“Issue” is in quotes because it doesn’t deserve the dignity of being called an actual issue. It’s the stupidest farce of a so-called “issue” I’ve seen come up in a long time.
Stupid not because the government can’t endlessly engage in deficit spending without consequences. Stupid not because it isn’t a good idea to try and pay down the debt during a recovery. Stupid not because it mandates underfunding anything. Stupid because it’s a totally meaningless gesture.
You see, any pay-as-you-go legislation would take the form of a plain old bill that gets passed by both the House and the Senate and signed into a plain old law by the President. That’s it. Just a law. Not an amendment to the US Constitution, just a plain old garden-variety law.
Guess what? Laws contradict each other all the time. What happens when that happens? Simple, the new law nullifies the old one. The most complicated case is if (like Paygo) a law regulates what kind of laws can be passed. Even that’s not very complicated: all the new law needs to legally override the old one is to insert a section revising the old law to exempt the new one from it.
The only way to avoid this is to make the “new law” take the form of an amendment to the US Constitution. That’s the supreme law of the land, and every plain old law must conform to it or it can be ruled unconstitutional and nullified by the courts. A new amendment, of course, would take years to enact, and success is hardly guaranteed. So nobody is considering it. Paygo will be a plain old law. As such, it will be meaningless.
But suppose, hypothetically, Paygo were implemented via a balanced-budget amendment. What then? Surely, that would change things!
Actually, probably not. Any such amendment would almost certainly not simply require balancing the budget, full stop. It would require balancing the budget unless some duly-certified crisis requires running a deficit to fund emergency measures.
Every major war the USA has been in, particularly the big defensive ones (the Revolutionary, the Civil, and the Second World) have been financed by deficit spending. A simple, ironclad balanced budget amendment (no exceptions allowed) would thus constitute a significant national security threat in and of itself.
Then there’s the paradox of thrift. Recessions and panics, absent prompt intervention that is funded by running deficits, tend to spiral out of control into severe and prolonged depressions. A simplistic balanced budget amendment would seriously imperil economic stability as well.
For these reasons, there would be an escape clause. And at that point, the amendment becomes basically a bunch of useless clutter in the US Constitution, since of course Congress would deficit spend whenever it wanted, simply by putting language in the bill that is necessary to trigger the escape clause.
So, no matter how you slice it, pay-as-you-go is a meaningless exercise. It does nothing more than make fiscal conservatives temporarily feel good and fiscal liberals temporarily feel bad.
Can we please move on to some actually meaningful issues now?