The NRO is Against a Balance Budget Agreement. Can You Guess Why?

At first I thought wow, even the NRO has a sensible position on the balanced budget amendment — it is opposed. But in the end it’s mostly the same old stuff, the fear that it might interfere with tax cuts, spending cuts, etc:

Against a BBA, Again, by The Editors: Senate Republicans are again set to mount a fight for a balanced-budget amendment (BBA). … The amendment would cap federal spending at 18 percent of GDP and require supermajorities for tax hikes and new borrowing.

First question. When income is growing and doubles every 30 years or so, as it does, wouldn’t we want to spend more on social insurance? Who said 18 percent is the right amount at any time, let alone always and forever? Anyway, moving on:

Passage of a BBA is not just implausible; it also … enshrines partisan policy priorities in the founding document of the republic, which was meant to structure the democratic process, not rig its outcome in advance.

I can agree with that, no reason to enshrine Republican dogma in the constitution, especially when it’s this harmful. And I can agree with this too, the courts shouldn’t be involved in setting fiscal policy:

It would invite a hyperactive judicial intervention in the budget-making process that would throw the separation of powers completely out of balance. … This means the judiciary might well attempt to set specific levels for every category of spending or otherwise shape budget priorities in an effort to enforce the Constitution. Such a perversion of republican government would raise the stakes of inter-branch hostility and distrust to unprecedented levels.

And Congress would have strong incentives to evade the spirit of such a law. If you think the official scoring of budget proposals is torturously politicized now, wait until constitutionality is at stake. Be prepared for a radical reimagining of just what phrases such as “gross domestic product” and “taxes” mean. And though the amendment includes provisions for exception — waiving spending limits in the case of a declared war, for instance — they are all but certain to prove unequal to reality and subject to abuse (think wars of fiscal choice).

Yes, I can think of a Party that says it doesn’t believe in fiscal (Keynesian) policy, but every time there’s a recession that same Party argues that we need to cut taxes to cure it. A balanced budget amendment might interfere with this game of lowering taxes to fight recessions, refusing to ever allow them to go up again, and then using the resulting deficit to claim spending is out of control.

But now we get to the real reason for the opposition, it might make it harder to reduce spending and cut taxes:

Moreover, the amendment’s very strictness in pushing for conservative priorities in 2013 could make it harder to realize conservative priorities in the future. Tax rates are lower today than they were in 1980, but could Reagan have slashed Carter-era rates under a constitutional regime that demanded such tight coordination between revenue and spending and erected massive hurdles to their decoupling?

There is no constitutional shortcut to the arduous task of reining in spending. …

And there is also no constitutional shortcut to “the arduous task” raising taxes to support the programs we want to have either. Glad the editors at the NRO are against the amendment, even if it is for a lot of wrong reasons.

About Mark Thoma 243 Articles

Affiliation: University of Oregon

Mark Thoma is a member of the Economics Department at the University of Oregon. He joined the UO faculty in 1987 and served as head of the Economics Department for five years. His research examines the effects that changes in monetary policy have on inflation, output, unemployment, interest rates and other macroeconomic variables with a focus on asymmetries in the response of these variables to policy changes, and on changes in the relationship between policy and the economy over time. He has also conducted research in other areas such as the relationship between the political party in power, and macroeconomic outcomes and using macroeconomic tools to predict transportation flows. He received his doctorate from Washington State University.

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