Here are the two relevant lessons for the ongoing discussions on raising the debt ceiling between Congress and the White House: 1) spending does little to spur economic growth and job creation and 2) cuts are fleeting and quickly overwhelmed by more spending. Thus the solution to the spending problem is straightforward: Rather than temporary cuts, what’s needed are a permanent cap on spending and structural changes in entitlement programs.
The key word is “permanent.” And to work, a cap must be enforceable.
Caps on spending come in different sizes, all of them likely to be opposed by Mr. Obama and most Democrats. The Republican Study Committee, the caucus of House conservatives, wants a cap at 18% of GDP—the average level of tax revenues in recent decades—with automatic cuts if spending exceeds the cap. To waive the cap, a two-thirds vote of both houses of Congress would be required.
For now, a constitutional amendment to balance the budget is a nonstarter. In the unlikely event it succeeded in winning a two-thirds vote in the Senate and House, it would face the steeply uphill task of gaining approval by legislatures in three-fourths of the states. At best, that could take years.