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Government and Politics

Economists: A balanced budget amendment is better politics than economics
Many economists raise concerns about the future impact of the balanced budget amendment

Karen Kasler
Richard Vedder, professor of economics at Ohio University, thinks the balanced budget amendment resolution is justifiable on economic grounds as well as political.
Courtesy of Mackinac Center
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State officials yesterday celebrated the signing of a resolution directed at their colleagues in Washington. Statehouse correspondent Karen Kasler reports in the debate over a balanced budget amendment, it’s hard to separate the economics from the politics.

LISTEN: Debate over a balanced budget amendment involves economics and politics.

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Ohio is the 20th state to approve a balanced budget amendment resolution, which demands Congress pass such a requirement or allow the states to call a Constitutional convention. Those who back a balanced budget amendment – most notably Gov. John Kasich – say it’s the only way to stop out of control federal spending. Those who oppose it say balanced budgets can be done if they are a priority for lawmakers and without putting strict spending caps into the US Constitution. Conservative economist Richard Vedder at Ohio University in Athens notes that this issue has been brought up mostly by those on his side of the aisle. 

“I’m sure there are some who take positions on this issue based on some political consideration. But I think it’s a move that’s justifiable on economic grounds as well.”

But many economists raise concerns about the future impact of the balanced budget amendment. And many liberal thinkers and politicians do as well. Dale Butland speaks for the progressive think tank Innovation Ohio, and testified against the balanced budget amendment resolution. He says this amendment is clearly a political move by Republicans. 

“It’s clear that politicians want to grandstand, they want to play to the cheap seats, to try to convince people that they’re doing something about a problem when in fact this would just be giving the illusion they’re doing something about the problem.” 

On this, conservative researcher Matt Mayer agrees. He’s been talking with Tea Party groups who are angry with Kasich’s Medicaid expansion, which some have speculated would be endangered by a balanced budget amendment. 

“I don’t think it’s coincidental that Gov. Kasich has wrapped his arms around that at the same time that he is hemorrhaging among conservatives for his endorsement of Medicaid expansion under Obamacare. So, yeah, there’s obviously a political element, but you know what? I’ll take his move toward the balanced budget amendment no matter what the reason for it.”

Central Ohio economist James Newton runs the consulting firm Economic Perspectives. He opposes a balanced budget amendment, and says it’s nothing more than political cover for politicians trying to make some voters happy. 

“It probably seems like a great time to get Tea Party types in particular rallying around this issue, but there comes a point where you just kind of have to let go of these things and realize there needs to be some sanity here.”

The resolution overwhelmingly passed at the Statehouse, with eight House Democrats joining 55 Republicans voting for it. The three Republicans who voted against it are very conservative, and one raised fears about what he called a “runaway convention” where major changes could be made in the Constitution.

In the Senate, the only four negative votes all came from Democrats, while the other six Democrats voted with the Republicans. Gov. Kasich said after the resolution was signed that this is a bipartisan issue, and that he’s optimistic it will get through the 34 needed states, but that he’ll be reaching out to the governors of states that haven’t passed it.
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