Balanced Budget Amendment: Pros and Cons
June 21, 2012
The 2011 Budget Control Act, which was enacted to end the impasse over raising the federal debt limit last summer, mandated that both houses of Congress vote on a balanced budget amendment by the end of 2011. The House fell 23 votes short of the two-thirds majority that is required to advance an amendment to the U.S. Constitution; in the Senate, the amendment garnered only 47 votes, well short of the 67 votes needed for passage. But despite that recent failure, the concept of a balanced budget amendment is one that regularly arises in the national conversation about debt and deficits and is sure to be considered again in the future.
Positions on whether the Constitution should be amended to require a balanced budget reflect opposing views about whether such an amendment would be an appropriate solution to the problem of persistent federal deficits and growing federal debt.
What is a balanced budget amendment?
In its simplest form, a balanced budget amendment would add a budget rule to the Constitution that would require federal spending not to exceed federal receipts. The amendment would make it unconstitutional for the federal government to run annual budget deficits.
Most amendment proposals go further than requiring a balanced budget or budget surpluses. Some of the most frequent additional elements are:
How Would a Balanced Budget Amendment Work in Practice?
Supporters of a balanced budget amendment argue that respect for the Constitution will create strong political pressure to rein in deficits and impose needed accountability for irresponsible fiscal policy. Because few elected officials would be willing to face constituents with a budget that violates the Constitution, opposing parties would be forced to compromise and pass legislation that would meet the constitutional requirement.
Opponents argue that the political pressure could lead to budget gimmicks that would meet the letter, but not the spirit, of the law. Opponents also contend that it could hamper the ability of the federal government to respond quickly and effectively to economic recessions and national emergencies.
In evaluating a balanced budget amendment, there are four types of practical questions that policy makers and the public should consider.
A constitutional amendment to require a balanced budget is one approach to controlling America's deficits and debt. It would focus on the "bottom line." However, that bottom line is the product of a set of complex accounting rules designed to capture the end result of a legislative process that involves many points of view about government's role and, within those roles, the nation's priorities. Deficits and debt arise in large part from the failure to achieve consensus about those issues. By itself, the amendment cannot resolve these underlying policy differences.
Although a balanced budget amendment could set a standard that elected officials would not want to miss, there are also legitimate concerns about how it would operate in practice.
2013 Fiscal Summit: Press Release
2013 Fiscal Summit: Media Advisory
Fiscal Confidence Index Results for April 2013
PGPF Provides $1 Million Grant to Newly-Established Rudman Center
Pete Peterson on Simpson-Bowles "Bipartisan Path Forward"
Analysis: President's FY 2014 Budget
Ways You Can Get Involved:
Q&A with Pete Peterson
Foundation Chairman candidly discusses fiscal and personal topics.
Engaging Americans in a movement to address the nation's fiscal challenges.
State of theUnion's Finances
Steps you can take to help cure our fiscal ills.
"I.O.U.S.A." "may be to the U.S. economy what 'An Inconvenient Truth' was to the environment."
to Get the PGPF Newsletter.
© 2009-2013 Peter G. Peterson Foundation. All rights reserved.