A letter to the editor today from an economist acquaintance points out something that’s ignored in the national dialogue (can we call the dueling punditocracy a dialogue?).
A balanced budget brings a whole new set of problems. (The full letter is here.)
An amendment to the U.S. Constitution, requiring an annually balanced federal budget, will destabilize the U.S. economy. . .
[if the] economy moves into recession, the budget will automatically move into a deficit, because income-tax collections will fall and unemployment compensation payments will rise. To bring the budget back into balance, Congress would have to increase taxes and/or cut spending.
. . . [if the] economy is expands rapidly, the budget will automatically move to a surplus, because income-tax collections will rise faster than GDP and spending on unemployment programs will fall. To bring the budget back into balance, Congress would have to increase spending and/or cut taxes.
Try planning in an environment where national priorities change every 12 months. But the GOP base would be thrilled and that’s the whole point, isn’t it.