The full House Judiciary Committee met on September 22 to consider, once again, the ill-fated Balanced Budget Amendment (H. J. RES. 22). While the Committee did meet to debate the amendment, they ended the session without making any decisions. The issue will most likely be revisted by the House Committee sometime next week, although it is currently unknown exactly when. Regardless of one’s opinions about the wisdom of balancing the budget or running massive deficits, the Balanced Budget Amendment currently being debated in the House Judiciary Committee is exceptionally bad economic policy.
Max B. Sawicky, an Economic Policy Institute budget and fiscal policy expert, said “The rush to force future Congresses to wear the balanced budget straitjacket comes from a fundamental misunderstanding about deficits."
Sawicky sent a letter to House Judiciary Chairman James Sensenbrenner, presenting a detailed, economists’ eye view of how moderate-sized deficits have historically been an important tool for stimulating economic growth, especially in times of recession. He points out that even the weak growth that has occurred in the recent recovery would likely have been choked off if the amendment now under consideration were already in place.
A constitutionally mandated requirement to balance the budget every year would have terrible economic consequences. It would destabilize the economy by amplifying downturns in the business cycle, and restrict the nation's ability to invest in projects that would yield significant benefits in the future.
In addition, more than 1,000 economists have publicly opposed the amendment, including 11 Nobel laureates. A letter oulining this opposition was coordinated by the Economic Policy Institute in 1997; a press release can be found here.
For more information on the amendment, click here to read a treasury Department memo by Brad DeLong.
Take action on this issue! Send a fax to the House Judiciary Committee, telling them that a balanced budget amendment is a fiscally irresponsible economic policy.
