount. It's government by formula. It ignores emerging needs or crises that can arise at any time. It would ratchet down spending to levels not seen in 50 years, even though our needs have grown tremendously since then."
  • Politicians will favor corporate interests w/ balanced budget. Jack Lohman: "If your politician’s choice is to 'balance the budget' by either (a) cutting entitlement or social spending, or (b) cutting spending on projects or contracts for the corporate interests that fund his elections, which way do you think the vote will go? If your politician’s choice is to raise taxes on the top 3 percent, or not, would you expect him to do that if those top 3 percent are the funders of his campaign? Or would he instead cut entitlements to protect his funders?"[5]
  • Congress shouldn't make Amend if it can't make good fiscal leg. "On a balanced-budget amendment." The Economist. Aug 2nd, 2011: "I see the argument for a well-designed, over-the-business-cycle balanced-budget amendment. But the idea of enshrining this Congress' pathologies into the constitution is terrifying. Let's see Congress design some quality fiscal rules using the normal legislative process first, and then we can talk about adding those to the constitution."

2/3 approval: Is supermajority rule for approving deficits wise?

Pro

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Con

  • Supermajority approval creates dangerous minority rule. Davis Merritt. "Balanced-budget amendment is unworkable." The Wichita Eagle. August 2nd, 2011: "It would leave the most crucial fiscal decisions in the hands of congressional minorities, a profoundly undemocratic idea. Even if, miraculously, no lawsuits arose, the nation could be impotent to deal with emergencies. If, for instance, a worldwide recession cut into revenues or costs soared, such as in a Katrina-like disaster, operating out of balance would require approval by a supermajority of each house, such as two-thirds, meaning a minority of one-third plus one could stop anything. If you think that wouldn't be a problem because people in Congress surely would act responsibly and not out of ideology or ignorance in an obvious crisis, you weren't paying attention last week as less than 15 percent of the House of Representatives paralyzed that body while the nation hurtled toward default and collapse."


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