A poorly thought out plan

Brought to you, of course, by the Tea Party.  A balanced budget amendment to the Constitution.  Perhaps it reads well; maybe it even sounds good rolling off the tongue, but have you thought about it?

Balanced budget, each year the government spends no more than it takes in - sounds phenomenal! In fact, ideally, that's what our fiscal books would look like year in and year out.  So what's the problem?

The problem is that things never work out ideally.  Say, for example, that the United States of America must go to war.  What would we do?  We would be bound by the Constitution to spend no more than we take in, so we could cut all other government spending or send the troops off to battle with pikes and Civil War muskets.

What about a recession, when the government should be engaged in deficit spending to dig the economy out of a hole (what about right now Tea Party!)?  What would we do then?  Would we allow the economy to stagnate because we can't spend more than we take in...wait a minute...

Conversely, what if we had a surplus?  Would that be a problem?  We can't spend more than we take in but can we take in more than we spend?  Would we be bound to spend the extra cash? After all, surpluses year after year after year can lead to deflation and economic stagnation.  That's no good.

We would be wise to remember that just a decade ago, before W., America was running a surplus, taking in more money annually than we spent.  Some poor decisions and an unplanned on economic crisis turned those annual surpluses into deficits, but there is a time for deficits.  Deficit spending is not bad if it is needed.  Is 14 trillion bucks in debt a problem?  Well yes, but spending when the economy is slumping is textbook economics.  Furthermore, massive savings may be good for you and I, but not for Uncle Sam.  Uncle Sam should use his surplus money to pay off his debts, but once we've reached that point, we don't want him building up an account.  That's bad for the economy too.

A balanced budget is good - in an ideal world, we would balance the budget every year, but of course in an ideal world we wouldn't have recessions, natural disasters or wars either.