Jared Bernstein and James Horney Discuss the Perils of a Constitutional Balanced Budget Amendment
A constitutional balanced budget amendment “is a really bad idea,” Jim Horney says in this video. “[I]n the long run, under current policies, we’re facing deficits that are way too large. We should get them down. . . . But we don’t have to balance [the budget]. What we have to do is bring deficits down to a level, somewhere below 3 percent of GDP, that would keep our debt from rising constantly as a share of the economy. That’s the danger.”
He and Jared Bernstein explain that policymakers can reduce deficits without enacting a balanced budget amendment, which could seriously harm the economy — by, for instance, making recessions longer and deeper.