The Balanced Budget Amendment is a proposed amendment to the United States Constitution which would require a balance in the projected revenues and expenditures of the United States Government. Most such proposals contain a supermajority exception allowed for times of war or national emergency.
Unlike the constitutions of most states, the United States Constitution does not actually require the United States Congress to pass a "balanced" budget, one in which the projected income to the government through taxes, fees, fines, and other revenues equals the amount proposed to be spent. This has led to "deficit spending" and the creation of a national debt. Except for a short period during the presidency of Andrew Jackson, since its inception the United States Government has always been in debt.
The practice of deficit spending has many critics. Briefly, their argument against this practice is usually twofold – the first point being that debt requires large portions of governmental revenues going not to any program or need but merely to pay interest to investors and the second being that the U.S. Government's ability to incur essentially limitless debt leads invariably to the expansion of government into areas which they believe the Founders never intended it to enter, such as the realm of social policy. They also note that many taxpayers themselves live off of what their income is, or even considerably less, and that government should do likewise. Even those taxpayers who incur debt, they note, are limited by considerations of creditworthiness and repayment, which hardly affect the U.S. Government because the results of its going into default are essentially regarded to be unthinkable, and it is therefore considered an event that will not happen, because it would be politically impossible to permit it. The supporters of a "balanced budget amendment" are often conservatives or libertarians whose major motivation is to reduce the size and role of government, or at least limit its growth.
Supporters of the current system state that the federal government, unlike state governments, needs the ability to control the size of the money supply. Followers of Keynesian economics believe that the government should deliberately engage in deficit spending during times of recession as a method of economic stimulation. They also state that the federal government, unlike the states, has the sole power and authority to wage war, and must defend the country even if this means going further into debt, and perhaps under circumstances which could not be contemplated by any supermajority bypass provisions which are in most "BBA" proposals. Many also state that as a percentage of gross national product both the current levels of deficit spending and overall national debt are acceptable, and even could be considered low in historic terms. At one time, those largely unworried by deficits also said that the deficit was largely irrelevant because it was "the debt we owe ourselves," meaning that it was largely owed to U.S.-based investors. Recent studies have shown that this is increasingly not the case; many holders of U.S. bonds are Japanese, European, and even Chinese.
As a political issue, the deficit, national debt, and the proposed Balanced Budget Amendment have ebbed and flowed in levels of discussion and the proposed amendment has varied greatly in level of support. The modern discussion of the issue seems to have been started by the Republican Party in response to the "guns and butter" policies of President Lyndon B. Johnson, who simultaneously announced his desires for "Great Society" social programs while prosecuting the Vietnam War. Johnson also pushed for Congressional enactment of a surtax as well as other tax increases which allowed him to leave office in 1969 with a balanced budget (plus a small surplus) on the books. This was the last time the United States would see a balanced budget for nearly three decades.
Deficit spending resumed under Richard M. Nixon, who had become President by the time that the 1969 surplus was known. Nixon's advisors chose to fight inflation rather than to maintain a balanced budget. Nixon was famously quoted as saying, "We are all Keynesians now" with regard to the budget deficit that his administration began to accumulate during years of mild recession. (He also imposed the first peacetime wage and price controls, mandatory petroleum allotments, and many other features of a command economy). With the distractions of Watergate and the budget deficit relatively small, however, most criticisms were sidelined until the administration of Jimmy Carter. During Carter's presidency, the term "stagflation" enjoyed widespread use as the economy stagnated even among increased inflation rates. This economic situation had been previously unheard of in the United States where increasing prices and wages had generally been seen during times of economic growth. Republicans began to make much mention of "Democratic deficits" and proposed the Balanced Budget Amendment as a cure. This was politically costless for them as long as they controlled neither house of Congress nor the Presidency, as they knew that it would not be enacted.
However, when the 1980 U.S. Presidential election gave Republicans both a new President in the person of Ronald Reagan and control of the United States Senate, passage of the amendment started to seem more possible (even though passage of a constitutional amendment requires a two-thirds majority in both houses of Congress). Deficit spending soared under a composite of Republican-promised tax cuts and Democratic-favored new programs. A program agreed to by Administration and Congressional leaders which was supposed to entail two dollars of spending cuts for every dollar of tax increases was an abysmal failure, and deficits soared further. It became apparent that Congress had no intention of passing the Balanced Budget Amendment.
The amendment's backers, far from despairing, said that it was needed more than ever. They began a plan to make an "end run" around Congress, for the U.S. Constitution also allows two-thirds of state legislatures to petition for a new constitutional convention to be called for the purpose of writing proposed amendments to the Constitution, a procedure which has never happened at the federal level since the original constitutional convention of 1787. Many people were appalled at the concept; some constitutional scholars suggested that such a body could not be limited to its obstensible purpose and could largely rewrite the Constitution, perhaps removing or reducing the Bill of Rights, a fear that backers described as being totally groundless, since any proposed changes would still have to be approved by the states, which would presumably doom any attempt to end basic constitutional freedoms. Detractors also noted that there was no mechanism in place by which to select delegates to any such convention, meaning that the states might chose to select them in a way which tended to subvert democracy. Backers also produced their own constitutional scholars stating that limiting such a convention was perfectly constitutional, that it could be limited to whatever purpose the states had called it for, and that states would be free to select the delegates to represent them, as was the case in 1787.
