Balance Budget Amendment

What is a Balanced Budget Amendment?

"Supporters of a balanced budget amendment point to growing levels of federal debt as evidence that Congress (and fellow voters) can't be trusted to keep deficits in check.

Because Congress' power to tax and spend money comes directly from the U.S. Constitution, a balanced budget requirement that would tie the hands of future Congresses would require a constitutional amendment (The Motley Fool 1)".

What is a BBA?

A Balanced Budget Amendment is a law that prohibits the federal government from spending more money than they earn through taxation, unless a vast majority of congress members vote otherwise.

There are many pros and cons to this concept, and there is currently a large debate as to whether or not a BBA should be in effect.

"The national debt is $3.2 trillion [as of October 3, 1993] and rising. Irresponsible government spending and borrowing has resulted in nearly $13,000 of debt for every man, woman, and child in America, and will add to this another $1.2 trillion of debt in the next five years... The only long-term solution to America's growing fiscal crisis is a balanced budget amendment (Mitchell 3)".

The Pros

Some pros of a BBA include the following:

The Pros

- Could help pay off US debt

- Wouldn't force taxation rates to increase drastically

- Could increase the value of money, causing the economy to boom

"A balanced budget amendment would.. severely slash Medicare, Medicaid, and many other programs while opening the door to massive new tax cuts... and diminishing the safeguards of the trust fund surpluses and burdening future generations (NCPSSM 2)".

The Cons

While there are good reasons in support for a BBA, there are also plenty of other reasons as to why it is not a good idea.

The Cons

- The economy might likely collapse as a result of less available contribution by the government

- Recessions would be very difficult to escape

- Lawmakers would be likely to find and use loopholes to circumvent the amendment

- More likely to harm long-term debt, as the government won't be as powerful and could

end up failing to sustain itself

- Reducing government spending reduces

GDP, contributing to economic failure

"By requiring a balanced budget every year, no matter the state of the economy, such an amendment would raise serious risks of tipping weak economies into recession and making recessions longer and deeper, causing very large job losses (CBPP 1)".

My Verdict

To recap, a balanced budget amendment could help the government by reducing federal spending in order to help bring America out of its current debt of $30T (as of May 2022). It would have potential to also cause economic growth by raising the value and demand of U.S. dollars.

However, I believe that this amendment is more likely to fail if took into effect. A balanced budget amendment is very risky, considering that America needs to spend billions of dollars every day in order to sustain not only itself, but contribute to the needs of other

countries and businesses. Without a well-developed plan beforehand, it's likely that a Balanced Budget Amendment could throw America into an even bigger debt in the long run.

Works Cited

Mitchell, Daniel. “Why America Needs a Balanced Budget Amendment.” The Heritage Foundation, 15 Aug. 1993, https://www.heritage.org/budget-and-spending/report/why-america-needs-balanced-budget-amendment.

“Balanced Budget Amendment: Pros & Cons.” Peter G. Peterson Foundation, https://www.pgpf.org/budget-basics/balanced-budget-amendment-pros-and-cons.

“A Constitutional Balanced Budget Amendment Threatens Social Security, Medicare and Medicaid.” NCPSSM, 19 Oct. 2021, https://www.ncpssm.org/documents/social-security-policy-papers/constitutional-balanced-budget-amendment-threatens-social-security-medicare-medicaid/#:~:text=Under%20a%20balanced%20budget%20amendment,from%20Social%20Security%20payroll%20taxes.

Richard Kogan. “Constitutional Balanced Budget Amendment Poses Serious Risks.” Center on Budget and Policy Priorities, https://www.cbpp.org/research/federal-budget/constitutional-balanced-budget-amendment-poses-serious-risks.

Staff, Motley Fool. “Advantages and Disadvantages of a Balanced Budget Amendment.” The Motley Fool, The Motley Fool, 8 May 2016, https://www.fool.com/knowledge-center/advantages-and-disadvantages-of-a-balanced-budget.aspx.

Hawks, Anthony. “The Balanced Budget Veto: A New Mechanism to Limit Federal Spending.” Cato.org, 4 Sept. 2003, https://www.cato.org/policy-analysis/balanced-budget-veto-new-mechanism-limit-federal-spending.