RoR: Forum

Update Friday July 29, 2011, 12:52 pm.

House Speaker John Boehner hastily rewrote his stalled emergency debt-limit bill again Friday, and former conservative foes began climbing aboard.
....
Rep. David Dreier of California said the revised measure would still raise the nation's debt limit by $900 billion -- essential to allow the government to keep paying its bills -- and cut spending by $917 billion. But a later increase in borrowing authority wouldn't take effect unless Congress sent a constitutional balanced budget amendment to the states for ratification (my italics)

That was a key demand of rebellious conservatives who withheld their votes from the legislation on Thursday night. (link)

(Edited by Merlin Jetton on 7/29, 10:34am)

Post 1

Friday, July 29, 2011 - 11:13am

Hmmmmmmmmmmm..................

Post 2

Friday, July 29, 2011 - 11:38am

But a later increase in borrowing authority wouldn't take effect unless Congress sent a constitutional balanced budget amendment to the states for ratification

If I wasn't an atheist, I'd by saying, "God bless those rebellious conservatives."

Assuming they pass that today, and assuming the senate will wait for Hell to freeze over before they even let it come up for a vote, the House needs to go out and tell the people (cuz the media won't) that they have created a budget (Ryan's), passed Cap, Cut and Balance which the Senate refused to even consider, and now they have passed Boehner's very reasonable bill (We give you 900 billion now, you reduce future spending by 917 billion and let the people vote on a requirement that we only spend what we take in - and that we have about 8 years to get that balanced budget implemented).

Post 3

Friday, July 29, 2011 - 11:40am

I found the actual bill (before the proposed addition to satisfy the 'rebellious conservatives'). It is a very difficult to read and 104 pages long.

I don't care for this part, about the committee to establish deficit reductions:

(1) ESTABLISHMENT.—There is established a joint select committee of Congress to be known as the ‘‘Joint Select Committee on Deficit Reduction’’.
(2) GOAL.—The goal of the joint committee shall be to reduce the deficit to 3 percent or less of GDP.

THAT is the goal???? That's something like 5 trillion added to the debt every decade!

There is all kinds of stuff in this bill that I couldn't make heads or tails of.

There is an auction of certain publically held wireless bandwiths.
There is a modification to Student Loans/Grants.
There is a modification to Farm acreage allowances.

All, written in a way that would require an extended period of research to understand.

(Edited by Steve Wolfer on 7/29, 11:42am)

Post 4

Monday, August 1, 2011 - 5:45am

Update: A deal on the debt limit has been reached, although the congressional vote awaits (link). Apparently a constitutional amendment for a balanced budget in not part of it. Politics as usual. Kick the can down the road.

Post 5

Monday, August 1, 2011 - 2:31pm

The details of the deal stink. Pure politics. Obama would have given anything to avoid this coming up again before the election. The GOP was scared to look bad and is only focused on the elections and on not getting publically trashed - they still have the lowest approval ratings.

The GOP needs to do a better job of getting around or through the mainstream media - take a look at Rand Paul's handling of a CNN idiot (how can anyone even call that journalism?)

YouTube Video

But the Dems didn't win as much as some might think. The far left gets that they lost in a very important way. The Tea Party members of the house, who are a minority of what is only 1/3 of the government, but they turned the entire focus from "Let's do some more spending" (congress WAS considering another stimulus package), and away from Obama and the far-left's pursuit of more "revenues" - now the entire discussion is about cutting. The Dems and moderate republicans will be painted into a corner, in time, where they have to answer this question: "Why won't you let the states vote on whether or not we should stop spending more than we take in?"

If the elections add a few more Tea Party candidates to the House, give the GOP a super-majority in the Senate, then the tide will have turned in this area and we will have a constitutional amendment to balance the budget - with or without Obama.

Here is the next shock for the Dems. The House will be in a position to shut the government down again in a few months. If Congress can't pass a budget that forces us into another situation where the Republicans can agree to pass a new Continuing Resolution funding the government through January 1, 2012, but only if the dems agree to another round of immediate cuts. It is all stupid politics, but it does focus on the debt and spending and the economy and that is the right area to focus on for wins in the Nov. 2012 elections.

More and more I see the future of the country depending upon the ability to get the message out to the voters before that election, despite the mainstream media, and the message has to be Capitalism/Individual responsibility/small government versus entitlement nation/nanny state/big government.

Post 6

Monday, August 1, 2011 - 3:54pm

Thanks for posting the video. Hooray for Rand Paul!

Those who oppose any sort of balanced budget amendment (even phased in over 7 or 8 years!) are #*^7$@;!!

Post 7

Tuesday, August 2, 2011 - 5:12am

Those who oppose any sort of balanced budget amendment (even phased in over 7 or 8 years!) are #*^7$@;!!

Revised:
Those who oppose any sort of balanced budget amendment (even phased in over 7 or 8 years!) act like terrorists!!

Hat tip to Rep. Mike Doyle (D-Pa.) and VP Joe Biden (link).

Post 8

Tuesday, August 2, 2011 - 9:31pm

I've heard good reasons to be wary of a balanced budget amendment. Obviously it depends on how it is written and interpreted. Optimistic libertarians tend to think the government won't be able to spend more than they bring in, so spending will automatically be curtailed. The pessimistic version is that taxes will be automatically increased to cover the spending. Either approach could in theory balance the budget (ignoring the fact that increasing the tax rate does not actually increase the taxes taken). The latter approach would be a disaster, though. Government could spend all it wanted to, and taxes would increase "automatically" without the need for a vote.

In general, the Democrats try to spend and take credit for the spending, and then try to force the Republicans to participate in the tax increases or debt limit increases. A balanced budget amendment would potentially increase their ability to do that by forcing the Republicans to participate.

Post 9

Wednesday, August 3, 2011 - 12:28am

Joe,

I think we will see some of that attempt of the liberals to force the republicans to participate in tax increase coming from the 'supercongress' this fall.

I heard that the Balanced Budget Amendments that have been part of recent legislative attempts are limited to spending cuts and also include absolute caps on spending as a percent of GDP. But I have come to believe that most of our elected officials would rather sneak through dishonest procedural rules that let them fake cuts (like using a "baseline" that goes up at about 7% per year).

Post 10

Wednesday, August 3, 2011 - 4:52am

Two questions:

1. For those state constitutions that have balanced budget provisions, how well do those work?

2. How will a federal amendment affect the government's ability to borrow for legitimate purposes, e.g. the bonds issued to fight World War II?

Post 11

Wednesday, August 3, 2011 - 9:03am

A balanced budget amendment is unlikely to work unless it addresses the fact that the majority of federal spending, entitlements, is immoral.

Post 12

Wednesday, August 3, 2011 - 11:45am

For those state constitutions that have balanced budget provisions, how well do those work?

From what I've heard, not very well. Politicians find a way to get around them by calling some spending capital rather than operational and so forth. Therefore, an amendment would have to be written well enough to prevent loopholes.

Post 13

Wednesday, August 3, 2011 - 12:49pm

It needs to require that cuts, not tax increases be used to address deficits. And it should also contain a cap on total spending that is based on a percentage of GDP.

Long term, this is just one part of the solution. Another is taking away the income tax - repealing that Constitutional amendment. Something like the Fair Tax (which requires appealing that amendment). In the Federalist Papers you can read how adamant some of the founders were that the federal government NEVER have the authority to tax individuals directly. If the Income Tax code is kept, it needs to be converted to a flat tax that applies to everyone equally. And, like the Fair Tax, we should never tax businesses - they just collect for the federal government from the businesses and make them less competitive in a global economy.

Another part of the overall solution is to end the fed. Don't let the government borrow via the Fed. The Treasury should have the ability to sell bond to cover instances of congressional declarations of war for limited periods of time. And, getting rid of the Fed doesn't just put us back in charge of borrowing, but also keeps us from loaning, from jacking up the money supply, inflating, and engaging in price control actions against interest rates, playing with the reserve ratio, and in general stopping the destruction of our currency as a hidden tax.

This is the way I'd like to see our country transformed over the next decade or two (a good start):
----------------------

Balanced budget amendment requiring use of cuts only to eliminate deficits
Keep the total Federal spending below a fixed percent of GDP
No items may be considered "off budget" if money is spent. And no baseline can used in calculations other than the absolute amount of money paid out in the prior year.
Pay off the debt over a reasonable time (using a budgetary surplus and the sale of assets)
Stop all the borrowing except for when absolutely needed in case of a war that congress actually declares
Stop all the forms of inflation and interest rate manipulations (end the Fed)
Reestablish a conversion mechanism for the dollar to gold (and allow private currencies)
Stop picking winners and losers with tax deductions and exemptions - Tax everyone equally
Shift to a consumption-based tax.
End all entitlements - grandfather in current Soc. Sec. recipients, but go to means testing, raise ages for the next set of retirees, grant block the Medicare/Medicaid then start phasing out and let the states work out privatization, over a few decades ensure that every federal entitlement ends.
Spending Cuts: Immediately get rid of most of the departments (dept of commerce, dept of education, HUD, Post Office, etc.) - Get 45% reduction in spending by end of next year.
Sell off all of Fannie and Freddie's assets and close them down.
No more bail-outs: Go on record that congress shall not provide any financial assistence to any private business.
Repeal ObamaCare, Dodd/Frank, and the new Consumer Agency regs, and other regulatory rat's nests.
Remove amendment that made Senators popularly elected - returning us to the system where their election is by state legislature.
Make all representatives vulnerable to a popular recall vote in their state and senators to a recall vote by their state legislature.
Constitutional amendment allowing for any supreme court justice to be removed by a vote of the State Attorneys of 2/3rds of the states.

Post 14

Wednesday, August 3, 2011 - 1:57pm

Joe you bring up a good point, but isn't it better to force the issue of paying for spending now by increasing taxes to cover it, than it is to simply increase spending and pay for it with debt, and divert those tax increases into the future, which would mean even more spending in the form of interest on the debt which means an even bigger future tax increase?
(Edited by John Armaos on 8/03, 1:57pm)

Post 15

Wednesday, August 3, 2011 - 2:29pm

In a strange way, the government's irrational borrowing to pay for their excessive spending is a safety trigger of sorts. When the borrowing gets this high it triggers a debate.

If instead the deficit were covered by tax increases, then the government growth would become more locked in and spending wold be harder to reduce.

To me, since every dollar the government spends has about 40 cents that was borrowed, we need to cut spending by 40%. Simple, huh?

Post 16

Thursday, August 4, 2011 - 9:21am

"Ceaușescu's political independence from the Soviet Union and his protest against the invasion of Czechoslovakia in 1968 drew the interest of Western powers, who briefly believed he was an anti-Soviet maverick and hoped to create a schism in the Warsaw Pact by funding him. Ceaușescu did not realise that the funding was not always favorable. Ceaușescu was able to borrow heavily (more than $13 billion) from the West to finance economic development programs, but these loans ultimately devastated the country's finances. In an attempt to correct this, Ceaușescu decided to repay Romania's foreign debts. He organised a referendum and managed to change the constitution, adding a clause that barred Romania from taking foreign loans in the future. The referendum yielded a nearly unanimous "yes" vote.

"In the 1980s, Ceaușescu ordered the export of much of the country's agricultural and industrial production in order to repay its debts. The resulting domestic shortages made the everyday life of Romanians a fight for survival as food rationing was introduced and heating, gas and electricity black-outs became the rule. During the 1980s, there was a steady decrease in the living standard, especially the availability and quality of food and general goods in stores. During this time, Ceaușescu shut down all radio stations outside of the capital, and limited television to one channel broadcasting only two hours a day. The official explanation was that the country was paying its debts and people accepted the suffering, believing it to be for a short time only and for the ultimate good."
http://en.wikipedia.org/wiki/Nicolae_Ceau%C8%99escu#Foreign_debt

When communism fell, East Germany's Egon Krenz was sentenced (seven years later) to six years in prison. Ceausescu was hauled out and shot in two days. I am sure that the lesson was not lost on other politicians. Debt is life.

Post 17

Thursday, August 4, 2011 - 12:53pm

From 1796 to 1811 there were 14 budget surpluses and only 2 deficits. The first dramatic growth spurt of the debt occurred because of the War of 1812. In the first 20 years following the War of 1812, 18 surpluses were experienced and the US paid off 99.97% of its debt. http://en.wikipedia.org/wiki/United_States_public_debt

During that time the United States experienced rapid economic growth. It's too bad this lesson has been lost on politicians.

Ok let's be serious. Romania's economy was probably propped up by those Western loans to the point it accounted for most of its GDP (I'd love to see figures on that) We are talking about a communist country that was very likely always a weak and crippled economy.

Post 18

Thursday, August 4, 2011 - 3:21pm

Well, yes, John, but you and I are not going to take it to the streets when Medicare and Medicaid are cut. Most of the Federal budget is entitlement. What do you think AARP and the broad left wing would do if the budget were balanced by cutting entitlements? We would see the old and infirm battling police lines just for the publicity. Congress would cave and over-ride any veto, assuming that the president had the courage to veto a budget, when doing so would bring out that kind of protest. Pres. Obama exposed his thuggish side by threatening to cut off social security checks. He would bring pain to the infirm, too, but, again, not to balance the budget, but to empower more spending.

Even Defense takes a back seat to Medicare/Medicaid. And the Secretary of Defense today said that the proposed cuts are "unacceptable." The present war is a budget buster.

The only solution, such as it may be, is continued inflation. The dollar falls against gold. Forever. A while back, waiting for a bus, I saw a sign at a Dominos: "Medium One Topping $899." They needed the decimal, of course, but it is only a matter of time before a pizza costs nine hundred dollars and your bartenders make $2000 per hour. Look at the Yen. A hundred years ago, the yen went from a silver coin the size of a silver dollar to a gold coin the size of a gold dollar. Now it is worth a cent. (War will do that to a nation. Losing is bad. Winning is not much better: look at the British pound -- and they won two world wars.) Turkey, Italy,... western nations have gone through the monetary wringer and never missed a step. Cutting entitlements, however, is never popular. Paying off the debt is just not a solution.

You and I might have the republican sensibilities of 1820. We are in exclusive company.

Post 19

Thursday, August 4, 2011 - 4:48pm