Conservative Bruce Barlett lays into fellow conservatives on the proposed balanced budget amendment:
"Today, all 47 Senate Republicans introduced a constitutional amendment to balance the federal budget.... Presumably, this is the amendment that Republicans plan to demand as their price for increasing the federal debt limit. Of course, simply refusing the raise the debt limit would balance the budget overnight — the nation would default on its debt and we would be plunged into the worst fiscal crisis in history, but the budget would be balanced. I have previously explained the idiocy of right wing advocates of debt default.... and the idiocy of a balanced budget amendment.... However, the new Republican balanced budget proposal is especially dimwitted."
From the MMT standpoint, a balance budget amendment would be tantamount to fiscal suicide, leaving government unable to address sectoral balances in accordance with the principles of functional finance using fiscal policy. The only hope would be backdoor fiscal policy through the Fed, e.g, through injecting nongovernment NFA by purchasing nongovernment assets, as it did in QE1.
If a balanced budget amendment were ever to be ratified, it would be a fail that would make the Eighteenth Amendment, prohibiting the use of alcohol, look tame with respect to consequences.