Balanced Budget Amendment Redux

There is increasing talk of Republicans tying their acquiescence to an increase in the debt ceiling (which could be reached as soon as May 16th) to a balanced budget amendment that has been introduced in the Senate, co-sponsored by all 47 Republican senators.

Balanced budget amendments have been introduced any number of times, beginning in 1936, when an amendment would have capped the per capita debt in peace time (it got nowhere). More comprehensive amendments to require a balanced budget were introduced in 1982, 1997, and 2005. They, too, got nowhere.

It would be difficult to have such an amendment make it to the Constitution, as doing so requires a two-thirds vote in each house of Congress and then ratification by three-quarters of the states. (Presidents have no veto power over proposed amendments.) It is by no means clear that the legislatures of 38 states, many of which are dependent on federal revenues to balance their own books, would be willing to ratify. The legislatures could be bypassed if Congress called for ratification by state conventions. That means has been utilized only once, however, for the 21st Amendment repealing prohibition, when Congress realized that many state legislatures were under the thumb of “the bootleggers and the preachers.” (by the way, it has been widely asserted that ratification, even if possible, would take years. That’s not necessarily true. The 26th Amendment, lowering the voting age to 18, was proposed by Congress on March 23, 1971, and declared ratified on June 30th, 1971, a mere three months later.

But would a balanced budget amendment do any good? The answer is no. Every state but Vermont has a constitutional requirement that the state expense budget be balanced. But many states are in total fiscal disarray anyway. How come? They cook the books. And they project rosy scenarios regarding revenues that then don’t materialize. New York City went to the very edge of bankruptcy in the 1970’s despite having “balanced” the city’s books every year.  The only state constitutional requirement that has provided real fiscal discipline has been to limit increases in state spending to increases in population and inflation. In other words, require that per-capita spending in real terms remain constant. These are hard, objective numbers, not bookkeeping entries or guesses about the future. California had such a requirement from the late 70’s to the early 90’s and thrived. Then it was gutted and the state began its two-decade lurch towards the fiscal cliff.

Do you think Congress and a free-spending president might play the same games under a federal balanced budget amendment? I sure do.

So a balanced budget amendment is unlikely to make it to ratification and wouldn’t work if it did. So why does it pop up every few years? Because it makes the sponsors look serious about federal fiscal discipline without actually doing anything to provide it. For politicians, tomorrow’s headline (“Senator Snoot Moves on Debt Crisis”) is often all they are really interested in.

A constitutional amendment that 1) established an independent, politically-insulated accounting board that would decide how the government’s books must be kept and how bills should be scored, 2) gave the president a line-item veto, which would make the president a powerful player in the budget battles, which he is not now, and 3) limited real spending increases per capita absent a congressional super-majority to waive the limit would provide that real fiscal discipline.

Don’t look for many congressional sponsors for that amendment anytime soon.

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Balanced Budget Amendment Redux

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