The amendment is their old ideological card, The Balanced Budget Amendment. The title makes it sound so sweet and simple, that the objective is to make the government balance their books every fiscal year. Problem is in the details.
The current form, aka Cut Cap And Balance Act, requires that there be an amendment that spells out requirement of a balanced budget; imposes a spending cap of 18 percent percentage of Gross Domestic Product; and requires a two-thirds majority vote in both houses of Congress to pass any tax hike.
The first part requiring the balanced budget seems simple but it's not. One of the rules of government spending that was set centuries ago by Alexander Hamilton himself was that government needed to run on a certain level of debt that can be structured to force government to function towards collecting revenue and paying off portions of debt. As long as the government operated with full faith and credit (that at some level it can pay off debts as needed), the system should work. And the deal is, for roughly 200 years that system did work. The problem came when the anti-tax proponents got in charge and started cutting off regular methods of revenue-gathering (i.e., taxes), forcing the government to borrow more than it had ever done before. Under these anti-taxers, who promised that cutting taxes would magically generate more revenue because lesser taxation would create more income (it didn't by the by. It just generated more income that was taxed less if at all), the national debt and massive annual deficits got worse. But the problem still exists: without other revenue, the government is going to have to borrow and operate with unbalanced budgets. Suddenly forcing the government to balance the books is going to create more havoc and chaos than ever before, and force future generations to pay for the damage done by this generation that would pass this amendment and then run for cover.
The second part of the amendment idea is even worse: it places a specific cap number percentage on how much government can work with. GDP is Gross Domestic Product, the market value of all final goods and services produced by a nation... basically how much that nation is worth. The United States is roughly $14.7 TRILLION as of 2010. This amendment would cap government spending to 18 percent of that, which is... (breaks out calculator) ...I get $2.6 Trillion based on the 2010 numbers. Now, the U.S. budget spending for 2010 was... $3.5 Trillion. You get about $900 Billion you gotta shave off the 2010 numbers. That's not something you can sneeze at in one year's budget. And that's the problem you get with a specific cap number like 18 percent. That gets to be a harsh cap, especially when it depends on an outside value (GDP) that doesn't remain constant, and in times of recession does not constantly go up in value.
The third part is the most unfair: it forces a supermajority to vote for any tax increase. Ever. We're talking about government voting habits now. When you make something next to impossible to vote for, you essentially make it meaningless to even try for it. The opposite has its own problem. The amendment does not to make it harder to vote for tax cuts, meaning that in a system where Path Of Least Resistance is the norm you're making it more likely that elected officials will vote for tax cuts more than anything else. This part of the amendment makes it next to impossible for government to create ANY kind of revenue system to keep its coffers even half-full. Considering that government pays for, oh, our national defense, our parks, our national highway and rail and airway networks that businesses use to ship goods and perform services, our farm subsidies, a ton of corporate tax credits and subsidies, money that goes to the STATES to pay for such things as schools, clean water and air, state roads and bridges, and a few other things... well, this is going to force the federal government to borrow even more debt to pay the bills.
Lemme link to Ezra Klein on this one (snippage for space, go read the whole thing):
One more caveat: the Republicans who push this balanced budget proposal never really seem to push for it very hard when their party has control of the White House. And when they've also got Congress under their belt, they spend like drunken teenagers with their parents' credit cards. But when there's a Democrat like Clinton or Obama running the executive branch, all of a sudden a BALANCED BUDGET IS A DAMN NECESSITY.
This isn’t just a Balanced Budget Amendment. It also includes a provision saying that tax increases would require a two-thirds majority in both houses of Congress — so, it includes a provision making it harder to balance the budget — and another saying that total spending couldn’t exceed 18 percent of GDP. No allowances are made for recessions, though allowances are made for wars. Not a single year of the Bush administration would qualify as constitutional under this amendment. Nor would a single year of the Reagan administration. The Clinton administration would’ve had exactly two years in which it wasn’t in violation.
Read that again: Every single Senate Republican has endorsed a constitutional amendment that would’ve made Ronald Reagan’s fiscal policy unconstitutional. That’s how far to the right the modern GOP has swung. But the problem isn’t simply that the proposed amendment is extreme. It’s also unworkable. ...This amendment includes no provisions for recessions, meaning that when the economy contracted, the government would have to contract as well. That is to say, we’re still not out of one of the deepest recessions in American history, and every Senate Republican has co-sponsored a constitutional amendment to make future recessions worse. It’s just breathtaking. A world in which this amendment is added to the Constitution is a world in which America effectively becomes California. It’s a world where the procedural impediments to passing budgets and raising revenues are so immense that effective fiscal management is essentially impossible; it’s a world where we can’t make public investments or sustain the safety net; it’s a world where recessions are much worse than they currently are and the government has to do more of its work off-budget through regulation and gimmickry. I would like to say something positive about this proposal, say there’s some silver lining here. But there isn’t. This is economic demagoguery, and nothing more. It’s so unrealistic that it would’ve ruled all but two of the last 30 years unconstitutional, which means it’s so unrealistic that there has not yet been a Republican president who has proven it can be done.
The Balanced Budget Amendment does nothing but force the federal government to either borrow like mad or drown itself in Grover Norquist's bathtub. Either way, the nation is screwed.
There are better amendment ideas out there. This one is a disaster.
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