Government Spending Should Be based on a Balanced Budget

Governments around the world are faced with the challenge on how to meet a balanced spending budget amid the increasing recurrent expenditures. According to Mazurak (2013, p. 1), the actual cause of huge government debts is the fact that most governments tend to spend way above what they get each year. For instance, Mazurak (2013, p. 1), notes that the United States spends 1 trillion dollars more than it gets in revenue and tax collection. This has caused the country to hit the debt ceiling in the close of the 2012 prompting a fiscal cliff in the country. Several amendments on budget have been passed in Congress which are aimed are reducing the amount of expenditure that the government incurs. The research in this paper seeks to discuss the advantages and disadvantages associated with setting a spending limit to a government. This is in light with the opposing views on government budgets and the reasons behind the overspending witnessed in several countries around the world and particularly in the United States.

The fiscal cliff debate in the United States has been ongoing for some time now with fears expressed over the country’s plunge into recession.  An interesting part in this debate is the relationship between the political and economic interests expressed in the debate from different factions. On the face of it all, the fears of a fiscal cliff emerged when the country’s legislative body, the Congress, refused to raise the debt ceiling of the country beyond the limit if $16.4 trillion to allow the government to make more borrowing. Apparently, the government borrowing has hit the debt limit and needed the approval of the Congress to make further borrowing. The result was a series of legislations including spending cuts through sequestration and tax increase which ultimately impacts on the ability of the citizens to transact their businesses in almost all sectors of their lives.

According to Mazurak (2013, p. 1), putting a limit to what the government can spent annually is advantageous in several ways. One important aspect of this budgetary regulation is that there will be a regulation and authorization from the relevant bodies on the array of good that the can government purchases. Thus there will be proper and positive valuation of the goods to be acquired by the government by relevant bodies which are mandated with such regulatory powers.  It is also possible for the government to be a little more careful with the allocation of revenues to different departments as a way of ensuring that each department can account fully to the resources allocated to them. As such, regulated spending will ensure that responsibility and accountability is placed on the people who are entrusted with the government’s books of accounts and thus reduce the cases of corruption and embezzlement of public funds. The other reason is that Balanced Budget Amendment will ensure that the burden of opportunity cost is not passed to the future generation who on many instances have been forced to foot the bill for the careless expenditure witnessed in government departments.  Equally, balanced spending will ensure that the government has priority areas where it wants to spend its money instead of the current ad hoc expenditures which sometimes are not justified in terms of their economic value to the government and the public.

The government should also consider the liberalization of markets and development on the global market as a careless expenditure is likely to destabilize economies of smaller countries. For instance, the bailing out of the companies during the financial crisis helped to reduce the effect and actually stop financial crisis in other country. An overspending by governments such as the federal government in the United States is likely to reverse the benefits of globalization in terms of free markets and movement of goods from one region to the other. The last fifty years has witnessed a rapid increase in the level of interaction between countries from different continents. This has mostly been facilitated through improved communication facilities and advancement in technology. As such, the world has witnessed alignment in international strategies which are intended at expanding the business operations to a global level, facilitative global communication systems such as the internet and the satellite system, socioeconomic and political developments in all countries around the world. Globalization has had both positive and negative impacts on the economies of different countries around the world. Evidently, the positives outnumbers the negatives owing to the role that globalization plays in the integration and liberalization of markets across the world. This paper is a research proposal on the economic benefits that globalization has on the economies of individual countries.

Through balanced budgetary spending, the government can support the thriving of globalization which has led to improvement in the level of competitive positions and at the same time lowered the cost of doing business as companies diverse in the manufacture of different products and services. Globalization is responsible for diversification of resources and development and creation of new business opportunities in societies which were formerly closed to the international world. For instance, many countries in Africa are able to sufficiently meet the needs of its people through importation of finished products from the developed countries in Europe and Asia while companies in these continents are able to get raw materials from Africa to make those products. Globalization is thus responsible for easier movement of raw materials and finished products from one part of the world to the other. Moreover, globalization has allowed the concepts of liberalization of markets and free trade to flourish as countries come to agree on the opening up of their markets for mutual benefits through trading (Steinhauer, 2013, p. 1).

Furthermore, through balanced budget and regulated spending the government can support programs related with globalization which are responsible for lower and staple prices of goods as consumers can access a variety of products from different manufacturers across the world almost at the same time. Globalization thus gives the consumers a greater choice on the products and services that they need and in process helps to lower the costs of such products and services. For instance, similar products manufactured in China, Germany, Japan, and United States find their way into the African market and therefore the consumer has a wide variety of choices to make hence a greater bargaining power. Similarly, globalization has brought about diversification and expansion in export markets especially for manufacturers who are manufacturing on the local or domestic markets (De Aenlle, 2012, p. 2).

In addition, it is noted that globalization has facilitated the implementation of economies of scale in many countries across the world as manufacturers specialize and particular goods and services Globalization has also benefited the economies of both developed and developing countries around the world by increasing the standard of living for its citizens by improving infrastructure such as roads, health care, education, and social services, opening up their access to new markets through freer trades between partner countries and removal of trade barriers which can be problematic to homegrown industries. Globalization is also responsible for opening up of job opportunities and therefore reducing the levels of unemployment especially in poor countries where access to jobs can be challenging. This is sometimes facilitated through the influx of foreign companies in local markets and improvement in technology and education levels. It has also facilitated the automation and mechanization of products in sectors such as agriculture leading to not only quality and cheaper product but also high volume of production (Steinhauer, 2013, p. 2).

However, the disadvantage of implementing balanced budget measures is that it infringes on some of the Constitutional rights enjoyed by the government which means that there should be massive amendment in the Constitution which is sometimes costly and time consuming.  In really sense, amendment to the federal government rights, for instance, to spend on particular projects are protected by the constitution and implementing them will contravene the provisions in the constitution.  The other disadvantage is that some of the proposals for balanced budget in the government have loopholes which when not taken care might be devastating to the taxpayer. For instance, the enumerated prerogatives, non delegation doctrine and the 9^th and 10^th amendment gives the federal government powers to spend on anything or even interfere with the legislation provided the annual expenditure does not exceed the 20 % of the of the GDP. In addition, the government can easily falsify the estimates of the GDP in order to justify its higher spending and the legislature will not have control over such actions. In addition, balanced budget is disadvantageous because it gives legislatures much control power to regulate and spend large sums of money on programs which are in fact supposed to be done by local government. As such, the federal government is almost guaranteed of the minimum percentage regardless of the economic continues prevailing in the country at one particular time (Kurtz, 2012, p. 1).

According to Banaian (2012, p. 2), implementing a balanced budget spending will not definitely demolish the operations in the states because they have tax revenues other than those from the federal government. However, the impact is likely to be seen in the agencies and programs within the states which almost entirely depend on the allocations and grants from the federal government for their budgets. Spending cuts will therefore be felt in the states since agencies and programs depending on the government support will experience leaner budgets and reduced revenues. Among the programs which will be greatly affected by the fiscal cliff in the states are the discretionary programs such as child welfare services and substance abuse treatment for prisoners whose budgets are entirely depended on the federal grants for their operations. Local governments are likely to witness a reduction by several millions in the federal grants which they receive for discretionary programs.

Balanced budget is also likely to cause millions of job losses in states that support several programs with federal grants. This is because balanced budget will touch on grants that support essential programs like law enforcement, wildlife preservation, mental health, education and other public services within the states operation and thus leads to the loss of jobs tied to the programs. The education and health sectors would be hit hardest with the balanced budget spending. Other sectors which are going to be affected by balanced spending by the federal include agriculture, homeland security, and environmental protection programs because local governments would not have the money to support these programs when spending cuts and tax increases are implemented by the federal government (Nicholas & Paletta, 2013, p. 1). In conclusion, it is evident that balanced budget has both the advantages and disadvantages which need to be evaluated before full implementation to ensure that the programs which are depended on the federal grants of government subsidies are not adversely affected  by the reduction in the amount allocated to them by the federal government. 

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