Balanced Budget Amendment the answer? Boozman says yes, Pryor no (Part 19, Milton Friedman’s view is yes)(Royal Wedding Part 19)

Milton Friedman on Phil Donahue Show in 1980 provides a direct and to-the-point defense of capitalism and free trade. He explains how governmental regulations, no matter how well-intended, are inevitably infiltrated by business interests which use governmental power to stifle competition

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Steve Brawner in his article “Safer roads and balanced budgets,” Arkansas News Bureau, April 13, 2011, noted:

The disagreement is over the solutions — on what spending to cut; what taxes to raise (basically none ever, according to Boozman); whether or not to enact a balanced budget amendment (Boozman says yes; Pryor no); and on what policies would promote the kind of economic growth that would make this a little easier.

In Feb of 1983 Milton Friedman wrote the article “Washington:Less Red Ink (An argument that the balanced-budget amendent would be a rare merging of public and private interests),” and here is a portion of that article:

Here, for their consideration, are my answers to the principal objections to the proposed amendment that I have come across, other than those that arise from a desire to have a still-bigger government: 

**5. The amendment will be ineffective because (a) it requires estimates of receipts and outlays which can be fudged; (b) its language is fuzzy; (c) the Congress can find loopholes to evade it; (d) it contains no specific provisions for enforcement.** 

(a) It will be possible to evade the amendment by overestimating receipts–but only once, for the first year the amendment is effective. Thereafter, section 2 of the amendment limits each year’s statement receipts to the prior year’s statement receipts plus the prior rate of increase of national income. No further estimates of budget receipts are called for. This is one of the overlooked subtleties in the amendment. 

Any further fudging would have to be of the national-income estimates. That is possible but both unlikely and not easy. What matters is not the level of national income but the percentage change in national income. Alterations of the definition of national income that affect levels are likely to have far less effect on percentage changes. Moreover, making the change in income artificially high in one year will tend to make it artificially low the next. All in all, I do not believe that this is a serious problem. 

(b) The language is not fuzzy. The only undefined technical term is “national income.” The amendment also refers to “receipts” and “outlays,” terms of long-standing usage in government accounting; in section 4, total receipts and total outlays are defined explicitly. 

Nor is the amendment a hastily drawn gimmick designed to provide a fig leaf to hide Congress’s sins. On the contrary, it is a sophisticated product, developed over a period of years, that reflects the combined wisdom of the many persons who participated in its development. 

(c) Loopholes are a more serious problem. One obvious loophole–off-budget outlays–has been closed by phrasing the amendment in terms of total outlays and defining them to include “all outlays of the United States except those for repayment of debt principal.” But other, less obvious, loopholes have not been closed. Two are particularly worrisome: government credit guarantees, and mandating private expenditures for public purposes (e. g., antipollution devices on automobiles). These loopholes now exist and are now being resorted to. I wish there were some way to close them. No doubt the amendment would provide an incentive to make greater use of them. Yet I find it hard to believe that they are such attractive alternatives to direct government spending that they would render the amendment useless. 

(d) No constitutional provision will be enforced unless it has widespread public support. That has certainly been demonstrated. However, if a provision does have widespread support–as public-opinion polls have clearly shown that this one does–legislators are not likely to flout it, which brings us back to the loopholes. 

Equally important, legislators will find it in their own interest to confer an aura of inviolability on the amendment. This point has been impressed on me by the experience of legislators in states that have adopted amendments limiting state spending. Prior to the amendments, they had no effective defense against lobbyists urging spending programs–all of them, of course, for good purposes. Now they do. They can say: Your program is an excellent one; I would like to support it, but the total amount we can spend is fixed. To get funds for your program, we shall have to cut elsewhere. Where should we cut?” The effect is to force lobbyists to compete against one another rather than form a coalition against the general taxpayer. 

That is the purpose of constitutional rules: to establish arrangements under which private interest coincides with the public interest. This amendment passes that test with flying colors.


The Queen and The Duke of Edinburgh travel from Buckingham Palace to Westminster Abbey

Princess Eugenie and Princess Beatrice

Princess Eugenie of York (L) and Princess Beatrice of York arrive to attend the Royal Wedding of Prince William to Catherine Middleton at Westminster Abbey on April 29, 2011 in London, England. (Photo by Pascal Le Segretain/Getty Images)
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