A Cogent Argument Against the Balanced Budget Amendment
[Guest post by Aaron Worthing; if you have tips, please send them here. Or by Twitter @AaronWorthing.]
Besides presenting a persuasive (to me at least) argument against proposals for a balanced budget amendment, I have to say that Carson Holloway’s argument is a prime example of how to disagree with people respectfully, taking their concerns seriously and making a serious argument on the subject. I started out disagreeing with him, but by the end, I was personally convinced.
Certain regular whipping-boy trolls might take notes.
[Posted and authored by Aaron Worthing.]
Same problem with the Super Congress; it makes no sense to set up a secondary structure to do the sensible things we should have done in the first place as a matter of SOP.It’s a fix that doesn’t make the hard decisions Congress and the President should be already making. Further, in WWII, we had a serious need to deficit spend. A BBA might make emergency spending along those lines illegal.
On the other hand, when the President doesn’t bother to submit a budget for almost 2 years, may be the BBA is the only way to light a fire under his ass.
Bugg (ea1809) — 8/18/2011 @ 6:03 amHere in California, voters enacted Prop. 13 as a response to higher and higher property taxes. It may have hamstrung local government but it saved a lot of people from losing their homes.
A balanced budget may severely limit the federal government but it is us vs. them.
AZ Bob (aa856e) — 8/18/2011 @ 7:03 amCorrection:
Another Drew - Restore the Republic / Obama Sucks! (52c114) — 8/18/2011 @ 7:04 amThe President has submitted a budget, no one passed it.
The only budget that has passed either House of Congress since FY-2008, has been what the GOP did this year for FY-2012.
Aren’t you feeling good how the Dems (Pelosi/Reid/Obama) have looked out for “the little guy” since they grabbed the reins of power?
I respectfully disagree with Carlson.
DohBiden (d54602) — 8/18/2011 @ 7:26 amEvery proposed BBA that I’ve actually seen text for contains outs for such emergencies. Perhaps not for the land purchase (although at this point that seems more than a little unlikely), but certainly for unprovoked war.
And the serious proposals I’ve seen don’t actually require that the budget balance every year, only that the total budgets over periods of years do so.
So I don’t necessarily think Holloway is arguing against what is actually being proposed. Whether that is because he hasn’t seen the same proposals, or because he thinks it is easier to morph the proposals in order to argue against them I leave to others to decide.
Soronel Haetir (134454) — 8/18/2011 @ 7:27 amMaybe I am dumb, but the concepts of a balanced budget and borrowing are not mutually exclusive. In this scenario Congress would craft a balanced budget, but as the fiscal year progresses, the budgeted amount is able to be exceeded, which would be made possible by borrowing. So if an emergency or opportunity came up and was not budgeted for, we could borrow to address the issue.
peadub (c26337) — 8/18/2011 @ 7:33 amAmerica has proven itself – beyond any doubt – too stupid craven and cowardly to manage its finances in absence of a balanced budget amendment.
It’s really that simple.
happyfeet (3c92a1) — 8/18/2011 @ 7:34 amWhy do we need a balanced budget amendment if we have paygo?
Oh wait………….nevermind.
daleyrocks (bf33e9) — 8/18/2011 @ 7:36 amA balanced budget may severely limit the federal government but it is us vs. them.
I’m with AZ Bob.
ColonelHaiku (d1f5ff) — 8/18/2011 @ 7:44 amI’ve thought for a long time that a BBA should have a metric limiting spending to what revenues were received in the most recent Fiscal Year.
Another Drew - Restore the Republic / Obama Sucks! (52c114) — 8/18/2011 @ 7:52 amIf the economy is expanding, revenues will also, and the govt could then spend more, but none of this “baseline” crap – if the most recent FY revenues were X, you get to budget X.
If that’s an increase, you’ve been doing well; if it’s a decrease, the govt gets to contract just like everybody else.
No, feet, it isn’t America that’s at fault, it’s the elite Washington DC political culture and the lack of direct accountability fostered by the shared, mutually beneficial, corruption of both political parties conducted in collusion with establishment media.
In short, the problem is an entrenched elite which sustains itself at the expense of those it pretends to represent. Government is the enemy of the people, and the Tree of Liberty is looking a bit parched.
ropelight (9d80b8) — 8/18/2011 @ 7:55 am…also, there should be a limitation on the size of spending vis-a-vis the GDP too.
Another Drew - Restore the Republic / Obama Sucks! (52c114) — 8/18/2011 @ 7:55 amIdeally, that limitation would be on a de-escalator to reduce the overall size and impact of the Fed. Govt. in the lives of Americans.
IIRC total govt spending, at all levels, prior to The Crash was in the neighborhood of 15% of GDP.
We would have a long way to go to get back to that.
yes you are right Mr. ropelight
parched and flat-headed
happyfeet (3c92a1) — 8/18/2011 @ 7:56 amThis essentially recaps arguments I’ve already made on this blog, was it a month ago? Historically no government has ever been able to finance a war without borrowing. Without borrowing the US revolution would have been impossible*, which is why the constitution gives Congress the power to borrow money. Capital improvements are also difficult to finance without borrowing, and there’s no good reason to do so.
But like many of the powers entrusted to Congress, especially by the likes of Hamilton, we’ve seen all too well how they can and will be abused, and there’s also a reason why the constitution allows for amendment. Holloway argues against a supermajority requirement to approve borrowing because it would allow a minority to block the majority’s program; I call that a feature rather than a bug. If as much as a third of one of the Houses of Congress objects to borrowing money then how urgent can it be? If it were truly necessary, can one imagine a third of the House or the Senate objecting? If they do object, clearly they don’t see the necessity, and if they don’t see it then maybe it’s not there.
* (But then so would have been the Seven Years War that created the debt which the UK quite reasonably wanted the colonists to help pay off, considering that so much of it was incurred to save those same colonists’ lives and property. Had the UK been unable to borrow for that war there would have been no taxes for the colonists to protest, but there would also have been no colonists in the first place, since the French and Indians would have killed or expelled them.)
Milhouse (ea66e3) — 8/18/2011 @ 7:58 amThen again, instead of a supermajority in Congress, perhaps a BBA should provide that Congress can’t borrow money without the concurrence of a majority of state governors. That would take it out of the Washington hothouse and into the real world, and with modern communications it’s easily doable. Once again, if they can’t be convinced of the necessity then it can’t be very urgent after all.
Milhouse (ea66e3) — 8/18/2011 @ 8:00 amRepeal the 17th-A!
Another Drew - Restore the Republic / Obama Sucks! (52c114) — 8/18/2011 @ 8:02 amRestore the voice of the Sovereign States to the corridors of power on Capitol Hill.
I don’t see what’s so convincing about that article. While it’s useful to consider the rationale of the founders, who thought deeply about the consequences of their action, that’s not binding on our amendments. Otherwise their wouldn’t be an amendment process. (The author acknowledges as much.) I don’t think much of the idea of a living constitution for current interpretations, but it’s vital that we consider differences between then and now when it comes to amendments. The US is vastly richer and has vastly higher tax revenue, relative to when we were founded.
Majority rule is one of the strengths of our country, but it’s not infinite in scope, and with good reason. While I shudder to think of this as an actual legal principle, it should be pointed out that we’re essentially confiscating money from (unrepresented) future US citizens. This is bug in our democracy and needs to be fixed. We’re not running a deficit because of exigent circumstances, but because we want a bunch of goodies, but don’t feel like paying for them. Further, the laughable deal to “reduce” the deficit is just one more example of the fact that no one’s going to get serious about this problem.
Personally I’d prefer a requirement that we run a small surplus (even 1%/year would be a lot of money) in normal years, with a 3/4 (or even 4/5) requirement requirement to touch the surplus. Only after we’ve run through the surplus, should we be able to acquire new debt.
supagold (6aa3f4) — 8/18/2011 @ 8:06 amThat’s probably an exaggeration. We could have financed the GWOT without borrowing had we cut back in other areas.
What I’d rather see is saving money for a rainy day, and if we have a rainy day, we spend the money we’ve saved. Obviously this is absurd in today’s climate. But what’s really absurd is that we don’t do this.
If we are faced with an existential threat, that should be enough to invoke a clause to permit a deficit budget. Alternatively a clause simply excluding x,y,z expenses (war being one of them).
I agree with you that a supermajority-for-deficit requirement would not be a bug. We would see some kicking and screaming akin to what we saw for the debt ceiling fight, but eventually both sides would work something out.
There are no great solutions to this massive problem. That’s what the BBA is all about. It’s a realization that our problem is that bad.
Dustin (b7410e) — 8/18/2011 @ 8:06 amRepeal the 17th? Why? How exactly do the states (i.e. the people of the states) have more power when their legislatures elect their senators than when their people do it directly? Why would a senator elected by a legislature, and whose reelection will be in the hands of another legislature that has itself yet to be elected, be more responsive to the views and interests of the state’s people than is one elected by those people, and who is constantly aware that those same people will be voting on his reelection?
On the contrary, I’d think that having the state legislature choose its senators is a guaranteed way to turn state elections into national ones. Just as in countries with Westminster-style governments, elections for parliament have turned into proxy elections for prime minister, so would elections for state legislatures turn into proxy elections for senator. I don’t see how that would be a good thing.
Milhouse (ea66e3) — 8/18/2011 @ 8:11 am#15, #16,
Actually, what I would like to see would be changing the Senate so that the state governors are simultaneously federal senators. Perhaps with the ability to appoint a deputy to do the day to day work, but who is fully answerable.
Perhaps leave the other seat as is is, or taken by another state wide office holder, or reverted to the state legislators, I’m not sure what would be best there. But with modern communications and travel realities I see no reason that such a system could not function.
Probably harder to get more tinkering passed though, instead of just repealing the new language.
Soronel Haetir (134454) — 8/18/2011 @ 8:12 amWhy do you need an exact answer?
True. To some extent. For those paying attention, which wouldn’t be a majority of people.
Let’s make the Senate a little less democratic rather than “be more responsive to the views and interests of the state’s people”. They have a House of Representatives for high response to their views. the Senate is not supposed to match the House in functionality. It’s supposed to be something of a procedural hurdle where ideas can cool and often die if they aren’t really good ideas.
The point is that it keep government from reacting and intruding into every damn thing.
I’d also say let the Senate meet ever odd year except in emergencies. And force them to all eat a sleeping pill before the session starts. And turn the thermostat to 84 F degrees. Get that sucker really plodding along at a snail’s pace.
But mostly, let’s get the states some more power over this so-called federal government. What power does the state of Texas have over the federal government today? This direct election of Senators is not good enough. Most voters don’t even understand there are different interests between the two governments.
Dustin (b7410e) — 8/18/2011 @ 8:17 amThat’s a nice idea.
Dustin (b7410e) — 8/18/2011 @ 8:17 amSoronel, that’s not a bad idea, and it’s one I’ve often thought of, but it’s not at all similar to the proposal to repeal the 17th. Some proponents of such a repeal seem to imagine that before its passage senators were actually answerable to their state legislatures, were subject to their direction, and could be recalled if they voted against the legislature’s wishes. That’s nonsense, and I don’t know where they get such an idea. Perhaps that would have been a good system, but it wasn’t the one that the founders chose, and it wasn’t one that ever existed. What you now propose might be similar to such a system, and that’s an argument in its favour.
However, on consideration I think it would have the exact opposite effect; rather than the governors becoming senators, the senators would become governors. That is to say, rather than giving the states more power over Washington, it would give Washington direct control of the states.
Milhouse (ea66e3) — 8/18/2011 @ 8:20 am(cont:) Consider once again the Westminster model of government. In theory it puts Parliament in charge of the government. In practise it does the exact opposite.
Milhouse (ea66e3) — 8/18/2011 @ 8:20 amOn the contrary, it’s those not paying attention who would treat the state legislative election as a proxy election for senator. In Westminster-style countries, how many people go to the polls thinking they are electing the prime minister, and not even knowing the names of the candidates for local MP? A clear majority.
Milhouse (ea66e3) — 8/18/2011 @ 8:23 amThe author’s arguments are very weak. Citing Hamilton? Really? Hamilton would have shut down the government a looooong time ago.
His strongest case is relative to natural disasters. Well, why should we pay for many of these? You build on a beach or a historic flood plain and it floods? Tough. Earthquake along an active fault area and it falls down? Tough.
Hamilton would have fought to the death this notion of the Feds being all things to all people. I am frankly stunned, Aaron, that you were persuaded.
To me, the real problem with an amendment is the mendacity in the judiciary, and the government generally. Look at how California, for one, “balances” their budget: they assume outrageous and unattainable revenues. Voila! The same crap would happen federally. Then, the courts would punt the issue – especially as they see THEY would face cuts or shutdowns themselves.
Ed from SFV (7d7851) — 8/18/2011 @ 8:27 am#22,
I’m fully aware that such a system is not at all similar to the pre-17th regime. Given that we already know that the pre-17th system had significant structural problems I am looking for something that addresses both those problems and the ones we currently have. I see no point in going back to a system that we already know broke down once (and I think would be even more likely to do so now).
Soronel Haetir (134454) — 8/18/2011 @ 8:27 amThen we’re in complete agreement.
Personally I’d like to get rid of the current House and replace it with a system of direct representation, under which every citizen has one proxy which he can assign to anybody he likes, and reassign it as often as he likes. Anyone holding at least 300K proxies would have the right to speak and vote in Congress. No more elections; just people reassigning their proxies as they see fit, whenever they see fit. No salary for Congressmen; they would be paid by the people they represent, at a rate agreeable to both, and that charge would cover all their expenses. No geographical restrictions on whom someone can represent; if all the shoemakers in the USA gave their proxies to the same person, then that person would represent their interests and cast their votes as he thinks they want him to.
Milhouse (ea66e3) — 8/18/2011 @ 8:37 amThat is indeed the problem with a BBA. I simply prefer this problem to the status quo with some kind of language meant to hold this at bay.
Any deliberatly misleading revenue or outlay estimates should be criminalized, for example.
Dustin (b7410e) — 8/18/2011 @ 8:44 amI agree with Happyfeet on the problem: we elect those “elite” people. And keep reelecting them. If we turn out the people who would show restraint because they didn’t give enough goodies out, then we are the corrupt ones.
If you look at the criticisms that are being heaped on those who attempted to block the debt limit increase, you get a good feel for how deep the corruption goes.
One thing that has puzzled me though, is why are these people considered “elite”? They should be removed from influence, not given high status. The people who elect big spenders are responsible for the current problem. Evading responsibility by blaming people in Washington doesn’t make much sense when we put them there.
For my part, my state of Utah has two senators and one congressman (mine) that voted against the ceiling increase. So some progress is being made.
Jeff Mitchell (481f2a) — 8/18/2011 @ 8:47 amWhether or not a balanced budget amendment would be appropriate, there are two weaknesses to his arguments. 1) Relying only on Hamilton to support his arguments, and not other founding father. 2) Claiming that we are always ruled by a majority.
As to the second point, there clearly are circumstances, even in the Constitution, which requires more than a majority vote (i.e. 2/3 vote of Senate to ratify treaties, 2/3 Congressional vote for amendments to Constitution and 3/4 vote of States, conviction on impeachment requires 2/3 Senate vote). Even the author concedes that the Senate essentially requires 60 Senator votes before the possibility of passing any bill. Under the author’s reasoning, should the filibuster system be considered unconstitutional?
Amazed_476 (8e4d78) — 8/18/2011 @ 8:56 amHonest and reasonable elected representatives could surely perform routine functions within the constraints of a conditional BBA and yet still retain the ability to recognize legitimate emergencies and to borrow accordingly.
The problem we face today is that one political party, The Democrat Party, has breached its position of trust and responsibility raiding the public treasury buying votes in order to remain in power. Regular ongoing excessive taxing, borrowing, and spending is the modus operandi that created the current financial crisis, year upon year upon year of it.
No, our current crisis has its origins not in the case of a national emergency, but in the ongoing daily functions of government largess. The Democrat Party has been wantonly focused almost exclusively on providing their increasingly greedy and dependent constituencies with a designated spot at the public trough in exchange for campaign contributions, political support, and votes.
Don’t fool yourself, we all agree borrowing in an emergency makes sense. But only in the context of a BBA can we have any hope of restraining corrupt Democrat Party practices of using public resources to feather private nests.
ropelight (9d80b8) — 8/18/2011 @ 9:11 amComment by Milhouse — 8/18/2011 @ 8:37 am
You might be interested in this article…
Another Drew - Restore the Republic / Obama Sucks! (52c114) — 8/18/2011 @ 10:00 amhttp://www.hoover.org/publications/defining-ideas/article/89656
forgot to include this:
“…Thus the Constitution established a monarchical executive, an oligarchic Senate, and a democratic House of Representatives, each empowered to balance the other and forestall the inevitable decline into tyranny each alone would undergo if it possessed too much power…”
Another Drew - Restore the Republic / Obama Sucks! (52c114) — 8/18/2011 @ 10:01 amAD, that’s a great summary. The Senate is not supposed to be so much like the House.
It’s no surprise that the result of ruining the Senate is that 50.00001% of taxpayers are getting freebies at the cost of the long term survival of the nation. It’s democracy gone too far. That was always the fundamental pitfall of our least-bad form of government.
The Senate can be an effective political body without being quite as democratic as it is today.
Dustin (b7410e) — 8/18/2011 @ 10:05 amdid I say taxpayers? Wrong word, obviously.
Dustin (b7410e) — 8/18/2011 @ 10:05 amThanks Dustin; and that’s why I say repeal the 17th!
Another Drew - Restore the Republic / Obama Sucks! (52c114) — 8/18/2011 @ 10:29 amAnother failed initiative of Progressives.
SpartacBS is eerily absent.
DohBiden (d54602) — 8/18/2011 @ 11:22 amWhat Halloway fails to consider is that the calls for a Ballanced Budget Amendment is just a tool to bring federal spending under control. I have always been opposed to an actual amendment, but the threat of one might force the Federal Government to adopt some mechanism which caps both debt and deficit spending to GDP. For example, long term debt can not be above 30% annual GDP and federal spending can not exceed federal tax receipts/fees/tariffs/royalties by more than the previous years GDP growth rate unless a super-majority of both houses agrees to a three quarter exemption with a cap of +5%.
bains (59f792) — 8/18/2011 @ 4:39 pmI learned years ago giving an order, passing a law, or setting down rules for your kids should only be done if one has the will and ability to enforce the decree.
How does any BBA get enforced? The ‘will of the people’ in the next election cycle? By then the money is spent and the debt incurred. Dissolution of congress? Impeachment? Recall?
I confess to having no answer; but consider that the inability to effectively enforce any BBA reduces my interest in it.
Old Bob (b3bc0d) — 8/18/2011 @ 4:53 pmI haven’t read his article yet. But my own take is twofold:
a) I don’t see anything wrong with the idea of credit, as long as it is kept under rational control. The government — at any level, state, local, federal — has not shown a particularly good job at mastering this idea, however. It spends money in good times on frippery, then, when it’s time to tighten the belt, screams to the voters about how they’re going to have to cut essential services — police, fire, emergency. The idea that some things have priorities is that priorities only go one way. Given this fact, one has to say that between choosing “no credit” and “no control over credit” I have to choose the former over the latter. So I do support the overall concept behind a Balanced Budget.
b) The basic notion, as proposed in most venues, however, suffers from an incredibly serious flaw:
No GAAP in Government.
The governments have, somehow and for some reason, managed to not be required by us, The People, to utilize GAAP techniques in their bookkeeping. This allows for a mass of outright folderol and overt chicanery to occur, such as Clinton’s so-called “Balancing of the Budget” that was, in fact, anything but. I put it to you: There is no point whatsoever to requiring a “Balanced Budget” unless we FIRST demand that governments MUST have a full set of books that are kept no differently than we require of virtually every business we do dealings with**.
In defense of this argument — that a BBA will be useless without a concurrant commitment to GAAP in the government, I cite the recent history of New York State and Attica Prison.
Because, you see, New York State HAS a BBA. That did not stop it from doing something that would get corporate officers thrown in jail for doing it: They sold their own assets to themselves and claimed it was “income”.
Read the article. There is not and will not be anything in-place to prevent similar abuses at the national, state, or local levels if the same governments are not required to adhere to GAAP.
So a BBA is a waste of time, as most people promote it.
====
Smock Puppet, Facepalm Expert (c9dcd8) — 8/18/2011 @ 10:27 pm** I’ll ack the idea that there are and should be sections of “The Books” which aren’t subject to direct public scrutiny — various “black ops” and “national security” matters — but they ought to be required to KEEP those books, they just ought not to be available to people without certain clearances. The should be essentially “black boxes” — such and such an amount goes into this large coverage area which is not directly accounted for at this level. Since this should be a fairly tiny percentage of the budget, it’s something where a little non-knowledge should not hurt an awful lot.
Any balanced budget amendment needs at least two features I’ve not seen discussed.
First, there must be a provision that the federal government cannot mandate state expenses without fully funding them itself. The states must be protected from this cost shifting ploy.
Second, there must be a clear exception for military and disaster expenses related to enemy attacks upon the US and proper military responses. This is a Constitutionally required function of the federal government. And when at war people must expect to spend more. That means that taxes must be raised to balance out the expenses to the extent necessary and feasible before the budget balance is allowed to be destroyed by high expenses.
{^_^}
jbd (99eed4) — 8/19/2011 @ 12:56 amjbd ,
Perhaps if our wars actually had to be paid for we wouldn’t be so eager to start them. Or so willing to use less than all available force to win them.
Soronel Haetir (134454) — 8/19/2011 @ 8:19 amRequire the government to follow Sarbanes Oxley.
JD (8b15c6) — 8/19/2011 @ 8:26 amI agree, Mr. Worthing. And another consideration: if the amendment were ratified and then ignored by Congress, what would the federal courts do? Raise our taxes? Declare what spending should be cut? We don’t want the courts making those decisions and they don’t want to either.
The amendment could provide political pressure…until such time Congress decides some crisis or opportunity demands an unbalanced budget, or decides that the amendment doesn’t mean exactly what it says (to which the courts will likely acquiesce).
Crispian (70c05e) — 8/19/2011 @ 12:06 pmSmock Puppet makes a great point about GAAP, and Crispian adds an important point about enforcement.
So let’s push for GAAP in government accounting, and pass a balanced budget amendment. Even without enforcement, a BBA creates a solid foundation to stand on for those in Congress who want to exercize responsible fiscal policy.
The amendment can’t precisely define everything, but it can make the point of requiring a nominally balanced budget with exceptions allowed with a larger majority vote (I suggest 60%). It at least formally establishes the concept/framework of fiscal responsibility.
It also expresses what is considered proper fiscal policy, so the citizen is less likely to be fooled into believing alternative concepts (if they make the effort to check the Constitution.)
Ken in Camarillo (645bed) — 8/20/2011 @ 9:20 am“…That means that taxes must be raised to balance out the expenses to the extent necessary and feasible – or ongoing expenditures must be reduced as required – before the budget balance is allowed to be destroyed by high expenses…”
FTFY!
Another Drew - Restore the Republic / Obama Sucks! (bf7b3a) — 8/20/2011 @ 10:24 amComment by Soronel Haetir — 8/19/2011 @ 8:19 am
Just what “wars” have not been “paid for” since the Feds began this long period of deficit spending?
Another Drew - Restore the Republic / Obama Sucks! (bf7b3a) — 8/20/2011 @ 10:27 amHow much do we still owe for WW-2?
Korea?
Viet-Nam?
and to whom?
For government accounting see <a href="http://gasb.org/, which promulgates GAAP for governments.
See also – GASB White Paper: Why Governmental Accounting and Financial Reporting Is—and Should Be—Different
http://gasb.org/cs/ContentServer?c=Page&pagename=GASB%2FPage%2FGASBSectionPage&cid=1176156741271
daleyrocks (bf33e9) — 8/20/2011 @ 11:34 amSorry about first link – should be gasb.org
daleyrocks (bf33e9) — 8/20/2011 @ 11:35 amMy fisking of Holloway’s article is here: A Balanced-Budget Amendment and the Constitution. The fisking is followed by my version of a balanced-budget amendment.
Thomas (92e0a5) — 8/20/2011 @ 3:05 pm