Tag: Balanced budget

Contributor Post Created with Sketch. This Chart Shows Just How Hard a Balanced Budget Will Be

 

As a candidate, Donald Trump said he favored a balanced budget “relatively soon.” Then again, he also said, “I love debt. I love playing with it.” Just how much Trump loves or hates federal debt will be revealed in the coming months. Congress, too. Congressional Republicans have typically offered annual budget resolutions that would eliminate the budget deficit within a decade by reducing spending growth.

The same this time around? Goldman Sachs raises some issues:

Contributor Post Created with Sketch. Is Trump Really Committed to Shrinking the Federal Government?

 

This article from TheHill.com today has set conservative hearts a-flutter.

Staffers for the Trump transition team have been meeting with career staff at the White House ahead of Friday’s presidential inauguration to outline their plans for shrinking the federal bureaucracy, The Hill has learned. The changes they propose are dramatic.

The departments of Commerce and Energy would see major reductions in funding, with programs under their jurisdiction either being eliminated or transferred to other agencies. The departments of Transportation, Justice and State would see significant cuts and program eliminations.

Contributor Post Created with Sketch. Scalia Would Have Wanted the States to Use the Article V Amendment Power Responsibly

 

Compact-for-America-logoBy Paulette Rakestraw and Mead Treadwell

A month ago, the editorial board of USA Today issued a warning urging the states to resist the call by Sen. Marco Rubio for a “constitutional convention” to draft amendments to balance the federal budget and impose term limits on judges and members of Congress. As the two current commissioners of the Compact for a Balanced Budget, we agree with the editorial board (and its reference to remarks that the late Justice Antonin Scalia had given years ago): a “constitutional convention” conducted outside the scope of Article V of the US Constitution would be inappropriate.

But there’s a big difference between conducting a constitutional convention of the kind that took place in Philadelphia in 1787 versus offering a single amendment as provided for in Article V. Currently, Congress can propose a constitutional amendment when two-thirds of both the House and Senate approve it. And the states can propose an amendment too, when at least two-thirds of them (34) submit a common application to Congress that details the amendment to be proposed. Once Congress receives the completed application, it is then required to call a convention where the states will formally consider the amendment. The vote of a majority of states at this convention would send the proposed amendment out for ratification, which requires the approval of three-quarters of state legislatures (38).

Contributor Post Created with Sketch. Compact for America: Using the States to Fix Washington

 

Compact-for-America-logoAs we’ve seen during Republican administrations and Democrat administrations, and with Republican congresses and Democrat congresses, Washington, DC refuses to fix its addiction to spending. During “conservative” George W. Bush’s two terms, the debt jumped by $4.9 trillion, and during “progressive” Barack Obama’s term (so far), it has jumped $8.2 trillion.

Looking at our nearly $19 trillion hole and with no end in sight to deficit spending, many limited government fans have decided that any solution to the Beltway can’t come from the Beltway. So, Marco Rubio caused a minor stir last week when he floated an idea that has been circulating in the right-leaning policy community for the past few years: Having the states leverage the power given to them by the Constitution.

Contributor Post Created with Sketch. Shoring up the Debt Ceiling Agreement: Terms of Credit Act Can Help

 

shutterstock_208794031There are two significant weaknesses in the recent debt ceiling agreement: 1) It departs from the balanced budget plan adopted earlier this year; and 2) it skirts the requirements of the budget process. The Terms of Credit Act drafted by the House Republican Study Committee can be used to address these weaknesses.

Congress and the Administration have reached an agreement that suspends the debt ceiling until March 2017, while increasing appropriated spending, restraining entitlement spending and taking steps to increase revenues. This agreement, within its confines, is an acceptable outcome for three reasons. First, it sets aside the risk of a breach of the debt ceiling or default by the federal government on its debt obligations. Either of these outcomes would have very likely shaken the confidence of markets in the “full faith and credit” of the federal government in a way that would have imposed serious damage on the economy. Second, it does not raise tax rates. Third, it sets a precedent for future steps to rein in out-of-control entitlement spending, thereby addressing the real cause of the fiscal crisis the federal government faces.

Outside the confines of the agreement, however, Congress must turn its attention to returning to the path to a balanced budget set by the budget resolution it approved earlier this year and restore the integrity of the budget process. The reason is that the debt ceiling agreement departs from the budget resolution. In fact, the Senate had to vote to waive the application of the Congressional Budget Act in order to permit the adoption of the bill to codify the agreement. Accordingly, it is essential that this departure from the budget resolution approved earlier this year and the budget process is only momentary.

Contributor Post Created with Sketch. Has Congress Gone Deaf on Deficits?

 

bl18deficit_JPG_552642fIn Applied Economics, one of his many great books, economist Dr. Thomas Sowell explains the incentives politicians face when making decisions:

Elected officials’ top priority is usually getting re-elected, and their time horizon seldom extends beyond the next election. Laws and policies that will produce politically beneficial effects before the next election are usually preferred to policies that will produce even better results some time after the next election.

There is no better model for this than government spending. Politicians love to spend lots of money because it’s the easiest way to make it look like you’re trying to solve real problems. Politicians especially love to spend borrowed money because they can stick future taxpayers, and not current voters, with the bill. When Congress returns from this year’s August recess, it appears we’ll be seeing this irresponsible behavior on full display.