Originally posted by Kunsoo
There's nothing to debate on such an amendment. It's a half-brained idea which has been rejected by everyone who has even taken a survey macro-economics class.
Unfortunately, I think the debate is necessary because the proposal crops up every several years, and because it can take various forms. Is the budget to be balanced every year, or over a period that allows for business cycle fluctuation? Are surpluses allowed, and if they occur then what? Is any deficit allowed to accrue under any circumstances—are their exceptions for national emergencies, say?—and what happens then? Etc., etc. It seems disingenuous at best to insist on agreement to some undefined BBA now in order to prevent default, and we’ll debate the details later—and what happens when there is gridlock over the details? Oh, yes: we’ll be facing the debt ceiling again in a few months.
To those who just assume the benign impact of a BBA, what do you think are the implications of having a BBA in place under circumstances of rising demand-side inflation? Inflations of other causes? Severe deflation?
With that said, this essay by an American Enterprise Institute resident scholar is pretty good—and the AEI is not known as a liberal (or Keynesian) think tank.
http://www.aei.org/article/103883
EDIT: Here’s one by Bruce Bartlett, who had deep conservative credentials until he started to criticize George W., and realized that Keynes was not always wrong. It also outlines key provisions of a BBA proposal currently sitting in the House—
http://www.thefiscaltimes.com/Columns/2010/08/27/Balanced-Budget-Amendment-a-Bad-Approach.aspx#page1
Interesting that one of the things that Bartlett mentions is the possibility that a BBA could result in--a tax increase...unless, of course that is prohibited from the get-go. Which is apparently why most Republiclans rejected a version in the 1980s.