Abstract
Today, the debate about public indebtedness has reached a fervor not often seen among professional economists and the general public. This has renewed considerations of requiring Congress to balance its budget, through either a Constitutional amendment or some other legislative or statutory means. But what effect would such a requirement have on the actual practice of federal spending? Conventional approaches to answering this question are typically empirical in nature, perhaps looking at the budgets of individual states and the patterns of spending before and after balanced budget requirements were put into practice. This paper takes a different tack, instead exploring the process by which figures of federal revenues and expenditures are constructed and what effect requiring these constructed figures to be equal would have on actual underlying fiscal realities.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsNotes
- 1.
Wagner (2012) points to “clubs, churches, and other groups” which are able to balance their budgets despite their group-decision-making nature, at least over a sufficiently long period of time.
- 2.
Thus, this contracting-out method can appear advantageous even if it ultimately costs significantly more than Congress simply building/buying the building themselves.
- 3.
To be sure, sunsets are not always used to play budgetary games. The Byrd Rule, among other things, makes it necessary to sunset certain bills in the event that a 60 vote majority in the Senate cannot be achieved.
- 4.
Schick (2007), especially Chapters 4 and 6, provides a much more thorough investigation.
References
Bennet, J., & DiLorenzo, T. (1982). Off-Budget Activities of Local Governments: The Bane of the Tax Revolt. Public Choice, 39, 333–342.
Block, C. (2008). Budget Gimmicks. In E. Garrett, E. Graddy, & H. E. Jackson (Eds.), Fiscal Challenges: An Interdisciplinary Approach to Budget Policy. Cambridge, MA: Cambridge University Press.
Bowler, S., & Donovan, T. (2004). Evolution in State Governance Structures: Unintended Consequences of State Tax and Expenditure Limitations. Political Research Quarterly, 59, 189–196.
Buchanan, J., & Tullock, G. (1962). The Calculus of Consent: Logical Foundations of Constitutional Democracy. Vol. 6 of The Collected Works of James M. Buchanan. Indianapolis, IN: Liberty Fund.
Buchanan, J., & Wagner, R. (1977). Democracy in Deficit: The Political Legacy of Lord Keynes. Vol. 8 of The Collected Works of James M. Buchanan. Indianapolis, IN: Liberty Fund.
Graetz, M. (1995). Paint by Numbers Tax Lawmaking. Columbia Law Review, 95, 609–613.
Hebert, D. (forthcoming, a). The Spontaneous Order of Politics. The Quarterly Journal of Austrian Economics.
Hebert, D. (forthcoming, b). Politics as a Polycentric Order in Practice: The U.S. Federal Budget System. Journal of Public Finance and Public Choice.
Hebert, D., & Wagner, R. (2013). Taxation as a Quasi-Market Process: Explanation, Exhortation, and the Choice of Analytical Windows. Journal of Public Finance and Public Choice, 31, 163–177.
Mullins, D. (2004). Tax and Expenditure Limitations and the Fiscal Response of Local Government: Asymmetric Intra-local Fiscal Challenges. Public Budgeting and Finance, 24, 111–147.
Podemska-Mikluch, M., & Wagner, R. (2013). Dyads, Triads, and the Theory of Exchange: Between Liberty and Coercion. Review of Austrian Economics, 26, 171–182.
Salsman, R. (2017). The Political Economy of Public Debt: Three Centuries of Theory and Evidence. Cheltenham: Edward Elgar.
Schick, A. (2007). The Federal Budget: Politics, Policy, Process. Washington, DC: The Brookings Institution Press.
Tullock, G. (2005). The Economics of Politics. Vol. 4 of The Selected Works of Gordon Tullock. Indianapolis, IN: Liberty Fund.
Wagner, R. (2012). Deficits, Debt and Democracy: Wrestling with the Tragedy of the Fiscal Commons. Northampton, MA: Edward Elgar.
Wagner, R. (2016). Politics as a Peculiar Business: Insights from a Theory of Entangled Political Economy. Northampton, MA: Edward Elgar.
Wagner, R. (2017). James M. Buchanan and Liberal Political Economy: A Rational Reconstruction. Lanham, MD: Lexington Books.
Acknowledgements
The author wishes to thank participants at the 2018 Public Choice Society meetings for helpful feedback and discussion. All remaining errors are my own.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2018 The Author(s)
About this chapter
Cite this chapter
Hebert, D.J. (2018). The Irrelevance of Balanced Budget Amendments. In: Wagner, R. (eds) James M. Buchanan. Remaking Economics: Eminent Post-War Economists. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-03080-3_9
Download citation
DOI: https://doi.org/10.1007/978-3-030-03080-3_9
Published:
Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-030-03079-7
Online ISBN: 978-3-030-03080-3
eBook Packages: Economics and FinanceEconomics and Finance (R0)