Balanced Budget Amendment would double unemployment rate

Balanced Budget Amendment would double unemployment rate

In a week, the GOP will again vote on a Balanced Budget Amendment. The vote is part of the final compromise to raise the debt limit, in which President Obama and Senate Democrats promised to hold a vote on such an amendment, despite the fact that such votes have failed numerous times in the past.

Republicans have taken to ignoring the obvious perilous consequences of the amendment even as voices on both sides of the aisle denounce it as the “worst idea in Washington.” The current amendment, former Reagan adviser Bruce Bartlett said, “looks like it was drafted by a couple of interns on the back of a napkin.”

Today, the Center on Budget and Policy Priorities (CBPP) added to that criticism, releasing a study highlighting a piece from Macroeconomic Advisers that notes that such an amendment would make future recessions “deeper and longer.”

And according to CBPP, passing a Balanced Budget Amendment now, with the country trying to climb out of the hole of joblessness caused by the recession, would have the exact opposite affect one would expect policy makers to try and achieve. In fact, the budget cuts required by such an amendment now would double the unemployment rate and slide the country back into the throes of recession:

If the 2012 budget were balanced through spending cuts, those cuts would total about $1.5 trillion in 2012 alone, the analysis estimates. Those cuts would throw about 15 million more people out of work, double the unemployment rate from 9 percent to approximately 18 percent, and cause the economy to shrink by about 17 percent instead of growing by an expected 2 percent.

Yet, despite evidence that the amendment would have disastrous consequences for our economy, Republicans — even those who pitch themselves as credible on the economy, like former Massachusetts Gov. Mitt Romney — continue to support it.

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UPDATE: The House fell short of the votes necessary to approve a Balanced Budget Amendment to the U.S. Constitution in a largely sybolic exercise on Friday afternoon.

The House voted, 261 to 165, in favor of the amendment, which would prohibit federal spending in any fiscal year from exceeding tax receipts for that year. While a majority of the chamber favored the measure, two-thirds of the House — 290 members — is needed to approve an amendment to the Constitution.