Policy Documents

Why a Tax Limitation/Balanced Budget Amendment is Needed to Control Spending

Daniel Mitchell –

After nearly 30 consecutive years of deficit spending, Congress soon will vote on whether to add a balanced budget amendment to the Constitution. Should an amendment be approved by Congress and ratified by the states, the fiscal policy changes could be enormous. The objective of imposing such discipline is to balance the budget by reducing the size of government. A strong provision to limit taxes -- such as a two-thirds supermajority requirement to raise taxes -- would help ensure that politicians could not evade the amendment's intent by simply replacing debt-financed spending with tax-financed spending.

For much of America's history, government debt was kept under control. On those rare occasions on which budget deficits did occur, almost invariably because of war or economic downturn, lawmakers would approve budget surpluses in subsequent years. Unfortunately, beginning in the 1930s and culminating in the 1970s, this strong sense of fiscal responsibility was replaced by the view that deficit spending was good for the economy.

Armed with the rationale that more government would help the economy, politicians therefore were free to indulge in special-interest spending on an unprecedented scale. The fiscal policy consequences, not surprisingly, have been unpleasant.