Why We Need a Balanced Budget Amendment
Robert Petrosyan, Senior Fiscal Policy Contributor
$19,513,018,945,293. That is the size of the US national debt as I begin writing this piece. Our national debt now exceeds our yearly GDP, creating a long term threat to the country’s solvency and ability to repay its debts in the long run. A surging debt crisis will lead to economic slowdown, higher inflation, and an inability for the country to pay its bills. We have already seen these problems in action in Europe as it undergoes its seven year-long debt crisis that’s threatening the European Union’s very existence.
As of now, the US government has not made long term resolutions on how to tackle the rising debt, and instead uses short term fixes, like raising the debt limit each year to continue borrowing money. Unfortunately, this is merely kicking the can down the road. There are partisan plans to raise taxes or cut spending, but those ideas are usually unrealistic due to the lack of unified leadership in the country today. Also, even if they’re enacted, they still wouldn’t have a long-term and permanent impact on the way our country’s budget operates.
In the last eight years, the national debt has nearly doubled, increasing by over nine trillion dollars. There needs to be a long term reform to the way our government spends money in order to prevent our country from succumbing to its large debt.
One idea that has gained a lot of traction in the last five years is a balanced budget amendment to the Constitution. Such an amendment requires that the government doesn’t spend more money than it takes in. This provision exists in some form in every state except for Vermont, but it does not exist in the federal government.
Given the state of our budget deficit and the ballooning size of our national debt, it is time for the federal government to consider enacting a similar amendment. Preserving the country’s ability to repay its debts needs to be a priority for our country, and allowing the debt to continue ballooning the way it is right now could lead to economic catastrophe. This amendment should be flexible enough to deal with emergencies, but also strict enough that long term patterns of government deficit no longer continue. If done right, a balanced budget amendment would not only improve our solvency, but also improve the quality of life for our citizens.
In the long run, the national debt is considered by many not only to be a fiscal threat, but also a national security threat. In 2011, the former head of the Joint Chiefs of Staff Admiral Mike Mullen referred to the debt as the biggest threat to our national security. He explained this assertion by pointing to the cuts that were already made through sequestration, and claimed that long term financial insolvency will leave America incapable of paying for its global operations, and thus render the country and world less safe. The short term cuts are outweighed by long term peace of mind on the government’s reliability in providing for its military.
When the debt reaches the levels of being considered a national security threat, there needs to be a change. A balanced budget amendment will provide stability to America’s military budget, and protect its ability to pay for itself in the long run.
A balanced budget amendment would also be beneficial to the American family. A higher debt leads to higher interest rates and higher rates of inflation. This creates a hidden inflation tax that disproportionately affects the poor, since the poor are more likely to spend a bigger portion of their income on consumer goods susceptible to inflation. With wages already being stagnant due to slow economic growth, rising prices will have an adverse consequence for the poor.
In its height as an issue in 2011, 74 percent of Americans were in support of a balanced budget amendment. There is clear popular support for the idea of a balanced budget amendment, and there has been a recent movement by states to bring forth an Article V convention in which the states would propose a balanced budget amendment to the Constitution. However, many point to the fact that a balanced budget amendment is too rigid to be successful, and that it would leave the country disarmed against a crisis. For this proposal to be practical, there should be some flexibility.
One potential tweak is a budget that isn’t done yearly but instead is done over the course of a business cycle of about five to ten years. This makes sense, because it is more consistent with the ebbs and flows that occur within the economy. Additionally, this will give flexibility to the government in case of emergency situations when the government will need to spend more money than expected. In cases of recession or of military emergency, a budget that’s balanced across ten years could survive a one year deficit by making offsetting cuts in subsequent years, and is much more stable than a year by year budget plan.
Another proposal comes from Utah Senator Mike Lee’s book Freedom Agenda, where Senator Lee recommended a supermajority vote to circumvent the balanced budget amendment. Lee wanted there to be a provision to go over the deficit for legitimate emergency situations, but also did not want Congress to be able to raise deficits by a simple majority, or else the balanced budget amendment would have no teeth. A super-majority vote, or a sixty percent vote in both houses, would allow flexibility for fiscal emergencies while still ensuring that these emergency scenarios are invoked sparingly.
A balanced budget amendment would not make our nineteen trillion dollar debt disappear, but it would significantly raise the nation’s solvency and economic viability for the future. By balancing the budget now, we preserve our long term ability to pay our bills, and improve the domestic economy by lowering inflation, interest rates and cost of living. With certain procedures like the 60 or 67 vote circumvention requirement and balancing the budget across ten years as opposed to a single year, a new long term policy can be created that could finally address the oft-ignored problem of our rising debt. With the European fiscal crisis serving as a warning sign, America can ill afford to fall off its own fiscal cliff when so much is at stake.
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