Advantages & Disadvantages of the Balanced Budget Amendment

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Advantages & Disadvantages of the Balanced Budget Amendment Original post by Tom Gresham of Demand Media A federal balanced budget amendment occasionally emerges as a political hot-button issue. The amendment would require that the U.S. government not run a budget deficit, limiting expenses to the amount of revenue the government brings in. Passage of a balanced budget amendment requires overwhelming congressional and state support, needing the approval of three-fourths of the states and two-thirds majorities in both houses of Congress. Debt Load The chief advantage of a federal balanced budget amendment is that it reduces federal debt because it requires the government to operate without a deficit. Advocates argue that a balanced budget amendment would lead to a smaller federal government and less government waste, including a major reduction in pork-barrel spending -- the practice of legislators pushing pet projects for their constituencies. An elimination of the deficit also would reduce the millions of dollars in interest that the government pays on its debt when it runs a deficit. Taxes and Saving Over the long term, a balanced budget amendment would lower federal taxes on average, according to "Analyzing the Case for a Balanced Budget Amendment," a research paper by economists from Texas, Princeton and Cornell. Advocates argue that these lower taxes would spur economic growth. In their research paper, the economists also argue that a balanced budget amendment likely would inspire the government to increase savings to hedge against future problems in the broader economy. Crisis Response A key concern frequently raised about a balanced budget amendment is the lack of flexibility it allows. Because the budget is required by law to be balanced, the federal government has fewer options for responding to economic developments as they arise. Although an

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