Portland, OR
The Balanced Budget Amendment to the U.S. constitution is bad for the American economy and bad for America's working families. It would slow the economy at the cost of millions of jobs and would mandate the federal government to conduct its taxing and spending policies in a fashion that prolongs and deepens every recession. It would cripple the ability of the federal government to respond to natural disasters and economic emergencies such as the Savings and Loan crisis. It would constrain investments in education and infrastructure that are critical to the nation's future. It would increase the risk of default on the national debt, thereby raising interest rates on the government debt and further burdening American taxpayers. It would needlessly endanger Social Security and threaten the well-being of the American people by requiring deep cuts in spending for workplace safety, consumer protection and the environment. It would also devastate state government finances, since the states depend on the federal government for 27 cents of every dollar they spend.
Beyond these serious economic problems, the Balanced Budget Amendment poses grave political problems. It would increase the power of the judiciary at the expense of elected leaders in Congress and the White House, slow economic policy-making to conform with the pace of the legal system, and put important tax and budget decisions in the hands of federal judges who lack budgetary expertise.
Supporters of the Amendment present misleading comparisons to family and state budgets. Far from balancing their budgets year-in and year-out, families frequently borrow to finance the purchase of a home or to send their children to college: when they do, it is often a wise economic choice. States only balance their "operating" budgets and not their "capital" budgets. This leaves them crucial flexibility to borrow to finance public investment. This flexibility would be denied the federal government by the Balanced Budget Amendment. Moreover, the federal government has unique responsibilities to counteract economic downturns and cope with regional natural disasters or economic emergencies.
For these reasons, the AFL-CIO strongly opposes the Balanced Budget Amendment and urges Congress to reject it once again.