Balanced Budget Amendments: What Works?
There’s been a lot of talk lately in Congress about linking a Balanced Budget Amendment (BBA) to a debt limit increase. But there is more to a BBA than simply a line about balancing the budget; in other words, not all BBAs are created equal. Congressman Joe Walsh (R–IL) has introduced a BBA that encapsulates the fundamentals of what is needed in a Balanced Budget Amendment.
● First Principle: A Balanced Budget Amendment (BBA) is important to help bring long-term fiscal responsibility to America’s future when the BBA takes effect after ratification by three-quarters of the state legislatures; it is equally important for Congress to cut spending now to address the current overspending crisis.
● Second Principle: An effective BBA will include three elements to: (a) control spending, taxation, and borrowing, (b) ensure the defense of America, and (c) enforce the requirement to balance the budget.
The key to balancing the budget is cutting spending, not raising taxes. Because, as the article points out, “tax hikes shrink our economy and grow our government.” If we raise taxes, even “temporarily,” then it will always be an option. “Just tax the rich, that’ll work,” is not a mentality conducive to a free market or a free nation. If that is the plan – and it’s the only plan liberals have – then it will always be the plan. Congress would be able to spend as much as they want, then just tell the rich they have to pay more to make up for it. That cannot be the solution.
The Heritage Foundation also outlines what needs to be in a BBA:
● Control spending, taxing, and borrowing through a requirement to balance the budget. The BBA should cap annual spending at a level not exceeding either: (a) a specified percentage of the value of goods and services the economy produces in a year (known as gross domestic product, or GDP), or (b) the level of revenues. To ensure that Congress cannot simply balance the budget by continually raising taxes instead of cutting overspending, the BBA should require Congress to act by supermajority votes if Members wish to raise taxes. Any authority the BBA grants Congress to deal with economic slowdowns, by waiving temporarily the requirement that spending not exceed the GDP percentage or revenue level, should specify the amount of above-revenue spending allowed and require supermajority votes.
● Defend America. The BBA should allow Congress by supermajority votes to waive temporarily compliance with the balanced budget requirement when waiver is essential to pay for the defense of Americans from attack.
● Enforce the balanced budget requirement. The BBA should provide for its own enforcement, but must specifically exclude courts from any enforcement of the BBA, so unelected judges do not make policy decisions such as determining the appropriate level of funding for federal programs. A government that spends money in excess of its revenues must borrow to cover the difference. Therefore, to enforce the requirement to balance the budget, the BBA should prohibit government issuance of debt, except when necessary to finance a temporary deficit resulting from congressional supermajority votes discussed above.
The BBA introduced by Congressman Walsh includes these things. and would help put our country back on track.