As the old song goes, after 16 tons of Keynesian economics, all we have to show for it is that we are deeper in debt.
Should the United States adopt an amendment to the Constitution requiring a balanced budget?
Keynesian economists say no. They believe that Congress needs the discretion to be able to run deficits in order to fight recessions.
I say yes. I would be happy to see the debt ceiling eliminated permanently — as soon as a balanced budget amendment is approved by the states and goes into effect.
Without a taboo against deficits, deficit spending tends to become habitual. It is politically corrosive, because no constituency expects to be the one to have to sacrifice when the limits of borrowing have been reached.
No constitutional amendment will work perfectly. However, constitutional prohibitions against deficits make governments more fiscally responsible than they would be otherwise.
Nearly all U.S. states are prohibited from running deficits. In contrast, Canadian provinces face no such constitutional constraints. The result? According to a study undertaken by Marc Joffe for the Macdonald Laurier Institute, 8 of the 10 provinces have debt-to-GDP ratios in excess of 20 percent. Joffe told me that even in the most troubled U.S. states, this ratio is much lower.