Balanced Budget Amendment No. 215
Americans for Democratic Action opposes a Constitutional amendment to require a "balanced" federal budget. ADA opposes such an amendment for the following reasons:
- The Amendment would not actually balance the federal budget. Constitutional Balanced Budget Amendments are cheap political grandstanding, allowing politicians to vote for a balanced budget amendment without having to pay the political price of voting for tax increases and spending cuts. A Constitutional amendment gives politicians an incentive to play more accounting games than they already do. By moving items on and off the "federal ledger," the budget could be "balanced" even when spending exceeds revenues. Congress and the President already have all the tools they need to balance the federal budget.
- Provisions that differentiate between "investment spending" and "consumption" in the federal budget have not been laid out. Investment spending sometimes requires borrowing money. A small business does not pay cash for capital, such as factories or office space; it borrows money in anticipation of future profits made possible by investing in the business. Likewise, federal spending on human capital, such as job training, education or preventive health care, and infrastructure development sometimes requires borrowing money in anticipation of the gains in revenues from productivity gains.
- Federal fiscal policy sometimes requires "deficit spending." In a recession, revenues drop, but the need for federal spending is greater. "Pump-priming" and other counter-cyclical spending requires deficit spending.
- Requirements for super-majorities for deficit spending give undue weight to the minority party and to the concerns of special interest groups. Proposals that require super-majorities for deficit spending amount to tyranny of a minority. In order to get the 3/5 or 2/3 majority needed to pass the budget, more political deals and "pork barrel politics" would take place. This is not a democratic or economically sound way to devise federal fiscal policy and budget priorities. Balanced budget amendments are bad economics, bad law, and cheap politics.
- A Constitutional balanced budget amendment would inhibit the Congressional need to adopt a budget that, at that particular time, is the best plan for the nation by instead requiring a balanced budget regardless of needs.
- Interpreting implementation of a balanced budget amendment would give to federal judges many policy decisions that should be made by the elected branches of the federal government.
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Political and Governmental Commission