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February 04, 2011 10:37 AM UTC

Still a Bad Idea

  • 17 Comments
  • by: ThillyWabbit

( – promoted by Colorado Pols)

News has hit that Senator Mark Udall is cosponsoring the resurrected constitutional balanced budget amendment. The paper which shall not be named has a gushing editorial about it.

Needless to say, the base is rattled, and I think the Senator would do well to make the progressive case for this policy, or else every time the topic comes up the blogosphere will be a beehive being poked by a stick.

Fortunately, I don’t think it’s going to see the light of day in its current form for many reasons, but here are just a few:

1. The spending limit isn’t substantially different than the reconciliation rules in that it only takes a 3/5 majority to override it. Congress frequently waives the Byrd Rule already. So the spending side doesn’t have a lot of teeth while the revenue side is a straight jacket (see #2).

2. It contains a TABOR-like ratchet where spending is based on the previous year’s revenue. So when we go through a multi-year recession such as the one we just had, the budget would be needlessly constrained when spending is needed so as not to stymie a recovery. In addition, it has a percent-of-GDP cap at 20%. The problem there is sometimes the GDP drops suddenly. When that happens, government needs to spend more, not less, or the GDP will drop again as output gets choked off.

3. 3/4 of the states will never, ever ratify it. States and local governments derive a substantial share of their funding from the federal government, and as such if the federal government’s share of the funding expands and contracts with the economy then states will take a double hit.

4. There are times when we must deficit spend or face annihilation. If we had a balanced budget amendment in 1941 we’d all be speaking German or Japanese today. Fortunately the proposal has an out clause–a congressional declaration of war. Problem is, Congress hasn’t declared war since 1941. So while on one hand the constraint would tend to reduce the size of the military industrial complex and perhaps keep us out of several of our recent misadventures, it would also wipe us off the map as a world power. You can’t speak softly yet carry a big stick if you can’t afford the stick.

5. The base will stay home again. If we got a shellacking in 2010, imagine what will happen to us when hundreds of thousands of people are thrown off Medicaid because Wall Street screwed up again.

I don’t doubt Senator Udall’s sincerity about wanting to pay down the debt. But there’s very little in this proposal that seems workable. What we have to do is get the corrosive effect of money out of politics. We have a massive defense budget because of the power of the defense lobby. Our health care costs are so high because of the power of the various medical and insurance lobbies. We give massive tax cuts to the rich because if we don’t they’ll “shove 30-second ads up his ass,” to coin a phrase.

Even if, by some miracle (or catastrophe), this thing passes, and we don’t do something about the system of influence peddling, the rich and powerful are still gonna get theirs. The people who will suffer the wildly alternating cuts in services and tax hikes as the economy bobs up and down will be those who can’t afford to spend billions of dollars lobbying to protect their bottom lines. Comprende?

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17 thoughts on “Still a Bad Idea”

    1. His SLICE Act bill would require a simple majority rather than a 2/3 majority to override line item vetoes. Of course he’s been running that bill for years but the Democratic leadership has failed to bring it up.

      I agree that Congress isn’t serious. Udall is. He’s a deficit hawk, not a deficit peacock. Proof positive: he voted against the Bush/Obama tax cuts. Only a handful of senators were willing to go on record with a no vote, including the likes of Bernie Sanders.

    2. Thanks for the wiki link on the history. Byrd, the constitutional scholar and erstwhile defender of the legislative branch, did make a valid point that a line item veto could be used by a president to punish his political foes.

      I believe the balanced budget proposal was in the Republican Contract for America agenda that swept in the Republicans in 1994, ironically in response to the (then) huge deficits racked up by 12 years of Reagan/Bush rule.

      It took a Democratic president working with Republicans to actually do something about deficits instead of smoke and mirror proposals like the balanced budget amendment. Clinton left office handing his succesor budget surpluses, which of course Bush promptly squandered like a drunken sailor on payday.

       

  3. …just like voting to repeal health care reform or voting to repeal FASTER?

    What really bothers me, I suppose, is the notion that legislators need a constitutional amendment to force them to do their jobs responsibly. If it’s really that important to balance the budget now, then just go ahead and do it already.

    1. If people were angels, we wouldn’t need government, either, but we’re not, so we do.

      You’d think the Republican-controlled Colorado legislature wouldn’t have needed the GAVEL amendment to stop acting like jackasses, but they did. You might think an enlightened Congress wouldn’t need the First Amendment to leave speech, the press, religion and freedom of assembly alone, but I wouldn’t bet on it.

      There are plenty of good arguments against this amendment (Thilly makes a good start), but that isn’t one of them.

  4. I saw an item in Udall’s newsletter yesterday about this topic.  I sent him back an email trying to remind him of Colorado’s experience w/ TABOR and that setting hard numbers (20%) or ratcheting down the budget is questionable policy.

    Frankly, it’s an appalling waste of time and money to even propose something this simplistic, and given Colorado’s experience it calls his judgement into question.  Maybe he could arrange a fact-finding mission at the Colorado Legislature for the next few weeks while we go through the budget.

    1. Before running for Congress? You’d think he could take a fact-finding trip into his own memory banks to see what havoc TABOR has wrought in the past when it comes to budgets.

  6. and I’m no Republican.

    We absolutely must get this country’s fiscal affairs in order if we are to continue to have a prospering economy and a stable social order.

    You are right that some occasions call for deficit spending – a war, a national emergency – for a short time.

    But even national emergencies should be paid for by us, not by our children, and we should have the collective courage to decide what we are willing to pay for.

    Me, I think we need a strong social safety net, significantly more investment in basic infrastructure and schools, and expenditures on many areas of research, among many other things.

    We do need a vigorous defense capability, though perhaps not one that seeks to perpetuate American dominance world-wide.

    I have no problem at all supporting changes to the tax code, and even new forms of taxation, that will pay for those things we need. And I think taxation can be kept at a reasonable level, too.

    But, without a balanced budget amendment, Congress simply will not make the decisions that must be made. History proves that.

    As for your concern about the influence of the rich, I don’t see how that’s an argument against balancing the budget. That’s an argument against our current campaign finance system and it’s an argument against the disproportionate influence of professional lobbyists that system creates.

    Nor is your point that the proposal Udall has made has flaws an argument against the concept. Of course Udall’s specific proposal isn’t perfect. I agree with you that, along with a spending cap of some kind, the amendment must include some kind of correlating revenue floor so that spending isn’t the only aspect of the problem that is tackled when a deficit looms. But I also think there has to be a mechanism for revenue limitation, too, so that the incentive for spending control isn’t completely negated.

    As for the states, I think you’re just wrong on that. If Congress sends a balanced budget amendment to the states, it will be ratified. The consent will, in the end, be nearly unanimous. The reason is two-fold: first, many states are penalized by the existing system by paying more in taxes (collectively by their citizens) than what they receive in services. Second, most states have a balanced budget amendment and I think most state level politicians both recognize it is possible and realistic to live with that and regard it as an obligation Washington should have, too. And, of course, the idea is generally popular with the public.

    And if none of that convinces you, for exactly how long do you suppose China is going to keep paying our bills? Just asking.

    1. I’m not sure what history books you’ve studied. Here we are pushing 250 years without one. Even recently, the budget was in the black for most of the 1990s. Then we cut taxes and went to war, something that has never been done. The answer is fairly simple–raise taxes at least until the wars are done. How much, on whom, and how permanently are the only questions.

      China also does not pay our bills. The vast majority of the federal debt is held by Americans. They’re buying a lot right now because their currency manipulation makes it a good deal for them, but if America ever defaulted on its debt it would be Americans who took the brunt.

      A balanced budget amendment is not going to get rid of donor states. That’s much more a function of how much land is owned by the federal government each state and how much political juice a state’s senators and representatives have. And its exactly because states have to balance their budgets that they depend on federal money. And it’s not just states, it’s local governments. Everything from schools to police departments receive federal funds.

      1. Then we cut taxes and went to war, something that has never been done

        Policy sets the budget, not the constitution. If you don’t like massive deficits, the solution is simple–stop running them. Raise taxes to pay for expensive shit, or don’t add more expensive shit.

        Nobody wants to get tough on entitlements anyway, and that’s where the majority of our non-discretionary spending goes. Creating a balanced budget amendment just pigeonholes the budget when deficit spending may be necessary. It lacks foresight.

    2. I agree that we need to get the increasing borrowing under control. How to do it – I think there’s much better approaches. But one way or another we have to do it.

      Otherwise we’ll have this giant debt, hit our next recession courtesy of the banks who are still playing the same games, and have no ability to borrow then – leaving us in a permanent depression.

  7. I get it that Udall is genuine about reducing the deficit. But he has just associated himself with a gang that is not genuine-they just want to reduce spending and don’t give a damn about the deficit, as they (the Republican supporters of this amendment) proved by voting for the tax cuts, including those for the rich.

    Udall joining this group is like a sheep joining a pack of wolves to work for the “betterment of animals.” A good-sounding cause, but their definition of “betterment” will differ, and in the end the others are still wolves and the sheep is dead. The ones who will be squeezed by a balanced budget amendment will be the sick and poor and unemployed, not Wall Street.

    The economics-as this proposal is written-is plain stupid. Basing spending on the previous year, as others have noted, locks in a downturn in the economy. But it would also lock in, or at least allow, free spending in a raising economy, when the government should be saving. This proposal has it totally backward. An argument can be made for requiring balancing budgets over the course of a business cycle, but year to year is nuts. Oh, yeah….the “perfect market” theory folks say the ups and downs of the cycle can be totally controlled…except….uh…the last three years, well…..uh.

    And an automatic exemption for waging war, but not for assisting the poor and sick and unemployed in time of recession, has the morality backward as well.

    I sent off a letter to the Senator yesterday saying all of this and more. (Sigh)

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