The WSJ editorial board came out against the Balanced Budget Amendment (BBA) today, for several reasons, of which the following strikes me as most cogent:
Nor is it clear that the amendment could avoid unintended consequences. In the current fight over spending and the debt, the GOP Congressional leadership has worked well to protect the defense budget from a President who constantly cites the need to cut it. But under a mandated need to balance spending, the inevitable horse-trading would likely default to cutting defense while ducking fights on domestic programs. ...
Tea party Republicans, to their credit, want to pass a BBA that would include the supermajority tax limitation. But it has no chance of passing, and absent that rule, political pressure could turn the amendment into a driver for the entitlement state as successive Democratic governments raised taxes, most likely with a European-style value-added tax to balance spending commitments.
Norman Ornstein likewise recently opined against the BBA, but for far more left-leaning reasons:
A sagging economy requires what we call countercyclical policy, stimulus to counter a downturn and provide a boost. The need for countercyclical policy became apparent in the 1930s, after the opposite response to economic trouble caused a dizzying collapse; its application early in Franklin Roosevelt's presidency succeeded in pulling the United States out of the Depression (until a premature tightening in 1937-38 pulled us back down into it).
Countercyclical policy is what every industrialized country in the world employed when the credit shock hit in late 2008, to avoid a global disaster far more serious than the one we faced. Under a balanced-budget amendment, however, no countercyclical policy could emanate from Washington. Spending could not grow to combat the slump. And while the Obama stimulus did not jump-start a robust economic recovery, any objective analysis would find that absent the $800 billion stimulus, the economy would have spiraled down much further. ...
The Republican proposal would cap spending each year at 18 percent of gross domestic product. Because the formula is based on a previous year's economy, it would mean, according to Republican economist Don Marron, a cap of more like 16.7 percent of GDP. This in turn means that the House-passed budget proposed by Rep. Paul Ryan, which calls for draconian cuts in Social Security, Medicare, Medicaid and discretionary domestic programs, would not be nearly draconian enough. Accounting for population changes, the 16.7 percent limit would mean slashing Social Security and Medicare well below the levels contemplated by the bipartisan Simpson-Bowles fiscal commission, and cutting discretionary spending by half or more. It is hard to make the case that decapitating food inspection, air traffic control, scientific research, Head Start, childhood nutrition programs and more, as the amendment would almost certainly require, would lead to a healthier economy, itsef a necessity to solve the debt problem.
I'm a bit skeptical of the BBA myself, but what about a TABOR?
The Taxpayer Bill of Rights (abbreviated TABOR) is a concept advocated by conservative and free market libertarian groups, primarily in the United States, as a way of limiting the growth of government. It is not a charter of rights but a provision requiring that increases in overall tax revenue be tied to inflation and population increases unless larger increases are approved by referendum. ...
The basic reason for a TABOR is, as experience has taught, that politicians cannot be trusted:
If government always acted in the best interest of society, TABOR would never be needed. Therefore, the supposed need for TABOR is derived from a lack of trust of the representative democratic system. TABOR is kind of like the Bill of Rights in the U.S. Constitution: the Founding Fathers imposed restrictions on Congress (representatives of the people) from passing laws that restrict speech, establish religion, etc. If the Founding Fathers thought that Congress would always do what's in society's best interest, we wouldn't have needed a 1st Amendment that starts with the phrase "Congress shall make no law..." The Bill of Rights is inherently anti-democratic.
Maybe as a first-best solution (in a world of a purely benevolent government), the First Amendment isn't the best policy. But it's probably a second-best solution given that Congress isn't to be trusted when it comes to actively regulating speech, religion, etc.
And that's the ultimate question with TABOR. If government was purely benevolent, the first-best solution would be some optimal tax-spending mix. But if government is pre-disposed to get larger and larger (when left to its own devices) and be at a size that is far above optimal, a TABOR has the potential to improve societal well-being. It's likely not to lead to a perfect outcome, but it shouldn't be compared to what a perfect, purely benevolent government would do. It should be compared to what an imperfect government is actually doing (and likely to do in the future).
