My column today examines Republican plans to enact a balanced budget amendment (BBA) to the Constitution in lieu of a detailed plan for actually balancing the budget. If they gain control of Congress next year they may make an effort to enact such an amendment, which cannot be vetoed by the president. Following are some serious analyses of economic and constitutional issues that have been raised by scholars.
James M. Buchanan, “Clarifying Confusion About the Balanced Budget Amendment,” National Tax Journal, September 1995. Buchanan is a Nobel Prize winning economist who has long been the principal proponent of a constitutional balanced budget requirement among academic economists.
Congressional Budget Office, “Balanced Budget and Limiting Federal Spending: Constitutional and Statutory Approaches,” September 1982. Chapter VII is a good discussion of enforcement problems.
Congressional Research Service, “A Balanced Budget Constitutional Amendment: Procedural Issues and Legislative History,” August 5, 1998. Brief history of efforts to enact a BBA through the 105th Congress.
Walter Dellinger, Statement before the Joint Economic Committee of Congress, January 23, 1995. At the time this testimony was given, Dellinger was an assistant Attorney General. He raised extensive legal questions about how a BBA would be enforced and why it would be very unwise to involve the courts in the budget process.
House Judiciary Committee, “Balanced Budget Amendment,” a hearing held on March 6, 2003 when Republicans controlled the House. Testimony was heard from economists John Berthoud of the National Taxpayers Union, Kent Smetters of the University of Pennsylvania, Richard Kogan of the Center on Budget and Policy Priorities, and Bill Beach of the Heritage Foundation.
Leslie McGranahan, “State Budgets and the Business Cycle: Implications for the Federal Balanced Budget Amendment Debate,” Federal Reserve Bank of Chicago Economic Perspectives, 1999. She makes the point that state balanced budget requirements generally apply only to operating budgets; capital budgets are not included. The federal budget, by contrast, treats capital spending and consumption spending the same way.
Robert D. Reischauer, Statement before the House Budget Committee, May 6, 1992. Reischauer was director of the Congressional Budget Office when this testimony was delivered. His main point was that a BBA needed an enforcement mechanism in order to be more than just a statement of intent. In subsequent testimony before the same committee on June 3, 1992, Reischauer went into further detail on the problems of enforcement. He concluded that passage of a BBA needed to be accompanied by a detailed, credible plan for achieving its goal.
Charles L. Schultze, “The Balanced Budget Amendment: Needed? Effective? Efficient?” National Tax Journal, September 1995. Schultze is a former chairman of the Council of Economic Advisers. He argues that the Founding Fathers generally refrained from writing particular economic and social policies into the Constitution and that a BBA would violate this principle.
Theodore P. Seto, “Drafting a Federal Balanced Budget Amendment That Does What It Is Supposed to Do (And No More),” Yale Law Journal, March 1997. Seto is a professor at Loyola Law School. His discussion primarily concerns the proper drafting of a BBA so that it actually accomplishes its purpose.
National Association of State Budget Officers, “Budget Processes in the States,” Summer 2008. This is the most recent edition of a periodic report. Table 11 examines state balanced budget requirements in detail, showing that there is a wide variation in the nature of this requirement from state-to-state.
U.S. General Accounting Office, “Balanced Budget Requirements: State Experiences and Implications for the Federal Government,” March 1993. This study makes the point that state laws requiring a balanced budget are not the only factors motivating budget balance. Bond rating agencies, in particular, are very important in enforcing balanced budget requirements.
Bruce Bartlett is an American historian and columnist who focuses on the intersection between politics and economics. He blogs daily and writes a weekly column at The Fiscal Times. Read his most recent column here. Bartlett has written for Forbes Magazine and Creators Syndicate, and his work is informed by many years in government, including as a senior policy analyst in the Reagan White House. He is the author of seven books including the New York Times best-seller, Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy (Doubleday, 2006).