Why Balancing the Budget Too Soon is Dangerous

Today’s New York Times highlights one of the central reasons many GOPers oppose Rep. Paul Ryan's recently released budget proposal: It doesn’t balance the budget.
 "On the right, the conservative political action committee Club for Growth said the budget 'falls short' by not balancing the budget in a decade and nullifying automatic, across-the-board spending cuts agreed to in last summer’s Budget Control Act in the event that a special select committee on deficit reduction failed to agree on bipartisan deficit controls.

'The Club for Growth urges Republicans to support a budget that balances in the near future and complies with the Budget Control Act,' said Chris Chocola, the group’s president.

But according to the Committee For a Responsible Federal Budget, a plan that seeks to balance the budget isn't the ultimate key to fiscal security. In fact, CRFB Policy Director Marc Goldwein told me, it’s a treacherous short-term goal.
“Trying to balance the budget quickly is both impossible and indeed dangerous,” he said. “ If we try to balance the budget in the next few years it would take a lot of money out of the economy. The government is currently borrowing a significant amount and that’s not sustainable over the long run. But if we immediately take away the things the government is spending money on and raise peoples’ taxes severely, up front that could cause some serious economic turbulence.”  Attempting a balanced budget in the next few years “would almost definitely put us back into a recession,” Goldwein warns.
 So what should policymakers focus on, if not balancing the budget?
Stabilizing the debt, Goldwein says. That means getting to a place where our debt is growing slower than the economy. “We just need deficits that are small enough that the economy can catch up, and that really needs to be our target for now,” he says.
I asked him why the “balancing the budget” rhetoric is so pervasive when it seems to be quite a dangerous and flawed concept.  
“‘Stabilize the debt” just isn’t a catchy phrase,” Goldwein says. “Nobody has bumper stickers—I have one—but nobody else has bumper stickers that say stabilize the debt. Balancing the budget is something that people can easily understand. They balance their household budgets every year. “

Alarm clock and money photo via Shutterstock