If Done Right…The Balanced Budget Amendment Is a Good Idea
By Steven Osborne | Friday, January 28th, 2011 | PolicyFor a third consecutive Congress, Representative Bob Goodlatte is introducing a Balanced Budget Amendment. Republicans have long supported the idea of a balanced budget amendment though actually getting such an amendment into the Constitution is a necessarily long and difficult process.
It is also important for Republicans to realize that not just any balanced budget amendment will pass off as good policy. Unless the proper protections are put into place, a balanced budget amendment could quickly transform from a fiscal conservative’s dream into a tax payer’s nightmare.
If an amendment is passed and then the progressives who currently favor a large and bureaucratic government once again regain control of the purse strings, we may find ourselves in a situation where the big spenders merely print more money to meet the demands of the amendment. This would cause inflation to rise and consumers everywhere will suffer to a greater degree than they currently are. Even if one assumes that the progressives will risk a backlash and raise the tax rates, we will be faced with a situation in which America continues to lose its competative advantage in the world, and again, consumers will suffer.
Also, it is important that we not find ourselves overly restrained if federal spending becomes necessary for military emergencies. Certainly, having the ability to spend large amounts of money in a time of heightened warfare can sometimes prove necessary, and it would be important that any amendment take this into account.
With that being said, the idea of a balanced budget amendment is a good one. Making our government live within its means is not a bad thing. The Virginia General Assembly must grapple with the necessary wrangling of the budget in order to produce a balanced result and many in the Commonwealth support this proposition as it has helped to ensure our fiscal future. In addition, the specific plan put forward by Congressman Goodlatte addresses many of the concerns that were raised in the above paragraph. Specifically, Congressman Goodlatte’s plan would do the following according to his website:
(1) amend the Constitution to require that total spending for any fiscal year not exceed total receipts
(2) require that bills to raise revenues pass each House of Congress by a 3/5 majority
(3) establish an annual spending cap such that total federal spending could not exceed 1/5 of the economic output of the United States. The bill would also require a 3/5 majority vote for any increases in the debt limit.
While no plan is perfect, the plan put forward by Congressman Goodlatte represents an important discussion starter for the rest of the Congress as they begin to actually govern. However, it will be important that any final plan contain within itself the proper restraints to insure that unintended consequences are kept at a minimum.
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Steven Osborne is a grassroots conservative activist from Central Virginia. He is currently furthering his education at Liberty University in Lynchburg, Virginia. In addition to writing for Bearing Drift he is also a columnist for the Christian Law Journal.
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7 Responses to "If Done Right…The Balanced Budget Amendment Is a Good Idea"
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Unintended consequences: if it contains an exception for “Times of War”, then it will be functionally useless, as we are currently “at war”, even though it is undeclared, and we will remain “at war” as long as the president says we are. How many of you believe the “War on Terror” will end within five years? Ten years? So what’s the point? It that form it could perversely only serve to justify staying at war so that fed dot gov could continue to spend as much as it wants.
If it contains an exemption only for “War Declared by Congress,” then I love it.
The Balanced Budget amendment is and remains a bad idea. It works for states and local governments, but the federal government needs the flexibility to be able to spend more than it takes in when that is necessary to ensure a stable economy, or when that is necessary because of war or some other national emergency.
Bottom line for me is that Congress needs to be held accountable and political pressure needs to be brought to bear to ensure the budget is balanced. Forcing that with a constitutional amendment won’t solve the problem.
JJ-agree on declared war by Congress. Paragraphs 2@3 are unnecessary. And without entitlement reform its all in trouble. Entitlements ought to be limited on a “within the budget basis”. And I’ll gladly take a modest tax increase to get entitlement reform
It is useless. What happens is the same thing as happens in Virginia. The Bob McD fails to put 628 million into the VRS account and issues an “IOU” for ten years starting in 2013 while claiming a balanced state budget. How is that a good thing? Smoke & mirrors budgeting…
It will not work on a federal level if we use Virginia’s history as the model.
This would be a better solution than the balanced budget, but please note section 7, which creates an automatic surplus whenever te economy expands (which is more often) and a modest deficit when it contracts. Will you give up your special interest tax break and/or entitlement for this new approach?
1. All persons residing in the U.S. shall come together in households for the purpose of reporting all income from any source, each item to be identified by payer’s and payee’s tax number, and for receipt of federal and state benefits. Members of a household need not be related, need not reside together, and a household may consist of as few as one person.
2. Each year congress shall set by legislation a “minimum wage” and a “tax rate”.
3. The following income shall not be subject to taxation:
• An amount equal to a year’s earnings at the minimum wage rate, for each adult (age 20-65) member of the household, decreasing 10% per year to 50% at age 15, and increasing 10% per year to 150% at age 70.
• All payments for what is classified as necessary health care for all members of the household including medical care, any pharmaceuticals prescribed by a recognized health care professional, vision and hearing aids, and membership fees for health-enhancing entities such as gyms or other exercise facilities. Health care insurance premiums may be deducted but not health care expense paid for by such insurance.
• All educational expenses including day care for young children or legally incompetent persons, that portion of state and local taxes identified as spent on education, that portion of parochial school tuition, fees and other expenses identified as going for non-sectarian education, tuition, fees and educational materials for private school education at any level, and a per-diem allowance for students traveling more than 50 miles from primary residence for education.
• All income saved into an identified account from which investments may be made. All withdrawals from this account for the benefit of any member of the household shall be reported as income to that member.
4. The “tax rate” shall be applied to any income over and above the deductions listed above, regardless of amount.
5. For households whose deductions exceed total income, the Federal Government shall make payment equal to the tax rate multiplied by the shortfall in income, as shall municipalities and states.
6. There shall be no federal tax on corporations or other business entities.
7. The Office of Management and Budget shall compute revenues to be expected using the newly set tax rate and minimum wage, applied to the previous year’s reported incomes. No expenses in excess of that amount may be authorized or made by the federal government without approval by 75% of each house of Congress.
8. At the request, by legislation duly enacted by a municipality having greater than 100,000 inhabitants or a state, a surtax may be imposed on citizens of that municipality or state which shall be applied in a manner exactly as applied for the Federal tax.
Your suggestions sincerely requested. E-mail them to tbeebe6535@yahoo.com.
[...] in the past to take a vote. This strategy has the very real potential to backfire. As I noted in a post back in January, a Balanced Budget Amendment is a good idea; as long as it is done correctly. As [...]
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