"Deficit Spending or Balanced Budget"
Before getting into this discussion, I want you to read the attached "News Flash" from the textbook author, Bradley Schiller, which takes a look at implications of our national debt. This article was written in 2009 and since then our national debt has doubled as it approaches $20 Trillion.
It's not difficult to advocate a balanced federal budget during a period of widespread prosperity. The question is whether advocates of a balanced budget are willing to adhere to this position when the economy goes into a recession or faces economic difficulties while deciding tax and spending issues. During a downturn in the business cycle, for example, tax revenues (which are directly related to economic activity) fall off putting a strain on the federal budget. Indeed, our government now must deal with such circumstances. Hurricane Katrina required billions of dollars in unplanned government expenditures. A balanced budget then would have necessitated either increasing taxes and/or cutting other government programs. And now, Congress has yet to create a budget for the 2014-2015 fiscal year, while the president's proposed budget would add another $1trillion to our national debt. In the news everyday regarding "the debt ceiling," Congress and President Obama are facing a deadline fast approaching to whether or not to increase the ceiling. What will happen if the Congress does not reach a proposal that would also need to be acceptable to the president? What would be the affect of a Constitutional Amendment requiring Congress to balance the budget given the state of today's economy?
What I would like the class to consider is the wisdom of a Constitutional Amendment to balance the federal budget. All states except for Vermont have such requirements written into their state constitutions. However, swings in expenditures on the part of states do not have the potential significance as swings in federal expenditures. Before taking your position, give careful consideration to my brief comments to Chapter 12 as well as the text reading. I have also included three web sites below for additional information. The Concord Coalition you are familiar with. The Cato Institute is a conservative think tank while the Brookings Institute is a liberal think tank. As always, I expect one main entry stating your position by Wednesday, September 21 as well as two additional responses by Sunday, September 25.
Concord Coalition at https://www.concordcoalition.org/ (Links to an external site.) (Links to an external site.)
Cato Institute at https://www.cato.org/ (Links to an external site.)
Brookings Institution at https://www.brook.edu/ (Links to an external site.) (Links to an external site.)