U.S. Balanced Budget Amendment

Discussion in 'Archive: The Senate Floor' started by MasterDillon, Sep 8, 2011.

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  1. MasterDillon Jedi Knight

    Member Since:
    Dec 28, 2010
    star 2
    Due to the rather large debt the United States has right now many people in Congress have been calling for a balanced budget amendment. If one were to happen what would you want included in it, and what cost should the U.S. never exceed except during wartime?
  2. Raven Administrator Emeritus

    Member Since:
    Oct 5, 1998
    star 6

    It shouldn't happen. Even assuming that in a war the amendment doesn't apply its a restriction that can only hurt your country.

    -Economic/environmental catastrophes happen. In both cases, abnormal levels of spending may be required to have an effective recovery.

    -A balanced budget essentially prevents the government from running a surplus. Yes, I know that this is unlikely at the present moment, but just as the framers of your constitution couldn't imagine situations on the ground in 2011, we can't really predict overall circumstance down the road ourselves. A surplus could allow for tax breaks the following year, paying now for delayed infrastructure, building new infrastructure, boosting social security reserves, etc.

    -Depending on the philosophies of the parties in power, you could see massive tax increases or massive spending cuts. Looking at the 2012 budget information showing on Wikipedia, I see that "The Obama administration's original budget request contained $2.627 trillion in revenues and $3.729 trillion in outlays for 2012. The April 2011 Republican plan contained $2.533 trillion in revenues and $3.529 trillion in outlays." So, either A) you'd need to raise another trillion dollars in revenue, or B) to cut a trillion dollars from the budget. There's some obvious "easy" things to cut - the military budget is somewhat bloated, health care costs can be downloaded to the individual states in exchange for more control on the state level over how health care works - but at the end of the day, you might not find the direction that the party in power takes is one you expected. Even a compromise (say, cut 750 billion, raise taxes by 350 million) would still be a bitter, bitter pill for the Republicans.

    -Having said that, while I think that a constitutional mandate for a balanced budget is a mistake, I do think that the US does need to balance its books. Spending increases should be pegged under the rate of inflation, I do think that ideally health care costs should be downloaded to the state level, the military should be scaled back somewhat, etc. And yes, taxes should increase. I think that a national tax like the Canadian GST at around 5% (excluding books, children's clothes, groceries, etc) is reasonable (considering that the British VAT is at 20%...) and regressive (i.e., it makes those darn lazy poor people pay their fair share), while tax increases on high earners should balance out the pain.
  3. shinjo_jedi Jedi Master

    Member Since:
    May 21, 2002
    star 5
    I learned in Macro 101 that a Balanced Budget Amendment is a horrible policy.

    When you're in a recession, tax revenues drop and automatic stabilizers increase. Therefore, you're going to have to make up for those lost revenues with either spending cuts or tax increases, thus taking money out of the economy, exacerbating the recession.

    What we need is a responsible government that saves in the good times (Clinton) so we can spend in the red during the bad times, without taking on too much debt or cutting too much money out of the economy.
  4. Ghost Jedi Grand Master

    Member Since:
    Oct 13, 2003
    star 6
    I support the budget being balanced over time (everything should be planned to be paid for in the long run), not necessarily balanced in a single year, because who knows what may happen with national security or the economy. I support being fiscally responsible, I support going back to Bill Clinton's huge budget surpluses, and eventually paying off our national debt for the first time since Andrew Jackson, so we actually have a "treasury" again. But we shoudln't hurt the economy and kill jobs in order to achieve this.

    The current Republicans' "balanced budget" amendment is ridiculously unfair. It's not really about balancing the budget. They want to make tax reform impossible. They want to cap the economy at a certain level of GDP (including GDP in the constitution by itself if just stupid), and that cap would eventually leave Congress with no choice but to destroy Medicare and significantly cut the Defense Department. Their plan isn't about balancing the budget, it's about "starving the beast" (their name) which means ending government as we know it.
  5. shanerjedi Jedi Padawan

    Member Since:
    Mar 17, 2010
    star 4
    I'm not a big fan of the balanced budget amendment.

    There are times when you can run a deficit and times where you can't.

    I'm not a fan of the massive debt we've incurred but a balanced budget amendment is not really the solution.

    Deficits and some debt is not the end of the world. It's really the size of your deficits and debt. And that's where the US has a problem.

    But balancing things no matter what by fiat is extreme. Not necessary.
  6. DarthBoba Manager Emeritus

    Member Since:
    Jun 29, 2000
    star 9
    Yeah, the Balanced Budget Amendment crowd is ignoring the fact that being able to go into debt is what makes the US such a powerhouse. We can owe a trillion or two and it simply doesn't matter the way it would for the overwhelming majority of other countries, because (in decent economic times, anyway) we can pay it off without a great deal of discomfort. We can't of course go overboard like we are now, but debt isn't necessarily a bad thing at all. The Tea Party doesn't seem to realize that it's government with a capital G that defines the USA as a hyperpower.
  7. Vezner Jedi Master

    Member Since:
    Dec 29, 2001
    star 5
    The problem is we've had five trillion in deficit spending since 2008, which when you think about it is the most enormous Keynesian stimulus you can imagine. Yet we've had slower growth than any time since World War II. So I don't think spending is doing a whole lot to help here. This is exactly why you have groups like the Tea Party pushing for government to get out of the way and let the private sector do what they do best, build businesses and create jobs.

    Agreed. Unfortunately I've given up on trying to put the words "responsible" and "government" together in the same sentence.
  8. Jedi Merkurian ST Thread Reaper and Rumor Naysayer

    Manager
    Member Since:
    May 25, 2000
    star 6
    Hey Vezner! Good to see you in these parts again [face_coffee]
    While this makes for a good campaign slogan, realityand history beg to differ with you.
  9. Vezner Jedi Master

    Member Since:
    Dec 29, 2001
    star 5
    Thanks. :) Fortunately, life is keeping me busy with work and family and I don't have nearly as much time as I used to for online forums. Besides, it's probably better for my blood pressure to take a break from all of you crazy liberals in the senate. :p

    I'll see your anti-Bush rant and raise you some facts to mull over.

    You gotta love "link" poker. :)

    In all seriousness though, it's hard to take any argument that focuses on the benefits of government spending seriously at this point in the game. Obama, without a shadow of a doubt, has spent more in stimulus money than any President in history. Supposedly that was going to kick start this economy and save the nation. Unfortunately that didn't happen and we're worse off now than we were before. Getting downgraded from AAA status is only one example of the mess we're in and whether you like it or not, Obama's policies are a large reason for the downgrade. Thankfully most Americans are finally starting to wake up. I guarantee that it isn't going to get better for Obama before it gets worse.

    And I'll be quite honest, I wish he would have been successful in turning our nation around. I may not agree with his politics but that doesn't mean I want him to fail at leading our country out of an economy slump. Unfortunately, he simply isn't the man for the job because his policies stink. We need new blood in the White House and it needs to be someone who actually knows about economics. My vote is going to Romney.
  10. Lowbacca_1977 Jedi Master

    Member Since:
    Jun 28, 2006
    star 6
    Imo, the downgrade is a nonissue. They don't represent anything meaningful, Fitch and Moody's both have not downgraded the USA, and these credit agencies have already demonstrated that the credit ratings are unreliable. Not to mention that it came out that the reason S&P downgraded the US was due to bad math when their work was rechecked, which S&P seems to have acknowledged and then moved on like nothing happened by saying even if they did the math right, they would've downgraded the US.
  11. shinjo_jedi Jedi Master

    Member Since:
    May 21, 2002
    star 5
    There can be was bigger Keynesian stimulus packages, and it did do a lot to help, but that's for a different debate.

    And the Tea Party is empty rhetoric, in my opinion. Where is the demand going to come from to build the businesses and increase their profits so they can create jobs? People don't have the money to spend, and businesses won't invest until people are buying. It's a vicious downward cycle, to which Keynesian philosophy argues that the demand spark comes from the only source that can spend at this time and that is government.
  12. shinjo_jedi Jedi Master

    Member Since:
    May 21, 2002
    star 5
    There's quite a lot of bullcrap surrounding those "facts" though and some are pretty stretched. Nothing annoys me more than the GOP defense that the deficits weren't Bush's fault because the Dems controlled part of Congress during his presidency. The Senate at one time was 50-50, then 51-49. Not exactly holding Bush up much, from my observations. What did they make him pass that he didn't want to, or block of his that he wanted? Nothing, so it's irrelevant. And that tax revenues increased throughout his terms because of the tax cuts is a post hoc fallacy. They could have, yes, but he doesn't offer proof and quite a few economic studies say otherwise. The "deficits began to shrink" argument is also rather odd. "Yes, he inherited a surplus - and ran up record deficits - but eventually the deficits kind of got lower!" Also, saying Bush's addition to the debt isn't bad because of Obama's record is hiding behind the truth: Bush was president during an expansion, where fiscally responsible would mean taking away from the debt, whereas Obama is president during a recession where it would be fiscally irresponsible to not add to the debt.

    That article throws a lot of facts around, but fails to link them or reveal the whole truth.
  13. shinjo_jedi Jedi Master

    Member Since:
    May 21, 2002
    star 5
    No, it isn't actually. Keynesian economics has been the major school of thought within economics since the 30s and will continue to be - many of the most notable economists currently living are Keynesians.


    I don't doubt this, but is it more than Roosevelt during WWII?

    It saved the economy from depression, and sans stimulus the economy would be in much, much worse shape. Most economic studies claim that it made the economy better off than otherwise, and we're currently in better condition now than we were pre-stimulus. The economy is getting worse because global demand continues to lag, the recession is worse than anyone originally thought, and Washington is too obsessed with the "debt" crisis and focusing on cutting programs and money out of the economy, rather than focusing on the long-term prospects of the economy and getting people back to work. Businesses won't hire until there is demand for their products, and consumers won't purchase if they don't have a job, which is why Obama used spending to increase demand in a last resort option and a Jobs bill to provide incentives for businesses to hire, so demand will increase and get the economy going again.

    Eh, it really isn't though. S&P doesn't have a great track record going - they didn't warn about the subprime mortgage securities until it was too late. Moody's & Fitch upheld their rating, and the yield rate for Treasury bonds didn't change much (it immediately fell slightly, actually) post-downgrade meaning that investors, if anything, gained confidence in the U.S. government. It's a non-issue at this point. They also cited the political situation as a major cause for the downgrade, because currently there is a major party that doesn't see anything wrong with letting the U.S. default on it's debt obligations and will allow it to if they don't get their way.
  14. shanerjedi Jedi Padawan

    Member Since:
    Mar 17, 2010
    star 4
    At this point I tend to hear both sides blame the other and I just tune out.

    Most people know it was both sides who created this mess and no amount of cheerleading for either party rings true.

    They're not credible.

    The question here is what to do about it and the balanced budget amendment, while well-intentioned, is too extreme and inflexible.
  15. Ghost Jedi Grand Master

    Member Since:
    Oct 13, 2003
    star 6
    We agree on a lot of things, but no.

    When the Republicans had the House, Senate, and White House they turned a surplus into a deficit. That is a fact.

    What created the deficit? Tax Cuts, Wars in Afghanistan/Iraq, Medicare Part D... and then made significantly worse by the Recession.

    Medicare Part D is now paid for as part of "ObamaCare." We're almost out of Iraq completely, and beginning to withdraw from Afghanistan. Obama and the Democrats want to repeal the Tax Cuts for the top one/two brackets and eliminate deductions to pay for the rest. To get out of the recession: infrastructure spending.
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