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Can you imagine a US Constitutional amendment that, if proposed, would actually get passed these days?
The relevant part of the US Constitution is:
So, either 2/3 of both the House and the Senate, or 2/3 of the states must propose it, and then 3/4 of the state legislatures or conventions in those states must support it, for it to become part of the Constitution... as I understand it at least.
What sort of possible amendments could you imagine would actually pass and become part of the US Constitution in today's political climate, if they were proposed?
I find this to be an interesting question because it is a barometer of what the various factions of US politics actually agree on, despite their various differences, and also a barometer of how much polarization there is in today's US political situation.
In the event of an extreme economic crisis I can see a form of debt brake amendment becoming viable. It would take a lot, but it's possible and Germany passed a constitutional amendment to implement its debt brake (with some exceptions) in 2009. Switzerland also has one (again with limited exceptions, but it's mostly followed).
A combination of a big swing to the GOP, another tea party movement and a huge recession under an unpopular Democratic president trying to shore up support could do it, but it's still pretty unlikely. In the end, I suspect that a debt brake would be more constraining for Republican than Democratic administrations, because the demand for tax cuts would provide (welcome, I'd say, but still) constant downward pressure on spending, which even Republicans are loathe to cut for things like defense and medicare.
I think too many people in power have learned from MMT how money, banking, and government finance actually works, so it would probably take a few generations for people to forget those again for debt-hysteria to strongly return. In addition to the plain logic, all the evidence is that strong fiscal policy is the answer to extreme economic crises, rather than a target for blame.
Even the eurozone seems to have learned that their anti-fiscal-policy stances were a mistake and caused the first big crisis to flatline growth for the last 15 years. So the Maastricht 3% deficit limit is finally being scrutinized and softened to allow for better counter-cyclical fiscal policy. And in the US we've gone from Obama being confused and thinking he needed to fly to China to make sure they'll still 'lend' us money, to now the massive covid stimulus packages without a peep about becoming Greece or bankrupting our grandchildren.
Now the conversation is more correctly about inflation instead of solvency. And while regular people do hate inflation, even way more than is warranted, I'd guess that's too nuanced and subjective for much support of a constitutional amendment around debt/deficit.
This seems like a fringe opinion. Countries that have "figured out how money works" and lean into debt-financed government spending tend to end up like Argentina or Turkey.
We've just experienced an episode of high inflation due to government stimulus. If anything, we've learned just how dangerous MMT can be.
Why would returning to historical levels of deficit/GDP be considered hysteria?
I'm not sure the government stimulus is the best single explanation for the high inflation of the last few years. If you want to blame the government, then I think overreaction to COVID would be a better angle of attack, since a recent Indicator episode looked at why there is a disconnect between ordinary Americans, who claim to be miserable, and economists who say that despite what Americans say in polls they're spending more like they're happy (high spending on travel, etc.), and it concluded that a lot of indicators of Americans being happy with the economy are actually due to pent up COVID spending. Basically, people didn't get to go on vacations for a year or two and now that things have opened up they have a bunch of money saved up that they're still spending, in spite of inflation.
If this explanation is correct, it might mean the government stimulus is part of the saved up money that Americans are now spending, but I somehow doubt that one time payments of $600 per person in December of 2020, and $1000-$3000 in 2021 are the best explanation for a sustained increase of prices across the economy. That just doesn't seem like a parsimonious explanation of what we're observing.
This spending was financed by government debt. Debt that that wasn't paid off. In a standard Keynesian model a sustained increase in the level of government debt leads to a sustained increase in the price level all things equal. Monetary factors also matter a lot, but the Fed was also being expansionary and allowed inflation to increase rapidly and didn't want to tighten policy and cause deflation, since that would lead to a recession in the standard Keynesian model.
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