Question

explain why a constitutional amendment requiring the federal government to balance the budget annually is a bad idea.

(answer in 10 to 15 sentences or under)

Answer 1

A balanced change to the U.S. budget Constitution would be an uncommon and economically harmful way to tackle the long-term fiscal issues facing the nation. As described below, it would threaten important financial damage. It would also raise a host of issues for social security operations and other essential federal programs.

The most serious are the financial issues with such an amendment. By needing a balanced budget each year, regardless of the state of the economy, such an amendment would increase severe hazards of pushing fragile economies into recession and prolonging and deeper recessions, causing very big work losses. That's because the amendment would force policymakers to cut federal programs, increase taxes, or both when the economy is weak or already in recession — the precise opposite of what would recommend excellent financial policy.

When the economy slows down, federal income declines or grows more slowly, increasing the price of unemployment insurance and other social programs, causing deficits to increase. Instead of enabling reduced tax collections and greater unemployment and other advantages to "automatic stabilizers" to cushion a fragile economy, the amendment would force policymakers to cut programs, increase taxes, or both. This would trigger a harmful spiral of poor financial and fiscal policy: a weaker economy would result in greater deficits, forcing policymakers to cut programs or increase taxes more, further weakening the economy.

Every year, the fact that countries have to balance their budgets— no matter how the economy performs — makes it even more important that the federal government fails to meet this necessity as well and thus further impair a shaky economy. And while most of the constitutional balanced budget amendments implemented in Congress would enable Congress to waive the balanced budget requirement with a supermajority vote in both chambers, the issue is hardly solved. Recent experience demonstrates how difficult it is for almost any significant legislation to secure a supermajority vote in both chambers For almost any significant law. Furthermore, information indicating that the economy is in recession will not be accessible until the economy has already started to weaken; it could well take several months before adequate information are accessible to persuade a congressional supermajority to waive the balanced budget requirement if it could be done at all. Meanwhile, there would have been significant financial harm— and big work losses.