GOP Calls for Balanced Budget Amendment as Debt Limit Debate Looms
As the United States approaches its statutory debt limit of $31.38 trillion on Thursday, Republicans in Congress are preparing for a potential clash over raising the debt limit and implementing spending caps. Some members of the GOP are calling for a balanced budget amendment to the U.S. Constitution as a solution to the country's fiscal challenges.
Treasury Secretary Janet Yellen is expected to begin using "extraordinary measures" involving cash on hand to prevent a default on the debt. This will give lawmakers until at least early June to raise or suspend the debt limit. This looming deadline is setting the stage for a contentious debate in Congress, particularly in the GOP-controlled House.
Rep. Jay Obernolte, R-Calif., has introduced the Obernolte Balanced Budget Amendment, which would require the federal government to balance the budget in the fifth fiscal year after the constitutional amendment is ratified by the requisite 38 states. It would task Congress with enforcing the requirement, and spending could only exceed tax revenue in a given year if two-thirds majorities in the House and Senate vote to allow a specific amount of excess spending.
Additionally, other Republicans have introduced their own balanced budget proposals, such as Reps. Brian Fitzpatrick, R-Pa.; Zachary Nunn, R-Iowa; Derrick Van Orden, R-Wis.; and Scott Perry, R-Pa. Each proposal allows Congress to waive the requirement with either three-fifths or two-thirds votes of both chambers to account for war, disasters, and other national emergencies, though there are some differences in the details of each proposal.
Critics of balanced budget amendment proposals argue that requiring spending levels to be balanced with revenues could lead to harmful results during recessions. Downturns typically cause spending on safety net programs like unemployment insurance to rise, and policymakers often warn against raising taxes in a recession because it would further dampen economic activity. But a balanced budget amendment could force the federal government to take those steps to avoid running a deficit.
Furthermore, concerns have also been raised about the impact of a balanced budget amendment on programs like Medicare and Social Security if they aren't exempted from its requirements. This could result in continued deficit spending given that they're two of the most expensive items in the federal budget and their cost is expected to continue to rise in future years as America's population ages.
An analysis by the nonpartisan Committee for a Responsible Federal Budget (CRFB) found that balancing the budget over the course of a decade would require a 26% cut to all federal spending. Furthermore, the CRFB found that figure would rise to about 85% if lawmakers chose to avoid politically challenging cuts to spending on defense, veterans, Medicare, and Social Security.
In conclusion, the debate over raising the debt limit and implementing spending caps is shaping up to be a contentious one, with Republicans calling for a balanced budget amendment to the U.S. Constitution as a solution. While supporters argue that it would help to stabilize the economy and reduce wasteful spending, critics have raised concerns about the potential negative consequences during recessions and the impact on important programs like Medicare and Social Security.