Balanced Budget Amendments: Ineffective, Untried
The Balanced Budget Amendment has more support now than at any point in the past decade and a half. Nearly all Republican candidates for President support it in some form and many Democrats in Congress also have nice things to say about it. A look at states in the United States and countries around the world, however, reveals that the idea of a balanced budget amendment is ineffective at the state level and untried in other countries.
States first. In all, 49 U.S. states have balanced budget provisions already, but actual adherence to their spirit varies widely. Some states (Utah, Colorado, Virginia) really do balance their budgets year-to-year but most either do "creative" math (California) or take enormous numbers of expenditures "off budget" (Florida and New York).
If state-level balanced budget provisions don't do much, then, it may make sense to look oversees for models. But this search also comes up short: only two established, wealthy democracies, Switzerland and Germany, have anything like balanced budget provisions in national law. And both are awfully weak. The Swiss provision, Article 126, is really more of a suggestion than anything else: it specifies only that Switzerland "holds its expenditures and revenues in the [sic] long term in equilibrium" and lets parliament violate even this rule for "extraordinary financial need." These provisions are no stronger--and maybe less so--than existing paygo and budget reconciliation rules in the United States.
Germany's "debt brake" law, that some refer to as a national balanced budget amendement equivalent is, likewise, a pretty weak provision that doesn't really require the country to balance its books. It isn't part of the German Constitution at all, doesn't require a balanced budget (just limits debts to 0.35 percent of GDP), takes force over a ten year period, and also exists to control state (lander) level accounting deficits that basically don't exist in the United States because of balanced budget provisions and "creative" accounting at the state level. In any case, like American states Germany's landers have already spent beyond the limits that the law seems to establish.
No country, in other words, has really tried a national-level balanced budget provision that's even vaguely similar to the proposals now circulating in Washington and such provisions don't work well at the state level. Balanced budget amendments, in short, are ineffective at the state level and untried internationally.
