Friday, July 15, 2011

A balanced budget amendment vs the elephant in the room

Our huge public debt ultimately reflects our lack of individual restraint. But we can do better. — Lawrence W. Reed

Americans have been spoiled by a generation of extravagant federal spending made possible by an orgy of irresponsible borrowing. Now the party is over and the pain of long-lasting and unpopular austerity must come. — Zach Bogue, US Army veteran

The budget should be balanced; the treasury should be refilled; public debt should be reduced; and the arrogance of public officials should be controlled. — Cicero (106-43 BC)
Because of its out-of-control spending, the United States of America is long overdue a USSR-style collapse. Nevertheless, power-hungry politicians -- mostly in the Democrat Party -- are either in pathological denial, desire the collapse, or simply don't care.

At our current rate of government growth, the Congressional Budget Office projects the federal debt to reach 90% of GDP (Gross Domestic product) by 2020 and more than 200% in 2050! Meanwhile, the petulant acting president and other Democrats are opposing billion-dollar cuts when they should be cutting trillions!

Only a politician can believe that all money belongs to the government to use as it sees fit and that workers may be allowed to keep some of their earnings. Only a politician or a bureaucrat can claim that a reduction in the rate of growth of government is a cut in government! (Learn about baseline budgeting.)

Only the acting president and his delusional allies in Congress believe that runaway government growth, spending, and debt is necessary, sustainable, and affordable. Where in the world does the acting president think the money to pay for government will come from when it is destined to consume more than twice what taxpayers produce?
People look at me and say, "What are you talking about, Joe? You're telling me we've got to go spend money to keep from going bankrupt?" The answer is, "Yes, I'm telling ya." - Joe Biden, US Vice President and economic idiot (No wonder we're in such trouble!)
Solve a debt problem with more debt? Yeah, that oughta work!

Although everyone is talking about the debt crisis, nobody in either political party is talking about the elephant in the room: The vast majority of federal spending is unconstitutional and immoral! The primary cause of this crisis is the complete and utter disregard of the US Constitution, particularly the 9th and 10th Amendments. I also say the bulk of federal spending is immoral because it necessitates and justifies theft of property (earnings of taxpayers) for redistribution to persons (including and especially federal bureaucrats) who have not earned, and do not deserve, that stolen wealth. It is also immoral because recipients of that stolen loot are deprived of incentive and necessity to achieve and only grow bitter because they don't get enough stolen wealth.

Since the 1930s, some politicians have suggested a "balanced budget amendment" to the US Constitution to force politicians to make rational decisions regarding federal spending (as if Congress and the Administration would comply with that amendment any more than they do the rest of the Constitution).

Included in the suggested amendment would be a cap on federal spending and revenues -- say 18% of GDP except in time of war or national emergency. (In the post-WWII era, spending has generally hovered around 20% of GDP. If the central government were returned to its constitutionally-defined and limited size, it would only cost 2-3% of GDP during peacetime!)

The central government only cost 2-3% of GDP up until about 100 years ago except for periods of war. (For example, in 1910, GDP was $33,400 million and total federal spending was $839.9 million or 2.5% of GDP!) Yet, it provided all the services the people needed and asked for! Private enterprise provided the seed money, leadership, and labor for projects we are now accustomed to turning over to bumbling government bureaucrats and corrupt politicians. Today, the acting president believes that "at a certain point you’ve made enough money" and businessmen have no right to create wealth by providing goods, services, and jobs that people want and need.

Therefore, I am convinced that the 18% restriction does not go far enough. That is still nearly ten-times too much room for unwise and unconstitutional spending in that 18%. Just because we spend that much does not mean that we should!

An 18% limit is essentially a guarantee to spend 18% -- regardless of whether that level of spending is legal or justified! This is not a limited-government policy! I don't want it etched in Constitutional stone that the Federal State will be 18% of the national economy!

The 18% GDP cap may require some minor spending cuts here and there, but it won't compel fundamental reforms or phase-outs of countless unconstitutional programs like Medicare, which has made medical care more expensive, even for the elderly. And it fails to return most powers to the states or individuals, as the Ninth and Tenth Amendment requires.

Dr. Walter Williams calls the proposed balance budget amendment a "cop out." I agree. It does not require Congress to eliminate unconstitutional, unnecessary, or unwise programs. It only caps that spending at an arbitrary level. That spending will continue to fund activities that are not the constitutional purview of the central government (education, health care, social services, intrastate commerce, gun control, war on drugs, funding state and local projects, etc.) while giving short shrift to duties the Constitution specifically requires of the central government (national defense, protecting States against Invasion, etc.). So, any balanced budget amendment must be worded very carefully in order to force a return of the central government to its constitutional bounds.

Another aspect: Sad history shows that politicians have little regard for the Constitution. There must be immediate and extremely unpleasant consequences for any congressman or president who ignores any limits imposed by a balance budget amendment or anything else in the Constitution. We already have legislation that requires a balanced budget. A balanced budget law enacted by Congress and signed into law by President Jimmy Carter in 1977 requires that "Beginning with fiscal year 1981, the total budget outlays of the Federal Government shall not exceed its receipts." How's that working out? Without teeth, the law is worthless.

The proposed Balanced Budget Amendment, as with the current balanced budget legislation:
• Ignores the clear limitations already imposed by the Constitution.
• Substitutes those limitations for the permanent enshrinement of a government bloated to a whopping 18% of GDP.
• Says nothing about how GDP is to be calculated.
• Says nothing about what is to be counted in the official budget.

The effort to control spending and the central government must begin with evaluating exactly what the central government should be doing -- then limit it to those roles as intended by the Constitution and its writers. Nearly all of the specific "enumerated" Legislative Powers of Congress are spelled out in Article of I Section 8 the Constitution. I find twenty powers listed in Article I, Section 8 and a couple others elsewhere in the Constitution. Nothing else is the business of the central government and these powers and responsibilities must be returned to the States and the People!
Government is the only enterprise in the world which expands in size when its failures increase. — Janice Rogers Brown, Associate Justice, California Supreme Court

My reading of history convinces me that most bad government results from too much government. — Thomas Jefferson

The multiplication of public offices, increase of expense beyond income, growth and entailment of a public debt, are indications soliciting the employment of the pruning knife. — Thomas Jefferson, letter to Spencer Roane, 9 Mar 1821
One subject at a time!Much of the problem is the plethora of amendments that often turns a simple bill of a few paragraphs into a 1,000-page monster. Therefore, included in a balanced budget amendment must be a requirement that all legislation be limited strictly to one subject. Utah has such a constitutional restriction (Utah Constitution, Article VI, Section 22) and it works very well.

I believe that any balanced budget amendment must include a requirement that all current and future federal programs, agencies, laws, rules, policies, and judicial decisions face, at most, a ten-year sunset unless they are specifically renewed by appropriate legislation and are determined by at least 3/4ths of both houses of Congress to be in full compliance with the limits imposed by the original intent of the the US Constitution. Many agencies and programs should be cut immediately. Here are some of my ideas for federal cuts:
Agency or Program / Phase Out
• Agency for International Development / Immediately
• AmeriCorps / Immediately
• Amtrak subsidies / 1 year
• Bailouts / Immediately
• Bureau of Alcohol, Tobacco and Firearms / Immediately
• Bureau of Land Management / Immediately (see Constitution, Article I Section 8 clause 17 for limits on federal property)
• Centers for Disease Control / Immediately
• Center for Faith-Based and Community Initiatives / Immediately
• Clean Air Interstate Rule (CAIR) / Immediately
• Corporate Average Fuel Economy (CAFE) / Immediately
• Corporation for Public Broadcasting / Immediately
• Davis-Bacon Act / Immediately
• Death gratuity for members of Congress / Immediately
• Department of Agriculture / Immediately
• Department of Commerce / Immediately
• Department of Education / 1 year
• Department of Energy / Immediately
• Department of Health & Human Services / 1 year
• Department of Housing & Urban Development / Immediately
• Department of Interior / Immediately
• Department of Labor / Immediately
• Department of Transportation / Immediately
• Drug Enforcement Administration / 1 year
• Economic Development Administration / Immediately
• Economic stimulus schemes / Immediately
• Energy Policy Conservation Act / Immediately
• Energy Star Program / Immediately
• Environmental Protection Agency (EPA) / Immediately
• Earned Income Tax Credit / Immediately
• Essential Air Service / 1 year
• Federal Emergency Management Agency / Immediately
• Federal Reserve / 1 year
• Food and Drug Administration / 1 year
• Food stamps / 1 year
• Gun control / Immediately
• Head Start / Immediately
• Housing Assistance
• Low Income Home Energy Assistance Program (LIHEAP)
• Medicaid / 1 year
• Medicare / 20 years
• Minimum Wage and other Price Controls
• Most federal criminal laws / Immediately
• Most federal law-enforcement agencies / Immediately
• National and Community Services Act / Immediately
• National Endowment for the Arts / Immediately
• National Endowment for the Humanities / Immediately
• National Forest Service / Immediately (see Constitution, Article I Section 8 clause 17 for limits on federal property)
• National Institutes of Health / Immediately
• National Park Service / Immediately (see Constitution, Article I Section 8 clause 17 for limits on federal property)
• National Public Radio / Immediately
• National School Lunch Program / 1 year
• ObamaCare / Immediately
• Peace Corps / Immediately
• Planned Parenthood / Immediately
• Presidential Campaign Fund / Immediately
• Regulation of intrastate commerce / Immediately
• Renewable energy standards / Immediately
• Renewable energy subsidies / Immediately
• Sarbanes-Oxley Act / Immediately
• School breakfast and lunch subsidies
• Small Business Administration / 1 year
• Social Security / 20 years
• Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) / 1 year
• Tacit approval of illegal immigration / Immediately
• Temporary Assistance to Needy Families (TANF)
• Transportation Security Administration / 1 year
• United Nations Intergovernmental Panel on Climate Change / Immediately
• US Fish and Wildlife Service / Immediately
• Vehicle, light bulb, toilet, etc. efficiency standards / Immediately
• War on Drugs / Immediately
Before you say that I am a hard-hearted scrooge for wanting the termination of these federal programs, let me say that my life-long habit of charitable giving is far above the national average. I am deeply annoyed by those who are far less charitable than I and prefer to have the government extract even more money from me to support government-approved but ineffective "charities."

None of the above federal agencies and programs add to the nation's GDP (Gross Domestic Product); they only sap it. I'd prefer immediate termination of all the above federal agencies and programs. I only extend the termination of some agencies and programs to give individuals, States, and charities time to adjust to the elimination of unconstitutional federal powers and the sudden reduction in the size of government. A Ron Paul fan has an even longer list of 150+ agencies and programs to be considered for elimination.

There is no room in the Constitution for any of the above agencies and programs. There is no room in the Constitution to overhaul or reform any of the above agencies and programs. They all must be eliminated as soon as we can "wean" people from the long-entrenched programs. Most of the above agencies and programs can be eliminated in less that a year. The rest must be frozen at current levels, and receive no further increases or expansion of scope. Sunset dates must be set upon all programs which do not currently have closure dates. Each year a real reduction in funding to these programs must be legislated, with a straight line year-by-year diminishment of the program to its demise. There is no program listed above that should exist 20 years from now.

None of the above federal activities have any constitutional authority. Most these functions are the role of individuals, families, charities, communities, and the States. The remainder shouldn't exist at all!
Would you be willing to give up your favorite federal program if it meant never having to pay the income tax again? — Harry Browne
The acting president is correct when he says. "Any plan to reduce our deficit substantially must reflect American values of fairness and shared sacrifice." But his idea of sacrifice is directed in the wrong direction. He wants achievers to sacrifice by paying more taxes to support the government and non-achievers. Where is the "social justice" in that? The correct focus of sacrifice must be to sacrifice unconstitutional government agencies and jobs. This means that the few remaining government workers must sacrifice all compensation greater than that earned by non-government workers in comparable occupations. This means that non-achievers (except those who, due to disability, cannot care for themselves) must sacrifice by earning their own way in life instead of demanding that achievers support them though unconstitutional government programs.
The primary reason for government growth (and the "incumbent advantage") is that we've yet to convince people to refuse to be bribed with their own money. — Boyd K.

Everyone wants to live at the expense of the state. They forget that the state wants to live at the expense of everyone. — Frederic Bastiat
The Phoenix Center reports that
Even a small 5% reduction in the regulatory budget (about $2.8 billion) will result in about $75 billion in expanded private-sector GDP each year, with an increase in employment by 1.2 million jobs annually. On average, eliminating the job of a single regulator grows the American economy by $6.2 million and nearly 100 private sector jobs annually. Conversely, each million dollar increase in the regulatory budget costs the economy 420 private sector jobs.
Clearly, our economy urgently needs a sharp reduction in the size and power of government. We currently have one bureaucrat for every 100 people. That is far too much government. If my ideas are adopted, many of these federal employees will become unemployed during a tough time for our economy. But, the economy is in crisis primarily because we can't afford the size of government we have. With unemployed government workers on the street, unemployment will rise. However, the immediate drop in the cost of government and the reduction in government impediments to success will restore the ability of the free market to do what it does best -- create prosperity and lift people out of poverty.

The various government attempts to eliminate poverty have clearly failed to reduce the rate of poverty. Through government scams such as "The New Deal," Social Security, and "The Great Society," the government has "redistributed" wealth and power primarily to itself and its bureaucrats -- not to those actually in need. When government gets out of the way, achievement is properly rewarded through the free market. When success goes unpunished, Americans have the resources needed to take care of themselves, their families, and their neighbors. Power-hungry politicians and bureaucrats presume that typical Americans are as selfish as themselves. However, when government stays in its proper limits, America's traditional charitable generosity is unleashed to care for those who struggle financially.

The present federal budget crisis is very simple to address successfully. All we need is politicians with the courage, integrity, and wisdom to comply with the Constitution. The limits the Constitution places on the government is the only balanced budget provision necessary! There is no need whatsoever for a balanced budget amendment! Returning the central government to the size, power, and influence it had prior to the Morrill Act of 1862 (adjusted for population growth and inflation) is a good start. Merely limiting government to 18% of GDP does little to resolve the violation of principles by today's current lack of restraint.

The acting president said,
We don't need a constitutional amendment to do our jobs. The Constitution already tells us to do our jobs and to make sure the government is living within its means and making responsible choices....We don't need more studies. We don't need a balanced budget amendment. We simply need to make these tough choices. - Barrack Obama
Now, the acting president clearly did not really mean that the nation's leadership should follow the Constitution as written and intended. What he meant was that Congress do his will and follow the Constitution as he wants it to be twisted. Nevertheless, the words he spoke, as quoted above, were technically correct. Congress and the Whitehouse must follow the Constitution which entails making the "tough choices" outlined above in order to restore the Constitution and return to the limited government mandated therein. That means a lot of sacred cows must be sacrificed.
We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with. - Dr. Ron Paul, Congressman

My concern is that (the Balanced Budget Amendment) might limit our ability to rely on the plain text of the 1787 Constitution as presently amended. - Howard Phillips, past Constitution Party nominee for President

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1 comment:

  1. In the news today ( Congress and the Whitehouse have come up with a compromise to cut spending a bit and to raise the debt ceiling. All they’re really doing is kicking the can down the road again. So long as the central government exceeds its constitutional limits, this debt crisis will perpetually resurface without ever really fixing anything.

    Compromise in politics is always bad. When a big-government advocate compromises, he agrees to accelerate government growth and power a bit more slowly -- but in the end we still always get bigger big government. When a human-liberty advocate compromises, he agrees to allow big-government advocates to accelerate government growth and power a bit more slowly -- but, again, in the end we still always get bigger big government. That is exactly what's happening in this debt-crisis deal.

    The correct solution is simply to follow the Constitution: Phase out all spending, programs, agencies, regulations, policies, etc. which exceed the powers granted to the central government by the Constitution. Federal spending will drop to a reasonable 2-3% of GDP instead of the current, obviously unsustainable 20%+.

    The only good thing about this deal is that it doesn’t include a Balance Budget Amendment that would set a limit on federal spending based on GDP. The Constitution already has a long-ignored – and much better -- built-in spending limit by restricting what the central government is allowed do.

    Never compromise with evil. But that is exactly what the Republicans have done – as usual. This is why the Republicans do not deserve to be the majority party.