Policy Documents

Solving the Federal Spending Crisis With a Balanced Budget Amendment

Daniel Mitchell and John Olin –
June 4, 1992

Congress soon will vote on an amendment to the Constitution requiring that the federal government balance its budget each year. Unlike previous efforts to enact such an amendment, which failed to gain approval in Congress, supporters true confident that they have the two-thirds majority support needed in each chamber to send an amendment to the states for ratification.

Opinion polls over the past decade have found that the overwhelming majority of Americans favor a balanced budget amendment as a means of controlling the size of the federal government. Yet this goal will not necessarily be achieved unless the amendment explicitly restricts government spending. If the amendment only requires a balanced budget, lawmakers could evade tough decisions on spending priorities by raising taxes. Firm language either limiting taxes or capping total spending thus is needed to guarantee that a balanced budget requirement does not degenerate into an annual excuse to raise taxes.

A balanced budget amendment will improve America’s economic performance only if the amendment results in smaller government. A well-crafted balanced budget amendment, one that farces lawmakers to restrain the growth of federal spending, will reduce the amount of the economy’s output taken by government. By leaving more resources in the productive, private sector of the economy, a properly written balanced budget amendment will stimulate job creation and raise living standards for Americans.