House’s Reckless Balanced Budget Amendment Would Place Ever-Growing Share of Needed and Popular Benefits on Chopping Block

The House may vote this week on a constitutional amendment requiring the federal government to balance its budget. Balanced budget amendments are a highly ill-advised method for addressing the nation’s long-term fiscal problems, this version particularly so because it stacks the deck in favor of spending cuts over revenue increases. It would require two-thirds of each chamber to support revenue increases. This effectively guarantees that cuts needed to hit the balanced budget targets would immediately devastate programs that are appropriated annually, such as housing assistance, education, and scientific and medical research. And eventually it would require cutting programs such as Social Security, Medicare, and food assistance.

The amendment would meanwhile allow unlimited tax cuts to be adopted by a simple majority vote, even if the budget was already in deep deficit — placing an ever-growing share of federal program spending on the chopping block as revenue falls.

This ideological approach ignores basic math. Spending on Social Security, Medicare, defense, and veterans programs constitutes two-thirds of programmatic spending. There is simply no way to significantly reduce deficits, let alone balance the budget, with a spending-cuts-only approach that somehow doesn’t deeply affect these core and broadly supported public services.

Policymakers who support lowering deficits should craft specific tax and budget policies to lower deficits, not rely on this reckless constitutional amendment. The latter approach is designed to deprive the budget of needed revenue in the long run while providing political cover in the short run to policymakers who enacted July’s deficit-busting megabill. That law features $4.5 trillion in tax cuts tilted to the wealthiest households, which it partially offset with deep and harmful cuts to health care and food assistance. Overall the megabill will increase deficits by $3.4 trillion over a decade.

Addressing long-term fiscal challenges responsibly and with public support requires policymakers to recognize several realities:

• tax cuts enacted over the last three decades have increased near- and long-term deficits markedly;
• an aging population means we will need to spend more to meet our obligations to seniors in Medicare, Medicaid, and Social Security; and
• people in the U.S. favor a broad range of critical public services; investments in our economy such as education and research; and supports for seniors, people with disabilities, veterans, and individuals and families who need help affording food, health care, and housing.

Given these realities, there is no path to improving our long-term fiscal sustainability without raising significant revenue.

Yet this constitutional amendment would erect a huge barrier to raising revenue by imposing a supermajority requirement, explicitly putting the burden of deficit reduction on cutting programs. No programs would be off limits. Not Social Security, not Medicare, not defense, not veterans’ health care. Claims that these programs would ultimately be protected ring hollow, given their share of the budget. If policymakers decide to shield those programs from cuts, the amendment would require lawmakers to devastate the rest of the federal budget — including Medicaid, food assistance, housing assistance, education, scientific and medical research, farm aid, national parks, transportation, airport security, mine safety — since revenue increases would be so hard to achieve.

In reality, it would be almost impossible to protect Social Security — which faces steep benefit cuts under current law once its trust fund reserves run dry in 2032 — if revenues are not part of the solution to restore the program’s solvency. The two-thirds requirement in both chambers to raise revenues, even those to protect Social Security, likely shuts the door on revenue increases, and thus elevates Social Security benefit cuts as a “solution” to keeping the trust funds fully solvent.

This amendment would also produce a one-way ratcheting down of revenue over time, which would lead to even larger cuts to programs. Any time a President and simple majorities of the House and Senate agree to cut taxes, it will limit federal spending in future years. If a future President and simple majorities of the House and Senate believe those spending cuts were too large, they would only be able to reverse them if they could obtain two-thirds majorities in the House and Senate. This highly ideological, one-sided “solution” to our fiscal challenges really means that increasingly large portions of the federal budget would be on the chopping block.

One of the most serious concerns about this balanced budget amendment is how it would exacerbate and prolong recessions. When the economy weakens, unemployment rises and so do expenditures for programs such as unemployment insurance (UI) — and to a lesser but significant degree, Medicaid and food assistance through SNAP. At the same time, revenue falls. These cost increases are temporary, as are the revenue shortfalls; they largely or entirely disappear as the economy recovers. But they are critical for helping a struggling economy because they automatically cushion the blow by keeping public, business, and family purchases of goods and services from falling more. They help the economy avoid falling into recessions and moderate the depth and length of recessions that do occur.

Yet this constitutional amendment would limit automatic, countercyclical increases in federal spending, while making it harder to enact temporary recession aid packages that increased spending if the federal government was already up against the spending limit. All of this would make future recessions more severe.

Proponents likely will respond to these admonitions by noting that a proposed amendment could allow a vote of a supermajority of the House and the Senate to waive the balanced budget requirements. But securing supermajority votes for any major legislation is far from automatic.

Moreover, some of the hard data on the state of the economy come with a lag of several months, and it could well take many months after the economy has begun to weaken before sufficient data are available to convince supermajorities of both houses of Congress that economic conditions warrant waiving the balanced budget requirement. As a result, by the time a recession is recognized and supermajority votes are secured in both chambers, extensive economic damage could have occurred. And hundreds of thousands, or even millions, of additional jobs would be unnecessarily lost.

Ultimately, meeting long-standing and broadly popular commitments to seniors’ retirement and health care, and managing the future risks associated with higher debt, will require substantially more revenue. This constitutional amendment moves in the opposite direction. Not only would it effectively bar tax increases, but it would allow unlimited tax cuts, thus forcing huge, unacceptable program cuts. It should be roundly rejected.