Contributor Post Created with Sketch. Balanced Budget Amendment or Bust

 

Keeping a Balanced Budget Amendment out of the Constitution is the best strategy ever devised for destroying our Republic.

After all, imagine if you and everyone you invited could eat at your favorite steakhouse and send the bill to the next table—not that day, but ten years in the future. Next, imagine you no scruples. Is there any doubt you’d be splurging on porter houses, filet mignon and New York strip steaks both for yourself and your friends (and maybe their pets too) nearly every day of the week?

That’s how Washington politicians regard the federal government’s limitless borrowing capacity—only the results are not quite so tasty. Right now, they can promise anything to get elected, borrow the money to deliver the goods, and send the bill to future generations. Nothing can stop them from kicking the can on hard policy choices or lavishing goodies on special interests and favored voting groups at little or no immediate cost. And—surprise, surprise—that’s exactly what Washington politicians are doing.

But the debt spending spree can’t go on forever. Eventually you run out of other people’s money—even when you are stealing from babies; i.e., borrowing the future income of our kids and the unborn.

Keeping an unlimited credit card in Washington is unsustainable and guarantees a system crash—but not before the federal government grows into a monstrosity that burns trillions of dollars on political favors, unworkable programs, unwinnable wars, crony bailouts, and “free stuff” in general (as it already has). There is no way to keep the federal government within constitutional limits when Washington politicians can borrow and spend without limit.

The only solution is cutting the federal government’s credit card—before the bond markets do. That requires a Balanced Budget Amendment because the Constitution allows the federal government to borrow without limit.

The most plausible path to that goal is the Balanced Budget Compact.

The Balanced Budget Compact is an agreement among the states to propose and ratify a powerful constitutional amendment that would finally limit the national debt. The Balanced Budget Compact is not an excuse for organizing a political movement. It is not promising a grab bag of unattainable goals.

The Balanced Budget Compact is singularly focused and commits its member states to getting a Balanced Budget Amendment on the books by April 12, 2021. Already the Balanced Budget Compact has been joined by Alaska, Arizona, Georgia, Mississippi and North Dakota. To get the job done, 33 more states and Congress need to get on board. That seems like a lot, but the same or greater number of states have joined other “compacts” and uniform laws on more than 30 occasions in the past, many in three years or less.

In fact, Congress could be within reach this year. The House Judiciary Committee has already held a hearing on the Compact’s Balanced Budget Amendment. More than a dozen congressmen and women are advancing the necessary congressional resolution, H. Con. Res. 73. And the Balanced Budget Compact is endorsed at section 501 of the House Budget Resolution.

These developments couldn’t be happening quickly enough. Time is of the essence because, at $20 trillion dollars in debt, every man, woman and child in America is already on the hook for $61,000 in future taxation. Just eight years ago, the national debt was less than half of the current amount. And that’s just the tip of the iceberg.

Having an unlimited credit card has encouraged Washington politicians to promise another $200 trillion in government spending that has no current source of tax funding. This threatens to sock future generations with more than $500,000 in increased taxes per person when the bills come due.

Will they stand for it? More likely, revolt and political instability is our future. But what sort of system is likely to arise from future generations who have been lured by trillions of dollars of unfunded promises into government dependency?

Probably not the sort that emerged from Philadelphia in 1787.

If we want to keep and restore our Republic, we must stop the insanity of trusting Washington politicians with an unlimited credit card. Before we go bust, we must demand a Balanced Budget Amendment as quickly as only the Balanced Budget Compact can deliver it.

There are 14 comments.

  1. milkchaser Member

    It’s not clear what “balanced budget” means? Does this mean that the Federal gov’t cannot borrow? That its spending cannot exceed its revenues?

    One of the main original drivers of the Constitution was to empower the Federal gov’t to borrow. The government should borrow a certain amount. It is impractical to limit spending to revenues, if for no other reasons because it is impossible to accurately predict revenues.

    What I propose is a debt moderation amendment. The idea is to prevent excessive borrowing. The way to do this is to attack the primary incentive that seems to appeal to all federal legislators: The urge to get re-elected. Sometimes it almost seems that they don’t care about anything else.

    What the amendment would do is prohibit a federal legislator from running for re-election in any district or state (indeed, prohibit them from serving in any paid Federal gov’t position) after the legislator had voted to raise the debt limit too high. How much is too high? Once the total amount of borrowing that legislator had voted to add to the debt limit exceeds the total spending of the Federal gov’t from the preceding 12 months, he becomes barred from seeking any further national office. Can’t run for president, senator, congress… If there were a Dept of Dogcatching, they would not be able to work there.

    For example, say the Federal gov’t spends $4 trillion every year (without change, just to make the calculations easy). Congressman Spendalot votes to raise the debt limit by $1 trillion every year. At the end of that fourth vote, he would be barred from seeking any office for all time. He would finish his term and go home.

    Since legislators like to stay in Congress for decades, this would cause them to only vote moderate amounts of debt each year. If they borrowed 5% of the Federal budget each year (and never paid down existing debt), then they would be barred from office after 20 years. Borrowing 5% of the budget is not that bad.

    But if they borrow 20-30% of the budget each year, they’d be out of office in 4-5 years. They’re not going to let that happen. They will find a way to be disciplined spenders. They would get serious.

    And what if a national emergency occurred such as war and the Federal gov’t needed to borrow massively? Nothing would prevent the legislators from doing so. There really is no limit to the amount they can borrow. They would just not be able to continue serving in Congress afterward. They would certainly not go along with war demands unless they really felt it was in the national interest — or at least that it was more important than their continued time in office.

    • #1
    • September 29, 2017, at 1:24 PM PST
    • 1 like
  2. C. U. Douglas Thatcher

    Since my years in California, I’ve remained less convinced of the effectiveness of a balanced budget amendment. California’s legislature is similarly required to balance the budget every year, and every year of the Brown administration that I was there, they reported a balanced budget. Of course, they achieved that by making baseless assumptions — such as assuming the federal government will give them several times what could reasonably be expected — and shifting numbers, like placing large budget items on the next year’s budget. Every year they reported a balanced budget and yet magically its present reported debt is around $850 billion or more and growing.

    The law will do little to discourage those who have already decided to spend far more than they have. We cannot remove corruption with legislation, even constitutional amendments will hold little weight beyond a piece of paper our elected representatives will point at during their campaign, claiming to follow it and hoping the reality doesn’t get out before we’re too complacent to hold them to account.

    • #2
    • September 29, 2017, at 1:25 PM PST
    • 2 likes
  3. namlliT noD Member

    A better solution: “Members of congress can only be reelected if the budget is balanced.”

    The advantages are significant: It’s far more possible to implement. It provides an incentive for congress to spend less. Congress can spend for serious situations… they’ll just pay the price. It will severely reduce the number of career politicians. Over time, the party that spends less will be favored. It will reduce bribery.

    • #3
    • September 29, 2017, at 1:25 PM PST
    • 1 like
  4. I Walton Member

    Agree that spending is the problem and that Congress needs a rule because they lack the ability to self regulate. However, a balanced budget amendment is a bad idea. First as we’ve seen with the states it doesn’t restrain spending, it just means politicians keep raising taxes. Secondly the amendment would have to have exceptions for war or other emergencies. This would turn the Democrats into the war party. You doubt it? Don’t, they were the anti war party because the threat we needed our military deterrent for was their socialist home land. That’s over and they want the US to be the socialist homeland and socialist and fascist parties build their power on the military. Always. Of course, for Democrats a recession is an emergency that requires increased spending which is almost always a counter productive strategy. But most important, spending is the problem not the deficit and how we finance that spending matters most. It would be better to finance all spending with borrowing than by financing it all through taxes on work and savings. Then there’s the political angle working for a balanced budget amendment makes it look like our politicians are working for reduced spending and responsible fiscal policy when what is really happening is delay and talk and more talk. You want to restrain spending adopt a gold rule.

    • #4
    • September 29, 2017, at 2:12 PM PST
    • Like
  5. Skyler Coolidge

    Any balanced budget requirement would include an exception for being in a state of war. We would thus be in a perpetual state of war, make no mistake about it. They would rather send people off to die for nothing than restrain their gluttony for spending.

    • #5
    • September 29, 2017, at 3:16 PM PST
    • Like
  6. Z in MT Inactive

    The problem is not with the lack of a balanced budget amendment, it is with a voting public that cares more about the benefits they receive now than the taxes and consequences down the road. Why do you think we can pass a balanced budget amendment if the politicians don’t feel electoral pressure to constrain spending?

    I think term limits would be a far better constitutional amendment.

    • #6
    • September 29, 2017, at 4:35 PM PST
    • 2 likes
  7. The Reticulator Member

    A balanced budget amendment is a gift for those who want to tax, spend, and plant their jackboot heels on the necks of the working people of America.

    • #7
    • September 29, 2017, at 7:37 PM PST
    • Like
  8. I Walton Member

    Z in MT (View Comment):
    The problem is not with the lack of a balanced budget amendment, it is with a voting public that cares more about the benefits they receive now than the taxes and consequences down the road. Why do you think we can pass a balanced budget amendment if the politicians don’t feel electoral pressure to constrain spending?

    I think term limits would be a far better constitutional amendment.

    Legislators site voter preferences but voters preferences have little to do with their inability to do much. It’s what their donors want and how much media heat and opposition party attacks they can stomach. It’s about cowardice and avarice. If they just privatized SS and allowed older folks to continue with the old system voters would love it. If they privatized health care and got the government out of the business most voters would benefit and eventually love it. Then there’s spending on programs, tax subsidies and complications, not to mention regulations that voters don’t even know about but which have important lobbyists behind all of them. Congress simply can’t do much other than log roll and fiddle around the edges without strong White House leadership. A balanced budget amendment is just another harmful gesture and is part of the same cowardice and avarice.

    • #8
    • September 30, 2017, at 4:39 AM PST
    • 1 like
  9. milkchaser Member

    Don Tillman (View Comment):
    A better solution: “Members of congress can only be reelected if the budget is balanced.”

    The advantages are significant: It’s far more possible to implement. It provides an incentive for congress to spend less. Congress can spend for serious situations… they’ll just pay the price. It will severely reduce the number of career politicians. Over time, the party that spends less will be favored. It will reduce bribery.

    The problem with this, as stated, is that it punishes everyone in Congress even those that voted against spending. That is why I think it is better to focus on the debt limit. We could say that any member that votes to raise the debt limit (ever) cannot run for Congress. That way those who try to stay within the limit (or pay off debt) are not punished.

    But even that is too Draconian, in my opinion. That is why I propose that members be allowed to vote to raise the debt limit a few times without being barred from reelection. I suggested that the member be barred when the sum of all hikes to the debt limit that the member voted for exceeds the amount spent by the Federal gov’t in the preceding calendar year.

    Such a system would punish only the ones that seek to borrow too much.

    The argument against this is that Congress would just raise taxes, but I think they already try to raise taxes as much as they can and the people have a way of rebelling when taxed too much.

    • #9
    • September 30, 2017, at 6:47 AM PST
    • 1 like
  10. JoelB Member

    Deleted post.

    • #10
    • September 30, 2017, at 7:33 AM PST
    • Like
  11. I Walton Member

    Don Tillman (View Comment):
    A better solution: “Members of congress can only be reelected if the budget is balanced.”

    The advantages are significant: It’s far more possible to implement. It provides an incentive for congress to spend less. Congress can spend for serious situations… they’ll just pay the price. It will severely reduce the number of career politicians. Over time, the party that spends less will be favored. It will reduce bribery.

    They’ll just raise taxes, they won’t cut spending. Balance isn’t important by itself. What threatens us is external debt. We run deficits because we can. We can because we print our own foreign exchange. If we want to impose a rule on Congress that actually works to control spending it must be a gold rule or the equivalent that prohibits monetizing debt, but not by voting on debt ceilings or anything the can be avoided by political action. It must be an iron rule out of their hands. The gold standard did this. A gold rule might. But I don’t think anything is possible without continuous vigorous White House leadership on specific cuts and naming a Paul Volcker type to the FED.

    • #11
    • September 30, 2017, at 9:32 AM PST
    • 1 like
  12. The Reticulator Member

    I Walton (View Comment):
    They’ll just raise taxes, they won’t cut spending. Balance isn’t important by itself. What threatens us is external debt. We run deficits because we can. We can because we print our own foreign exchange. If we want to impose a rule on Congress that actually works to control spending it must be a gold rule or the equivalent that prohibits monetizing debt, but not by voting on debt ceilings or anything the can be avoided by political action. It must be an iron rule out of their hands. The gold standard did this. A gold rule might. But I don’t think anything is possible without continuous vigorous White House leadership on specific cuts and naming a Paul Volcker type to the FED.

    I’m glad you said this, because after watching Democrats get interested in a balanced budget amendment in the 90s as a way to guarantee tax increases, and after watching Republicans play with the debt limit, it had seemed to me that the only way to stop this is with some sort of gold standard.

    But still, the problem is entitlement spending, and we’ll never get anywhere on that if we don’t cut corporate welfare.

    • #12
    • September 30, 2017, at 10:27 PM PST
    • Like
  13. I Walton Member

    The Reticulator (View Comment):

    I Walton (View Comment):
    They’ll just raise taxes, they won’t cut spending. Balance isn’t important by itself. What threatens us is external debt. We run deficits because we can. We can because we print our own foreign exchange. If we want to impose a rule on Congress that actually works to control spending it must be a gold rule or the equivalent that prohibits monetizing debt, but not by voting on debt ceilings or anything the can be avoided by political action. It must be an iron rule out of their hands. The gold standard did this. A gold rule might. But I don’t think anything is possible without continuous vigorous White House leadership on specific cuts and naming a Paul Volcker type to the FED.

    I’m glad you said this, because after watching Democrats get interested in a balanced budget amendment in the 90s as a way to guarantee tax increases, and after watching Republicans play with the debt limit, it had seemed to me that the only way to stop this is with some sort of gold standard.

    But still, the problem is entitlement spending, and we’ll never get anywhere on that if we don’t cut corporate welfare.

    Eliminate the corporate profits tax and most corporate welfare goes away. Substitute a VAT for the payroll tax then privatize SS for those who want to own their own retirement savings. Both problems solved but not the fundamental disease allowed by the role of the dollar. The latter will end but in a stupendous crash that destroys our economy.

    • #13
    • October 1, 2017, at 4:23 AM PST
    • Like
  14. Al Sparks Thatcher

    As someone has pointed out, California has a balanced budget provision in their constitution and it hasn’t worked for them.

    To make a balanced budget amendment work, you would have to find honest accountants. Because presently, government accounting isn’t transparent or honest. A private sector CFO who used government accounting practices would end up in jail.

    Since there’s no heaven on earth, you won’t be able to get 100% honesty in any field. There will always be schemers who will cook the books.

    But what if you could? Accounting is a complicated profession. It’s not just debit or credit bookkeeping. Honest accountants often disagree with each other how to bean count something, and translate it into dollars and cents.

    There are straightforward ways to limit the government so that there is no wiggle room by the politicians to get around them.

    A balanced budget amendment isn’t one of them.

    • #14
    • October 1, 2017, at 9:54 AM PST
    • 1 like