A Case for Requiring a Balanced Budget
The arguments against a constitutional amendment to require balanced budgets are various and, cumulatively, almost conclusive. Almost. The main arguments are:
The Constitution should be amended rarely and reluctantly. Constitutionalizing fiscal policy is a dubious undertaking. Unless carefully crafted, such an amendment might instead be a constant driver of tax increases. A carefully crafted amendment that minimizes this risk could not pass until Republicans have two-thirds majorities in both houses of Congress, which they have not had since 1871.
Furthermore, requiring a balanced budget would incite creative bookkeeping that would make a mockery of the amendment and the Constitution. For example, New York, which like 48 other states has some sort of requirement for a balanced budget, once balanced its by selling Attica Prison to itself.
There is, however, one sufficient argument for a balanced-budget amendment. It is: George Mason Universitys James Buchanan.
This Nobel laureate economist, who died last month at 93, pioneered the "public choice" theory, which applies economic analysis essentially, the study of how incentives influence behavior to politics.
Public choice analysis began in the 1960s, when Washingtons social engineers were busy as beavers building a Great Society, and confidence in government reached an apogee. Public choice theory demystified politics by puncturing the grand illusion that nourishes government growth. It is the fiction that elected politicians and government administrators are more nobly motivated, unselfish and disinterested than are persons acting in the private sector.
Buchanan extended the idea of the profit motive to the behavior of politicians and bureaucrats, two groups seeking to maximize power the way many people in the private sector maximize monetary profits. Public-sector actors often do this by transactions with rent-seekers private factions trying to maximize their welfare by getting government to give them benefits, such as appropriations, tax preferences and other subsidies. …