Despite the media frenzy in Washington, D.C., surrounding the impending vote on the Republican-sponsored Balanced Budget Amendment, three Dartmouth professors said the measure would have only a modest effect on the U.S. economy.
Professors from the economics and government departments spoke in a forum called "Gambling with Our Economic Future: The Balanced Budget Amendment" before about 50 students in the Rockefeller Center for the Social Sciences last night.
Even if the GOP-dominated Senate could pass the amendment, which would force Congress to keep federal spending in check with revenue, "it would have no teeth," Government Professor James Shoch said.
The Senate recently passed an addendum to the amendment that would prevent the courts from intervening if Congress does not meet the amendment's conditions.
For this reason the amendment is "a dead issue financially," Government Professor Tom Nichols said.
Economics Professor Michael Knetter said since the courts will not hold Congress accountable, the amendment would not make any huge changes. Instead, he said, the amendment would only amplify the "business cycle."
Knetter said the current "fiscal policy is not as out of whack as some people think it is ... [the deficit is] less alarming when compared to" Gross Domestic Product. Gross Domestic Product is the total of goods and services produced by a country.
There are two kinds of government spending: those with "investment character" and those with "consumption character," he said.
Since Knetter said much spending is in investment goods, "we are going in the right direction without a Balanced Budget Amendment."
Shoch said he agrees it is a "bad idea" to lump these two kinds of spending together and said many state legislatures distinguish between the two.
"We could maintain the current deficit forever," Shoch said. "The problem is what is projected."
But Knetter said if the amendment was implemented too quickly, it could slow down the economy.
Nichols said he hopes the Amendment will pass because "it would force choices back to states. It would force hard decisions. That is the point."
Nichols said he would like Congress to eliminate Social Security to help balance the budget.
"The state houses would think less about how to weasel money from Washington," Nichols said. "The GOP had a long debate on this, and the Democratic Party was too hidebound to listen."
Shoch speculated that Republicans would be satisfied to see the measure lose by one vote so the Democrats could be blamed for blocking it.
But Shoch called the amendment "deceitful and unfair" and said it will "disproportionately hit the poor and cities and states, although it will hit the middle class as well."
Shoch said if the amendment was passed, people who are poor or who live in urban areas and are not adequately represented in state legislatures would see their taxes rise.
Shoch suggested Republicans wish "to push it through quickly before the public learns" the amendment's ramifications.
"The public will not like this," he said. The proposal was instigated by public "anger about the way money is spent in Congress," he said.
Nichols said he agrees that the amendment is somewhat politically motivated. "The Republicans have already done their damage to the Democratic party," he said.
