Balancing the Budget Has Taxing Aspects

Article excerpt

In Republicans are mobilizing to adopt a balanced-budget amendment to the Constitution in the next Congress. They only see an opportunity to achieve a long-sought goal and do not understand the many dangers.

Don't get me wrong. A balanced budget is a good thing, but a constitutional amendment to do the job is not. The amendment has momentum because a balanced budget has been the centerpiece of Republican economics and politics for a half-century. Moreover, the Republicans are being advised that, having talked so much about it, they now must deliver: With the amendment will come the following consequence: Tax increases will be more likely than spending cuts.

The original amendment supermajority vote to raise taxes, but Republicans gave up this protection for the sake of a compromise. When the 535 members of Congress are unable to agree among themselves or with the executive branch where to make spending cuts, they can declare their opposition to tax increases but point out that the constitutional requirement of a balanced budget leaves them no alternative. In other words, the amendment passes the political buck to the Constitution.

If the amendment puts pressure on spending, one result will be creative budgeting. For example, Congress can make room in the annual operating budget for more spending by creating a separate capital budget. Accounting rules do not require depreciable investments, such as aircraft carriers and interstate highways, to be treated the same way as salaries for government employees. Investment expenditures properly are financed by borrowing, rowing, thus freeing tax revenues for more spending programs such as legal aid and food stamps. …


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