Our Views: An old idea that won’t work
Perhaps, having watched the budget machinations of governors for years, we’re a bit jaded. But experience of Louisiana’s constitutional requirement of a balanced budget makes us wary of a similar national requirement.
Some in the GOP leadership are resurrecting the idea of a balanced budget amendment to the U.S. Constitution. It was pushed by President Ronald Reagan among others, but never passed.
Why not? Part of it is that the devil is in the details.
A reported requirement of limiting government spending to 18 percent of the national output is outwardly attractive, but budget analysts of left and right argue that’s not enough to pay for the health-care costs of America’s aging population.
To make the balanced budget amendment work, then, would be to write it so that the 18 percent is not the real number. The historical average is about 20 percent to 21 percent, and you could get close to that number — as pointed out by analysts at the American Enterprise Institute — by making debt payments not part of the amendment.
This smacks to us of just the sort of “adjustment” that will flourish in the myriad ways that politicians have in the State Capitol to avoid the balanced budget requirements of the Louisiana Constitution.
The problem has been particularly acute in the past five years of the administration of Gov. Bobby Jindal.
The budgets have been propped up by declaring federal stimulus grants as “recurring” revenues.
The various dedicated funds have been “swept” every year to provide cash to use to match federal health-care payments for the poor.
Payments for sales of state assets are mixed in with tax revenues on the books.
On and on the expedients have been invented, or borrowed from earlier administrations but applied with more gusto.
Not surprisingly, Jindal is a backer of the balanced budget amendment: It’s easy to get around.
Naturally, federal and state operations and obligations — particularly the latter, in the case of Social Security and Medicare — are vastly different things. The state has some obligations that go up in hard times. In just one example, the state payments to local schools tend to go up because more students show up, private-school tuition being more difficult for families to make.
The larger federal obligations that are a consequence of hard times offer a significant reason not to adopt a balanced budget amendment.
“A cap on spending, especially one at 18 percent, also means recessions will be turning into depressions,” argues conservative commentator David Frum. “The automatic stabilizers that have induced such deep deficits since 2008, especially unemployment insurance, would be capped under such a plan. Without that spending to prop up demand, expect the boom and bust cycle to get worse.”
Again, perhaps those kinds of payments could be exempted from a balanced budget amendment. But, as in state government, once you start exempting things, where does the exempting stop? So the definitions of “recurring revenue” suddenly become as flexible on Capitol Hill as they are in Baton Rouge?
So count us as skeptical on the balanced budget amendment idea.