A 2010 meeting between a Senate candidate and a Cato Institute scholar inspired the author to experiment with alternatives to annual balance. The concept that emerged was to balance the budget over the medium term by limiting spending to a three-year rolling average of prior revenue, adjusted for inflation and population. It would provide stable, predictable, and slightly countercyclical fiscal policy. Congress needs a safety valve to respond to emergencies without being a loophole, and a two-thirds requirement in both houses strikes this balance. Deficits would phase out over ten years. This was the basis for Rep. Justin Amash’s Business Cycle BBA, which he and the author started promoting in 2011. It attracted broad, bipartisan support but could not displace the traditional BBA for a floor vote that year. The author realized mechanics may not be ideal for a BBA and developed another version that became Rep. Dave Brat’s Principles-based BBA in 2015. It also gained substantial support despite BBA’s lower salience then. After dormancy as their sponsors left Congress, Senator Braun and Representatives Arrington, Mace, and Moran have introduced updated versions of both BBAs.

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Next-Generation BBAs Emerge

  • Kurt Couchman

摘要

A 2010 meeting between a Senate candidate and a Cato Institute scholar inspired the author to experiment with alternatives to annual balance. The concept that emerged was to balance the budget over the medium term by limiting spending to a three-year rolling average of prior revenue, adjusted for inflation and population. It would provide stable, predictable, and slightly countercyclical fiscal policy. Congress needs a safety valve to respond to emergencies without being a loophole, and a two-thirds requirement in both houses strikes this balance. Deficits would phase out over ten years. This was the basis for Rep. Justin Amash’s Business Cycle BBA, which he and the author started promoting in 2011. It attracted broad, bipartisan support but could not displace the traditional BBA for a floor vote that year. The author realized mechanics may not be ideal for a BBA and developed another version that became Rep. Dave Brat’s Principles-based BBA in 2015. It also gained substantial support despite BBA’s lower salience then. After dormancy as their sponsors left Congress, Senator Braun and Representatives Arrington, Mace, and Moran have introduced updated versions of both BBAs.