Seven leading economists offer seven reasons that a constitutional balanced budget amendment is one bad idea for the economy.
With unemployment over 9 percent nationally and 6 percent in Iowa, and various proposals for an amendment with severe restrictions being offered — one of them passing the House on Tuesday, July 19 — the economists’ thoughts are worth noting. In summary, they are:
Reason No. 1: It’s bad for economic recovery, requiring spending cuts that would aggravate recessions.
Reason No. 2: Borrowing to invest in the nation’s needs would be banned.
Reason No. 3: Pinched by restrictions, Congress would use gimmicks or shift responsibilities to states, localities and private businesses.
Reason No. 4: Supermajority requirements are undemocratic and are recipes for gridlock.
Reason No. 5: Binding caps on spending limit Congress’ ability to fight recessions.
Reason No. 6: An amendment is not necessary; Congress has the authority to pass balanced budgets.
Reason No. 7: Imposing such restrictions quickly would damage an already-weak recovery.
For more explanation in their own words, see the economists’ letter to the President and party leaders in both houses of Congress.
Posted by Mike Owen, Assistant Director