There is once again a serious effort underway to amend the U.S. Constitution to require a balanced federal budget. Although Congress has considered federal balanced budget amendments in the past, such efforts always have failed to achieve the necessary support to be submitted to the states for ratification. However, this latest initiative would use the other method by which an amendment can be added to the U.S. Constitution: calling for a constitutional convention by state legislatures. Such an amendment to the U.S. Constitution, either originating from Congress itself or through a constitutional convention, would have a devastating impact on the economy and would affect the ability of government at all levels to meet the needs of the people. An amendment to require a balanced budget must be defeated.
To call for a constitutional convention, two-thirds of states, or 34 states, must express the desire to do so by submitting applications to Congress. Encouraged by radical right-wing advocates such as the American Legislative Exchange Council (ALEC), a number of states have submitted applications calling for such a convention with the specific purpose of ratifying a federal balanced budget amendment. In the last four years alone, eight states have adopted new resolutions, including Alabama (2011), Florida (2010, 2014), Georgia (2014), Louisiana (2014), Michigan (2014), New Hampshire (2012), Ohio (2013) and Tennessee (2014). And while there is a debate over how many states currently have “live” applications before Congress—by some counts, the number may be as high as 24—the momentum for a constitutional convention is putting pressure on Congress to schedule its own vote on a federal balanced budget amendment.
Many economists, including a number of Nobel Prize recipients, maintain that a balanced budget amendment is bad public policy. At best, it could be called a blunt instrument and a misguided answer to a complex issue. At worst, it is a politically motivated attack to undermine programs that millions of Americans rely upon. Either way, a balanced budget amendment is absolutely unnecessary to achieve responsible fiscal policy and, if adopted, would pose grave risks to the economy. It would make recessions deeper and longer and economic downturns even worse. To achieve budget balance, the amendment would require large spending cuts or tax increases no matter what state the economy was in, precisely the opposite of what would be needed to stabilize downturns and recessions. It inevitably would result in major cuts to education, health, homeland security, labor and transportation programs. Even popular tax deductions such as the mortgage interest deduction for homeowners could be in jeopardy should the budget fall out of balance. In fact, no program would be spared, not even Social Security, Medicare, Medicaid or other lifeline programs. The vast majority of any cuts and the elimination of popular policies would disproportionally affect middle- and working-class families who rely on many basic federal programs, especially when unemployed, retired or experiencing health problems.
Eliminating the federal government’s ability to borrow to fund needed investments in jobs and services also would limit the amount of federal funding for programs that affect state and local budgets. Highway construction and repair, education, job training and environmental protection all benefit from significant and reliable federal funding. Any unexpected shortfalls or cuts would severely impact states and local communities, putting pressure on them to cut vital services or raise their own taxes.
Finally, should Congress be unable to bring the budget into balance, ultimately the courts might have to intervene, leaving important budget-making decisions to unelected judges who might lack fiscal expertise and eliminating one of the most sacred aspects of our democracy: the principle that fiscal decisions and priority setting should be entrusted to those who are elected and who ultimately must stand before their constituents.
The AFL-CIO strongly opposes any effort to amend the U.S. Constitution by requiring a balanced federal budget and will oppose any efforts by Congress or the states, including a call for a constitutional convention, to achieve such a purpose.