Setting the record straight on the first presidential debate is very easy if you are a reader of the Heritage Foundation website!!! Here are some examples below taken from Romina Boccia‘s excellent article from October 4, 2012:
During last night’s presidential debate, claims were flying fast and furious. Some of these claims were true, others false. Here are the top 10—see which ones you can guess as either true or false.
4. Romney would cut taxes by $5 trillion.
Obama: “Governor Romney’s central economic plan calls for a $5 trillion tax cut.”
False.Governor Romney’s tax plan doesn’t cut taxes. His plan is revenue neutral.
5. Dodd–Frank promises to bail out “too-big-to-fail” firms.
Romney: “Dodd–Frank was passed. And it includes within it a number of provisions that I think has some unintended consequences that are harmful to the economy. One is it designates a number of banks as too big to fail, and they’re effectively guaranteed by the federal government.”
6. The oil industry receives $4 billion in corporate welfare that other businesses don’t get.
Obama: “The oil industry gets $4 billion a year in corporate welfare. Basically, they get deductions that those small businesses that Governor Romney refers to, they don’t get.”
False.A large part of that $4 billion figure comes from a broadly available tax provision and expensing options. These are neither subsidies nor corporate welfare. The tax deduction, under Internal Revenue Code Section 199, goes to all domestic manufacturing. Producers of clothing, roads, electricity, water, renewable energy projects, and many other things produced in the United States are eligible for the manufacturer’s tax deduction—including Hollywood movies.
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Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com
FIRST PRESIDENTIAL DEBATE – Barack Obama VS Mitt Romney (Part 4)
Setting the record straight on the first presidential debate is very easy if you are a reader of the Heritage Foundation website!!! Here are some examples below taken from Romina Boccia‘s excellent article from October 4, 2012:
During last night’s presidential debate, claims were flying fast and furious. Some of these claims were true, others false. Here are the top 10—see which ones you can guess as either true or false.
1. Governor Mitt Romney’s tax plan would burden the middle class.
President Obama: “[I]ndependent studies looking at this said the only way to meet Governor Romney’s pledge of not reducing the deficit or—or—or not adding to the deficit is by burdening middle-class families.”
Former Governor Romney: “You’ve raised [taxes] by $1 trillion under Obamacare [and] cut Medicare by $716 billion.”
True.Over the coming decade, Obamacare’s taxes will reach $1 trillion, including new taxes on workers’ wages and capital income, as well as taxes on insurers and manufacturers of medical products. Obamacare also cuts Medicare by $716 billion from 2013 to 2022 and uses the savings to pay for other provisions in Obamacare, not to help shore up Medicare’s finances. Many of Obamacare’s 18 new or increased taxes and penalties would fall directly on the middle class—like the ever-controversial individual mandate tax, which is primarily paid by middle- and low-income Americans, as reported by the Congressional Budget Office.
3. Seniors would receive vouchers under Medicare reform.
Obama: “The idea, which was originally presented by Congressman Ryan, your running mate, is that we would give a voucher to seniors and they could go out in the private marketplace and buy their own health insurance.”
False.There is no premium support proposal that would issue seniors a voucher. The Ryan proposal, like all major premium support models, is a defined-contribution system that would provide direct payment from the government to a health plan of a person’s choice, including traditional Medicare. Health plans would have to meet government standards, including benefit standards of the traditional Medicare program, plus new and much-needed protections against the costs of catastrophic illness. Moreover, Congressman Ryan is not the first to propose premium support; its origins are bipartisan and date back to the 1990s.
_______
Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com
FIRST PRESIDENTIAL DEBATE – Barack Obama VS Mitt Romney (Part 2)
Nobel Laureate Dr. Milton Friedman discusses the principles of Ronald Reagan during this talk for students at Young America’s Foundation’s 25th annual National Conservative Student Conference
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President Obama c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500
Passing the Balanced Budget Amendment would be what the founding fathers would have wanted. Look at what my favorite economist once said.
“The amendment is very much in the spirit of the first 10 amendments — the Bill of Rights. Their purpose was to limit the government in order to free the people. Similarly, the purpose of the balanced-budget-and-tax-limitation amendment is to limit the government in order to free the people — this time from excessive taxation.”
“The balanced budget amendment has good aspects, but it is simply not good enough in dealing with fundamental constitutional change for our country.” And thus with that 23-word statement in 1997, Democrat Sen. Robert Torricelli of New Jersey sunk conservative spirits. No longer did the U.S. Senate have the two-thirds it needed to enshrine a fundamental principle of governing into the highest law of the land: that politicians should pay for what they spend.
Controversial, I know. Pfft.
Due to Democrat Torricelli’s jellyfish backbone, the 1997 Balanced Budget Amendment fell one vote short of hitting the needed threshold, which was the same margin of failure as just one year before. And liberals couldnt have been happier. Their penchant for obligating the taxpayers of tomorrow to pay for the spending binges of today remained unbroken.
Not that the dissenting senators worded their objections that way. Nope. To Vermont’s incorrigible leftist Sen. Patrick Leahy, inserting a mechanism into the Constitution that would enable our government’s books to mirror the realities American businesses and families face daily was “bumper sticker politics” and “sloganeering.” The way toward rectifying Uncle Sam’s balance sheet was, according to Leahy, “political courage,” not tinkering with the Constitution. Thirty-three of Leahy’s Democratic colleagues agreed.
Mind-Boggling Debt
Of course, by “political courage,” Leahy didnt mean reforming our insolvent entitlement systems or abolishing many of the improvident, senseless, and unconstitutional government bureaucracies and programs in existence. Nah. He meant tax increases on the rich. You know the drill, people.
Prescience, however, is not a valued commodity in Washington, D.C., as lawmakers pursue policies that are in the best interest of their reelection, not of the republic.
When the balanced budget amendment failed in 1997, the federal deficit stood at just $22 billion and the national debt hovered around 5.5 trillion — meager compared with today’s obscene figures, where we have a deficit topping $1.6 trillion this year alone accompanied by a mind-boggling debt of $14 trillion and growing.
To put our debt in perspective, Kobe Bryant makes $25 million playing for the Los Angeles Lakers. Any guesses on how many seasons Kobe would have to play in order to pay off today’s national debt? How about a whopping 560,000. That’s chilling, and quite frankly, incomprehensible.
Heck, we’ve run deficits in 54 of the last 60 years, as the National Taxpayer Union points out. That’s a figure that would make Keynes himself blink.
Ironically, Leahy was on the right track when he spoke of the need for political courage. This country desperately needs it, but it must manifest itself in the form of politicians who will defend the property rights of all Americans as opposed to the current lawmaking that treats this nation’s treasury as a personal ATM card.
The brute political courage we need is for politicians to plug Congress’s desire to ransack the appropriations process to engineer winners and losers in the marketplace and thus perpetuate a class of constituents whose inspiration to vote is driven by keeping the government gravy train on a track straight to their bank accounts.
Thanks to the midterm elections, the time for real political courage is now: The balanced budget amendment is making a comeback thanks to one veteran and one freshman senator.
“The people are calling for it. They are clamoring for it. They’re demanding it,” said newly elected Utah Sen. Mike Lee, who has 19 of his colleagues, including Jim DeMint and Rand Paul, rallying in support of his balanced budget amendment. “The American people overwhelmingly demand it, and if members of Congress value their jobs, they are going to vote for it,” he told Human Events in an exclusive interview.
Lee’s a Tea Party faithful who believes his job boils down to this bare-bones task: produce a government in the original mold of the Constitution, which is to say, one whose legislative reach is restricted and clearly defined. In other words, a federal government that looks absolutely nothing like what we have today.
Opportune Time Needed
Lee is so intent on getting a vote on his balanced budget amendment that he’s ready to filibuster the vote on whether or not to raise the debt ceiling as a tactical move.
“I can tell you that there are a lot of people who will not even consider it [a vote on the debt limit] without a balanced budget amendment first being proposed by Congress,” he said emphatically.
That’s certainly one approach — to hold the Senate hostage until real, austere statutory spending limits are adopted.
Utah’s senior Sen. Orrin Hatch doesnt see it that way. He’s looking for a vote on his balanced budget amendment too, but at a time believed to be the most opportune for passage. He hasn’t set firm timetables or made any strict demands.
“You have to have a bipartisan vote. You have to have a President that does care, and you have to have a setting in time where people can’t do anything but vote for it,” Hatch explained. “Right now, I don’t think we have that.”
If youre keeping score, the two senators from Utah both have competing balanced budget amendments floating around the Senate. In some ways, these jockeying amendments are a reflection of the Tea Party being a big kid on the block within the GOP.
Hatch, though, has been in the Senate for more than three decades, and is confident that he can get a balanced budget amendment through, which is why he’s taking a softer tone and insisting on waiting for the best moment to accomplish that.
And there’s something to be said for Hatch’s, well, “political,” approach. He’s shepherded the balanced budget amendment since 1982, when it was approved in the Senate, but torpedoed in the House by then-Speaker Tip O’Neill. And, as noted above, Hatch came painstakingly close twice in the Senate, both in 1996 and 1997.
“It’s every bit as difficult now, but it’s important that we bring it up and that we make all the strides we can,” he said.
The long-serving senator has 32 co-sponsors for his bill, including Chuck Grassley of Iowa, who is the ranking member on the Judiciary Committee.
When it comes down to it, both Hatch and Lee’s amendments have the same goal: ending profligate spending. In fact, as Nobel Laureate James Buchanan said, “The balanced budget norm is ultimately based on the acceptance of the classic principles of public finance, meaning that politicians shouldn’t spend more than they are willing to generate in tax revenues, except during periods of extreme and temporary emergency.”
Wait, why is this concept controversial again? Because it handcuffs Big Government believers from exerting influence over our personal decision making, thats why.
Courts Involved
There are notable differences between the balanced budget amendments of Hatch and Lee, which we lay out in detail in the accompanying chart. While Mike Lee would restrict government spending to 18% of the gross domestic product (GDP), Hatch’s limits the figure to 20%. The 40-year average of tax receipts to GDP is around 18%, and Hatch knows this to be the case, but, to quote him, “If you get it too low, then you lose any chance with the Democrats.” And that, right there, encapsulates the internal friction the GOP will face with this budding Tea Party caucus going head-to-head with those who are willing to work with Democrats to deliver a final product.
But there’s more: Hatch’s proposal allows a simple majority vote to waive the balanced budget requirement when there’s a declaration of war or a designated military conflict, whereas Lee’s amendment provides no such exception. His threshold is much higher — a two-thirds vote.
When aren’t we in a military conflict? Lee quips.
There are also differences in the enforcement mechanism. Lee would grant standing in federal court to members of Congress if flagrant violations of the amendment occur. Hatch doesnt want the courts anywhere near enforcement, believing that public pressure placed on politicians instead provides the best form of accountability. Plus, “Who wants the courts doing it?” asked Hatch, alluding to their predilection toward activism.
Lee himself acknowledges that court intervention would be rare, but that the mere possibility that it could occur would add some additional incentive to Congress to make sure that it stays within their restrictions.
So far, so good.
But procedurally, how would our gargantuan budget ever get balanced? We’re dealing with trillions of dollars here, after all, a highly complex web of arithmetic. Congress must make a good-faith effort, say Hatch and Lee, to use the best possible projections of spending and receipts. Even with the accurate projections, economic conditions change throughout the year that may inhibit the Feds’ budget from being balanced, such as underestimating costs, which happens more frequently than not these days. If such a scenario plays out, and a fiscal year does end with a deficit, such spending cuts can be incorporated into the next fiscal year’s budget and make up the difference on the back end. Under both plans, by the way, two-thirds of Congress would be needed to raise taxes, so it would be more likely than not that the budget would be balanced by spending cuts, not tax increases.
Hey, were all game for that.
Naturally, getting a balanced budget amendment adopted as part of the Constitution will not be an easy feat. And not because of the numerical hurdles and multiple steps needed to get any amendment through the Constitution (the process should be difficult). It’s because Democrats will kick and scream over the severe cuts to spending that would ensue after the adoption of a balanced budget amendment.
Heck, Senate Majority Leader Harry Reid and his left-wing posse went apoplectic at a proposed spending reduction of $61 billion over the next seven months, calling it “extreme” and “draconian.” Just $61 billion. Thats it. To realize just how absurd such objections were, $61 billion is only a one-third of the money needed to cover the interest payments for U.S. bondholders this year alone.
Imagine when formal debate begins on the need to cut trillions in spending to rein in our deficit? Democrats may cut off their right arms in protest.
“This is exhibit A for why we need a balanced budget amendment,” responded Lee. “Politicians have reached the conclusion that they are the bad guys unless they say ‘yes’ to more spending, and it’s in light of that aspect of human nature that particularly tends to affect politicians, and that’s why we need a constitutional amendment.”
Unified GOP Caucus
“If this is going to get passed in the next two years,” says Hatch, “President Obama will have to step to the plate. Ultimately you’ll need presidential leadership because everybody knows that you’re not going to get spending under control until we take on entitlements as well. You cannot do it without presidential leadership.”
Remider: There’s always new presidential leadership come 2012. Well, we hope so anyway.
In the end, expect the GOP to have a unified caucus on a merger of the Hatch and Lee balanced budget amendments. It’s hard enough (almost impossible) to get one through when Democrats are in control of the Senate and the presidency, so the Republicans will need a unified front like they’ve had in the past.
A balanced budget amendment restricts the power of lawmakers, and that’s why the left despises it, and will work vigorously to defeat it. Get ready.
In the end, it is exactly what the Constitution needs. And esteemed economist Milton Friedman identified why two decades ago.
Said Friedman: “The amendment is very much in the spirit of the first 10 amendments — the Bill of Rights. Their purpose was to limit the government in order to free the people. Similarly, the purpose of the balanced-budget-and-tax-limitation amendment is to limit the government in order to free the people — this time from excessive taxation.”
If we cannot cut the Welfare State under these distressing economic conditions, then we’ll never do it. Now’s the time.
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Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com
My hero Milton Friedman was a big supporter of the Balanced Budget Amendment and in an article on this subject in 1983 he wrote:
“The key problem is not deficits but the size of government spending. […] I have never supported an amendment directed solely at a balanced budget. I have written repeatedly that while I would prefer that the budget be balanced, I would rather have government spend $500 billion and run a deficit of $100 billion than have it spend $800 billion with a balanced budget. It matters greatly how the budget is balanced, whether by cutting spending or by raising taxes.”
As a member of the Conservative Action Project, CEO Susan Carleson and leaders of 28 other organizations, representing a broad cross section of the conservative movement, are united in supporting a Balanced Budget Amendment that actually reins in national spending and increasing our national debt – without raising taxes.
MEMO FOR THE MOVEMENT: A Balanced Budget Amendment — in addition to balancing the budget — should make it difficult to raise taxes, tough to increase the debt, and prohibit any court from ordering a tax increase or deciding budget priorities.
“I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government; I mean an additional article taking from the Federal Government the power of borrowing.”
Thomas Jefferson, 1798
RE: In accordance with the Budget Control Act of 2011, sometime between October 1 and December 31, 2011 both houses of Congress must vote on a balanced budget amendment (BBA) to the U.S. Constitution. It is important that any such amendment must protect taxpayers by not forcing automatic tax increases to keep revenues in line with rising expenditures. Our fiscal problems are caused not by under taxation–but by over-spending.
ISSUE-IN-BRIEF: Not all balanced budget Amendments were created equal. The most comprehensive BBA proposed is S.J. Resolution 10 co-sponsored by all 47 Republican members of the United States Senate. It caps spending at 18% of GDP; requires a 2/3 vote of congress to raise taxes; requires a 3/5 vote of congress to increase the debt ceiling; and prohibits any court from ordering an increase in taxes. Proposed BBA’s that do less can have the unintended effect of managing a tax increase instead of limiting spending and would be counter-productive and must be opposed.
A STRONG BBA MUST BE EASY TO UNDERSTAND AND NOT HAVE LOOPHOLES:
Require a Balanced Budget every year: The federal debt is on track to consume our country’s entire Gross Domestic Product. The BBA would force Washington to live within its means.
Prohibit Perpetual Deficit Spending: Deficit spending is a tax on future earnings.
A debt ceiling will actually be a ceiling: The debt ceiling has been raised 11 times in the past decade. S.J. 10–co-sponsored by 47 members of the U.S. Senate– would require a three-fifths majority in both chambers to raise the debt ceiling. This is also an important provision to prevent cheating and other budget gimmicks because actual spending cannot exceed actual revenue for long without hitting the debt limit.
Congress may waive BBA requirement by simple majority if a declaration of war is in effect; and it would require a three-fifths majority to waive if the country is engaged in a military conflict that causes an imminent and serious military threat to our national security.
Courts setting any budget priorities would be a problem. Court-ordered military cuts or activist “declaratory judgments” requiring increased welfare spending would also be intolerable. S.J. 10 can be improved with an explicit ban on courts exercising jurisdiction on any of these essential political questions.
A “Weak” BBA will increase the size of Government and pave the way for Tax Increases:
Unlike other proposals, such as a “Weak” BBA, not only should a BBA have a supermajority requirement to raise taxes, there should be no loopholes for creative accounting.
Without a limitation on tax increases and a specific prohibition on courts ordering revenue increases a “Weak” BBA would allow judges the power to implement higher taxes to bring the budget into balance.
A “Weak” BBA would allow a simple majority of Members of Congress to raise the federal debt ceiling and continue to borrow against future generations. That’s why there is a three-fifths majority requirement to raise the debt ceiling in S.J. 10
Why the Tax Hike Limitation Component is Important to any BBA:
“The key problem is not deficits but the size of government spending. […] I have never supported an amendment directed solely at a balanced budget. I have written repeatedly that while I would prefer that the budget be balanced, I would rather have government spend $500 billion and run a deficit of $100 billion than have it spend $800 billion with a balanced budget. It matters greatly how the budget is balanced, whether by cutting spending or by raising taxes.”
Americans Support a Balanced Budget Amendment:
Americans have always overwhelmingly support a balanced budget amendment. A Fox News poll (June 30), shows support is 72-20.
On Message, Inc., on behalf of Let Freedom Ring, shows 81% of the American people (including 74% of Democrats) support Congress balancing their budget every year. In addition 66% of Americans favor capping federal spending at the historically average 18% of GDP.
“Of course, the best way to permanently reduce spending would be to enact a balanced-budget amendment to the Constitution requiring a supermajority in both houses of Congress to run an annual deficit, raise tax rates, or increase the debit ceiling.”
James A. Baker III, Ronald Reagan’s Secretary of the Treasury from 1985-1988
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Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com
Ronald Reagan was a firm believer in the Balanced Budget Amendment and Milton Friedman was a key advisor to Reagan. Friedman’s 1980 film series taught the lesson of restraining growth of the federal budget.
Vital changes needed to keep road to further reforms open
There is a problem brewing in the House of Representatives of which most conservatives in and outside Congress are largely unaware. It has to do with H.J. Res. 1 – the balanced budget amendment – soon to be voted on per the debt-ceiling “deal” struck by Congress and the president. While H.J. Res. 1 is a solid first effort – and we have urged support for it as a symbolic vote – it is possibly fatally flawed and should be revised.
After years of indifference to constitutional fiscal discipline, Congress is once again stirring. In 1982, then-President Ronald Reagan, convened a federal amendment drafting committee led by Milton Friedman, Jim Buchanan, Bill Niskanen, Walter Williams and many others, and fashioned Senate Joint Resolution 58, a tax limitation-balanced budget amendment, which garnered 67 votes in the Senate under the able leadership of Sen. Orrin G. Hatch, Utah Republican. After a successful discharge petition forced a House vote, the amendment failed to achieve the two-thirds vote necessary in a Tip O’Neill-Jim Wright-controlled House. In 1996, Newt Gingrich and company came within one vote of passing a fiscal amendment in the House.
Currently, H.J. Res. 1 is designed as a classic balanced budget amendment in which outlays can be as great as, but no more than, receipts for that year. However, it requires an estimate of receipts, which is notoriously faulty, and it does not necessarily produce surpluses with which to pay down our massive debt. Furthermore, it contains a second limit on outlays – “not more than 18 percent of the economic output of the United States” – without defining such output or resolving the inevitable conflict between the outlay calculations in the two provisions.
This could be fixed by restructuring the amendment as a spending or outlay limit based on prior year receipts or outlays (known numbers), adjusted only for inflation and population changes. This will produce surpluses in most years with which to pay down debts and will reduce government spending as a share of gross domestic product over time, right-sizing government and increasing the rate of economic growth for the benefit of all citizens, especially those least able to compete.
Section 4 of H.J. Res. 1 might best be described as a supreme example of the law of unintended consequences. This section imposes on the president a constitutional responsibility to present a balanced budget. Surely, the drafters were saying to themselves “We’ll fix that guy in the White House. Now he will have to fess up and either propose specific tax increases or specific spending cuts. He won’t be able to duck reality any longer.” The only problem is that this section is at odds with our Constitution in that it gives the president a constitutional power over fiscal matters never intended by the Founders.
For much of our history, the president did not propose a budget. In the Budget and Accounting Act of 1921, which established the Bureau of the Budget, now the Office of Management and Budget and the General Accounting Office, the president was statutorily authorized to propose a budget. Presidents have always shaped the budget and spending using their negotiating opportunities and veto pen. Wearing their chief administrator hat, earlier presidents sought to save money from the amounts appropriated by Congress, getting things done for less, impounding funds they did not think essential to spend. Congress‘ ceiling on an appropriation was not also the spending floor for the president, as it is now.
Section 4 appears to give the president co-equal power with Congress not only to present a budget but to shape it, in conflict with congressional budget authority. At a minimum, it is likely to create a conflict over the amount of allowed annual spending. The president surely will be guided by his own Office of Management and Budget, whose budget and receipts calculations will undoubtedly differ from the Congressional Budget Office’s numbers that will direct Congress. We should not start the budget process each year with this kind of conflict.
It would be better to restore the historic role of the president to impound and otherwise reduce expenditures by repealing and revising appropriate portions of the Congressional Budget and Impoundment Control Act of 1974 so a fiscally conservative president is a revitalized partner in cutting the size of government.
Section 5 requires a supermajority vote for “a bill to increase revenues.” Whether one agrees or disagrees with making tax increases more difficult, this language is troublesome because it requires some government bureaucrat or bureaucracy to make a calculation or estimate of the effect of tax law changes on revenues. Proponents of a bill to increase cash flow to the government will argue that their tax law changes are “revenue neutral” and will likely persuade the Joint Committee on Taxation or Congressional Budget Office to back them up. Once again, estimators would be in control.
If we ever expect to convert our income-based tax system to a consumption tax, better not to require a two-thirds vote as liberals will use such a supermajority voting rule to stymie tax system reform.
There are other issues, as well, with debt limit and national emergency supermajority votes and definitions. While this balanced budget amendment – H.J. Res. 1 – has deserved a “yes” vote as a demonstration of commitment to constitutional fiscal discipline, it can and must be revised before the showdown vote in the House this fall.
Lewis K. Uhler is president of the National Tax Limitation Committee.
_________________
Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com
This week, House Republican freshmen Members held a press conference to discuss the importance of passing a balanced budget amendment to the United States Constitution and how now is the time for a permanent solution to our nation’s spending-driven debt crisis. We need a balanced budget amendment to ensure a prosperous future for our children and grandchildren. It’s the right thing to do.
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President Obama c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500
Over and over in the past Milton Friedman pleaded for restraint in our federal spending. Below you will see a fine article supporting the Balanced Budget Amendment and it points out that Friedman favored this mechanism to control our spending.
The question is how to solve our problem of unsustainable debt.
The United States of America is on the road to bankruptcy, with a federal debt of more than $14.2 trillion, almost half of which is owned by foreign countries. (Communist China alone owns fully a quarter of the foreign-held portion). The problem is so well known that it almost came as an anticlimax when Standard & Poor’s recently downgraded U.S. debt from its coveted AAA rating to an unheard-of AA+. As for the budget deficit, it is expected to total $1.3 trillion for this year alone, with tax revenues of about $2.3 trillion and total expenditures of about $3.6 trillion. If a household ran its budget like that, we would say it was headed for a rude shock.
Making matters worse is that our debt is structural rather than cyclical: the federal budget is in deficit both in good economic times and bad. When George W. Bush took office in 2001, the gross federal debt was $5.76 trillion. When he left eight years later, the debt was up to $10.626 trillion, an increase of $607 billion a year. During Barack Obama’s presidency it has risen by $1.7 trillion a year and now almost 40 percent higher than when he took office. Deficits of this size are quite simply unsustainable.
The only way to fix this mess is to radically cut federal spending, cap the budget with pay-as-you-go spending rules, and then enact a balanced budget amendment (BBA).
The most important point is that we need to cut spending, not raise taxes. Total federal spending as a percentage of Gross Domestic Product (GDP) has skyrocketed from around 18 percent, when George W. Bush became president, to more than 25 percent today. This shows that our current deficit problem is entirely due to overspending. If tomorrow we cut spending back to the levels of January 20, 2001, when Bush took office, the deficit would almost disappear.
Then we need to cap and balance the budget, once we’ve cut overall spending back to 2001 levels. To do this effectively, we need to enact a federal BBA to the U.S. Constitution. This amendment should have several features.
First, it should require that the president submit to Congress each year a balanced federal budget with no fiscal gimmicks. Presidential failure to do so would be an impeachable offense. Congress should be constitutionally required to hold a vote in both houses on the president’s proposed budget within three months, with the president and Congress having up to six months to adopt a final budget in any given calendar year (this requirement should be waivable during any time of declared war for up to two years). If they fail to do that, all federal spending except for payments on the debt should be frozen at levels 10 percent lower than in the preceding fiscal year. To help impose this, any one of the several states should have standing to sue in the Supreme Court’s original jurisdiction for enforcement of this requirement.
Second, the BBA should cap federal spending at 18 percent of GDP. A spending cap of this proportion would keep the federal government at the size it was under President Bill Clinton — hardly onerous or severe. The amendment should require a two-thirds vote of both houses of Congress to enact any new taxes or to raise tax rates. Votes to raise the national debt limit should also require a two-thirds majority. These provisions are essential to prevent a BBA from becoming just an excuse to raise taxes.
THE USUAL RESPONSE to calls for such an amendment is that we ought not tamper with the Constitution. Critics of a BBA also claim it is not needed since a majority of Congress could balance the budget today if it really wanted to. There are at least five reasons why those critics are dead wrong.
First, it is a core principle of American constitutionalism that there be no taxation without representation. The American Revolution was fought in part to prevent taxation by a British Parliament in which Americans were not represented. When Congress borrows 40 cents of every dollar it spends, as it is doing today, it passes the burden of paying for current spending on to our children and grandchildren who cannot vote right now — nothing less than taxation without representation.
Second, a core purpose of the Constitution is to protect fundamental principles like freedom of speech and of the press from being whittled away during moments of legislative passion. Exactly the same argument holds true with respect to spending more money than the government collects in tax revenue. Constitutionalizing the balanced budget requirement is as necessary as constitutionalizing the protection of freedom of speech and of the press. This is an argument that was first made more than 30 years ago by Noble Prize laureate Milton Friedman. It is just as true today as it was then.
Third, there is an economic reason why it is easier to assemble lobbies for government spending than it is to assemble a nationwide lobby for a balanced budget. Consider the farm lobby that argues for agricultural price supports, or the AARP that lobbies for benefits for the elderly. It is cheaper and easier for small groups with a shared common interest to lobby Congress than for a large, diffuse majority of the American population to do the same. That’s why the silent majority is silent. A BBA in the Constitution would prevent the special interests from ripping off the children and grandchildren of the silent majority. James Madison wrote in The Federalist No. 51 that the secret of constitutional government was to make ambition counteract ambition. The way to check and balance over-spending is to constitutionalize a pay-as-you-go rule while making tax increases hard to enact.
Fourth, yet another economic reason for a BBA is that it would reduce risk and thereby promote investment. When people are looking for a place to invest, one of their first questions is how risky is the investment and how large is the potential reward. Foreign and American investors since World War II have invested in the U.S. and in its debt because our Constitution of checks and balances makes it hard to do crazy things like nationalize industries or set up a single payer health insurance monopoly.
A BBA would reduce further the risk of investing in the U. S., and that would promote investment and economic growth by constitutionally committing itself not to overspend. The risk of inflationary devaluation of the dollar would thus go way down. This in turn would bolster the dollar as the world’s reserve currency. It would also prevent federal borrowing from crowding out private sector borrowing in the U.S. This would free up a capital for investment in job-creating ventures.
A fifth argument for the BBA paradoxically grows out of one of the arguments commonly made against it: it would be purely symbolic. Or as James Madison would have said, “a mere parchment barrier” against overspending.
This criticism fails for many reasons. A BBA of the kind I argue for would have enforcement teeth. Presidential failure to submit a good-faith balanced budget would be a specific ground for impeachment. Then too, if Congress failed to enact a balanced budget, state governments could sue for an across theboard spending cut of 10 percent.
But suppose Congress wimps out and enacts a BBA without teeth. Would such a symbolic victory be worth anything? The answer again is clearly yes. Almost every state has some form of a balanced budget requirement in its constitution or law. The fact is that balanced budget requirements actually do work at the state level. This strongly suggests they would work at the federal level as well.
CONSTITUTIONAL PROVISIONS, even symbolic ones, set the agenda of political debate. The Second and Tenth Amendments clearly do that in the U.S. today, even though the federal courts almost never enforce them. A BBA would work very much the same way.
The case for a BBA is so powerful that Germany and Switzerland — both models of fiscal sobriety — actually require a balanced budget in their own constitutions. And now Germany and France have actually proposed requiring that all Eurozone countries amend their national constitutions to require a balanced budget. What is good enough for almost every state in the Union and for many countries of Europe is certainly worth trying at the federal level here.
So what harm could come from enacting a BBA to the U.S. Constitution? Is there any argument against such an amendment that outweighs the arguments in favor of it?
One concern conservatives have is that it might lead to tax increases. I share that concern and therefore would couple it with a super-majority requirement for tax increases. That should make a BBA clearly appealing to conservatives of all stripes. But what if such an amendment gets ratified that does not protect against tax increases? Would we then be worse off?
I think the answer is no. It is harder politically for Congress to tax real people living today than it is to borrow money from the children and grandchildren of the silent majority. People living today will mobilize in many ways against tax increases. The correct solution is to cut, cap, and balance, but I would not let concerns about tax increases stop us from doing what virtually every state constitution does.
Another real concern for conservatives is that a BBA could lead to dangerous cuts in spending on national defense. This concern I share. The U.S. is a world leader and the greatest force for liberty and economic opportunity in history. We must always be ready to defend liberty worldwide.
The problem is, however, that current levels of deficit spending — almost half of which is financed by foreign countries — is itself a threat to U.S. global might. We simply cannot defend liberty in Asia, for example, if we continue to borrow massively from the Chinese. We cannot defend freedom in Arab countries while being so dependent on Saudi Arabia and others for imported oil and purchases of our debt. The status quo is at least as threatening to America’s military might as is living under a BBA, for the status quo is not sustainable.
Finally, some conservatives argue that the solution to congressional deficit spending is a line item veto amendment giving the president the same power over spending enjoyed by a majority of state governors. I am quite skeptical about such an amendment because of the enormous power it would shift from Congress to the president. Imagine for a moment that President Obama could threaten senators or representatives with line item vetoes of locally important spending projects unless they voted his way on socialized medicine. Or on a card check law reform making it easy to fraudulently form a union. Do we really want to cede that much power from Congress to the president? I do not think so.
In sum, we need to cut, cap, and balance. To do that permanently, we must enact a BBA. Nothing less than the future of government of the people, by the people, and for the people is at stake.
____________
Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com
I read that President Obama in his meetings with the Republicans would not even say that a balanced budget was a goal. According to the budget presented by the Democratic Senate he is in agreement with their approach. Cartoonists have taken the opportunity to poke fun at that below.
As you can imagine, this might be my favorite of the group because I’m a sucker for cartoons portraying government as an obese slob (see here, here, here, and here).
Last but not least, thisJerry Holbert cartoon also is worth sharing.
It will be very interesting to see what we get (from both a substance perspective and humor perspective) when the White House finally decides to issue its budget.
That budget was legally required back on the first Monday in February. Based on what we saw last year and the year before that, I’m not holding my breath expecting anything more than another tax-and-spend blueprint.
Max Brantley is wrong about Tom Cotton’s accusation concerning the rise of welfare spending under President Obama. Actually welfare spending has been increasing for the last 12 years and Obama did nothing during his first four years to slow down the rate of increase of welfare spending. Rachel Sheffield of the Heritage Foundation has noted: […]
I have put up lots of cartoons from Dan Mitchell’s blog before and they have got lots of hits before. Many of them have dealt with the economy, eternal unemployment benefits, socialism, Greece, welfare state or on gun control. I think Max Brantley of the Arkansas Times Blog was right to point out on 2-6-13 that Hillary […]
I thought it was great when the Republican Congress and Bill Clinton put in welfare reform but now that has been done away with and no one has to work anymore it seems. In fact, over 40% of the USA is now on the government dole. What is going to happen when that figure gets over […]
Again we have another shooting and the gun control bloggers are out again calling for more laws. I have written about this subject below and on May 23, 2012, I even got a letter back from President Obama on the subject. Now some very interesting statistics below and a cartoon follows. (Since this just hit the […]
watch?v=llQUrko0Gqw] The federal government spends about 10% on roads and public goods but with the other money in the budget a lot of harm is done including excessive regulations on business. That makes Obama’s comment the other day look very silly. A Funny Look at Obama’s You-Didn’t-Build-That Comment July 28, 2012 by Dan Mitchell I made […]
I have written a lot about this in the past and sometimes you just have to sit back and laugh. Laughing at Obama’s Bumbling Class Warfare Agenda July 13, 2012 by Dan Mitchell We know that President Obama’s class-warfare agenda is bad economic policy. We know high tax rates undermine competitiveness. And we know tax increases […]
Dan Mitchell Discussing Dishonest Budget Numbers with John Stossel Uploaded by danmitchellcato on Feb 11, 2012 No description available. ______________ Dan Mitchell of the Cato Institute has shown before how excessive spending at the federal level has increased in recent years. A Humorous Look at Obama’s Screwy Budget Math May 31, 2012 by Dan Mitchell I’ve […]
Sometimes it is so crazy that you just have to laugh a little. The European Mess, Captured by a Cartoon June 22, 2012 by Dan Mitchell The self-inflicted economic crisis in Europe has generated some good humor, as you can see from these cartoons by Michael Ramirez and Chuck Asay. But for pure laughter, I don’t […]
Another great cartoon on President Obama’s efforts to create jobs!!! A Simple Lesson about Job Creation for Barack Obama December 7, 2011 by Dan Mitchell Even though leftist economists such as Paul Krugman and Larry Summers have admitted that unemployment insurance benefits are a recipe for more joblessness, the White House is arguing that Congress should […]
Dan Mitchell hits the nail on the head and sometimes it gets so sad that you just have to laugh at it like Conan does. In order to correct this mess we got to get people off of government support and get them in the private market place!!!! Chuck Asay’s New Cartoon Nicely Captures Mentality […]
Cato Institute scholar Dan Mitchell is right about Greece and the fate of socialism: Two Pictures that Perfectly Capture the Rise and Fall of the Welfare State July 15, 2011 by Dan Mitchell In my speeches, especially when talking about the fiscal crisis in Europe (or the future fiscal crisis in America), I often warn that […]
John Stossel report “Myth: Gun Control Reduces Crime Sheriff Tommy Robinson tried what he called “Robinson roulette” from 1980 to 1984 in Central Arkansas where he would put some of his men in some stores in the back room with guns and the number of robberies in stores sank. I got this from Dan Mitchell’s […]
I have put up lots of cartons and posters from Dan Mitchell’s blog before and they have got lots of hits before. Many of them have dealt with the economy, eternal unemployment benefits, socialism, Greece, welfare state or on gun control. Amusing Gun Control Picture – Circa 1999 April 3, 2010 by Dan Mitchell Dug this gem out […]
We got to cut spending and stop raising the debt ceiling!!! When Governments Cut Spending Uploaded on Sep 28, 2011 Do governments ever cut spending? According to Dr. Stephen Davies, there are historical examples of government spending cuts in Canada, New Zealand, Sweden, and America. In these cases, despite popular belief, the government spending […]
I have put up lots of cartons and posters from Dan Mitchell’s blog before and they have got lots of hits before. Many of them have dealt with the economy, eternal unemployment benefits, socialism, Greece, welfare state or on gun control. On 2-6-13 the Arkansas Times Blogger “Sound Policy” suggested, “All churches that wish to allow concealed […]
Gun Free Zones???? Stalin and gun control On 1-31-13 ”Arkie” on the Arkansas Times Blog the following: “Remember that the biggest gun control advocate was Hitler and every other tyrant that every lived.” Except that under Hitler, Germany liberalized its gun control laws. __________ After reading the link from Wikipedia that Arkie provided then I responded: […]
On 1-31-13 I posted on the Arkansas Times Blog the following: I like the poster of the lady holding the rifle and next to her are these words: I am compensating for being smaller and weaker than more violent criminals. __________ Then I gave a link to this poster below: On 1-31-13 also I posted […]
Max Brantley is wrong about Tom Cotton’s accusation concerning the rise of welfare spending under President Obama. Actually welfare spending has been increasing for the last 12 years and Obama did nothing during his first four years to slow down the rate of increase of welfare spending. Rachel Sheffield of the Heritage Foundation has noted: […]
I have put up lots of cartoons from Dan Mitchell’s blog before and they have got lots of hits before. Many of them have dealt with the economy, eternal unemployment benefits, socialism, Greece, welfare state or on gun control. I think Max Brantley of the Arkansas Times Blog was right to point out on 2-6-13 that Hillary […]
I thought it was great when the Republican Congress and Bill Clinton put in welfare reform but now that has been done away with and no one has to work anymore it seems. In fact, over 40% of the USA is now on the government dole. What is going to happen when that figure gets over […]
Again we have another shooting and the gun control bloggers are out again calling for more laws. I have written about this subject below and on May 23, 2012, I even got a letter back from President Obama on the subject. Now some very interesting statistics below and a cartoon follows. (Since this just hit the […]
watch?v=llQUrko0Gqw] The federal government spends about 10% on roads and public goods but with the other money in the budget a lot of harm is done including excessive regulations on business. That makes Obama’s comment the other day look very silly. A Funny Look at Obama’s You-Didn’t-Build-That Comment July 28, 2012 by Dan Mitchell I made […]
I have written a lot about this in the past and sometimes you just have to sit back and laugh. Laughing at Obama’s Bumbling Class Warfare Agenda July 13, 2012 by Dan Mitchell We know that President Obama’s class-warfare agenda is bad economic policy. We know high tax rates undermine competitiveness. And we know tax increases […]
Dan Mitchell Discussing Dishonest Budget Numbers with John Stossel Uploaded by danmitchellcato on Feb 11, 2012 No description available. ______________ Dan Mitchell of the Cato Institute has shown before how excessive spending at the federal level has increased in recent years. A Humorous Look at Obama’s Screwy Budget Math May 31, 2012 by Dan Mitchell I’ve […]
Sometimes it is so crazy that you just have to laugh a little. The European Mess, Captured by a Cartoon June 22, 2012 by Dan Mitchell The self-inflicted economic crisis in Europe has generated some good humor, as you can see from these cartoons by Michael Ramirez and Chuck Asay. But for pure laughter, I don’t […]
Another great cartoon on President Obama’s efforts to create jobs!!! A Simple Lesson about Job Creation for Barack Obama December 7, 2011 by Dan Mitchell Even though leftist economists such as Paul Krugman and Larry Summers have admitted that unemployment insurance benefits are a recipe for more joblessness, the White House is arguing that Congress should […]
Dan Mitchell hits the nail on the head and sometimes it gets so sad that you just have to laugh at it like Conan does. In order to correct this mess we got to get people off of government support and get them in the private market place!!!! Chuck Asay’s New Cartoon Nicely Captures Mentality […]
Cato Institute scholar Dan Mitchell is right about Greece and the fate of socialism: Two Pictures that Perfectly Capture the Rise and Fall of the Welfare State July 15, 2011 by Dan Mitchell In my speeches, especially when talking about the fiscal crisis in Europe (or the future fiscal crisis in America), I often warn that […]
John Stossel report “Myth: Gun Control Reduces Crime Sheriff Tommy Robinson tried what he called “Robinson roulette” from 1980 to 1984 in Central Arkansas where he would put some of his men in some stores in the back room with guns and the number of robberies in stores sank. I got this from Dan Mitchell’s […]
I have put up lots of cartons and posters from Dan Mitchell’s blog before and they have got lots of hits before. Many of them have dealt with the economy, eternal unemployment benefits, socialism, Greece, welfare state or on gun control. Amusing Gun Control Picture – Circa 1999 April 3, 2010 by Dan Mitchell Dug this gem out […]
We got to cut spending and stop raising the debt ceiling!!! When Governments Cut Spending Uploaded on Sep 28, 2011 Do governments ever cut spending? According to Dr. Stephen Davies, there are historical examples of government spending cuts in Canada, New Zealand, Sweden, and America. In these cases, despite popular belief, the government spending […]
I have put up lots of cartons and posters from Dan Mitchell’s blog before and they have got lots of hits before. Many of them have dealt with the economy, eternal unemployment benefits, socialism, Greece, welfare state or on gun control. On 2-6-13 the Arkansas Times Blogger “Sound Policy” suggested, “All churches that wish to allow concealed […]
Gun Free Zones???? Stalin and gun control On 1-31-13 ”Arkie” on the Arkansas Times Blog the following: “Remember that the biggest gun control advocate was Hitler and every other tyrant that every lived.” Except that under Hitler, Germany liberalized its gun control laws. __________ After reading the link from Wikipedia that Arkie provided then I responded: […]
On 1-31-13 I posted on the Arkansas Times Blog the following: I like the poster of the lady holding the rifle and next to her are these words: I am compensating for being smaller and weaker than more violent criminals. __________ Then I gave a link to this poster below: On 1-31-13 also I posted […]
Mark Levin “I feel that we can do great things.” Mark is excited by the proposed Balanced Budget Amendment. He states that this would be a great thing for America to pass. He believes the Balanced Budget Amendment will help bring the nation back to it’s Constitutional roots. Mark explains what the amendment is and how it will work. In his February 1983 classic essay, Nobel Prize-winning economist Milton Friedman gives his opinion on a balanced budget amendment that requires a super majority to raise taxes. Friedman states, “The purpose of the balanced-budget-and-tax-limitation amendment is to limit the government in order to free the people—this time from excessive taxation. Its passage would go a long way to remedy the defect that has developed in our budgetary process.” Part #1 3-25-2011
___________________
President Obama c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500
The best article I have ever read on the Balanced Budget Amendment was written by my favorite economist Milton Friedman. Here is the second portion below:
I have been much more surprised, and dismayed, by the criticism that has been expressed by persons who share my basic outlook about the importance of limiting government in order to preserve and expand individual freedom—for example, the editors of The Wall Street Journal and a former editor and current columnist, Vermont Royster. They do not question the objectives of the amendment, but they doubt its necessity and potential effectiveness.
Those doubts are presumably shared by many other thoughtful citizens of all shades of political opinion who are united by concern about the growth of government spending and deficits. 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:
1. The amendment is unnecessary. Congress and the President have the power to limit spending and balance the budget.
Taken seriously, this is an argument for scrapping most of the Constitution. Congress and the President have the power to preserve freedom of the press and of speech without the First Amendment. Does that make the First Amendment unnecessary? Not surprisingly, I know of no one who has criticized the balanced-budget amendment as unnecessary—however caustic his comments on congressional hypocrisy—who would draw the conclusion that the First Amendment should be scrapped.
It is essential to look not only at the power of Congress but at the incentives of its members—to act in such a way as to be re-elected. As Phil Gramm, a Democratic congressman from Texas, has said: Every time you vote on every issue, all the people who want the program are looking over your right shoulder and nobody’s looking over your left shoulder….In being fiscally responsible under such circumstances, we’re asking more of people than the Lord asks.”
Under present arrangements, Congress will not in fact balance the budget. Similarly, a President will not produce a balanced budget by using the kind of vetoes that would be required. The function of the amendment is to remedy the defect in our legislative procedure that distorts the will of the people as it is filtered through their representatives. The amendment process is the only effective way the public can treat the budget as a whole. That is the function of the First Amendment, as well—it treats free speech as a bundle. In its absence, Congress would consider each case “on its merits.” It is not hard to envisage the way unpopular groups and views would fare.
2. The President and Congress are guilty of hypocrisy in voting simultaneously for a large current deficit and for a constitutional amendment to prevent future deficits.
Of course, I have long believed that congressional hypocrisy and shortsightedness are the only reasons there is a ghost of a chance of getting Congress to pass an amendment limiting itself. Most members of Congress will do anything to postpone the problems they face by a couple of years—only Wall Street has a shorter perspective. If the hypocrisy did not exist, if Congress behaved “responsibly,” there would be no need for the amendment. Congress’s irresponsibility is the reason we need an amendment and at the same time the reason that there is a chance of getting one.
Hypocrisy may eventually lead to the passing of the amendment. But hypocrisy will not prevent the amendment from having important effects three or four years down the line—and from casting its shadow on events even earlier. Congress will not violate the Constitution lightly. Members of Congress will wriggle and squirm; they will seek, and no doubt find, subterfuges and evasions. But their actions will be significantly affected by the existence of the amendment. The experience of several states that have passed similar tax-limitation amendments provides ample evidence of that.
3. The amendment is substantive, not procedural and the Constitution should be limited to procedural matters. The fate of the Prohibition amendment is a cautionary tale that should give us pause in enacting substantive amendments.
If this amendment is substantive, so is the income-tax (sixteenth) amendment and so are many specific provisions of the Constitution. The income-tax amendment does not specify the rate of tax. It leaves that to Congress. Similarly, this amendment does not specify the size of the budget. It simply outlines a procedure for approving it: the same as now exists if total legislated outlays do not exceed an amount determined by prior events (the prior budget and the prior growth in national income); and by a majority of 60 percent if total legislated outlays do exceed that amount. The requirement of a supernormal majority is neither substantive nor undemocratic nor unprecedented. Witness the two-thirds majority necessary to override a presidential veto or to approve a treaty.
The prohibition amendment was incompatible with the basic aim of the Constitution, because it was not directed at limiting government. On the contrary, it limited the people and freed government to control them. The balanced-budget-tax-limitation amendment is thoroughly compatible with the basic role of the Constitution, because it seeks to improve the ability of the public to limit government.
4. The amendment is unduly rigid because it requires an annually balanced budget.
This is a misconception. Section 1 of the amendment prohibits a planned budget deficit unless it is explicitly approved by three fifths of the members of the House and Senate. It further requires the Congress and the President to “ensure that actual outlays do not exceed the outlays set forth in [the budget] statement.” But it does not require that actual receipts equal or exceed statement receipts. A deficit that emerged because a recession produced a reduction in tax receipts would not be in violation of the amendment, provided that outlays were no greater than statement outlays. This is a sensible arrangement: outlays can be controlled more readily over short periods than receipts.
I have never been willing to support an amendment calling for an annually balanced budget. I do support this one, because it has the necessary flexibility.
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.
6. The key problem is not deficits but the size of government spending.
My sentiments exactly. Which is why I have never supported an amendment directed solely at a balanced budget. I have written repeatedly that while I would prefer that the budget be balanced, I would rather have government spend $500 billion and run a deficit of $100 billion than have it spend $800 billion with a balanced budget. It matters greatly how the budget is balanced, whether by cutting spending or by raising taxes.
In my eyes, the chief merit of the amendment recommended by the Senate Judiciary Committee is precisely that it does limit spending. Section 1 requires that statement outlays be no greater than statement receipts; section 2 limits the maximum increase in statement receipts; the two together effectively limit statement outlays. Moreover, if in any year Congress manages to keep statement receipts and outlays below the maximum level, the effect is to lower the maximum level for future years, thus fostering a gradual ratcheting down of spending relative to national income.
A further strength of the amendment is the provision for approving an exceptional increase in statement receipts (hence in statement outlays). The spending-limitation amendment that was drafted by the National Tax Limitation Committee required a two-thirds majority of both houses in order to justify an exceptional increase in outlays. The amendment passed by the Senate requires only “a majority of the whole number of both houses of Congress.” However, the majority must vote for an explicit tax increase. I submit that it is far easier to get a two-thirds majority of Congress to approve an exceptional increase in spending than to get a simple majority to approve an explicit increase in taxes. So this is a stronger, not a weaker, amendment.
Section 6 proposed by Senator Armstrong in the course of Senate debate, makes the debt ceiling permanent and requires a supermajority vote to raise it. That provision was approved by a narrow majority composed of a coalition of right-wing Republicans and left-wing Democrats—the one group demonstrating its hardcore conservatism, the other seeking to reduce the chances of adoption of the basic amendment.
I do not favor the debt-limit provision. Its objective—to strengthen pressure on Congress to balance the budget—is fine, and it may be that it would do little harm. But it seems to me both unnecessary and potentially harmful. I trust that it will be eliminated if and when the amendment is finally approved by Congress. I shall favor the amendment even if the debt-limit provision is left in, but less enthusiastically.
7. The amendment introduces a near economic theory into the Constitution.
It does nothing of the kind—unless the idea that there should be some connection between receipts and outlays is a new economic theory. The amendment does not even change the present budget process, if Congress enacts a balanced budget that rises by no greater a percentage than does national income. But it does significantly stiffen the requirement for passing a budget that is in deficit or for raising the fraction of our income spent on our behalf by the government.
The amendment recommended by the Senate Judiciary Committee deserves the wholehearted backing of every believer in a limited government and maximum freedom for the individual.
Milton Friedman received the Nobel Prize in economics in 1976. He is the Paul Snowden Russell Distinguished Service Professor Emeritus of Economics at the University of Chicago and a senior research fellow at the Hoover Institution at Stanford University.
________
Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com
Mark Levin “I feel that we can do great things.” Mark is excited by the proposed Balanced Budget Amendment. He states that this would be a great thing for America to pass. He believes the Balanced Budget Amendment will help bring the nation back to it’s Constitutional roots. Mark explains what the amendment is and how it will work. In his February 1983 classic essay, Nobel Prize-winning economist Milton Friedman gives his opinion on a balanced budget amendment that requires a super majority to raise taxes. Friedman states, “The purpose of the balanced-budget-and-tax-limitation amendment is to limit the government in order to free the people—this time from excessive taxation. Its passage would go a long way to remedy the defect that has developed in our budgetary process.” Part #1 3-25-2011
President Obama c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500
The best article I have ever read on the Balanced Budget Amendment was written by my favorite economist Milton Friedman. Here is the first portion below:
An argument that the balanced-budget amendment would be a rare merging of public and private interests.
Our elected representatives in Congress have been voting larger expenditures year after year—larger not only in dollars but as a fraction of the national income. Tax revenue has been rising as well, but nothing like so rapidly. As a result, deficits have grown and grown.
At the same time, the public has demonstrated increasing resistance to higher spending, higher taxes, and higher deficits. Every survey of public opinion shows a large majority that believes that government is spending too much money, and that the government budget should be balanced.
How is it that a government of the majority produces results that the majority opposes?
The paradox reflects a defect in our political structure. We are ruled by a majority—but it is a majority composed of a coalition of minorities representing special interests. A particular minority may lose more from programs benefiting other minorities than it gains from programs benefiting itself. It might be willing to give up its own programs as part of a package deal eliminating all programs—but, currently, there is no way it can express that preference.
Similarly, it is not in the interest of a legislator to vote against a particular appropriation bill if that vote would create strong enemies while a vote in its favor would alienate few supporters. That is why simply electing the right people is not a solution. Each of us will be favorably inclined toward a legislator who has voted for a bill that confers a large benefit on us, as we perceive it. Yet who among us will oppose a legislator because he has voted for a measure that, while requiring a large expenditure, will increase the taxes on each of us by a few cents or a few dollars? When we are among the few who benefit, it pays us to keep track of the vote. When we are among the many who bear the cost, it does not pay us even to read about it.
The result is a major defect in the legislative procedure whereby a budget is enacted: each measure is considered separately, and the final budget is the sum of the separate items, limited by no effective, overriding total. That defect will not be remedied by Congress itself—as the failure of one attempt after another at reforming the budget process has demonstrated. It simply is not in the self-interest of legislators to remedy it—at least not as they have perceived their self-interest.
Dissatisfaction with ever-increasing spending and taxes first took the form of pressure on legislators to discipline themselves. When it became clear that they could not or would not do so, the dissatisfaction took the form of a drive for constitutional amendments at both the state and the federal levels. The drive captured national attention when Proposition 13, reducing property taxes, was passed in California; it has held public attention since, scoring successes in state after state. The constitutional route remains the only one by which the general interest of the public can be expressed, by which package deals, as it were, can be realized.
Two national organizations have led this drive: the National Tax Limitation Committee (NTLC), founded in 1975 as a single-issue, nonpartisan organization to serve as a clearinghouse for information on attempts to limit taxes at a local, state, or federal level, and to assist such attempts; and the National Taxpayers Union (NTU), which led the drive to persuade state legislatures to pass resolutions calling for a constitutional convention to enact an amendment requiring the federal government to balance its budget. Thirty-one states have already passed resolutions calling for a convention. If three more pass similar resolutions, the Constitution requires Congress to call such a convention—a major reason Congress has been active in producing its own amendment.
The amendment that was passed by the Senate last August 4, by a vote of 69 to 31 (two more than the two thirds required for approval of a constitutional amendment), had its origin in 1973 in a California proposition that failed at the time but passed in 1979 in improved form (not Proposition 13). A drafting committee organized by the NTLC produced a draft amendment applicable to the federal government in late 1978. The NTU contributed its own version. The Senate Judiciary Committee approved a final version on May 19, 1981, after lengthy hearings and with the cooperation of all the major contributors to the earlier work. In my opinion, the committee’s final version was better than any earlier draft. That version was adopted by the Senate except for the addition of section 6, proposed by Senator William Armstrong, of Colorado, a Republican. Approval by the Senate, like the sponsorship of the amendment, was bipartisan: forty-seven Republicans, twenty-one Democrats, and one Independent voted for the amendment.
The House Democratic leadership tried to prevent a vote on the amendment in the House before last November’s elections. However, a discharge petition forced a vote on it on October 1, the last full day of the regular session. The amendment was approved by a majority (236 to 187), but not by the necessary two thirds. Again, the majority was bipartisan: 167 Republicans, 69 Democrats. In view of its near passage and the widespread public support for it, the amendment is sure to be reintroduced in the current session of Congress. Hence it remains a very live issue.
The amendment as adopted by the Senate would achieve two related objectives: first, it would increase the likelihood that the federal budget would be brought into balance, not by prohibiting an unbalanced budget but by making it more difficult to enact a budget calling for a deficit; second, it would check the growth of government spending—again, not by prohibiting such growth but by making it more difficult.
The amendment is very much in the spirit of the first ten amendments—the Bill of Rights. Their purpose was to limit the government in order to free the people. Similarly, the purpose of the balanced-budget-and-tax-limitation amendment is to limit the government in order to free the people—this time from excessive taxation. Its passage would go a long way to remedy the defect that has developed in our budgetary process. By the same token, it would make it more difficult for supporters of ever-bigger government to attain their goals.
It is no surprise, therefore, that a torrent of criticism has been loosed against the proposed amendment by people who believe that our problems arise not from excessive government but from our failure to give government enough power, enough control over us as individuals. It is no surprise that Tip O’Neill and his fellow advocates of big government tried to prevent a vote in the House on the amendment, and used all the pressure at their command to prevent its receiving a two-thirds majority.
It is no surprise, either, that when the amendment did come to a vote in the House, a substantial majority voted for it. After all, in repeated opinion polls, more than three quarters of the public have favored such an amendment. Their representatives do not find it easy to disregard that sentiment in an open vote—which is why Democratic leaders tried to prevent the amendment from coming to a vote. When their hand was forced, they quickly introduced a meaningless substitute that was overwhelmingly defeated (346 to 77) but gave some representatives an opportunity to cast a recorded vote for a token budget-balancing amendment while at the same time voting against the real thing.
Milton Friedman received the Nobel Prize in economics in 1976. He is the Paul Snowden Russell Distinguished Service Professor Emeritus of Economics at the University of Chicago and a senior research fellow at the Hoover Institution at Stanford University.
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Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.
Sincerely,
Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com
To put our debt in perspective, Kobe Bryant makes $25 million playing for the Los Angeles Lakers. Any guesses on how many seasons Kobe would have to play in order to pay off today’s national debt? How about a whopping 560,000. That’s chilling, and quite frankly, incomprehensible.
Utah’s senior Sen. Orrin Hatch doesnt see it that way. He’s looking for a vote on his balanced budget amendment too, but at a time believed to be the most opportune for passage. He hasn’t set firm timetables or made any strict demands.
“If this is going to get passed in the next two years,” says Hatch, “President Obama will have to step to the plate. Ultimately you’ll need presidential leadership because everybody knows that you’re not going to get spending under control until we take on entitlements as well. You cannot do it without presidential leadership.”
The Daily Hatch 