Reservations About a Balanced Budget Amendment

Calling for a balanced budget amendment has been a staple campaign issue for conservative Republicans for years. Undeniably, our nation is beset by fearful fiscal woes. However, a balanced budget amendment isn’t the answer.

Let me emphasize that I endorse a balanced budget in principle. Indeed, in my recent article, "Good Cop, Bad Cop," I wrote, "The greatest threat to our country’s future is chronic overspending by the federal government."

Government, like individuals, should live within its means, and because it isn’t, we are bankrupting ourselves and perpetrating a great evil on our children by saddling them with a national debt that now exceeds $13 trillion.
Further, I reject the economic orthodoxy that claims that government has mystical power to spend us into prosperity by running deficits. All deficit spending can do is what an inflationary monetary policy does, namely, distort production, not produce a net increase in sustainable production.

In short, then, I believe that balancing government budgets is a virtue and that government fiscal deficits are a vice. So what objections could I possibly have to a balanced budget amendment? I have two … well, make that two-and-a-half.

The "half" is my skepticism about the facile notion—so common among both conservatives and liberals—that laws and amendments solve every problem. Not so. In practice, no law can work unless there is the will to enforce it and abide by it. Remember Public Law #95-435? Of course, not. Adopted by Congress in October 1978, it was one of several laws solemnly binding Congress to a balanced budget (in that case, by 1982). Needless to say, Congress has perennially proven incapable of abiding by such laws.

Ah, but wouldn’t enshrining a balanced budget in the Constitution itself accomplish the goal? I doubt it. I’ve already written about the way the Constitution is selectively observed. An additional reason for skepticism is that many state governments are running large deficits despite state constitutions that expressly ban deficit spending.

Let’s assume, though, that human nature is transformed so that Congress would actually balance the budget if the Constitution said it must. There reside the two major problems with passing a constitutional amendment to balance the budget:

The first problem is a practical consideration. How would Congress close a deficit of $1.5 trillion? While free-market economists like yours truly would love to see federal spending cut by $1.5 trillion (actually, by more!), can you imagine the political donnybrook in Washington this would precipitate? The only way the Big Government majority in Washington would agree to a balanced budget would be to raise taxes one dollar for every dollar of spending cuts. In other words, the best we could hope for would be spending cuts of three-quarters of a trillion dollars combined with increasing tax revenues by three-quarters of a trillion dollars. Ouch! In the economy’s current weak condition, increasing the tax burden by $750 billion would absolutely crush us. This "cure" would kill the patient.

The other problem with a balanced budget amendment is that it would legitimize current constitutional abuses. As it currently stands, the Constitution does not authorize most of what the federal government spends.

The founders crafted a Constitution of limited enumerated powers of government. They clearly were of the "strict construction" school, believing that the federal government should do only what the Constitution explicitly stipulates and nothing else.

In the decades since, the "loose construction" philosophy has mangled that original intent by adopting the opposite view that the federal government can do anything that the Constitution doesn’t explicitly state that it can’t do—a formula for virtually unlimited, infinitely elastic expansion of government.

If we, as a country, would strictly abide by the letter of the Constitution, federal spending would be a mere fraction of what it currently is. We wouldn’t have trillion-dollar deficits and nobody would be talking about a balanced budget amendment.

Amending the Constitution requires prodigious effort. That is why it has been done fewer than 20 times since the Bill of Rights was ratified in 1791. Rather than knock ourselves out trying to amend the Constitution, let’s strive to restore a correct understanding of the Constitution. We don’t need to amend the Constitution as much as we need to read it, understand it, and abide by it.

The founders have given us the only tool we need to put an end to deficit spending. Let’s begin using it.

— Dr. Mark W. Hendrickson is an adjunct faculty member, economist, and contributing scholar with The Center for Vision & Values at Grove City College.

www.VisAndVals.org