A balanced budget amendment won't halt the growth of big government
When I graduated from college in 1976, I got a job in Washington with the National Taxpayers Union, which was working to get a constitutional amendment to require a balanced federal budget. Someone graduating today could sign up there and pursue the same goal. The balanced-budget amendment has never gone away and never come to pass.
Earlier this month, a vote in the House of Representatives fell short of the two-thirds majority needed for that measure. But we haven't seen the last of it. If Republicans capture the White House and the Senate next year, expect another push.
This may seem like the right moment for the amendment. In 1976, the national debt was $629 billion. Today, it exceeds $15 trillion. As our elected leaders continue spending more than the government takes in, a constitutional amendment looks like a fail-safe way to make them stop.
If only. One flaw is that it doesn't actually balance the budget. It merely requires Congress and the president to do so. But they can already do so—and they consistently fail to get serious about the deficit even when they face a stark obligation.
Last summer, it was hitting the debt ceiling. This week, it was the automatic cuts that would take effect if the congressional supercommittee couldn't agree on ways to reduce the deficit, which it didn't. In both cases, fiscal irresponsibility triumphed.
The reason politicians don't balance the budget is that they and their constituents aren't ready for the unthinkable realities this option would entail: higher taxes, reduced government benefits, or both. Those choices won't get any less excruciating if a balanced-budget amendment is ratified.
Given that reality, we could expect elected officials to find ways to evade the restriction. The amendment would allow a deficit if both houses agree by a three-fifths vote. Not only that, but a mere majority could authorize red ink when there is "a serious military threat to national security." And when is there not?
Even if Congress didn't suspend the requirement, it would have no trouble getting around it. What if it looks like you're going to run a deficit? You change your estimates to reduce your spending and boost your income. Voila! Deficit eliminated.
Or you put off spending until after the fiscal year ends, to balance this year's books. The Illinois state government has used this ploy for years, deferring pension contributions and making vendors wait months to be paid.
The experience of states does not inspire confidence in a balanced-budget rule. One common trick, says economist Josh Rauh of the Kellogg School of Management at Northwestern University, is to underfund public pension funds by inflating expected returns. By his count, the underfunding for all 50 state governments totals $3 trillion.
Nor would the amendment curb the power of Washington. If it becomes harder for Congress to tax and spend, rest assured, advocates of big government will find other ways to get what they want.
Instead of passing laws to spend money for some purpose, they will pass laws forcing businesses, nonprofits, states or local governments to spend money for that purpose. The cost will be off the federal books, but it will still be there.
Even the strongest requirement is only as good as its enforcement. And there is no good way to enforce a balanced-budget rule. If Congress and the president may choose to toss it overboard every year, who's gonna stop them?
Probably not federal judges, who generally flee from matters that are the responsibility of the elected branches—which spending and taxing definitely are. If Congress and the president run a deficit in defiance of a constitutional command, this is what the judicial branch is likely to do: nothing.
Sounds terrible, but the alternative would be worse. Does anyone want federal courts ordering specific spending cuts or tax increases—in other words, usurping the primary functions of the elected branches? That's what judicial enforcement of a balanced-budget amendment would mean.
Earlier this month, a vote in the House of Representatives fell short of the two-thirds majority needed for that measure. But we haven't seen the last of it. If Republicans capture the White House and the Senate next year, expect another push.
This may seem like the right moment for the amendment. In 1976, the national debt was $629 billion. Today, it exceeds $15 trillion. As our elected leaders continue spending more than the government takes in, a constitutional amendment looks like a fail-safe way to make them stop.
If only. One flaw is that it doesn't actually balance the budget. It merely requires Congress and the president to do so. But they can already do so—and they consistently fail to get serious about the deficit even when they face a stark obligation.
Last summer, it was hitting the debt ceiling. This week, it was the automatic cuts that would take effect if the congressional supercommittee couldn't agree on ways to reduce the deficit, which it didn't. In both cases, fiscal irresponsibility triumphed.
The reason politicians don't balance the budget is that they and their constituents aren't ready for the unthinkable realities this option would entail: higher taxes, reduced government benefits, or both. Those choices won't get any less excruciating if a balanced-budget amendment is ratified.
Given that reality, we could expect elected officials to find ways to evade the restriction. The amendment would allow a deficit if both houses agree by a three-fifths vote. Not only that, but a mere majority could authorize red ink when there is "a serious military threat to national security." And when is there not?
Even if Congress didn't suspend the requirement, it would have no trouble getting around it. What if it looks like you're going to run a deficit? You change your estimates to reduce your spending and boost your income. Voila! Deficit eliminated.
Or you put off spending until after the fiscal year ends, to balance this year's books. The Illinois state government has used this ploy for years, deferring pension contributions and making vendors wait months to be paid.
The experience of states does not inspire confidence in a balanced-budget rule. One common trick, says economist Josh Rauh of the Kellogg School of Management at Northwestern University, is to underfund public pension funds by inflating expected returns. By his count, the underfunding for all 50 state governments totals $3 trillion.
Nor would the amendment curb the power of Washington. If it becomes harder for Congress to tax and spend, rest assured, advocates of big government will find other ways to get what they want.
Instead of passing laws to spend money for some purpose, they will pass laws forcing businesses, nonprofits, states or local governments to spend money for that purpose. The cost will be off the federal books, but it will still be there.
Even the strongest requirement is only as good as its enforcement. And there is no good way to enforce a balanced-budget rule. If Congress and the president may choose to toss it overboard every year, who's gonna stop them?
Probably not federal judges, who generally flee from matters that are the responsibility of the elected branches—which spending and taxing definitely are. If Congress and the president run a deficit in defiance of a constitutional command, this is what the judicial branch is likely to do: nothing.
Sounds terrible, but the alternative would be worse. Does anyone want federal courts ordering specific spending cuts or tax increases—in other words, usurping the primary functions of the elected branches? That's what judicial enforcement of a balanced-budget amendment would mean.
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