Action Alert! The Unfortunate Return of the Balanced Budget Amendment

The full House Judiciary Committee met on September 22 to consider, once again, the ill-conceived constitutional Balanced Budget Amendment (H. J. RES. 22). The issue will most likely be revisited 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 is exceptionally bad economic policy. Download Press Statement - (.pdf, 1pp) Download Factsheet - (.pdf, 1pp) Take Action!

The full House Judiciary Committee met on September 22 to consider, once again, the ill-conceived constitutional Balanced Budget Amendment (H. J. RES. 22). The issue will most likely be revisited 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 is exceptionally bad economic policy. Download Press Statement - (.pdf, 1pp) Download Factsheet - (.pdf, 1pp) Take Action!

Overview

The long-ago defeated proposal for a balanced budget amendment has reared its ugly head once again. Unable to pass a budget this year and having created near-record deficits, some members of the House of Representatives are desperate to create the appearance of being fiscally responsible, and are considering bringing up a vote on the measure.

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 it would restrict the nation's ability to invest in projects that would yield significant benefits in the future. (A good example of the various arguments made against the amendment is a Clinton-era Treasury Department memo by Brad DeLong.)

In addition, more than 1,000 economists have publicly opposed the amendment, including 11 Nobel laureates. The letter was coordinated by the Economic Policy Institute in 1997 (click for the press release or the letter itself.)

Take Action Now! Urge Congress to again reject the Balanced Budget Amendment.

For more information on the amendment, read a letter written by Economic Policy Institute budget and fiscal policy expert Max Sawicky. Sawicky's letter, to House Judiciary Chairman James Sensenbrenner, presents 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.

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