In 82 and 90 tax increases happened immediately but spending cuts never came. If you have ever dealt with a drug dealer then you would know that they will lie to you in order to get money out of you for drugs. Congress has lied in the past to keep their addiction to overspending going!!!
Today, President Barack Obama signed an executive order announcing the creation of his “debt commission,” modeled after the infamous “Conrad-Gregg commission” plan the Senate voted down in January. The Administration has already announced that the panel will be headed up by former White House chief of staff under Bill Clinton Erskine Bowles and former Republican Senate Whip Alan Simpson.
While a United States Senator, Simpson voted for two “bipartisan deals” which had real tax increases and phony spending cuts. The first was the 1982 “TEFRA” bill which promised $3 in spending cuts for every $1 in tax hikes. The second was the 1990 “Read My Lips” deal struck at Andrews Air Force Base, which promised $2 in spending cuts for every $1 in tax hikes. In both cases, every penny of the tax hikes went through. Also in each case, the spending restraint never materialized.
Says ATR President Grover Norquist:
Taxpayers have every reason to be concerned. Alan Simpson has a history of walking into a room with the stated goal of reform – and in both cases he voted for higher taxes and higher spending, leaving taxpayers to foot the bill. There is no reason to believe that things would be different this time around – when you put everything on the table, including damaging tax hikes, taxpayers will more than likely be sold out.
Reform commission proposals that would not run the risk of being hijacked by tax increase proponents have been put forth in both the U.S. House and Senate. Senator Sam Brownback (R-KS) has sponsored the CARFA Act, which is modeled after the successful BRAC base closure commission, just like a similar bill, the FAPRAC Act sponsored by Rep. John Sullivan (R-OK) in the House. Both of these bills focus only on Federal spending and leave no room for tax increases. Rep. Patrick McHenry’s (R-NC) CORE Spending Act, while setting up a differently focused commission, protects taxpayers by incorporating a clear prohibition of tax increases or new taxes.
Norquist continues:
Rather than falling into the old “everything’s on the table” trap where tax increases are a foregone conclusion, Congress and the Administration should look to enact a BRAC-style spending reform-only commission or the CORE Spending Act all of which would take increases off the table. The BRAC process would not have worked if it had been tasked with either closing unnecessary bases or raising taxes to pay for unnecessary bases. It worked precisely because it had one job: to save taxpayer money by closing unnecessary bases, and along these lines, we should focus only on the real culprit of our fiscal problems – out-of-control spending.
Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 34)
This post today is a part of a series I am doing on the 66 Republican Tea Party favorites that resisted eating the “Sugar-coated Satan Sandwich” Debt Deal. Actually that name did not originate from a representative who agrees with the Tea Party, but from a liberal.
Rep. Emanuel Clever (D-Mo.) called the newly agreed-upon bipartisan compromise deal to raise the debt limit “a sugar-coated satan sandwich.”
“This deal is a sugar-coated satan sandwich. If you lift the bun, you will not like what you see,” Clever tweeted on August 1, 2011.
Congressman John Fleming, M.D. released the following statement today reacting to President Obama’s news conference on the debt ceiling negotiations with Republican and Democrat Congressional leadership throughout the week. This news conference offered little more than a photo opportunity for President Obama to merely show that he is somewhat interested in solving our nation’s financial problems.
“Once again we see our Campaigner-in-Chief take the podium today with NO real solutions to solve this debt ceiling crisis. He would rather to vilify job creators instead of embracing them. Instead of taking responsibility for our debt surging 35% during his term, President Obama chose to blame Republicans for our nation’s financial problems and then has the nerve to cite erroneous polls that say Americans are in favor of tax increases when that could not be farther from the truth. This further proves that President Obama is a complete failure when it comes to leading on this important issue,” said Congressman Fleming.
Congressman Fleming added, “Republicans have put forth real solutions like CUT, CAP, and BALANCE – a balanced budget amendment along with budget cuts and spending caps that will take us further towards fiscal sanity. This will ensure that future generations of Americans are not riddled with debt. Mr. President, stop insulting the American people with your misguided solutions to these problems that will have little or no effect.”
Dr. John Fleming is Chairman of the Natural Resources Subcommittee on Fisheries, Wildlife, Oceans and Insular Affairs and is a member of the House Armed Services Committee. He is a physician and small business owner and represents the 4th Congressional District of Louisiana.
Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 33)
This post today is a part of a series I am doing on the 66 Republican Tea Party favorites that resisted eating the “Sugar-coated Satan Sandwich” Debt Deal. Actually that name did not originate from a representative who agrees with the Tea Party, but from a liberal.
Rep. Emanuel Clever (D-Mo.) called the newly agreed-upon bipartisan compromise deal to raise the debt limit “a sugar-coated satan sandwich.”
“This deal is a sugar-coated satan sandwich. If you lift the bun, you will not like what you see,” Clever tweeted on August 1, 2011.
Washington, Aug 1 -Congressman Geoff Davis made the following statement after voting against S. 365, the Budget Control Act of 2011. The bill passed the House of Representatives by a vote of 269 to 161.
“I commend our Leadership for their tireless efforts throughout this process. This bill makes a number of positive steps toward beginning to address our fiscal problems and also averts default, but I chose to vote against it for two main reasons.
“First, unlike the original House version of the Budget Control Act, this bill decouples the passage of a Balanced Budget Amendment with the second portion of the debt limit increase. This was an important component of the original bill and making the second debt limit increase contingent on its passage would have a lasting impact on getting spending in check.
“Second, while there is certainly room for cuts and efficiency improvements in every federal agency and program, I have concerns about the method by which cuts would take place if the Joint Select Committee did not work as intended. For the sake of our country, I hope the Committee is successful and reports to Congress a deficit reduction package that addresses the true cost drivers. However, in the event that does not happen, the sequester mechanism could be devastating to defense during a time of war and to Medicare when health care providers are already facing cuts thanks to President Obama’s health care law.
“The fight to ensure our country is on sound fiscal footing in the future for our children and grandchildren does not end with this vote. Over the course of the past year, House Republicans have been successful in changing the debate in Washington from whether to cut spending to how much to cut. The magnitude of our fiscal woes cannot be resolved overnight and I look forward to continuing to work for a better and more sustainable path forward.”
Senator Mark Pryor wants our ideas on how to cut federal spending. Take a look at this video clip below:
Senator Pryor has asked us to send our ideas to him at cutspending@pryor.senate.gov and I have done so in the past and will continue to do so in the future.
On May 11, 2011, I emailed to this above address and I got this email back from Senator Pryor’s office:
Please note, this is not a monitored email account. Due to the sheer volume of correspondence I receive, I ask that constituents please contact me via my website with any responses or additional concerns. If you would like a specific reply to your message, please visit http://pryor.senate.gov/contact. This system ensures that I will continue to keep Arkansas First by allowing me to better organize the thousands of emails I get from Arkansans each week and ensuring that I have all the information I need to respond to your particular communication in timely manner. I appreciate you writing. I always welcome your input and suggestions. Please do not hesitate to contact me on any issue of concern to you in the future.
I just did. I went to the Senator’s website and sent this below:
The Department of Health and Human Services encompasses a giant and sprawling collection of agencies and programs. Its 2010 budget of $869 billion represents almost one-quarter of total federal spending. The department operates more than 400 different subsidy programs, including the massive and fast-growing Medicare and Medicaid programs.
The projected growth in Medicare and Medicaid will create a national fiscal disaster in coming decades unless the programs are restructured and cut. Unfortunately, the 2010 health care law expanded federal health spending and will likely make America’s looming fiscal crisis worse.1
Eventually, policymakers will have to control rising federal debt, and that means they will have to downsize HHS programs. Medicare should be converted to a system based on individual vouchers and competitive coverage options. Medicaid should be turned into a state block grant with a fixed level of federal funding. The 2010 health care law should be repealed and other HHS programs should be terminated, as listed below.
Medicare and Medicaid
Rep. Paul Ryan (R-WI) has proposed a detailed plan to convert Medicare and Medicaid into consumer-directed health systems by replacing current programs with tax credits and vouchers.2 Rather than the government reimbursing doctors and hospitals, the government would provide payments directly to individuals, who would purchase health insurance in private markets. The Ryan plan incorporates refundable tax credits for all Americans under age 65 and vouchers for the elderly and low-income populations. The budget effects of the proposal were examined by the Congressional Budget Office, and so the plan provides a useful illustration of the cost savings possible from market-oriented health reforms.3
The Ryan plan would repeal the current tax exclusion for employer-provided health insurance and replace it with a refundable tax credit of $2,300 per adult, $1,700 per child, and a maximum of $5,700 per family. The tax credit would be used to cover the costs of either individual or employer-based health insurance for people under age 65.
Individuals age 65 and over would purchase private health insurance with the aid of a federal voucher. Individuals with lower incomes would purchase private health insurance with the aid of the federal tax credit and a voucher. The reforms would essentially convert Medicare and Medicaid from defined benefit to defined contribution plans. That would allow policymakers to directly restrain program costs without having the government ration health care services.
If individuals receiving tax credits and vouchers purchased health insurance costing less than the federal payment, they would put the excess in a tax-free medical savings account. If individuals purchased an insurance plan costing more than the federal payment, they would chip in the extra. Either way, individuals would be encouraged to make efficient purchasing decisions.
To restructure Medicare, the Ryan plan would provide retirees with a voucher averaging $11,000, which is the current average Medicare spending per beneficiary. The reform would only affect people who are age 55 and younger today. When those individuals start reaching age 65 after 2020, they would receive the Medicare voucher instead of benefits under the current program structure.
The Medicare voucher would grow in value after 2010 based on the average growth rate of general inflation and medical inflation. The dollar values of the vouchers would be adjusted to reflect the age of a beneficiary, income level, and health status. Poorer and sicker persons would receive higher subsidies. The low-income elderly under the Ryan plan would receive an additional payment to their medical savings accounts to cover out-of-pocket health expenses.4
To restructure Medicaid, the Ryan plan would provide low-income individuals with both a refundable tax credit and a voucher to purchase private health insurance. People below the poverty line would receive a $5,000 voucher, while those with incomes between the poverty line and twice the poverty line would receive a smaller voucher amount. State taxpayers—who currently pay a portion of the costs of Medicaid—would pay a portion of the costs of the new Medicaid vouchers.
An alternative approach to reforming Medicaid would be to convert it to a block grant for the states. The states would receive a fixed grant from the federal government with few strings attached, allowing them to experiment with more efficient ways of delivering health subsidies to low-income families. This approach is probably preferable to the Ryan voucher approach because it would likely result in less federal micromanagement of state health care markets and more state innovation.
However, both the voucher and block-grant approaches to reforming Medicaid would create strong incentives to improve efficiency in health care markets, and both reform approaches would allow federal policymakers to directly clamp down on explosive Medicaid spending growth.
Other HHS Spending
Aside from Medicare and Medicaid, HHS operates a huge array of health and nonhealth programs. Essays on this website describe the problems with some of these programs and the advantages of terminating them. As Medicare and Medicaid spending expand, taxpayers will be less able to afford funding all the other HHS subsidy programs.
Table 1 lists HHS programs aside from Medicare and Medicaid that could be terminated. These programs have one thing in common: they are all state grant programs. The federal government raises the money from taxpayers who live in the 50 states and then dispenses it back to the states to administer these programs. That roundabout way of financing government programs makes no sense. Why don’t the states just fund their own programs and cut out the inefficient middleman in Washington?
Elsewhere I have examined why federal grants to state governments are an ineffective and bureaucratic way to try and solve society’s problems.5 For example, an authoritative HHS report on Head Start in 2010 conceded that the program produced few if any long-term benefits to participating children.6 The HHS activities listed in Table 1 that are worthwhile would be better handled by state and local governments or the private sector.
The proposed terminations in Table 1 would save taxpayers $81 billion annually. Even with these cuts, HHS would still spend about $61 billion annually aside from Medicare and Medicaid. Remaining HHS activities would include the Centers for Disease Control, the National Institutes of Health, and the Food and Drug Administration. These agencies could probably use reforms as well, and thus the cuts in Table 1 are not the only possible reforms to the HHS budget.
Table 1. Proposed Spending Cuts
to HHS Programs Other Than Medicare and Medicaid
Program
Spending in 2010
($ million)
Temporary Assistance for Needy Families
$17,754
Children’s Health Insurance Program
$8,903
Foster care grants
$7,403
Head Start
$7,235
Low income energy assistance
$4,993
Child support grants
$4,710
Child care development grant
$3,394
Substance abuse
$3,349
Child care entitlement
$2,925
Social services grant
$2,118
Administration on Aging
$1,600
Other state grant programs
$16,961
Total proposed cuts
$81,345
HHS outlays (excluding Medicare/Medicaid)
$142,379
Source: Author, based on estimated fiscal year outlays from the Budget of the U.S. Government, FY2011.
Have you ever been lied to by a drug addict? “I will stop taking drugs. I am clean now!!” That is the same straight and narrow path that Congress promised to take in 1982 and then again in 1990 when they promised future spending cuts to President Reagan and then to President Bush.
Fool me once, shame on you. Fool me twice shame on me. Fool me thrice? Say it isn’t so!The current promises from President Obama to give future spending cuts in return for raising revenue now [read that as taxes] and the debt ceiling have been twice heard before. So my skepticism is based on the fact that the Democrats have historically not been particularly good at dealing in good faith when it comes to following through on their promises of spending cuts.
The first promised deal was a $3 for $1
Following the Carter era of massive recession and taxation, President Regan sought and signed the largest tax reduction in history. Thus beginning the turn around in the economy. Then came the Tax Equity and Fiscal Responsibility Act of 1982, which agreed to tax hikes on the promise from Congress of a $3 reduction in spending for every $1 increase in taxes. TEFRA was created in order to reduce the budget gap, from a short term fall in tax revenue, by generating revenue through closure of tax loopholes and introduction of tougher enforcement of tax rules, rather than changing marginal income tax rates. Does that sound familiar to our current discussion? The tax increases were real and immediate. The “future” spending cuts never really materialized, especially since the house came under full Democrat control a couple of months later.
The second promised deal was a $2 for $1
Then as a reprise of the “grand deal”, an offer was made to George H. W. Bush in 1990 by House speaker Tom Foley (D., Wash.) and Senate majority leader George Mitchell (D., Me.) promising to cut spending by $274 billion in exchange for a $137 billion tax increase. As before the tax increases were real, the spending cuts? Not so much.
Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 32)
This post today is a part of a series I am doing on the 66 Republican Tea Party favorites that resisted eating the “Sugar-coated Satan Sandwich” Debt Deal. Actually that name did not originate from a representative who agrees with the Tea Party, but from a liberal.
Rep. Emanuel Clever (D-Mo.) called the newly agreed-upon bipartisan compromise deal to raise the debt limit “a sugar-coated satan sandwich.”
“This deal is a sugar-coated satan sandwich. If you lift the bun, you will not like what you see,” Clever tweeted on August 1, 2011.
Congressman Yoder Votes Against $2.4 Trillion Increase to Our National Debt
“Today I voted against a $2.4 Trillion increase in our national debt. I believe we missed an opportunity for historic spending reform in Washington and that we have once again passed our problems on to another day. Although I commend our leaders for working out a temporary solution against choppy political waters, I could not join in an effort that did not solve the problems that got us in to this spot in the first place. To borrow a phrase, I was not persuaded by the logic that Congress would gladly pay Tuesday for a hamburger today. I look forward to many future efforts to join my colleagues on both sides of the aisle as we continue to work towards growing the economy, spurring job creation and fiscal reform that that will combat the national debt.”
Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 31)
This post today is a part of a series I am doing on the 66 Republican Tea Party favorites that resisted eating the “Sugar-coated Satan Sandwich” Debt Deal. Actually that name did not originate from a representative who agrees with the Tea Party, but from a liberal.
Rep. Emanuel Clever (D-Mo.) called the newly agreed-upon bipartisan compromise deal to raise the debt limit “a sugar-coated satan sandwich.”
“This deal is a sugar-coated satan sandwich. If you lift the bun, you will not like what you see,” Clever tweeted on August 1, 2011.
(WASHINGTON) – Kansas Congressman Tim Huelskamp issued the following statement after voting against the Budget Control Act:
“My fellow freshmen and I were sent to Washington to end tricks and gimmicks that put America in this position,” Congressman Tim Huelskamp said. “I voted ‘no’ today because I refuse to dig America into a deeper and un-scalable hole. I refuse to be complicit in recklessly spending and borrowing on the backs of the next generation. And, I believe conservatives should make good on their promises to cut trillions in spending, enact structural reforms, and fill the role of elected representatives, rather than hand control to an exclusive committee.”
“Back in April – when I voted against the continuing resolution for this year – I said ‘no’ because the cuts were minimal. I came to the same conclusion today: these are paltry cuts compared to the $14.3 trillion in debt we already have and the $7 trillion in new debt we can expect in the next decade. This is not a path to fiscal solvency, it’s a path to fiscal insanity. My constituents and our economy deserve a long-term solution that ends the biggest problem: we simply spend too much.”
“Despite having pledged to the American people an open and transparent process and despite having months to fix this problem, we were asked to vote in the 11th hour for a bill that the public had less than 16 hours to read and understand. The culture of fiscal irresponsibility may not have been created by this Congress, but we were sent here to put an end to it; I’m afraid this bill does not rise to that occasion.”
Sixty Six who resisted “Sugar-coated Satan Sandwich” Debt Deal (Part 30)
This post today is a part of a series I am doing on the 66 Republican Tea Party favorites that resisted eating the “Sugar-coated Satan Sandwich” Debt Deal. Actually that name did not originate from a representative who agrees with the Tea Party, but from a liberal.
Rep. Emanuel Clever (D-Mo.) called the newly agreed-upon bipartisan compromise deal to raise the debt limit “a sugar-coated satan sandwich.”
“This deal is a sugar-coated satan sandwich. If you lift the bun, you will not like what you see,” Clever tweeted on August 1, 2011.
Washington, Jul 28 – Iowa Congressman Tom Latham released the following statement on Friday after voting against S. 627 in the U.S. House of Representatives:
“Throughout this year, the national discussion has been dominated by the need to change Washington’s spending ways. I, as many Americans do, fear that this talk is truly just talk. A good case in point is President Obama’s 2012 budget. When he introduced this budget he used these strong words, “We simply cannot continue to spend as if deficits don’t have consequences; as if waste doesn’t matter; as if the hard-earned tax dollars of the American people can be treated like Monopoly money; as if we can ignore this challenge for another generation. We can’t.” But a review of the President’s budget shows that his words are nothing more than just talk about changing the culture of spending because that budget adds an additional $9.5 trillion dollars to our debt.
“I have been very clear in our debate about spending that I will only support measures that meet the criteria of immediately cutting wasteful spending, imposing spending caps as a percentage of our economy going forward, and requiring a balanced budget amendment. We simply can’t keep giving Washington permission in the form of a blank check to continue to spend beyond its means.
“As neither the President nor the Senate have yet to offer one specific proposal, I applaud the House Republican leadership for taking the initiative on the national debt limit and spending restraint debate by actually offering real proposals, discussions and votes in an effort to move this process forward and meet the President’s declared default deadline of August 2nd.
“Unfortunately, while this measure heads in the right direction, it falls short of the criteria I feel must be met in order to gain my support and vote.
“This bill gives the government permission to continue the destructive spending and borrowing policies that have created waves of uncertainty throughout our economy without the real guarantees we need to force Washington to do as Iowa families, farmers and small businesses do – live and spend within its means.
“I share the growing frustration and anger the American people have over this debate and fractured process. And I continue to pledge to work with any members of the House or Senate who are willing to join me to move our country forward with a solution that gives the American people the peace of mind of a common-sense, enforceable solution. This is our responsibility as elected leaders to do nothing short of putting this nation on the path towards fiscal sanity and responsibility without risking default on our debt and other obligations.”
Why not pass the Balanced Budget Amendment? As you know that federal deficit is at all time high (1.6 trillion deficit with revenues of 2.2 trillion and spending at 3.8 trillion).
On my blog www.HaltingArkansasLiberalswithTruth.com I took you at your word and sent you over 100 emails with specific spending cut ideas. However, I did not see any of them in the recent debt deal that Congress adopted. Now I am trying another approach. Every week from now on I will send you an email explaining different reasons why we need the Balanced Budget Amendment. It will appear on my blog on “Thirsty Thursday” because the government is always thirsty for more money to spend.
Abstract:Attempts at passing a balanced budget amendment (BBA) date back to the 1930s, and all have been unsuccessful. Both parties carry some of the blame: The GOP too often has been neglectful of the issue, and the Democratic Left, recognizing a threat to big government, has stalled and obfuscated, attempting to water down any proposals to mandate balanced budgets. On the occasion of the July 2011 vote on a new proposed BBA, former Representative from Oklahoma Ernest Istook presents lessons from history.
A proposed balanced budget amendment (BBA) to the Constitution is set to be considered by Congress this July—the first such vote since 1997.
The BBA is a powerful proposal that attracts great vitriol from the American Left, which recognizes it as an enormous threat to its big-government ways—perhaps the greatest threat. For that reason, the history of Congress’s work on a BBA is full of frustrations, high-profile defections, reversals, and betrayals.
This paper discusses that history. It also describes some of the milktoast versions and amendments that have been offered to gut the BBA while providing political cover for those who are unwilling to support a robust version.
Brief History
Thomas Jefferson wrote in 1798, “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.”[1] Yet according to the Congressional Research Service,[2] the first balanced budget amendment was not proposed until 1936, when Representative Harold Knutson (R–MN) introduced House Joint Resolution 579, proposing a per capita limit on federal debt.
No BBA measure passed either body of Congress until 1982, when the Senate took 11 days to consider it and mustered the necessary two-thirds majority on the version crafted by Senator Strom Thurmond (R–SC).[3] A companion measure received a vote of 236 to 187 in the House—short of the required two-thirds. Despite opposition from Speaker Thomas “Tip” O’Neill (D–MA), the floor vote was obtained by means of a discharge petition led by Representatives Barber Conable (R–NY) and Ed Jenkins (D–GA).[4]
Subsequently, continuing opposition from Speaker O’Neill and his successor, Jim Wright (D–TX), prompted creative use of discharge petitions to circumvent leadership opposition. Several House votes were held in the early 1990s, when Representative Charles Stenholm (D–TX) led bipartisan coalitions to force Democratic leaders to permit (unsuccessful) floor votes. At the time, even prominent Democrats such as Representative Joseph Kennedy (MA) openly supported the BBA and voted for it. There were multiple House and Senate votes, but all were unsuccessful.[5]
The first and only time the House gave two-thirds approval to a balanced budget amendment was in 1995, when Members voted for the “Contract with America” that helped Republicans win major congressional majorities. That was the last time the House held a floor or committee vote. Since then, the Senate has failed twice—each time by a single vote—to gather the two-thirds needed.[6]
Defections Block BBA Approval
Three Senators were the key defectors who prevented Congress from approving a balanced budget amendment in the 1990s. One actually had never supported it and bucked his party to oppose it. The other two flip-flopped in order to go along with their party in opposing the BBA.
First, in 1995, Senator Mark Hatfield (R–OR) took the heat when he would not join his party in support of a BBA. But Hatfield’s vote would have been unnecessary had Senator Tom Daschle (D–SD) not reversed years of prior support to oppose the BBA at President Bill Clinton’s urging.
Then, in 1997, the measure again failed by a single vote in the Senate when newly elected Senator Robert Torricelli (D–NJ) broke his campaign pledge and refused to support the same BBA that he had supported as a House member.[7]
More recently, many House Democrats who voted for the BBA in 1995 are now saying they will vote no in 2011. Most notable among these is House Democratic Whip Steny Hoyer (D–MD).
Senate Defections
Senator Hatfield called the BBA a “political gimmick,” and his high-profile defection broke GOP party unity. Less noticed was that his opposition could have been a moot point. Then-Senate Majority Leader Bob Dole (R–KS) told The New York Times that Hatfield offered to resign before the vote—a resignation that would have produced a 66-to-33 victory for the BBA—but Dole refused to accept the resignation offer.[8]
Still, with or without Hatfield’s vote or resignation, the BBA would have prevailed in the 1995 Senate vote were it not for Senator Daschle’s reversal. That flip-flop is described in a book about his later ousting from office by the voters:
Although the balanced budget amendment had not been a major issue nationally for several years, it provided a striking contrast between Daschle’s first campaign in 1978 and his early career in Congress, when he consistently promoted the amendment, and his later years in the Senate. During his last competitive Senate bid in 1986, Daschle ran a television ad saying that “in 1979, Tom Daschle saw the damage these deficits could do to our country. His first official act was to sponsor a Constitutional amendment to balance the budget.” In 1992, Daschle’s campaign literature touted the “Daschle Plan,” which included the balanced budget amendment: “In 1979, before it became popular, I was pushing a balanced budget amendment to the Constitution. It was my first official action, and I’ve authored or coauthored one every year.” In 1995, the amendment had the support of sixty-six of the sixty-seven senators needed for passage, but Daschle voted against it because of opposition from the Clinton administration…. When pressed on the amendment in the last [2004] television debate, Daschle said that he had opposed the bill in the 1990s because there were no provisions in the amendment allowing for emergencies such as war. But the record showed that there wasan emergency clause.[9]
In 2011, Daschle has penned several articles denouncing the BBA, complaining that it would make the country’s fiscal crisis even worse and would tie lawmakers’ hands.[10]
The 1997 effort to approve the BBA failed in the Senate by a single vote, just as it had in 1995. This time it was Senator Torricelli doing the political acrobatics. As the New York Daily News described it:
Sen. Robert Torricelli (D–N.J.) yesterday announced he will vote against the balanced budget amendment to the Constitution giving Democrats the one-vote margin they need to kill it. The freshman senator flipped on his campaign pledge to support the amendment and on his own past voting record in the House in favor of similar proposals. “I have struggled with this decision more than any I have ever made in my life,” Torricelli said…
Torricelli acknowledged that he had campaigned in support of the amendment to win his Senate seat last year and had voted three times in favor of similar amendments as a House member. But he said President Clinton’s efforts in bringing down annual budget deficits from $300 billion to $100 billion, and the President’s commitment to a balanced budget by 2002, had relieved the pressure for a constitutional amendment.[11]
Trying to give himself political cover, Torricelli tried but failed to get the Senate to support a loophole-riddled version.
House Reversals
Chief among Representatives who supported a BBA in 1995 but say they will actively oppose it in 2011 is Representative Hoyer. In 1995, he even helped to garner votes for the BBA. As the Baltimore Sun reported at the time, “‘The issue of a balanced budget is not a conservative one or a liberal one, and it is not an easy one,’ said Mr. Hoyer, who said he fears the consequences of a national debt that is headed toward $5 trillion. ‘But it is an essential one.’”[12] Arguing for the BBA on the House floor in 1995, Hoyer said:
[T]his country confronts a critical threat caused by the continuation of large annual deficits…. I am absolutely convinced that the long term consequences of refusing to come to grips with the necessity to balance our budget will be catastrophic…. [T]hose who will pay the highest price for our fiscal irresponsibility, should we fail, will be those least able to protect themselves, and the children of today and the generations of tomorrow.[13]
Hoyer reversed course after rising to high leadership within his party, as did Daschle. Daschle did a turnaround against the same language he previously had supported. Hoyer, however, argued that the latest 2011 version (with tax limitation and size-of-government limits) had gone beyond what he originally supported in 1995:
It would require drastic and harmful cuts to programs like Medicare, Medicaid, and Social Security, programs that form the heart of America’s social compact…. Unlike previous balanced budget amendments, this amendment would mean great pain for ordinary Americans, even as it shielded the most privileged from any comparable sacrifice. It is not a solution to our nation’s pressing fiscal challenges.[14]
It is an open question how other Democrats who supported the 1995 version of the BBA will vote on the tougher 2011 version.[15] They include another member of the current Democratic House leadership, James Clyburn (SC).
The GOP was also guilty of abandoning the BBA—by neglect. The BBA had been the number one item on its Contract with America legislative agenda in 1994, but after the single (and successful) 1995 House vote, House GOP leaders refused all entreaties to bring it up again. No House or Senate vote has been held since Torricelli’s dramatic about-face in 1997.
For part of the time while Republican leaders were dormant on a BBA, the budget was balanced. Rather than spotting an opportunity to cement that condition into a permanent requirement, however, some saw it as proving that a BBA is not needed.
During that time when the federal budget was balanced without a BBA requirement (fiscal years 1998–2001),[16] Congress had political incentives to maintain that balance. However, after 9/11, Washington not only ramped up national security spending, but also let other spending rise significantly. The prevailing notion seemed to be that if the budget was not balanced, then it mattered little just how far out of balance it was.
That experience illustrates not only the need for a proper BBA, but also the need for any national security exceptions to be drafted narrowly, to permit deficits only to the extent necessary to provide for non-routine defense circumstances and not to justify unrelated deficit spending.
Watering Down the BBA
The versions of the BBA to be voted on in 2011 are improvements over the Contract with America. Because of this strengthening, the current versions are described herein as “BBA-plus.”[17]
Simply put, the additional features require a supermajority to raise taxes; create limits on the level of federal spending (as a percentage of the national economy); tighten the permitted and limited exceptions to a balanced budget; and limit the potential for judicially imposed tax increases as a means of enforcement.
According to their strictness, different variations in proposed texts could be considered good, better, and best, with a full-featured BBA-plus being the best. But the greater the strictures, the more difficult passage becomes. Many pro-BBA lawmakers have therefore introduced and supported versions that were not as strong as they prefer but have greater likelihood of adoption.
These variations also create potential for mischief. Because they recognize the huge popular support for the BBA, many opponents have attempted to offer amendments and variations that would water down or emasculate the provisions of the BBA so that they could posture as supporters while justifying their “no” votes. The following is a historical synopsis of those tactics.
Taking Social Security Off-Budget. The most prominently advanced effort to weaken a BBA is a provision to separate Social Security payments and receipts from the requirements for a balanced budget. Amendments to do so were offered in both the House and Senate from 1995 to 1997. Senator Harry Reid (D–NV) was a principal leader of that effort in 1997.
Reid and others argued that removing Social Security from a BBA would protect the program from spending cuts. They argued that its funds do not actually constitute government spending since the program involves a trust fund. This ignored the fact that the entirety of the trust fund has been invested in federal bonds and that all of the borrowed money has been spent. Furthermore, during the 1990s, the Social Security program was producing annual surpluses ranging from $60 billion to $65 billion, which disguised deficit spending elsewhere. Today, Social Security runs an annual deficit.
If Social Security were removed from a BBA’s requirements, Congress would be approving major deficit spending while not counting it as a deficit. Politicians would only be pretending to have balanced the budget. As the Congressional Budget Office reported this past January, “Excluding interest, surpluses for Social Security become deficits of $45 billion in 2011 and $547 billion over the 2012–2021 period.”[18]
The Torricelli Ploy. As previously mentioned, the most transparent ploy to create an excuse for opposing the BBA came in 1997 from newly elected Senator Robert Torricelli. As a House member, he had voted for a substitute version and also voted “yea” on final passage of the Contract with America BBA in 1995. He campaigned for the Senate in 1996 as a BBA supporter.
As heads were counted for the 1997 Senate vote, it was apparent that Torricelli and Senator Mary Landrieu (D–LA), both previous BBA supporters, were the swing votes. If both voted “yea,” the necessary two-thirds would be achieved in the Senate. President Clinton lobbied both Senators to vote “nay.” Landrieu announced that she would vote yes, and Torricelli announced that he would vote no. Reporters openly asked him whether “he drew the short straw.”
In a move that was publicly derided, Torricelli offered an amendment to the BBA on the Senate floor and then announced he would vote no because the amendment failed. Then, minutes later in a news conference, he undercut his own explanation by stating that in the future, he would vote no on all Republican versions of a BBA and yes on all Democratic versions.
Torricelli’s unsuccessful amendment would have waived the balanced budget requirement whenever a simple majority in Congress declared “an imminent and serious military threat” or “a period of economic recession or significant economic hardship” or when Congress chose to approve deficit spending for “investments in major public physical capital that provides long-term economic benefits.”[19] The three-pronged nature of Torricelli’s effort was a lumping together of provisions that were also offered separately in both the House and Senate by others.
Other Diluting Amendments. The following is a sampling of other proposals offered on the House or Senate floors during the 1995–1997 considerations:[20]
Representative Robert Wise (D–WV) offered a multifaceted substitute that would have provided for separate federal capital and operating budgets; would have required that only the operating budget be balanced; would have exempted Social Security from balanced budget calculations; and would have permitted Congress to waive the balanced budget provisions in times of war, military conflict, or recession.
Senator Richard Durbin (D–IL) tried to insert the following languageinto the BBA: “The provisions of this article may be waived for any fiscal year in which there is an economic recession or serious economic emergency in the United States as declared by a joint resolution, adopted by a majority of the whole number of each House, which becomes law.”
Senator Barbara Boxer (D–CA) proposed, “The provisions of this article may be waived for any fiscal year in which there is a declaration made by the President (and a designation by the Congress) that a major disaster or emergency exists, adopted by a majority vote in each House of those present and voting.”
Representative Major Owens (D–NY) wanted “to allow a majority of Congress to waive the balanced budget provisions contained in the joint resolution in any fiscal year that the national unemployment rate exceeds 4 percent.”
Representative John Conyers (D–MI) wanted to require a detailed plan of spending cuts before balance could be required, proposing “to exempt Social Security from balanced budget calculations; and provide that before the constitutional amendment could take effect, Congress would be required to pass legislation showing what the budget will be for the fiscal years 1996 through 2002, containing aggregate levels of new budget authority, outlays, reserves, and the deficit and surplus, as well as new budget authority and outlays on an account-by-account basis.”
Representative David Bonior (D–MI) tried not only to exempt Social Security from the calculations, but also to require only a simple constitutional majority vote (218 in the House, 51 in the Senate) to allow deficit spending.
Additional amendments were more straightforward, such as whether a supermajority would or would not be required to raise taxes under the BBA. The House Rules Committee screened out 38 proposed floor amendments; only six were permitted.
Conclusion
History shows that the potency of a balanced budget amendment attracts fervent efforts to confuse the issues, especially by creating counterfeit versions and exceptions to provide political cover. Proponents of a BBA should prepare accordingly.
If not for high-profile political defections in the mid-1990s, the BBA would have been approved by Congress. Had it then been ratified by the requisite three-fourths of the states, today’s debates over borrowing limits, entitlements, and spending levels would be greatly different, if not absent.
However, the versions considered in the ’90s were notably weaker than both the House and Senate versions of the BBA-plus now being considered. Had an earlier version been adopted, today’s debate might be about efforts by Congress to evade the spirit of the BBA by exploiting loopholes in that earlier version. This is why vigilance is necessary to prevent the insertion of loopholes into the language of a BBA-plus.
Those who do not learn from the failures of history are doomed to repeat them.
—The Honorable Ernest J. Istook, Jr., a former Member of Congress, is Distinguished Fellow in Government Studies in the Department of Government Studies at The Heritage Foundation.
Michael Tanner is a senior fellow at the Cato Institute and coauthor of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution.
Texas governor Rick Perry is being criticized for calling Social Security a “Ponzi scheme.” Even Mitt Romney is reportedly preparing to attack him for holding such a radical view. But if anything, Perry was being too kind.
The original Ponzi scheme was the brainchild of Charles Ponzi. Starting in 1916, the poor but enterprising Italian immigrant convinced people to allow him to invest their money. However, Ponzi never actually made any investments. He simply took the money he was given by later investors and gave it to his early investors, providing those early investors with a handsome profit. He then used these satisfied early investors as advertisements to get more investors. Unfortunately, in order to keep paying previous investors, Ponzi had to continue finding more and more new investors. Eventually, he couldn’t expand the number of new investors fast enough, and the scheme collapsed. Ponzi was convicted of fraud and sent to prison.
Social Security, on the other hand, forces people to invest in it through a mandatory payroll tax. A small portion of that money is used to buy special-issue Treasury bonds that the government will eventually have to repay, but the vast majority of the money you pay in Social Security taxes is not invested in anything. Instead, the money you pay into the system is used to pay benefits to those “early investors” who are retired today. When you retire, you will have to rely on the next generation of workers behind you to pay the taxes that will finance your benefits.
As with Ponzi’s scheme, this turns out to be a very good deal for those who got in early. The very first Social Security recipient, Ida Mae Fuller of Vermont, paid just $44 in Social Security taxes, but the long-lived Mrs. Fuller collected $20,993 in benefits. Such high returns were possible because there were many workers paying into the system and only a few retirees taking benefits out of it. In 1950, for instance, there were 16 workers supporting every retiree. Today, there are just over three. By around 2030, we will be down to just two.
As with Ponzi’s scheme, when the number of new contributors dries up, it will become impossible to continue to pay the promised benefits. Those early windfall returns are long gone. When today’s young workers retire, they will receive returns far below what private investments could provide. Many will be lucky to break even.
Eventually the pyramid crumbles.
Of course, Social Security and Ponzi schemes are not perfectly analogous. Ponzi, after all, had to rely on what people were willing to voluntarily invest with him. Once he couldn’t convince enough new investors to join his scheme, it collapsed. Social Security, on the other hand, can rely on the power of the government to tax. As the shrinking number of workers paying into the system makes it harder to continue to sustain benefits, the government can just force young people to pay even more into the system.
In fact, Social Security taxes have been raised some 40 times since the program began. The initial Social Security tax was 2 percent (split between the employer and employee), capped at $3,000 of earnings. That made for a maximum tax of $60. Today, the tax is 12.4 percent, capped at $106,800, for a maximum tax of $13,234. Even adjusting for inflation, that represents more than an 800 percent increase.
In addition, at least until the final collapse of his scheme, Ponzi was more or less obligated to pay his early investors what he promised them. With Social Security, on the other hand, Congress is always able to change or cut those benefits in order to keep the scheme going.
Social Security is facing more than $20 trillion in unfunded future liabilities. Raising taxes and cutting benefits enough to keep the program limping along will obviously mean an ever-worsening deal for younger workers. They will be forced to pay more and get less.
On the Arkansas Times Blog the person using the username “the outlier” noted: Saline, leave SS out of the mix. It is solvent through 2037, and can be made solvent indefinitely with minor tweaks. So many people think that the Social Security is a great investment plan and it may only need a few tweaks. […]
On the Arkansas Times Blog on June 11, 2011 the person going by the username Jake de Snake noted,”Current empirical evidence indicates that the American welfare is successful in reducing poverty, inequality and mortality considerably. Public pensions, for instance, are estimated to keep 40% of American seniors above the poverty line.” If Social Security was […]
If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand. Milton Friedman Ep. 4 – From Cradle to Grave [2/7]. Milton Friedman’s Free to Choose (1980) Since the Depression years of the 1930s, there has been almost continuous expansion of governmental efforts to provide […]
Author Biography Eric Schurenberg is Editor-in-Chief of BNET.com and Editorial Director of CBS MoneyWatch.com. Previously, Eric was managing editor of MONEY. As managing editor, he expanded the editorial focus to new interests including real estate, family finance, health, retirement, and the workplace. Prior to MONEY, Eric was deputy editor of Business 2.0. He was also […]
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