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Can Amending the Constitution Cure the Budget Deficit?: No, It Would Wreck the Economy
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19980 |
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Section : |
CURRENT ISSUES
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| Issue
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8 / 1992 |
1,765 Words |
| Author
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Robert S. McIntyre
Robert S. McIntyre is director of Citizens for Tax Justice. |
The House has defeated the balanced budget constitutional amendment, falling nine votes short of the two-thirds supermajority required for passage. That kills the measure for this year, but it is still worth considering whether amending the Constitution is the answer to the excessive federal borrowing that began a little over a decade ago.
Robert Reischauer, director of the Congressional Budget Office, got it exactly right when he labeled the proposed constitutional amendment "a cruel hoax." It's cruel because quickly wiping out the deficit or rigidly balancing the budget every year would cause extreme economic damage and human misery. It's a hoax because it would give lawmakers another excuse to do nothing now and offer them five years or so to find ways around the amendment. Moreover, it's hard to figure how the constitutional requirement would be enforced.
In other words, the problems with a balanced budget amendment are (1) that it might work, and (2) that it probably wouldn't.
There is no doubt that the enormous and unprecedented buildup in federal debt since 1980 has been bad, even immoral. Ronald Reagan was the first president since World War II to leave office with a federal debt that was a larger share of total national output than when he came in. George Bush will almost certainly be the second.
The last balanced federal budget was in fiscal 1969, at the height of the Vietnam War. Despite huge military outlays, Lyndon Johnson managed to balance his swan-song budget by increasing taxes enough to pay for spending.
Source Of The Deficit
That achievement was quickly reversed under Richard Nixon and his successor, Gerald Ford. The Nixon-Ford era saw a major shift in spending priorities away from defense and into domestic programs (this didn't happen in the sixties under Johnson, as is sometimes asserted). But it also saw major reductions in taxes--largely from expanded corporate loopholes. As a result, the annual deficit jumped to 2.8 percent of the gross domestic product (GDP) by the time President Ford left office in 1977. (Even so, the total national debt fell slightly as a share of the growing GDP.)
Things stabilized briefly under Jimmy Carter, who at least didn't make the annual deficit any worse. He left his successor about the
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