With unemployment stuck over 9% and GDP limping along barely above flat and no job creation going on to speak of, what should be our top priority?
Hey, I know! How ’bout a balanced-budget amendment! That’ll help.
Except for the part where it totally won’t, according to Macroeconomic Advisers, which provides nonpartisan analysis to major corporations and government entities. Here’s what that group says a BBA would do:
Macroeconomic Advisers writes that if a constitutional balanced budget requirement had been ratified in 2008 and took effect in fiscal year 2012, “The effect on the economy would be catastrophic.” If the 2012 budget were balanced through spending cuts, those cuts would have to total about $1.5 trillion in 2012 alone, which the report estimates 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.
Yeah, that sounds like fun. Even the whores at Standard & Poor’s think this is a bad idea.
(h/t: Steve Benen)