List of Pros and Cons of Balanced Budget Amendment
If you’ve been keeping up with the news and with what is going on in the United States, you have probably heard about the balanced budget amendment, but do you know what it is all about? There has been a large debate regarding the balanced budget amendment and if you should know a little more about it before joining the debate.
But don’t worry, we’re here to help you out and to give you the information you require. Simply put, the balanced budget amendment would create a few guidelines to the Constitution that would make federal expenditures to not go over federal receipts. As such, it would be unconstitutional to go over annual deficits. One of the most used arguments regarding the balanced budget amendment is that congress cannot be trusted regarding its discipline with money. We are, however, going to take a look at the pros and cons of the balanced budget amendment.
List of Pros of the Balanced Budget Amendment
1. It Addresses Deficit.
The balanced budget amendment addresses the chronic deficit issue, which is growing in importance in the United States. Over the past few years, the country has managed to run deficit of about one trillion dollars, which is clearly an amount of money so big that it is hard to comprehend.
We are able to tell form history that to conquer a country there are two ways: a direct way through hostile action, and a less direct way through economical domination. As of right now, there are a lot of countries facing huge amounts of debt, which is going to create certain events in the future.
2. It Fixes Flaws In Democracy.
The balanced budget amendment is one of the most effective ways to fix one of the major flaws in democracy since it allows a limit to be set on the total amount of money that comes from public treasury. This makes balanced budget amendment a incredibly important amendment for most countries because not only does it address the chronic deficit issue, but it also addresses the amount of money that a certain nation is spending. By limit the amount of money that can be taken from the public treasury, the balanced budget amendment limits and secures major flaws in our current systems.
3. Avoidance Of Long-Term Debt.
Usually governments end up not being able to balance their budget and as such, money needs to be borrowed in order to make up for the rest of what’s left. Usually, the money that is borrowed is considered a short-term loan but with time we can tell that is not a short-term loan at all. What happens is that it becomes a long-term debt which is harmful to the economy of a country in a lot of ways. If the balanced budget amendment comes to action, than governments will be forced to balance their budgets.
4. Transparency Would Come To Surface.
If a balanced budget amendment is passed, than the budgeting process and every component would have to be more transparent to the public, so that it would be able to know what is going on. If a government takes on debt to pay it is in a certain way hiding the current fiscal condition of the country, since we can consider that if the government keeps on functioning regularly, everything is being paid for. If the budget is balanced, than a citizen can assume this with more confidence.
List of Cons of the Balanced Budget Amendment
1. There Are Costs Involved In Balancing The Budget.
In order for a budget to truly be balanced, costs must be contained and income sources must be obtained. The money cannot come from loans as it usually is and as such, there is no way for the government to manipulate the cash flow and still be able to properly balance the budget. For an individual, containing the expenditures usually just means that he won’t go shopping for a while but when it comes to a large-scaled term such as in a country, it means reducing a lot of things and making some cuts, which can be harmful for the country. Increasing income however can come from donors and from an increase in taxes, which will also make the population unhappy.
2. Conflicts May Arise.
People have different views and ideas as to what is required in a budget and as such, there is a high risk of conflict arising. Traditionally, this doesn’t happen because the budget is a little overdone but if there are limits to the budget, than there are going to exist paradoxes that need to be solved.
You can better understand this by looking at a family for example, where the budget is limited to the amount of money coming in, and everyone wants to use it a little bit for themselves so that they can satisfy their personal needs. When some crucial needs aren’t met, relationships might end up paying the price.
3. In-Depth Analysis Will Increase Costs.
If managing to get the balance right wasn’t expensive enough, there are still costs involved with the analysis of the budget. Since there are limits set, everything needs to be properly analyzed in order to make sure the most is being made out of the budget and as such there will be a lot of costs involved in this analysis. In return that analysis is going to make the budget work better at a higher cost.