The United States currently faces a federal budget deficit of over $524 billion, and the national debt is rapidly approaching $20 trillion. This situation is unsustainable.
Congress should consider the following remedial measures: (a) tax reform to increase taxes on the wealthy few in the top one percent, while maintaining or lowering rates for the middle class; (b) measures to guard against another meltdown, including enforcing instead of diluting protections of the Dodd-Frank Wall Street Reform and Consumer Protection Act and its “Volker Rule” and reinstating the Glass-Steagall Act division between commercial and investment banking; (c) elimination of unwarranted subsidies to the fossil fuel and other industries and their replacement with incentives to develop alternative energy sources; and (d) reform of the federal budget process to avoid careening from one artificial crisis to another, making irresponsible threats to default on the debt, imposing government shutdowns and threatening to shove the country off manufactured “fiscal cliffs.”
Nevertheless, despite the need to rein in and balance the federal budget, a Balanced Budget Amendment would be dangerous. It could deprive federal policymakers of essential flexibility to address national security and economic emergencies; revise the Constitution in a way that could give dangerous power to Congressional minorities and even extremist fringes; and potentially make recessions and downturns deeper and longer.
Moreover, in bad economic downturns, the most effective way to stimulate the economy and to generate jobs and growth is for the federal government to spend more, not less. Also, with a mandated balanced federal budget, when federal assistance is most needed, no program would be spared — not even Social Security, Medicare or Medicaid. The vast majority of cuts would disproportionally affect middle- and working-class families who rely on basic federal programs, especially when retired, unemployed, or suffering from health problems or disabilities. Eliminating the power of the federal government to borrow money could also have collateral consequences for state and local governments, depriving them of essential funds for investments in jobs and services.