Good Idea or Bad Idea?

Is a Balanced Budget Amendment a good idea? That is, will it help really reduce the debt?

Proponents of such an amendment often point out that 49 states have some sort of legal requirement for a balanced budget (either in the form of a constitutional requirement or a statutory requirement) to support their argument. Perhaps a useful question to ask is, “How well have these balanced budget requirements worked for these states?”

Let us consider Illinois as an example. According to Article VIII, Section 2.b of the Illinois Constitution,

The General Assembly by law shall make appropriations for all expenditures of public funds by the State. Appropriations for a fiscal year shall not exceed funds estimated by the General Assembly to be available during that year.

Illinois’ total debt is currently over $120 billion. There are other examples:

From these examples, I am likely to infer that a Balanced Budget Amendment would not do anything to curb our spending on a national level.

Another question a person might ask regarding a Balanced Budget Amendment is, “How would such an amendment be enforced?” Would the President be impeached if he signed an unbalanced budget into law? Or, should the House of Representatives be held responsible? Should the Speaker of the House or the Chairman of the House Budget Committee face fines and/or imprisonment for violating the law of the land?

Perhaps we should again look at the states for guidance. According to the National Conference of State Legislatures, requirements for an enforcement provision are not the norm (State Balanced Budget Provisions, p. 9). Alabama, according to the NCSL, has the most rigorous enforcement provisions: A treasurer who violates the provision is subject to a $5,000 fine and up to two years in prison, as well as impeachment. (Fortunately for Young Boozer, the State Treasurer of Alabama, it is not clear if this provision has been enforced–Alabama’s debt is currently at $26 billion.) So much for state guidance.

A final question must be asked, “Is a Balanced Budget Amendment really necessary?” I tend to concur with the  conclusion of the NCSL:

For the majority of states, however, the most important factor contributing to balanced budgets is not an enforcement mechanism or a provision specifying how a shortfall will be resolved. Rather, it is the tradition of balancing the budget that has created a forceful political rule to do so. Although states with enforcement provisions emphasize their importance, the expectation that state budgets will be balanced is the most important force in maintaining a balanced budget. (State Balanced Budget Provisions, p. 9).

Legislation reflects our societal values, but legislation is incapable forcing behavior (the noble experiment of the 18th Amendment provides a useful example).

Perhaps the motivation behind a Balanced Budget Amendment–to create sustainable budgets–is wise. However, I wonder if the reality of such an amendment would restrict the options of policymakers during periods of economic stress that are endemic to our economic system and only hurt the common good.

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2 Responses

  1. Bob, you are on a role, keep rolling; I am going to print your first post today and take it to my Thursday night discussion group. As to the subject of balanced budgets, it should be a goal (as it is in my house), but not an absolute necessity (cheep tickets to Italy now). But, there must be a way to keep a long term measurement that demands accountability to the overall goal. I like your prior suggestion of a system that is much closer to a parliamentary democracy where we can fire those folks who are inept immediately. That system would also support more political parties and we need more parties.

    • Thanks for reading, Larry! I’m glad those words inspired some thoughts!
      Fiscal responsibility demands accountability (that’s why my wife runs our household budget). But will a Balanced Budget Amendment demand that accountability? I doubt it. Rather, we need to create a new political culture in Washington that is more responsive to the people, a culture where fiscal responsibility is an expectation. What would such a culture look like? I am building a sketch for the basis of such a culture on my “Revolution” Page.

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