From my paper this morning: budget bedlam?

Now you see it, now you don't!

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.

6 responses to “From my paper this morning: budget bedlam?

  1. I have been mentioning this over at the Dog……

    Like

  2. George Bush created this mess, and the Republicans, the Tea Party, the right-wing radio blowhards, and of course the so-called “Fair and Balanced” Fox News dolts, are still in denial that he did. For them to put the blame on Obama is ludicrous.
    They should man up, and face the reality. Not all of us Americans was born on the back of a turnip truck.

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  3. Her letter is a sane and comprehensible analysis of this situation. I wish she/they had mentioned her credentials as this is NOT our usual ltter writing type

    Like

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