Balanced budget amendment back in business next week
By JR Hoeft | Friday, June 24th, 2011 | PoliticsAfter a brief hiatus of having any chance of passage under the then Democratically-controlled House of Representatives, the Balanced Budget amendment, offered every year by Rep. Bob Goodlatte (R-VA06), will be back up for a vote next week.
As the news has reported ad nauseum, both Majority Leader Eric Cantor (R-VA07) and Senator John Kyl (R-AZ) said, “No mas!” to the ongoing debate over whether to increase taxes as part of the next budget deal, leaving talks with Vice President Joe Biden. This means the remainder of the budget discussion to break the logjam is now up to Speaker of the House John Boehner (R-OH) and President Barack Obama. One presumes it will all ride on a par 3 on the back 9.
As Erick Erickson relates, the whole budget discussion is a sham anyway. Despite the huge numbers being thrown around (not that large considering the exponential rise of our debt and the trillions of dollars of deficit spending we’ve seen since the beginning of the Obama administration), nothing is being done to actually reduce the debt.
That’s why Goodlatte’s bill is so important. By having a balanced budget, we at least add no discretionary spending to a debt that already spiraling out of control. It’s a step in the right direction.
Leader Cantor had this to say about the upcoming vote:
“We are being asked by the Obama Administration to approve a debt limit increase. While President Obama inherited a bad economy, his overspending and failure to enact pro-growth policies have made it worse and now our national debt is currently more than $14 trillion. House Republicans have made clear that we will not agree to raise the debt limit without real spending cuts and binding budget process reforms to ensure that we don’t continue to max out the credit card. One option to ensure that we begin to get our fiscal house in order is a balanced budget amendment to the Constitution, and I expect to schedule such a measure during the week of July 25th. I have no doubt that my Republican colleagues will overwhelmingly support this common sense measure and I urge Democrats to as well in order to get our fiscal house in order.”
Unfortunately, we’re at least two years from having such a rational proposal actually being considered as possible law, so this vote will be mainly as a demonstration.
But it’s an important demonstration.
With most states already having a form of a balanced budget amendment on the books, it’s clear that it is the federal government that’s dragging the states down in this sinking ship. It is likely that a federal balanced budget amendment would be ratified by the states. By having a vote, it will be clear to the American people who is serious about getting our fiscal house in order and who is all talk.
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About the author
Conservative to the core; liberal with his opinion! J.R. has been involved in politics for over a decade and has worked on several campaigns in Hampton Roads. He has served on the Executive Committee of the Republican Party of Chesapeake and the Central Committee of the Republican Party of Virginia. He is also the director of “Blogs United” in Virginia. E-mail J.R.. Follow J.R. on Twitter.
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48 Responses to "Balanced budget amendment back in business next week"
Let’s deal with reality. Yes, I share your desire for a balanced budget. The issue is how can we get back to the balance last in effect when Bill Clinton was President and there was a republican Congress, without putting our economy back into another Great Recession. For Cantor to become missing in action is an insult to all americans who expect their political representatives to be schooled in the art of compromise. Why don’t the republicans just give up and send in the unelected Grover Norquist who is calling all the shots anyway? If Cantor won’t, Norquist will, but the America he advocates is a place where I don’t think even you would want to live.
Note that the latest boogey man to the left is Grover Norquist. That’s fine with me since most Americans don’t know who he is, and he’s not onthe ballot. The left is usually more savvy in choosing conservatives to demonize with their wacky conspiracy theories.
Re the BBA, the Dems oppose it in principle becaue it would interfere with their statist agenda, but they know that politically they cannot say so. So, their tactic will be to demagogue the BBA as hostile to Social Security. Scaring old people is a proven tactic in the leftist handbook, and they’ll trot it out again on this issue.
Most saavy commentators acknowledge that to balance the federal budget, we must institute spending cuts, revenue increases, and do so over a reasonable period of time so as not to throw the economy into recession. The goal should be to adjust revenue and expenditures so both equal about 20% of GDP by 2020. Then, the national debt should remain at no more than 60% of GDP. Reasonable and rational leaders know this is both achievable and will stimulate growth in GDP as well. Cantor’s gesture of contempt for negotiation and compromise, those elements required in our form of government, shows he is simply not serious about solving the major issue facing our nation.
Contempt, Barrett? Give me a break. Cantor’s been negotiating this for at least the last several years, even while in the minority. The left simply is not serious about the debt crisis we’re in.
What debt crises. If we do absolutely nothing about the budget but conform with current law, the CBO says it will balance by mid-decade.
Yes Hoeft, contempt. He is one of the leaders of his party and the Congress. To stomp out like a child is an indication that he and the republcians are simply engaged in political theater, not substantive negotiations. As a citizen and a voter, I am absolutely enraged that a politician in a position of authority would act is such a disrespectful way. As a centrist, and a businessman who must lead a small corporation in these tough times, we don’t need actors; we need leaders who grasp the nature of negotiation and compromise. Yes, increased revenue is required just as budget cuts are as well; stop letting Grover Norquist brow beat every elected republican from acting responsibly.
Mike- When you want your kids to eat their vegetables, do you tell them that if they don’t, Grover Norquist will come and get them? If so, I assume that it’s because the threat of NewtGingrichRushLimbaughJohnMcCainEricCantorRonaldReaganTrentLottAnnCoulterGlennBeck, etc. boogey men has worn off, so Grover Norquist is the boogey man du jour. With some luck, maybe by the time Grover Norquist’s effectiveness as a boogey man has worn off, I’ll have reached a point that you can use me. A humble blogger can always dream…!
Well Ken, unless you are willing to dedicate yourself to the creation of a vast network of foot soldiers in every state of the union, willing at Norquist’s command to discipline local politicians who fail to walk the no tax line, you will not be a candidate to replace Norquist. Every political operative who posts on or participates in this forum knows Norquist, and knows that as a republican, allegiance to him is primary, above the public interest. Grover Norquist and his army of minions is the enforcer of the republican dogma that tax increases are never justified. As you know, Norquist has now decided that reducing tax credits and deductions is to be considered a tax increase, so effectively, republicans cannot actually negotiate on this matter; hence, Cantor left the talks. So those voters who elected Cantor to represent their interests come second to his allegiance to Grover Norquist.
I’m enjoying your conspiracy theory that Grover Norquist is the (latest) evil puppeteer behind the Republican Party, especially since last year the leftist talking point was that Ruah Limbaugh led that distinction. Of course, leftists believe so strongly in the idea people are nothing more than members of collectives that are expected to follow orders from a person or small group that is in control (see, e.g. union bosses, George Soros) that they assume that that is the case among groups that respect individualism. Leftists cannot fathom that in the Republican Party, the real power lies with the members of the party (see, e.g., the abandonment of the unprincipled Republican leadership by the rank-and-file in 2006 and 2008).
Conspiracy theory? Not from me. I have simply repeated the facts in regard to Norquist’s ability to enforce the no tax pledge. The fact that the few moderate republicans who actually want to solve the deficit problem feel totally handicapped if curtailment of corporate tax breaks and tax breaks for the rich are off the table, simply speaks to Norquist’s power of enforcement and his ability to punish any republican who strays from his doctrine. Just ask Senator Coburn who found that his “impure thoughts” required Norqist to compare Coburn to a “malignant cell in the body politic so we must use chemo and radiation to protect all the healthy cells around it so it does not grow and metastasize.” Conspiracy, no. Threat and fear, absolutely.
Ken,
Barrett has no desire to listen to logic. The only one with contempt is him. He prefers we spend ourselves into oblivion under the dictates of a central government that can pick winners and losers. I’ve seen his spin for nearly two years and it hasn’t changed – despite our adding more than $3 trillion to the federal debt while simultaneously balancing the state budget and growing state revenue. He can’t fathom that basic conservative principles work. Given how fiercely he defends a command economy, one thinks maybe his business is one that relies on government spending?
At least he knows and understands self-interest.
J.R., why the personal attack? I’m talking public policy here. If you disagree with the thought that to really deal with the deficit, and not throw the economy into another recession, we need to reduce expenditures, increase revenues, so that we move toward a balanced budget and whittle away at the deficit. Norquist essentially wants only to cut expenditures which most reputable economists say will throw the economy back into recession. Perhaps you remember that is what President Reagan did, but that is another matter. Point is, rather than attack me, tell me how we can reduce the deficit by cutting trillions without causing another great recession.
Mike, did you vote for Reagan?
MB feels the same way about McDonnell as he does Reagan (when and only when its convenient, he agrees with them as he twists what they said or did). Actually this is a favorite trick of the left. It’s slightly more sophisticated than the old Soviet habit of erasing the person from the photograph.
Mike never got over Grover’s comment “Cut the arms and legs off of government so it can be drowned in a bath tub”, it continues to haunt him to this day and is the source of his sometimes deranged, progressive musings.
So clearly, most posters herein will simply not deal with reality; that is, if in fact reducing the deficit without causing a recession is really their number one priority, they must support revenue increases which would come from the reduction and curtailment of tax credits. Until Norquist decided that he would consider that to be a tax increase, and he would paint targets on the backs of republicans like Coburn who had impure thoughts, we had a chance to resolve this matter. Now, who knows? Frankly, I think most americans want to move forward with a negotiated solution that involves more revenue and less expenditure. All except those on this forum, of course.
Mike, are you saying you support reducing the earned income tax credit?
Back to the topic of the thread, a federal balanced budget amendment won’t actually balance the budget. All it will do is promote more gimmicks and games to make the budget look balanced on paper while the real spending happens off-budget (which pretty much happens today anyway). There’s no point in bothering. The right answer is electing officials who will toe the line on spending, not forcing them to come up with creative ways to claim the budget is balanced.
The problem with all of this stimulus is that it’s unsustainable. At some point you’ve got to rip the band-aid off and using the argument that if we do it now we’ll harm the recovery just doesn’t hold water. If that’s the main reason not to cut spending, we’ll never see spending cut because we’ll never want to harm the economy we have at the time. It’s better to do it now and take whatever lumps may come than prolong it any further out.
I, for one, am dismayed at Representative Cantor’s performance. He may have been selected as a majority leader based on his rhetoric, but he is a poor politician. What the American public want, now, is constructive dialog to solve our dilemma. The continuous flow of electioneering press releases preceded with finger pointing only fuels discord. This line-in-sand attitude from both sides is fallacious. Each Senator and Representative, irrespective of affiliation, is part of the whole. Cumulatively, their effectiveness as legislators (there is no other way of saying it) sucks.
Mike- Your entire premise is wrong. The leftist Democrats have governed the country for the past 2+ years based on the argument that the problem with our economy is that we weren’t taxing people enough, weren’t spending enough, and that $9 trillion was not enough debt to impose on our kids. All that approach did was make the economy worse and increase the debt to our kids by 2/3 to $15 trillion. Our bond rating is threatened for the first time ever. Businesses are afraid to hire, and people are afraid to make major purchases for fear of the next Democrat policy that will increase their taxes or cause them to lose their job. And that’s without even mentioning the ObamaCare debacle, in which the Democrats spent hundreds of millions of dollars to bribe their own members into passing a scheme opposed by the American people to put the government in control of the greatest health care system in human history.
So, no, I don’t buy your premise that if we don’t include “revenues” – leftist propaganda term for tax increases – in a debt reduction scheme, we’ll sink into recession. WE’RE ALREADY IN THE WORST ECONOMY IN 80 YEARS BECAUSE TAXES WERE ALREADY TOO HIGH AND WERE MADE EVEN HIGHER BY YOU DEMOCRATS. And the idea that you reduce the debt by increasing spending, as the Democrats are currently advocating, is the definition of insanity.
The fact is that the only way to stimulate the economy is to CUT taxes and make those reduced rates PERMANENT to bring stability to the business sector and give them confidence to start hiring again. And the way you cut debt is to REDUCE SPENDING.
These facts are so blazingly obvious that I am certain that the Democrats know them. The truth is that leftist Democrats like ObamaPelosiReid are not interested in reducing the debt or even in repairing the economy. They want to upend the economy so as to create crises that they can exploit to impose their statist agenda on the American people. (“Never let a good crisis go to waste.” – Rahm Emmanuel and Hillary Clinton) And that’s why it is vital to America’s future as a free and prosperous country that conservatives stop arguing the subject with the leftist Democrats and set out to DEFEAT them.
A few direct comments. I am in Warner’s camp; that is, reductions in expenditures and increases in revenue, whether through tax increases or curtailments of tax credits, must be part of the solution. Bush tried the way you recommend, Ken, and that is why we almost went off the cliff. To put that tired old rhetoric of vodoo economics back on the table is simple revisionist history.
OK, how about Republicans explaining how this new Balanced Budget amendment, after which passes they will still oppose any revenue increase Grover Norquist opposes, would impact the average American and the government services they have come to expect and demand.
Grover really is an extremist. Ronald Reagan would not have passed his purity test. Ronald Reagan raised some taxes when necessary to make government work. Grover Norquist is almost an anarchist in that he only wants to reduce taxes up until the federal government implodes. Grover wants to cut the arms and legs off the baby so it drowns in the bathtub.
Now, if Grover Norquist and his ilk (are YOU included) are willing to to throw us over the cliff, is he (and YOU) willing to live with the results?
If you are willing to sell your soul to the devil, don’t be surprised when the devil comes knocking at your door.
Back to the Brian S. comment on “rip the band aid off”… the problem is that both sides are trying to put political “band aids” on cancer that is spreading through all public and private governments, institutions and business. We have several “cancers”… spending, deficit, debt and lack of leadership which when combined, have a pathology which will kill the host, our country. The cancer is accelerating and unless we all take responsibility for treating the causes, the current leadership of both parties will keep putting political band aids on the symptoms to keep getting re-elected.
Brian says …”a federal balanced budget amendment won’t actually balance the budget. All it will do is promote more gimmicks and games…”
I used to feel the same way about a balanced budget amendment but I think anything that makes it tougher for the leftists is necessary at this point. Raising taxes is always an option but politically difficult as the Dems saw in 2009. The process does work fairly well at the state level (yes there are differences). One advantage to instituting such an amendment currently is that Social Security and Medicare are both moving into the red. Their former surpluses made a big difference in hiding the budget “deficit” number.
As Ken notes, the hard left and the Dem party they control have decided that they have gotten everything they can out of a bipartisan environment. To do anything further requires an authoritarian or dictatorial system. They are not scared by Greece etc. They see people demonstrating to repudiate debt so as to leave their socialist system in place for a few more years. But the Dems can’t or won’t see the massive tax evasion that goes on in all these socialist countries. Only the (shrinking) middle class pays taxes. The wealthy always have the clout to escape high taxes. Even in the US politically connected Dems (Geitner, Kerry, Rangel et al) are already going down this road of tax avoidance and evasion. If that isn’t enough their cronies will write a loophole or waiver. Look at the special tax breaks for Govt Motors or Pelosi’s health care waivers for her district. This is why they need the enviro scare tactics to say that the population (but not them) have to live in poverty to save the planet.
If and when we finally start failing as a country where inflation explodes and government bonds are only backed by the capital value of government property, furniture and the government printing presses that will be sold by Chinese creditors on Ebay. At that point, instead of being viewed as a right wing radical extremist, Grover Norquist will be looked upon as a prophet. Our creditors will be removing the “arms and legs” from our Government and economy and drowning us in our own toilet.
OK prophets, the American miracle is coming to an end.
What is going to rise from the apocalypse as long democracy still rules? Think about it.
LD,
You and other Dems have never answered my question about tax evasion in socialist countries. Democracy can’t survive without a knowledgeable and vigilant population. So absent that, the answer to your question is some form of autocratic (eg Russia, China) or ineffective (eg Italy) government. I don’t think a large country can copy small “Good government” socialist states like Denmark etc)
By the way thanks to Mike B for validating my first post in record time. “(when and only when its convenient, he agrees with Reagan as he twists what he said or did.)”
LD, I don’t know of anything which has “risen” that is any good once it has been drowned in an apocalyptic toilet.
valentinus,
Oh come on now. You’re trying to blame tax evasion on socialism? Who did you get that from, Rush Limbaugh? Was Al Capone a socialist?
Some people might argue that a balanced budget amendment is irrelevant since the economy has already gone over the cliff.
The American people have a national delusion that a person can spend 100 K a year while only making 60 K a year. Have a feeling that going from fantasy to reality will be quite a shock.
“Americans will do the right thing but only after all other options are explored.”
Frankly, in this crisis, red or blue, I could care less. But where does a moderate centrist look for leadership? To the gang of six, which appear to have accepted the premis put forth in the Debt Commisson that a national debt of the amount we have now is unprecedented, it has the potential to lessen investor interest in America, and it should be gradually reduced to more historical amounts; that is, in the 60% of GDP range. To do so is not rocket science; over the next decade, annually reduce expenditures and increase revenues until they both total about 20% of GDP, and focus on investment in areas of the economy thta will spur economic growth. Now frankly, that solution does not fit the political strategy advocated by Grover Norquist, and since he has the power to immediately punish any republican who has “impure thoughts” they are essentially prohibited from contributing to the successful solution to our nation’s pressing fiscal crisis. So a once grand party is reduced to a sniveling shell of greatness because it has sold its soul to an unelected official who could care less about the success of our nation and its people. Pretty sad.
Mike, as a fiscal conservative, I contend to strongly agree with your position at this juncture. Facts are facts, and our last budget surplus was not a result of any legislation, but a function of abnormal growth during the “dot com” swing. Grover Norquist’s premises, most of which I agree with during normal growth periods, are not germane during this crisis. And “crisis” is what it is. Moreover, Norquis is not a legislator. Representatives Cantor and Pelosi are poor legislators as they concentrate on electioneering rhetoric rather genuine problem solving. It is time for each legislator to break away from arm-twisting leadership and come to grip with a true and honest dialog. Then true leadership, like cream, will rise to the top.
Mike, you haven’t indicated that you have ever thought that the Republican Party was a “once grand party” in modern political history. Which proverbial “arm” or “leg” do we remove to satisfy our creditors once they foreclose on us? Your in business… so what do you do when a deadbeat doesn’t honor their contract with you? If our creditors allow us, I would suggest that we remove the “arms and legs” starting on the left side of the torso, then move to the right before the drowning.
Yes Brian, of course the level of stimulus is unsustainable, and of course, most of it is now coming to an end. The problem is, will we then go into another recession. In your post above, you toe the Grover Norquist approved party line; that is, it is all about curtailing spending. Problem is, that is simply untrue from a public policy perspecitve; it is about the balance between cutting spending, increasing revenue, and stimulating growth in GDP. In ths past, I have learned more on this forum from you than just about anyone, but now, you are a republican candidate, and if you were to deviate from Norquist’s line one iota, you candidacy and your future as a politician would be over. Let me ask you two questions. Is it healthy for our nation to have an unelected official to have that much power? Do you see that political tactics, and tactics to do the right thing for our nation, are diametrically opposed in this case? Never mind, I already know the answer that those questions.
To have a balanced budget, refuse to raise the debt limit.
So simple, even a democrat can do it.
Not Blue Virginia,
Yeah, that sounds simple, all we need to do is rile the bond market up so that we have to pay higher rates of interest on Treasury Bills and increase the rate of interest we have to pay.
There is a whole lot that goes into this, but believe me the answer is not so simple that if we are not borrowing new money we need not worry about the interest rates on new debt.
Yes, regretfully, Not Blue Virginia appears to be the voice of the republican party right now; that is, our successful political tactic, that is, no new taxes, has worked for us so well that we are willing to bring the nation to its knees in order to make someone else act responsibly. Republicans know that putting us back into recession is a deplorable act, yet they are willing to bet that many americans will blame the President, and that will help their election chances. Frankly, this is a despicable attitude, one in which a Party is willing to throw the welfare of most of us under the bus in order to get back in power so they can once again serve their wealthy corporate masters with impunity.
A recent poll showed that 42% of Americans favor not raising the debt ceiling. And I have a fairly good idea of what would happen.
But also have faith that the politicians will just kick the can down the road. They will continue moving the deckchairs on the Titanic.
Which will give me more time to prepare for this slow motion train wreck. I have no interest in making huge amounts of money in the coming financial meltdown. I just want to come as close as I can to breaking even.
Instead of raising gas taxes to pay for transportation, what about a 1% tax on food instead ?
Not Blue Virginia,
Your imposition of a 1% sales tax on food might make sense if it only was imposed on food produced domestically. That might pay for the subsidies we give to domestic agricultural.
If that was a pointed barb at my support for a fuel tax increase then I will point out we will not be building roads in Mexico from an increase in the fuel tax (not yet at least). Although it could be pointed out that even without the increase the United States’ DOT (Department of Transportation) is already providing millions of dollars for Mexican trucking companies to put EOBR (Electronic On Board Recorders) in their vehicles in advance of a probable mandate for all trucking companies to have them if the travel in the good ole USA. My own trucking company will probably not get such assistance and it will probably cost me around $2k to comply but the Mexicans already got it for free.
Some people say that Virginia needs to raise more money to fix our transportation system in Virgina. Instead of raising taxes on gasoline, Virginia should put a 1% sales tax on food at the retail level. So when I go to Food Lion to buy a loaf of bread and some peanut butter, would pay 1% tax at that time.
All citizens in Virginia benefit from an efficient transportation system so all citizens should help to to pay for it.
EOBR Europe has been doing that for a couple of decades. Really deserves its own article.
Not Blue Virginia,
Why should food only be subject to such a tax and not fur coats? With an increase in the fuel tax, the fur coats would at least pay their fair share of the increased costs of transportation. Why should those who need to eat subsidize the costs of transportation of those who desire to buy fur coats?
As many will remember, in Hampton Roads a coalition was formed to finance regional projects through an increase in the sales tax. The voters rejected it, prefering to believe we could have our cake and eat it too. Of course, that was as false then as it is now, but apparently if voters have a choice between truth and baloney, they will pick baloney every time. That is why BK is such a successful operative; he has learned that lesson well.
If one spends a lot of time out of this country, then you can learn how other countries tax (or steal) from their citizens. Taxing food is the best way for a government to raise large sums of money because everyone buys food.
I merely suggested a way for Virginia to raise money to help fix the transportation system. If you can think of a better way go for it.
Yes, thanks Not Blue Virginia, for summarizing the dilemma. There is not a republican in this state that will deny the abysmal condition of our transportation infrastructure, caused by the intrasigence of the majority in the House of Delegates, yet there is hardly a republican in the Commonwealth who would vote to raise any tax to solve this problem. In a nutshell, that is the issue on the local, the state, and the federal level. Not raising any tax and not doing away with any tax credit, is Norquist’s mantra and if any republican deviates from this hard and fast position, that republican will be punished, then banned forever. Party? There is no party, just one man pulling all the strings.
Would doubt that any Virginia politician would run around screaming “Lets raise taxes!! Lets raise taxes!!” for the next 4 months.
Perhaps in 5 months, might mention some possible ways for a Virginian politician to raise taxes without causing Virginian citizens to want to play “Feed the politicians to Hungry polar bears”.
Not Blue Virginia:
You stated: “If you can think of a better way go for it.”
OK, if we are wanting to fund/fix transportation then raise the fuel tax. Those that use it and benefit from it pay for it. There are numerous reasons for why this is preferable but I am not going to go into all of the details again unless it is drug out of me.
In my 21 years in the military I traveled extensively outside our nation. During that time I noted Europe has fallen in love with the VAT (Value Added Tax), however just because they did it does not cause me to state that it is a good idea.
Mike, I’m no Grover Norquist acolyte. My philosophy on taxes is simple – they’re the most powerful tool in any legislators tool box and that power should not be used lightly. My stance on taxes is consistent – I’m not 100% anti-tax, as we have to fund the government and taxes are the only way to do it. But I also believe we owe it to the taxpayers to use that money wisely, not waste it, and not take more of it than is absolutely necessary. When folks say we have a spending problem and not a revenue problem, I agree with them, for the most part. Once the case has been made that we can’t cut or reform anything else, then taxes will be the last resort.
That’s what they always should be – a last resort.
Honestly, I don’t think Grover has that much power. Most people don’t even know him. And there are plenty of unelected folks who wield inordinate amounts of power. That’s the nature of our system.
Bottom line for me on this issue is it’s a sad day when we need to pass a law demanding that lawmakers do their job.
Re: Cantor’s withdrawal from the Biden-led budget negations … VP Biden is a ineffectual dork and Cantor’s withdrawal now puts negotiations exactly where they should be: between the president, the senate majority leader, and the speaker. In any tough business negotiation, cutting a deal eventually involves the principals. Boehner was elected unanimously; we’ll soon find out if he can negotiate something that will win broad support. (And I’m also guessing the Cantor walk-out was no more than a good-cop/bad-cop tactic.)
@ Brian – as usual, well said and thumbs up for not always towing the extremist party line. I hope your potential constituents recognize and reward your temperance and intelligence.
@ Mike – although we might disagree on some issues, you (and Wally Erb) are completely spot-on. Pure political ideology might bring satisfaction, but it isn’t part of the solution and definitely guarantees ‘can-kicking’ down the road. As long as the right- and left-wing bases and politicos (both extremists) insist on purity, we’ll have static growth, no compromise, and continued economic and socioeconomic decline.
The solution must be – and will be – a combination of increased taxes (increased SS and Medicare rates, curtailments of tax credits [including the earned income tax credit], etc.) and decreased spending.
It’s time to admit that we all want way more government than we can afford and that harsh cuts (in all departments, including defense) can either be made today (when there still is some flexibility) or tomorrow (when we are truly broke). The solution is a hybrid: more investment in ‘the future’ (technology, sustainable energy, re-training American’s manufacturing sector for 21st century manufacturing, education, etc.) and less investment (cuts) in programs that either don’t work, don’t advance our citizenry, or have minimal cost/benefit ratio.
The stimulus didn’t work, in part, because it wasn’t targeted appropriately. Most of the cash went to shore up insolvent states & financial institutions or was passed out as tax refunds (or perks to administration supporters) and not spent (no velocity), but rather used to pay down personal and corporate debt.
@ Ken – you forget, President Bush signed the Economic Stimulus Act of (Feb) 2008 and called it a “booster shot” for the American economy and “large enough to have an impact” to prevent a recession (or make it relatively brief). So … how well did those tax rebate checks work out for you? Honestly, I don’t get it – you’re a smart guy, yet consistently earning a D- in accuracy? Stimulus was not a ‘leftist’ invention. Try weaning off of Glenn Beck for a month?
And FWIW, the government won’t to run out of money if the debt ceiling isn’t raised. The treasury takes in about $200 billion a month in revenues; the debt service on the present national debt is about $20 billion a month. The only way the treasury would default is if Secretary Geithner refused to make our debt payments.
GDP growth for the first quarter was 1.9% and likely for the 2nd quarter about 2%. An annual growth of 2% is really nothing to get excited about. However, it cannot be refuted that the fiscal and monetary stimulus resulted in any growth at all and prevented (delayed) a recession. There is no doubt that, on (midnight) or before the August 2 deadline, the debt ceiling will be raised and this game of “chicken” will end. Ironically, a quick fix for long term solutions is not in the cards of either partisan approach. Moreover, significant reduction of debt could be retired with a GDP growth of 4%. Worldwide ramifications of the U.S. Bond market is the loss of liquidity. International monetary diversification appears apropos.
The economic solutions to our predicament are complex. Unless Congress and the executive branch come to wraps and broker meaningful solutions, they are failures. Not one individually, but collectively. If Cantor and/or Pelosi are willing to turn their backs and play “chicken”, they are in effect turning their backs on the American people and worldwide partners. Get to the table or quit – there is no time for this BS.
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