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I missed Ed Glaeser's column this week on the merits of a balanced budget. Ed is one of the most interesting economists in America today, and so it's always worth listening to him when he weighs in on policy matters.
After pointing out that both parties have helped make the case for a balanced budget by showing so much fiscal promiscuity over the past few decades, Glaeser makes this interesting observation:
Another reason to favor more federal fiscal restraint is that we could use a better balance between state and federal spending. Over the past 50 years, the federal government has become heavily involved in financing infrastructure, even when those projects overwhelmingly serve in-state users and could be funded with user fees. Why is it so obvious that the federal government has a role in funding rail between Tampa and Orlando, or a big tunnel in Boston?
Washington’s prominence is explained primarily by the federal government’s ability to borrow, and not by any inherent edge it has in infrastructure development. Federalizing expenditures breaks the connection between the projects’ funders and the projects’ users. Any instance when we’re spending other people’s money is an invitation for waste.
This relationship between state needs and lobbying and the federal government's borrowing addiction needs to be explored more. It's an important point.
As far as the amendment goes, Ed rightly says that a balanced budget amendment is both needed and difficult to craft. He suggests that in order to make it through wars and recessions, the budget should be balanced on business cycles, not calendar years. That strikes me as the right approach, but also very hard to do.
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