Off Balance: Proposal to Balance the Budget Drastic, Unrealistic and Harmful to all Americans
Jun 14, 2011
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The U.S. House Judiciary Committee is considering a bill (HJRes.1 Proposing a Balanced Budget Amendment to the Constitution of the United States) that would make an annual balanced federal budget constitutional law. While it is true that the nation must work to get its deficit under control, the bill is a plan not for balance but rather for dismantling the government and weakening programs and services on which all Americans rely. The proposed constitutional amendment would limit federal spending to 18 percent of the nation's Gross Domestic Product (GDP). Not since FY 1966 has federal spending been less than 18 percent of GDP.[1] It's important to note that era preceded aging Baby Boomers and expansions in national security, health care, education and other critical programs that provide support to Americans at every income level.
The proposed balanced budget amendment is drastic and highly political. While limiting spending, the amendment all but takes raising additional revenue off the table by requiring a supermajority (two-thirds) vote in Congress to pass any tax increases, including closing tax loopholes. It weakens America's future by underfunding the very programs-education, research, access to job training and higher degrees, investments in space travel, technology and infrastructure-that make the nation economically sound and globally competitive. And it would hurt low-income people severely by squeezing out sufficient funding for opportunity promoting programs such as child care and early education to help children succeed in school, workforce development and adult education opportunities to help individuals get and retain jobs that provide for their families or safety net programs such as SNAP, Medicaid, and TANF that support families during times of need.
This proposal comes as federal lawmakers are having a wide conversation about deficit reduction that also includes the FY2012 budget, the nation's debt ceiling as well as its long-term debt. While these conversations are important, they are incomplete. The nation can't begin having honest discourse about its finances until lawmakers begin to take a broad look at spending and revenue.
What Is H. J. Res.1: Proposing a Balanced Budget Amendment to the Constitution of the United States [ii]
- The "balanced budget amendment" is a proposed constitutional amendment.
- By constitutional law, the balanced budget amendment would require government revenues to be in line with government spending. The government could not spend more money each year than it collects in taxes and other revenue.
- The measure mandates that the nation spend no more than 18 percent of its economy, or GDP, each year. This is a strict spending cap. By comparison, spending in FY 2010 was estimated to be about 24 percent of GDP.[iii] Spending more than 18 percent of GDP would require a supermajority vote in both houses.
- This bill also requires a supermajority of the House and Senate (two-thirds) to pass any tax increases. The bill effectively starves the federal government by severely limiting spending and taking additional revenue off the table.
- The bill also stipulates that government cannot increase the debt ceiling, which is the limit placed on the government's borrowing, without approval by three-fifths of the House and the Senate.
A Balanced Budget Amendment Is Harmful to All Americans, Particularly Low-Income People
For many Americans, the government is a hidden partner in their everyday lives. We may take for granted that school buses pick our children up each day, that street lights come on at dusk, and that our food and water supplies are safe. But the federal budget covers all this and more. Federal dollars maintain the national parks we visit and the public transportation we use. Federal dollars support consumer safety, so unsafe toys can be recalled to protect our children. Federal spending supports research and development advancing new medicines and technologies. All of these services and protections that Americans rely on would be jeopardized by imposing an artificial limit on spending.
Low-income Americans would be most harmed by a balanced budget amendment. Once the country's most urgent priorities were met, spending on programs that help children grow up safe, healthy and prepared to succeed, such as Head Start and Early Head Start, would be virtually eliminated. Spending on programs that give adults the skills and supports they need to fulfill their potential, such as Pell grants and workforce development programs, would be starved. Funding for immunizations for poor children, summer employment for youth and unemployment and health insurance for those without jobs would simply not be possible.
Given that revenue is subject to the vagaries of the economy (federal revenue sharply declined during the recession), requiring a balanced budget every year would hamstring the government's ability to increase spending to respond to natural disasters or national emergencies, or to stimulate the economy and help provide jobs when the economy is sluggish. In the wake of an economic recession or natural disaster, the federal government might only be able to provide help to individuals and communities by making additional cuts in services to others.
While the federal government is right to consider policies that bring spending and revenue closer in line, the proposed balanced budget amendment is simply the wrong approach. As both the House and Senate continue debating the nation's deficit, we urge them to begin having realistic discourse that focuses on the nation's broad needs, including providing affordable health care, and supporting job training and education from birth through college while making appropriate and reasonable changes to the tax code and entitlement programs. And we urge them to abide by one of the guiding principles of the National Commission on Fiscal Responsibility and Reform: Protect the truly disadvantaged.
[1]"Table 15.3 - Total Government Expenditures as Percentages of GDP: 1948-2010," Budget of the United States Government, Fiscal Year 2012, Office of Management and Budget, February 2011, http://www.whitehouse.gov/omb/budget/Historicals/.
[ii] Proposing a balanced budget amendment to the Constitution of the United States, H. J. Res.1, 112th Congress, 1st sess., http://www.gpo.gov/fdsys/pkg/BILLS-112hjres1ih/pdf/BILLS-112hjres1ih.pdf.
[iii] "Table 15.3," Budget of the United States Government, Fiscal Year 2012.