balanced budget amendment

Republicans may soon vote on something called the “balanced budget amendment,” which would deal a death blow to social safety nets.

On April 10th, the House will return from recess, and confidential sources have told the Politico Playbook that House Speaker Paul Ryan may hold a vote on a balanced budget amendment upon Republicans’ return to Washington. This is bad news for working-class seniors and families who depend on social safety nets like Social Security, Medicare, and Medicaid to make ends meet.

Essentially, a balanced budget amendment — introduced as H.J. Res. 1 in the current Congress — would require a balanced federal budget every year regardless of the state of the national economy, and that total government expenditures cannot exceed total government revenues. According to the National Committee to Protect Social Security and Medicare, H.J. Res. 1 would require a spending cap of just 18 percent of GDP, which the federal government hasn’t done since 1965.

While requiring a balanced budget may sound good for a business, the federal government would have to make massive cuts to Social Security, Medicare, and Medicaid in order to achieve the balanced budget amendment’s mandate. These cuts will be especially deep, given the $1.5 trillion tax cut Republicans passed last year (which overwhelmingly benefits corporations and the wealthy). The $700 billion military budget Trump already signed into law will also result in even less room in the budget for social safety net programs the poor depend on for survival.

Aside from cuts to social safety nets, the effect a balanced budget amendment would have on job growth is particularly devastating. In a recent study for the Center on Budget and Policy Priorities, scholar Richard Kogan brought up a 2011 report in which economic forecasting firm Macroeconomic Advisers found that, had Republicans’ last balanced budget attempt passed during the Obama administration, it would have doubled the unemployment rate, resulting in 15 million more layoffs and a 17 percent contraction in economic growth.

The group also pointed out the “maddeningly vague” shortcomings in the Republican proposal:

Which definition of the budget?  Is it the current deficit, the projected deficit, or even the structural deficit that is to be eliminated?  Is balance in the budget required year by year or on average over the business cycle?  What’s the enforcement mechanism? Would enforcement require spending cuts, tax increases, or some combination of both?  Are there any contingencies (war, natural disasters, recessions, etc) for which the commitment is temporarily set aside?

Passing a balanced budget amendment at the local and state level has been a longtime goal of billionaire right-wing donors Charles and David Koch. Coincidentally, the Koch Brothers are also benefactors of House Speaker Paul Ryan, donating $500,000 to Ryan’s fundraising committee after Ryan passed the $1.5 trillion tax cut package.

 

Logan Espinoza is a freelance contributor specializing in economic issues. He lives in Phoenix, Arizona with his wife and daughter. Contact him at logan DOT espinoza AT yahoo DOT com.

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