Revised Response to: A Balanced Budget Amendment?

1) The Federal budget becoming balanced is a confusing idea that can help the economy or hurt it. One reason that there should not be a balanced Federal Budget because the budget should not be balanced, it needs to be like it is now, a huge budget deficit. The federal budget is below balanced and it has kept taxes low and Government Spending high. If a balanced federal budget was required then taxes would have to increase because of a debt that will be caused and needed to be paid off. Also demand will decrease due to the increase in taxes which caused consumption to decrease along with consumer confidence. Another reason why a balanced federal budget should be enforced is because it will cause the economy to fall because of the rise in taxes and low demand. Quantity decreases and price increases, causing the economy to fall. With the federal budget staying below the balanced level, the economy will stay normal and taxes will remain the same.2) One reason to favor a balanced federal budget is that is it easier to balance the budget. If the Federal Government can control the balance of the budget then it puts then in control and it can make then choose what the amount should be to raise the taxes. Another reason that is beneficial to have a balanced federal budget is that it can cause new economic policies to be made and put forth into action. When a problem like a balanced federal budget comes abroad, new policies like an expansionary fiscal policy or automatic stabilizers that stabilize the economy. When a problem in the economy comes along, there will always be a way to fix the problem. With a balanced federal budget there will be new policies that can be produced to change the budget. This also can limit impulsive and excessive government spending. This causes taxes to increase and demand to decrease.