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Should the people control public spending? A normative assessment of balanced budget constitutional amendments

During the XX century, many western countries introduced balanced budget constitutional amendments (BBCA), i.e. they reformed their constitution to forbid excessive deficit spending. These reforms had a massive impact on public policy, promoting austerity and reducing public spending. This paper aims to evaluate such change from the perspective of normative political theory, which has so far largely ignored this upsetting development.

The first section of the paper offers an empirical overview of BBCA and shows that this was a recent and ubiquitous phenomenon: Germany in 2009, Austria in 2011, Spain in 2011, France in 2012, Italy in 2013 (Amick, Chapman, e Elkins 2019). While this shift toward economic constitutionalism might be imputed to the influence of EU economic regulations and might be considered an instrument of domination imposed by wealthy saving economies over poor spending economies, our analysis will challenge these popular narratives. On the one hand, BBCA is present in many Canadian states (Mou, Atkinson, e Tapp 2018), in parts of Asia, e.g. Hong Kong (Tang 1991), in most US states (Buchanan 1950), and it is supported by the republican party at the federal level (Crosby e Holbrook 2019). On the other hand, even saving economies (Germany, Austria) choose to impose such constrain upon themselves. It is thus possible to conclude that we are facing a paradigm shift (Harvey 2007) that needs to be properly evaluated.

Our second section reviews the existing literature concerning the justification of BBCA. While  the economic rationales and benefits of BBCA have been deeply debated (Buchanan 1997; Debrun et al. 2008) a normative assessment of its democratic legitimacy is lacking. We will claim that it is instead fundamental to understand if BBCA embodies democratic ideals by promoting the long-term interests of the citizens or corrupts democracy by removing fundamental issues from public control.

To answer this question the third section of our paper will present and analyze democratic arguments in favor of constitutionalizing balanced budget. BBCA may be seen to avoid two fundamental shortcomings of actual democratic systems: short-termism (or short-term responsiveness) and instability. Democracies should ideally respond to the preferences of the citizens and promote their long-term interests even if this requires going beyond their short-term demands (e.g. intergenerational fairness, sustainability of public expenditures, long-term investments in security, education). To achieve this balance between responsiveness and responsibility, a democratic system requires political actors that develop long-term policies and the stability to promote these policies. Yet actual political actors (political parties and leaders) need the support of voters and are thus primarily focused on their short-term interests (Mair 2009; Bardi, Bartolini, e Trechsel 2014). Constitutionalizing balanced budget will avoid this distortion, grant that financial stability that is necessary to promote long-term interests of the polity, and ensure that a democratic system will respond to the short-term interests (responsiveness) and long-term demands (responsibility) of the citizens.

The next section responds presenting democratic arguments against the constitutionalisation of balanced budget amendments. According to these views BBCA entails a form of depoliticization that fosters instability, curtails democratic control, and undermines social equality.  The recent populist momentum (Mouffe 2009) clearly showed that the depoliticization of the economic sphere foments populist parties which channel resentment against the system, thereby compromising political stability (Berman 2003). Since, moreover, these issues are particularly relevant and divisive, citizens should be exposed to a plurality of perspectives and have the opportunity to properly challenge them. Any concrete constitutionalisation would, thus, constitute a severe injustice (Rawls 1993) and curtail democratic control. Finally, ossifying low public spending risks consistently undermining social equality, sacrificing lower classes to the benefit of economic elite (McCormick 2011).

The final section summarizes our overall assessment of such reforms. Here we argue that the normative burden to justify constitutionalisation is much heavier than the one that warrant political support. Thus, we conclude that reducing deficit spending is a legitimate political position, but one whose constitutionalisation would harbor unbearably high democratic costs.

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