Republicans love to call for a "balanced budget amendment" to the Constitution, to prevent deficit spending. This comes from their adherence to disproven right-wing economic theories that were disproven in the 1930s. All of modern economic theory post-Keynes demonstrates that the money supply needs to be managed, and in times of recession, more needs to be created. You don't cut back in a recession; austerity makes them worse, cutting revenues further and causing huge unemployment and losses in production.
We now have a living laboratory experiment in what happens to a 21st century economy that is ruled by a balanced budget amendment to its constitution. The results are, alas, what Keynes would have said. Everything looks fine until the first recession hits. Then it becomes a black hole and things collapse.
The example is the Euro zone, and the worst case is Greece.
First, let's review what money is. There are different kinds of "money" in the world. In the old days, it was typically a compact, resilient commodity that could be traded in exchange for other goods. Metal. Precious metal. Just a commodity, really, but gold and silver don't corrode much (gold not at all) and a small weight of gold could be exchanged for a large weight of cattle, sheep, bricks, whatever. So it was a third-item upgrade for two-item barter. But still barter, since the money was a valued commodity.
The trouble with commodity money is that it makes the economy utterly dependent on the supply of the commodity. So when Spain brought back tonnes of gold from Mexico in the 1500s, inflation hit Europe -- too much gold chased the same amount of production. Gold was not wealth! The opposite would apply nowadays. A large share of the world's gold has been mined out already. But the population and economy have growth hugely since the end of the gold standard. Thus the inadequate supply of gold does not hold back economic growth.
The alternative is fiat money, where the government creates "money" that is legal tender but not otherwise valuable. In this case, the trick is to manage the supply. A government may be tempted to print money in lieu of taxation. But too much money causes inflation -- more money chasing the same goods. LBJ did this in the 1960s and it caused all sorts of annoyance, though oddly enough the annoyance of inflation occurred during a period of great prosperity.
The opposite case is when there is too little money and deflation sets in. That is a real disaster! Deflation means that money gains value when not being invested, so investors lose their incentive to "create jobs" or in general keep the economy afloat. Japan fell into this trap in the 1990s and never really recovered. What saves their society is probably the declining population. Deflation in America could be destabilizing.
So how does the government add money to grow the economy? One way is deficit spending. A small deficit can be monetized and it does not cause much inflation if the economy is growing. Fiat money is managed by a central bank; in the US that role is held by the Federal Reserve. The Treasury regularly auctions debt (bonds) to cover the deficit. Third-party buyers (Americans, Chinese, Dutch, etc.) may buy the bonds; if the price (interest rate) gets too high, though, the Fed can buy some themselves, thereby creating that money by fiat.
A government has too much debt if one of two conditions applies. One is high interest rates, the other is high inflation. A central bank like the Fed can trade off between them. So if the US deficit were really too high, then one of those would apply. But interest is low, and inflation is low, which tells you that the economy still has a lot of slack in it. A short-term deficit fix would just make things worse. A long-term fix, once the economy is humming, will eventually be needed, but not now.
So let's look at Europe. They broke things, badly.
A dozen years ago, every little country had its own currency. Greece, for instance, had the drachma; Italy had the lira and Spain the peseta. These were not the worlds' favorite currencies! The countries tended to run deficits. Greece in particular has low tax collection rates: Under 70% of what it's due is ever collected. (The US is on the high side of 90%, among the worlds' highest rates. The IRS may be a mean attack dog but it's effective.) So what happens to the drachma? Usually inflation. So these countries had endemic inflation. And that led to high interest rates, when expressed in current-currency (uncorrected) terms. In other words, if a loan needed a 3% margin but inflation were 10%, it would have to cost 13%. This makes capital expensive. BUT it was the way the government raised its own revenues! Inflation was for all intents and purpose part of the tax system. It all added up in the end.
Then along came the Euro. This violated the first rule of money; it put fiscal and monetary policy under different controls. So the government ran fiscal policy but the Euro was run by the ECB. Which was and is dominated by Germany, the richest country in Europe. So the "adjust the money supply to meet the deficit" was not run by the folks creating the deficit. Oops.
How could anything go wrong?
The Euro treaty was set up like a balanced budget amendment to each member country's constitution: It dictated a maximum budget deficit. Now when Greece joined the Eurozone, the drachma was converted on reasonably favorable terms, and suddenly Greece had access to cheap Euro loans. In the early 2000s, the economy was strong enough to cover this, and things looked good.
But as the economy declined later in the decade, the then-government started to lie about its books, simply lying its way around its deficits. And borrowing to cover them. This doesn't last long when the money comes from somebody else's central bank, though. So it blew up.
The austerity now creating 25% unemployment, and even more ominously encouraging the growth of neo-Nazi parties like Golden Dawn, is the German/ECB response to the Greek deficit. And since austerity and unemployment reduce revenues, the economy is in a death spiral. You can't cut your way to prosperity. But Germany doesn't seem to care. Markel's right-wing government is anti-Keynsian and doesn't seem interested in observing reality. Italy and Spain are also suffering German fantasies.
That's what a balanced budget amendment does. It takes away the ability to have an economic stimulus. It takes away the ability to do what Keynes called for, which has been proven correct time and time again. It is like doing away with antibiotics and insisting that all infections be treated with bloodletting and leeches, and if they don't work, then even more bloodletting and leeches!
Yet the assholes in America who call for a BBA also cite Greece as a reason for it. As if a national deficit naturally, automatically led to economic disaster, and as if there were no fix but bloodletting/austerity. That lie has to be fought. America should not be allowed become the next Greece; austerity, not stimulus, would make that happen.