CHN: House Rejects Balanced Budget Amendment
On November 18 the House failed to garner the two-thirds majority (290 votes) needed to pass H. J. Res. 2, a constitutional amendment to balance the federal budget (BBA). The vote was 261-165. All Republicans except 4 voted for the resolution and all but 25 Democrats voted against the bill. This version of a BBA would prohibit outlays (excluding payment on the national debt) from exceeding total revenues for the fiscal year unless three-fifths of members in each chamber authorized an excess of outlays over receipts. A three-fifths vote in each chamber would also be required to increase the national debt. H.J. Res. 2 directs the President to submit a balanced budget annually, and would allow these provisions to be waived in times when war has been declared. In 1995 when the House last passed a BBA (300-132) the Senate fell one vote short of passage. The level of partisanship today and the difficulty this summer in passing an increase in the debt limit even with a simple majority led some House Democrats who voted for a BBA 16 years ago to oppose it now.
The concept of balancing the federal budget has broad appeal among constituents. However polls indicate that when they understand the deep level of cuts that would be required to balance the budget support drops significantly. According to a recent analysis by Macroeconomic Advisors, a preeminent economic forecasting firm, if the BBA were in place for FY 2012, one-year cuts of about $1.5 trillion would have been required. Such deep cuts would result in a loss of 15 million jobs, doubling the unemployment rate from 9 to 18 percent.
While the White House does not have veto power over a constitutional BBA it did issue a Statement of Administration Policy strongly opposing H.J. Res. 2. One reason it cited for its opposition is the risk a BBA imposes of accelerating economic downturns by requiring the government to cut spending and raise taxes when the economy is contracting, leading to the even greater job losses.
The Budget Control Act (PL 112-25) passed in August requires both chambers to vote on a BBA this year but does not impose a penalty for failing to pass it. The Senate will vote on a BBA in December but leaders have not yet decided which version(s) will be on the floor.