The year was 1979. A policeman, construction worker, cowboy and Indian chief, who for all we knew were definitely straight, were making it fun to stay at the YMCA. Pink Floyd gave us “The Wall,” and a young Orrin Hatch introduced his first balanced budget amendment.
Four decades later, the Village People, it turns out, were totally gay, Hatch has finally retired, and now talk of “The Wall" more than likely refers to the border with Mexico.
The push to amend the Constitution to balance the budget, however, is timeless.
Hatch proposed and re-proposed balanced budget amendments year after year during his long Senate tenure. Sen. Mike Lee has put forward his own balanced budget amendment … and got nowhere.
Now, Rep. Ben McAdams, a Democrat no less, has joined with moderate members of his caucus to introduce a balanced budget amendment, too.
"With this bill, I'm saying let's stop ignoring the issue and start talking about how to address it,” McAdams, D-Utah, said.
Fortunately, talk is cheap, so it won’t add to the deficit.
A balanced budget amendment certainly sounds like a good idea, at least on the surface. The Utah Legislature and many other states have constitutional requirements that they balance their budgets. But what happens the next time the bottom falls out of the economy, like it did in 2008?
“During a recession, tax revenue plummets and that causes you to run a deficit,” said Phillip Garner, an economics professor at Dixie State University. “If the government has to respond to that, they have to raise taxes or cut spending during a recession, which is the opposite of the normal economic prescription.”
Essentially in a financial crisis, it helps if the government spends MORE or taxes less to stimulate the economy. Being forced to cut back as the economy shrinks doesn’t just hamper Congress’ ability to respond to the next financial catastrophe, it could make it much worse.
If Congress ever really wanted to balance the budget, it has all the tools it needs. Lawmakers simply have to do it, and it would be a lot simpler than amending the Constitution. For most of our history, that was the norm, except during major recessions or wartime. Indeed, there was a budget surplus from 1998 to 2001.
But politics always get in the way. Democrats won’t consider anything that touches Medicare or Medicaid, and Republicans want their tax cuts and defense spending. So nothing changes, or if it does change, it changes for the worse.
Thanks to the Trump tax cuts, the deficit for the month of February was an all-time high, despite brisk economic growth. On Wednesday, the Treasury Department announced the projected deficit for the current year will likely exceed $1.1 trillion, the largest since we came out of the recession.
For perspective, back when young Sen. Hatch proposed his first balanced budget amendment 40 years ago, the entire debt — all the deficits since the country became a country — totaled $820 billion. Now we are at $24 trillion, and heading higher.
As bad as it sounds, the situation is not dire, at least not yet, according to Garner. The deficits in recent years have been running between 3 and 4 percent of the gross domestic product, which is manageable in the near term.
“The real problem as far as creating a potential crisis will be in the coming decades when those budget deficits will get much much worse because of the aging of the population,” he said.
Thirty years out, forecasts see the deficits growing to 9% of the GDP — a level that becomes a real problem. Like any economic problem, dealing with it before it becomes a crisis is a lot less painful.
So Lee, McAdams and the rest of Congress, of course, will spring into action, demonstrate real leadership and start to address the problem.
Yeah, right. Congress can barely manage to keep the lights on.
“In the near term, I see pretty much zero possibility of [a balanced budget amendment] happening,” Garner said. “It’s too painful politically to go out there, right before an election, and say we’re going to cause everyone a bunch of pain by raising your taxes a lot or cutting your favorite programs you rely on.”
What we’re left with, then, is theatrics in the form of balanced budget amendments. That way at least our politicians can take a popular — if pointless — stand. They can look like they’re doing something, even if they’re not. They’ll get re-elected and the red ink will keep flowing and the next generation can deal with the consequences.