Balanced Budget Amendment Folly   Leave a comment

There are plenty of amendments that a convention of the states might propose and forward to the states for ratification, but the balanced budget amendment is the only one that is about to pass the application threshold.

I don’t believe in panaceas. A balanced budget amendment would be a step toward reining in the stupid course our government has been on for a long time, but by itself I don’t expect it to work any miracles and it might cause a host of larger problems through setting off unintended consequences.

A journey of a thousand miles begins with the first step, provided that step is not off a cliff.

On the face of it, forcing the federal government to balance its budget sounds like a great idea. I’m all in favor of DC spending no more than it takes in. When House Republicans drafted a version of the amendment in 2012, I was hopeful, but there’s a pros-and-cons process that can make a great idea not seem so great.

Forcing the government to live within our means is a wonderful idea. Controlled spending might return Congressional elections to a choice of character over the bribery of special interests. It could limit new spending and reduce current spending. Of course, it would also reduce the government’s flexibility in dealing with crises. While there are folks who think that would be the end of the world, I see it as an opportunity for the market to move toward free enterprise once more rather than relying on government bailouts.

But ….

The 2012 House version of the amendment required spending not to exceed 18 percent of GDP and required a two-thirds majority to raise taxes.  It also allowed waivers in case of a declaration of war against a nation-state or if three-fifths of Congress agrees there’s an imminent and serious threat to national security. Congress and the Executive Branch could drive a truck through the exceptions.

In reality …

If we want to take in enough revenue to cover the current spending levels, all Congress would need to do is increase taxation levels to 60-65% of taxable income (about 30% of GDP).

To keep it within the 18% of GDP would be more difficult, but there are those exceptions after all. Congress could declare war on a country that can’t fight back or claim that terrorists are hovering and about to strike, so the exceptions are required. And, then the Supreme Court (appointed by the Executive Branch and confirmed by the Legislative Branch) will mount their high holy seats and speak down from the heavens to announce that it’s unconstitution to balance the budget and ….

The impulse behind the amendment is laudable, but a balanced budget amendment by itself isn’t going to work in the way that we the people would want it to. Congress is never going to pass it anyway, so it will have to come from an Article V convention of the states and it can’t be implemented by itself because it’s not a magic bullet. It’s a brick that will unweight the scales.

But if an Article V convention were to propose a slate of amendments meant to work together ….

And, yes, there’s precedence for that. We call it the Bill of Rights.

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