YES: Handcuff Congress so it can’t spend more than it takes in.
By Chris Chocola
Enough with the backroom deals that result in higher taxes! Enough with spending “cuts” that are spread out over 10 years or longer and forgotten almost instantly! And enough with phony federal “budgets” that are never in balance and are drowning America in red ink! It’s time for Congress to come together to pass a balanced-budget amendment to the Constitution.
We face a debt crisis of massive proportions precisely because the budget process in Washington is as fundamentally sound as the Titanic, post-iceberg. As I write this, the national debt is $14.4 trillion and rising. That’s $46,334 per citizen. That’s simply too much.
There are things we can do in the short, middle and long term to attack this problem.
Congress can make immediate spending cuts in the short term to cut the deficit in half. Congress can pass enforceable spending caps to keep spending under control. But these are nothing without fundamental reform.
The final piece, a balanced-budget amendment, would be a game changer for the federal budget process. Conservative leaders are calling this plan “Cut, Cap, and Balance.”
The most important piece, the balanced-budget amendment, should be a no-brainer. Forty-nine of the 50 states are required to balance their budgets. Every family has to balance its budget. There is no argument against a balanced-budget amendment unless you are interested in spending more money and going deeper into debt — precisely where we find ourselves right now.
The arguments that opponents on both sides of the aisle make are tenuous at best and at worst belied by history and fact. Some are worried about political fallout from voting for a balanced budget. Read that sentence again.
Some members of Congress are actually worried that they might lose their jobs by voting for a balanced budget. For some in Congress, the thought that not spending more than you take in might be unpopular politically often meanders through their minds.
All public polling points to the contrary. A Mason-Dixon poll in May, for example, put the support of a balanced-budget amendment at 65 percent, with only 25 percent opposed. Eighty-one percent of Republicans and 68 percent of independents support a balanced-budget amendment. Even a plurality of Democrats, 45 percent, support it.
Some opponents of the balanced-budget amendment think that Congress should not be ceding its own spending authority. The fact that Congress has to decide on whether to pay off the Visa with the Mastercard, yet again, should tell you all you need to know.
The federal government has produced deficit after deficit. How we got here is the fault of both Republicans and Democrats. It won’t get fixed by allowing Congress to operate under the same set of rules. Going forward, we must handcuff Congress with the Constitution so we can stop the endless cycle of spending, debt, taxes.
My organization, the Club for Growth, supports a balanced-budget amendment that includes a spending limitation and a supermajority for raising taxes, in addition to balancing revenues and expenses, in exchange for raising the debt ceiling.
If Republicans lost control of the House — or if enough conservatives lose re-election — then Democrats along with liberal Republicans could simply raise the debt ceiling the next time it came up without a balanced-budget amendment, and gains made by spending cuts would be lost. With a balanced-budget amendment, it would be very difficult for a future Congress to raise spending.
If President Barack Obama wants to raise the debt ceiling, then Cut, Cap, and Balance is what we should demand in exchange.
Chris Chocola, a former Republican congressman from Indiana, is president of the Club for Growth.
NO: Governments, like families, must be able to borrow in hard times.
By Helen Popper
To many of us, the balanced-budget amendment is a seductive proposal. It tempts us with a promise to sweep away a very messy problem: the government’s chronic budget shortfall. But, tempting as the proposal is, an amendment to our Constitution is a serious commitment.
We ought to consider the proposal very carefully before we put on that big white dress and walk down the aisle.
The proposal’s allure comes from what might seem like good, old-fashioned common sense. Did our Founding Fathers just make a mistake in not requiring Congress to balance the budget each year? We all have to balance our budgets, so why shouldn’t the government? Well, that’s not exactly right. We don’t actually always have to balance our budgets — we borrow money once in a while. In my own family, my husband borrowed to go to college. There he was, studying engineering, eating mac and cheese and racking up his first, personal budget deficits. He spent more than he earned.
Later, like many families, we borrowed to buy our house. I suppose we’d still be renting if we’d had our own personal balanced-budget “amendment” making us spend only what we earn each year.
Looking around me, I see many businesses with “budget deficits.” Some are borrowing to get going, and others are exhausting their reserves to make ends meet. And, I see families who, hard hit by the recession, manage with little.
In these bad times, most of them get along by running their own family budget deficits. Some spend more than they earn by using up their savings. Some, who’ve already used up their savings, spend more than they earn by borrowing from friends and family. Others are worse off. Running a budget deficit in bad times is sometimes what lets a family eat.
A private version of the balanced-budget amendment would have been bad for my family, it would be bad for business, and it sure would be bad for those families struggling in the recent slump. Being able to borrow to build a better future or to get through hard times is a good — not a bad — thing for businesses and families.
But how about when it applies to the government? Would a balanced budget amendment to our Constitution be good for the economy as a whole? No, it wouldn’t. Just like a family or a business, the government needs to be able to borrow during hard times.
In tough times, the country’s income falls, so the government’s take — the tax bill — falls too. As taxes fall short of spending, a deficit is created.
If the government had to balance its budget immediately, then it would have to cut spending or raise taxes during hard times. That would worsen the downturn. That is, a balanced budget amendment would force the government to kick the economy when it’s down.
Temporary government budget shortfalls aren’t the real issue. Chronic shortfalls are. After running deficits in hard times, the government must run surpluses — it must save — in good times.
Fixing the chronic problem means cutting back when the economy is strong. The balanced budget amendment doesn’t do that. It doesn’t tell Congress or the president how to rein in spending in good times — or how to pay for spending. The amendment would hurt the economy, and it lacks the most basic tenet of sound budgeting: deciding what’s important.
There are choices to be made and, like families and businesses, our country must wrangle over the choices. Then, we can fix the problem by voting for people who are honest about the choices, not for politicians selling a phony quick fix. There’s no crash diet for long-term budget health. And the balanced-budget amendment is no knight in shining armor.
Helen Popper is an associate professor of economics at Santa Clara University’s Leavey School of Business.