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Critique of Argument Against a Balanced Budget Amendment

written December 21, 2011

A bunch of ivory tower elitists wrote and signed off on this 1.5 page letter arguing against a balanced budget amendment to the President and leaders of Congress. That is, Nobel prize winning economists tried to make a case against an amendment to the Constitution which would require our government to spend no more money than it takes in. But before I start my stellar point-by-point critique, I have to get it off my chest that this letter is so ridiculous, I almost wonder if it's meant to be a joke.

First of all, every state other than Vermont has some sort of balanced budget amendment, and strange as it may seem to these wizards of economics (and the wide-eyed, unskeptical, gullible little yuppies eating every word they speak), 49 states in our union aren't drowning in trillions of dollars in debt. In fact, Virginia, one of those states with a balanced budget amendment and the state rated best in the union for businesses, is reported to have a $311 million dollar surplus this year. They must have gotten lucky. Or maybe they accomplished it by "keeping taxes low, keeping government spending under control, and maintaining strong right to work laws."

What follows is this preposterous letter with my comments interjected in yellow, like this.

"Adding additional restrictions, as some balanced budget amendment proposals would do, such as an arbitrary cap on total federal expenditures, would make the balanced budget amendment even worse."

So let me get this straight: all kinds of caps and restrictions on businesses (you know, the things that make up the economy) are A-OK, but when we try to limit the federal government—the thing that drains free flowing businesses and our individual liberties; the thing that extended the depression; that thing that got us in trillions of dollars in debt—that's "unsound economic policy." Brilliant.

"A balanced budget amendment would mandate perverse actions in the face of recessions. In economic downturns, tax revenues fall and some outlays, such as unemployment benefits, rise. These so-called built-in stabilizers increase the deficit but limit declines of after-tax income and purchasing power. To keep the budget balanced every year would aggravate recessions."

I've never seen so many words say so little. The market has fluctuations due to natural business cycles. The economy evens itself out without the omniscient hand of government throwing its altruistic yet chaotic monkey wrench in there every time.

"Unlike many state constitutions, which permit borrowing to finance capital expenditures, the federal budget makes no distinction between capital investments and current outlays. Private businesses and households borrow all the time to finance capital spending."

This "problem" is easily solved: DO BETTER ACCOUNTING.

"A balanced budget amendment would prevent federal borrowing to finance expenditures for infrastructure, education, research and development, environmental protection, and other investment vital to the nation's future well being."

Loaded statement. Public funding of all these by the federal government is not vital. States can do just as well, as can the private sector. Or some combination of both, which should *gasp* be left up to the states. There's a reason parents prefer to send their kids to private schools over public. There's a reason non-governmental organizations dealing with education, environment, research and development, and other things "vital to the nations future" not only exist, but thrive: because the free market works.

"A balanced budget amendment would invite Congress to enact unfunded mandates, requiring states, localities, and private businesses to do what it cannot finance itself."

First, this is a slippery slope logical fallacy. Second it's dead wrong. A balanced budget amendment would have the exact opposite effect. Congress wouldn't enact mandates it couldn't afford, just like citizens with budgets don't take up hobbies they can't afford.

"It also invites dubious accounting maneuvers (such as selling more public lands and other assets and counting the proceeds as deficit-reducing revenues), and other budgetary gimmicks."

This is hands down my favorite line from the letter. That's like saying citizens shouldn't balance their budgets and spend within their means, because it will invite them to cheat on their taxes, have yard sales, and using that money to pay off their unruly credit card debt. Literally, these Nobel Prize winning economists just said, "We can't tell Congress to be responsible, because their incompetence prevents them from spending within their means, so they'll be forced to resort to unethical practices." And I already said this, but the solution is easy: DO BETTER ACCOUNTING. Fucking incredible.

"Disputes on the meaning of budget balance would likely end up in the courts, resulting in judge-made economic policy. So would disputes about how to balance an unbalanced budget when Congress lacks the votes to inflict painful cuts."

So basically they're admitting we have a broken system. They're admitting government is both inefficient and incompetent, and they're proposing the only solution is to not only to not regulate it, but throw more money at it. FUCK.

"Balanced budget amendment proposals typically contain escape hatches, but in peacetime they require super-majorities of each House to adopt an unbalanced budget or to raise the debt limit. These provisions are recipes for gridlock."

Another slippery slope. They're criticizing the details of an amendment that hasn't even been made yet. Outside that, the ridiculousness of the statement isn't lost: They basically just said, "Sometimes when they're not allowed to spend more than they take in, they REALLY REALLY NEED TO, which makes them poop themselves. We don't want them to have to do their jobs correctly. Give them a blank check so they don't poop themselves while doing their jobs."

"An overall spending cap, which is part of some proposed amendments, would further limit Congress's ability to fight recessions through either the built-in automatic stabilizers or deliberate changes in fiscal policy. Even during expansions, a binding spending cap could harm economic growth because increases in high-return investments—even those fully paid for with additional revenue—would be deemed unconstitutional if not offset by other spending reductions. A binding spending cap also would mean that emergency spending (for example on natural disasters) would necessitate reductions elsewhere, leading to increased volatility in the funding for non-emergency programs."

This is an unfounded assumption that the government has ever played a helping role in fighting a recession. History shows FDR's policies extended the depression in the 30s, while Ronald Reagan's relative inaction during the recession in the 80s allowed it to recover on its own fairly quickly. The rest about emergency spending is just a fear-inspiring way of saying, "We're really, really bad at budgeting all this free money. Please let us have more."

"A Constitutional amendment is not needed to balance the budget."

Yes, it is. Ever heard of checks and balances? Ever heard of our most basic value—limiting the government in size and scope via the Constitution? Without the amendment, making it illegal to spend more than we take in, we end up with a $14 trillion crisis like we're in today.

"The budget not only attained balance, but actually recorded surpluses and reduced debt, for four consecutive years after Congress enacted budget plans in the 1990s that reduced spending growth and raised revenues."

Wow. Four whole years out of 200? The federal government really deserves a pat on the back for that one. Oh wait, those surpluses were recorded due to those "dubious accounting practices" you were so scared of a minute ago. They simply borrowed money from the Social Security pool to pay for other expenditures, then called it a surplus. But somehow, that money they borrowed from Social Security didn't reappear out of thin air. And now, Social Security is considered unsustainable. Imagine that.

"This was done under the existing Constitution, and it can be done again."

Just because a kleptomaniac can walk through a store without stealing anything four times doesn't mean you can trust him to do it again. He needs to be watched, and so does our out of control government, as evidenced by our unprecedented 14 trillion dollar debt.

"No other major nation hobbles its economy with a balanced-budget mandate."

Right, only 49 states within our nation do. Oh and nice use of "hobbles" for added dramatic effect in attempt at misdirection away from your lack of a substantive argument. Idiots.

"There is no need to put the nation in an economic straitjacket."

I can count 14 trillion reasons. And I think by "put the nation in an economic straitjacket" you meant "force the government to be more responsible with our money."

"Let the President and Congress make fiscal policies in response to national needs and priorities as the authors of our Constitution wisely provided."

No. Both history and our current crisis are undeniable proof that the President and Congress are incapable of addressing the nation's needs. Instead, let's let the people and the states choose how to spend their own money in response to their own needs and priorities as the authors of our Constitution so wisely provided.

"It is dangerous to try to balance the budget too quickly in today's economy. The large spending cuts and/or tax increases that would be needed to do so would greatly damage an already-weak recovery."

The loaded statements never cease to amaze me: 1) Tax increases would not be "necessary." More taxes are not the solution to every little problem. 2) Spending cuts are a good thing—that's the natural response to spending too much: you spend less. You cut spending. 3) Congratulations on admitting the federal government's efforts to recover from the recession have been futile. Now try the alternative: get out of the way and let it recover on its own.

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