GOP: Time for a balanced budget amendment
By Guest Post | Monday, August 22nd, 2011 | Policy
By Congressman Scott Rigell and 38 other freshmen Republicans
Earlier this month, the creditworthiness of our country was officially called into question, for the first time since the United States’ “full faith and credit” was established in 1790.
This could have been avoided.
Over the last few months, the House and the Senate have received the same dire warnings from Standard & Poor’s, Moody’s and the other ratings agencies.
The House led by crafting solutions to our debt problem. Months ago, the House passed a budget that reduces short-term deficits by more than $4.4 trillion and addresses the unsustainable, long-term structural deficits that threaten this nation.
Just a few weeks ago, the House passed a bipartisan bill, “Cut, Cap and Balance,” that could have cut federal spending by $111 billion next year, capped future expenditures and required passage of a Balanced Budget Amendment to the Constitution.
In doing so, the House twice met the requirements that Standard & Poor’s laid out to avoid a downgrade.
The Senate, on the other hand, did nothing. So far this year, the Senate has failed to adopt a budget or pass “Cut, Cap and Balance.”
In fact, it has been more than 850 days since the Senate passed a budget. Given the fiscal crisis we are facing as a nation, the Senate’s failure to act is unacceptable—both to our creditors and to all Americans, who must ultimately shoulder the burden of paying our debts.
While Americans understand the Senate will have its own opinions on legislation that the House passes, the Senate cannot escape from its obligation to govern. The Senate has a responsibility to pass a proposal of its own that addresses these issues.
Every moment the Senate has spent deriding the House for taking bold and decisive action was time that should have been spent working toward solutions.
President Barack Obama, his debt commission, the pundits, our creditors and many in the Democratic Party all agree that reforms to Medicare and Social Security are necessary to prevent the insolvency of those programs—and this nation. Senate Majority Leader Harry Reid (D-Nev.), however, chooses instead to play games by telling the American people that the House wanted to “end Medicare as we know it.”
Reid chose scare tactics—saying that the House was “trying to balance the budget on the backs of seniors to pay for tax loopholes for the rich.” He knows full well that the House-passed budget not only saves Medicare, but also closes the tax loopholes he and his fellow Senate Democrats keep talking about. With 21 Senate Democrats up for re-election, Reid chose to place a higher value on political theater than on protecting seniors, job creators and the “full faith and credit” of the United States of America.
The consequences of Senate inaction are real and have led to continuing resolutions, threats of government shutdowns and, now, the nation’s first credit downgrade.
There is no more time for dithering. There is no more time for politics. It is time for the Senate to act.
The Senate must present its plan—if it has one, or figure out how to work with the House to solve America’s challenges. As a first simple step, the Senate should do what 75 percent of the American people want it to do: It should join the House in passing a Balanced Budget Amendment to the Constitution—so that U.S. taxpayers can never be put in this position again.
We, the Republican freshmen, were elected to fundamentally change the way things are being done in Washington. We are making the tough decisions necessary to ensure that we remain the greatest and most prosperous nation in the world.
We simply need a Senate that will get to work and join us in this effort.
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25 Responses to "GOP: Time for a balanced budget amendment"
Unless your plan includes reinacting the Glass-Steagall Act and removing the current wealthy and corporate tax cuts so that ALL are paying their fair share and the Wall Street corruption is leashed so that it won’t happen again then you will not get my vote. I think that is pretty much the majority of the middle class and the newest generation of voters. The wealthy are not “job creators” if they were then there would be jobs. Continuing to allow the loopholes and lower rate of taxes is a slap in the face to the American public. The wealthy are 1% of your voter population, the rest of us are the 99%.
Clearly, these freshman were not in office when their party created the conditions for the worst fiscal calamity since the great depression, so they want us to put them into more power so they can do it again? No thanks, my meager personal net worth could not take more tax breaks for the rich, more loop holes for the international conglomerates, and more cuts in the safety net for those who really need help. If these bozos were willing to actually seriously negotiate, fine, let the talks begin, but this balanced budget amendment is just another circus, just like the debt ceiling debacle, that will cause financial disruption and another glitch in our recovery. No thanks, plus of course, it is terrible public policy as well.
Welcome Nine West to the Mike Barrett club for leftist nonsense here at BD. Although I do agree with you to some extent on Glass Steagal (signed by Bill Clinton you fail to note).
You obviously know nothing about your own country’s tax rates. The US has the highest corporate tax rate in the world. Only Obama cronies like GE get to pay zero taxes. As for individuals see the table below obviously for the first time:
Top 1% $380,354 pays 38.02% of the total income tax
Top 5% $159,619 pays 58.72%
Top 10% $113,799 pays 69.94%
Top 25% $67,280 pays 86.34%
while half the country pays zero income tax.
BTW you want to know a secret about your idol Warren Buffett. He takes no salary from Berkshire Hathaway. You can raise income tax rates to 100% without him paying a nickel more. You notice he didn’t say capital gains taxes should be doubled. You also don’t know that removing the Bush tax rates on people above $200000 (millionaires according to you and Obama) would be a drop in the bucket (5%) of our annual deficit. But don’t let facts hit you on the way out.
@Barrett: What is “terrible public policy” is the President’s failed $1 Trillion stimulus that he “predicted” would lower unemployment to 6.8% by this quarter of 2011.
Failure.
What is “terrible public policy” is borrowing over 40 cents of every dime we spend by the federal government.
Your problem Mike is that you honestly think more government spending leads to economic prosperity; this line of thinking has been so thoroughly refuted by the last three years of the Obama Administration its laughable
What is even more laughable is that you still advocate it
Tax rates are meaningless; it is what a corporation pays that is important. And many pay nothing; that is why tax reform is crucial, and yes, I would support reductions in rates if loopholes and credits were eliminated. Of course the rich pay more taxes; however, the last thing this nation needs is more tax relief for the wealthy. But my point above is that the eight republican candidates have raised their hand and refused to support any reform in tax codes or loopholes if it results in more revenue, and every expert worth his/her salt knows that to actually reverse deficits, we need more revenue as well as cuts. So the eight candidates are divorced from fiscal reality; if their pledge is upheld, the nation will re-enter recession. I guess they could care less about jobs and economic development, but hey, let’s pass that marriage amendment.
A Balanced Budget Ammendment would eliminate the ability of the country to deal with the unexpected, you know, little stuff like 9/11 and its ensuing wars, Katrina, the tornados that ripped through the south and midwest this year.
Fixing the debt and deficit requires new revenue. The wealthy, the international corporations (which have moved the majority of their production and jobs overseas, and won’t release to the public the breakdown of where their employees are), the big banks and insurance companies, all of those who benefitted from the Bush tax cuts, these need to pay their fair share.
Bring the troops home. Why do we still have bases in Germany, Japan, Korea, Italy? bring home the troops. Cut Defense to what is needed, and end buying them new toys that they don’t need or even want.
Almost all of the nation’s wealth is held by the top 5% of the population, and while Tbaggers are fond of citing how many dollars they pay, they don’t want to talk about the fact that as a % of their income or wealth they pay substantially less.
The last time we were in this position was right before the Great Depression. This is the direct result of 40 years of Tbagger control of government and steady erosion of the New Deal. Obama has been in office only 2 1/2 years, and for only 60 days did he have control. After Kennedy died and Scott Brown was elected everything was filibustered. The Minority Leader said on the floor of the Senate that making Obama a one term President was the Tbaggers #1 goal. Not jobs. Not improving the economy, not cutting the deficit. We need to turn the country around and return to the prosperity we had from the late 40′s to 1981 when Reagan took office. That will only happen by burying the Tbaggers at the polls in Nov 2011.
Deja vu all over again – Yogi Berra
Another group of exuberant freshman led by Newt Gingrich and “Contract with America” attempted the Balanced Budget Constitutional Amendment. The balanced budget amendment failed the Senate by only one vote in March 1995, and two votes in June 1996. It was also the undoing of the Republican majority in the house.
The problem, the amendment would fundamentally alter the rules of fiscal policymaking. Federal revenues and expenditures would have to be balanced each fiscal year. Any tax increase would require a majority vote of the full membership, not an ordinary quorum, in both houses. Budget reductions, by contrast, could be passed with traditional majority votes.
In essence, the amendment embeds a “starve the beast” ideology in the Constitution and provides a continuous impetus for spending cuts.
Short of an overwhelming consensus (three-fifths of all members, both houses) to suspend the amendment’s provisions, deficit spending would be prohibited whether the economy is growing, stagnating, or in serious recession. The federal fiscal role as “automatic stabilizer” would end, along with countercyclical aid, leaving many of those hurt by recession not only out of a job but out of assistance.
In economic downturns, revenues fall and demands for transfer payments go up. This requires a temporary increase in deficit spending. But with constitutionally mandated budget balance, the fiscal stabilizer role goes into reverse. Faced with revenue shortfalls in a weak economy, the federal government must raise taxes or cut spending to balance its books—both of which serve to deepen rather than moderate recessions.
Be careful what you ask for; it may lead to higher taxes.
Misinformation and outright ignorance on display.
“A Balanced Budget Ammendment would eliminate the ability of the country to deal with the unexpected, you know, little stuff like 9/11 and its ensuing wars, Katrina, the tornados that ripped through the south and midwest this year.”
Absolutely and transparently untrue. The dot gov could build a reserve emergency fund by actually spending marginally less than it took in. It could budget for some expected historical average rate of “emergency” spending. Tornadoes and hurricanes are not black swans. A balanced budget amendment could contain a provision allowing deficit spending in the event of a war DECLARED BY CONGRESS.
Your statement, revealingly, begins from the assumption that government already spends everything it has.
“Fixing the debt and deficit requires new revenue. The wealthy, the international corporations (which have moved the majority of their production and jobs overseas, and won’t release to the public the breakdown of where their employees are),”
OMFG. WHY HAVE THEY MOVED THEIR PRODUCTION AND JOBS OVERSEAS? COULD IT BE TAX “POLICY”? Could it be our 35% corporate tax rate, as compared to Hong Kong’s 16% corporate rate? Could it be the regulatory nightmare that is the CFR? THEIR EMPLOYEES ARE OVERSEAS.
I also want to point out the embedded socialist thinking in this statement. You speak of corporations as if they are public property and you have a right to some managerial input. Public ownership of the means of production, right? These damned corporations must be brought into line!
Then, Wally weighs in with this interventionist blather:
“The federal fiscal role as automatic stabilizer would end, along with countercyclical aid, leaving many of those hurt by recession not only out of a job but out of assistance.”
As we can plainly see, countercyclical “policy” only exacerbates the cycle. Managed economies don’t work. The government has no legitimate role managing economic activity or picking winners and losers. These management efforts only magnify the malinvestment by making it possible for stupid businesspeople to avoid the losses they so richly deserve. Capital is poured into a black hole of bad business models. Good money after bad.
We’ve reached the end of this cycle. There’s no more good money left, so we’re printing it, lending it to ourselves and telling ourselves it’s “countercyclical policy.” It’s positively laughable, and it is obviously an excursion into “Don’t Ask, Don’t Tell” economics.
If printing money is an acceptable “policy,” then why don’t we just print up $10 Million for each and every person in the U.S. and we can all stop working? And if printing that much is bad, why is it OK to print up just a few $Trillion and give it to the banks?
This is the kind of nonsense you get when you accept the notion of a managed economy.
Well, there is no doubt that the freshmen congressman believe that calling for a balanced budget is great political theater, but what would it do to the economy? It would cause depression, and it would do so very quickly. Unemployment would skyrocket, jobs would be lost permanently as the economy simply slowed down, we would lose our valued role as the leader of the world economy, and each of us would lose most of our net worth. The security of our nation would be at risk, our infrastructure, already seriously depreciated by republican policies, would crumle faster with no money to fix it, and all in all, more folks would move to Canada. So no Jamie, I would not support a politician that wants a balanced budget anymore than I would ever vote for one who has signed the Grover Norquist No Tax Pledge. I will support those who vote for a deficit reduction goal that within ten years, we will have reduced expenditures and increased revenues so that each represents 20% of GDP by 2023.
What part of
“The consequences of Senate inaction are real and have led to continuing resolutions, threats of government shutdowns and, now, the nation’s first credit downgrade.
There is no more time for dithering. There is no more time for politics. It is time for the Senate to act.”
do democrats not understand ???
“each of us would lose most of our net worth.” Really. Keep 75% to 80% of my net worth in real estate. You really think house prices will go to ZERO.
Upset with Jamie. I was going to suggest “why don’t we just print up $10 Million for each and every person in the U.S. and we can all stop working?”. Beat me to it.
Bought some gold yesterday. Warning, I always have horrible timing, so gold should now go down in price.
Frankly, the audacity of these freshmen is overwhelming. As the protectors of the super rich, wealthy 2% of the nation, doing all they can to ensure these folks can take longer vacations in Europe and buy finer wine, while the rest of us struggle with declining 401ks, loss of value of our homes, and job prospects that are dwindling, all because of a budget imbalance brought on by tax cuts for the rich and super rich. What has happened to this nation which since after the depression had stood for an equal shake for everyone in this society? Replaced by lower tax rates for the rich, more deductions for the rich, special treatment for their earnings off their brokerage accounts, and of course low tax rates for the brokers who lost all our money, and tax credits so large super rich companies pay no taxes at all. Yes, I agree, what is wrong with this nation. Why are we becoming a plutocracy? Why don’t these freshman work for us, the 98% of this nation who just want a fair deal, not barriers to prosperity. Frankly, Mr. Rigell, stop bickering about internal politics and the machinations of the legislature; support a balanced approach so we can start prospering again. If you don’t, you are simply toast when the great middle class wakes up and realizes what you, Cantor, and Boehner have done to us.
That was not an earth quake you felt. That was the founders of this country turning in their graves. Even they are ashamed of Reid and the senate democrats and their refusal to make the tough decisions necessary to ensure that we remain the greatest and most prosperous nation in the world.
I note that Congressman Rigell and his fellow freshman point to the broad public support for a balanced budget, however they will ignore the polls when they show broad support for something they do not want.
I am going to provide a link reporting on the results of a CNN poll released earlier this month from which I am going to lift some quotes.
http://politicalticker.blogs.cnn.com/2011/08/10/new-cnn-poll-majority-want-tax-increase-for-wealthy-and-deep-spending-cuts/
“Most Americans want a special congressional committee tasked with drafting a long-term solution to the nation’s mounting federal deficits to include tax hikes for the wealthy and businesses and deep cuts in domestic spending, according to a new national survey.”
“According to the poll, 63 percent say the super committee should call for increased taxes on higher-income Americans and businesses, with 36 percent disagreeing.”
“Nearly two-thirds say no to major changes to Social Security and Medicare.”
“According to the survey, only a third say that taxes on wealthy people should be kept low because higher-income Americans help create jobs, with 62 percent saying that taxes on the wealthy should be high so the government can use the money for programs to help lower-income Americans.”
So, Scott, just how often do the votes you and your freshman class cast coincide with public opinion? Will you continue to only cite public opinion polls when you agree with the results and completely ignore the results when they run counter to your ideology and agenda?
Rigell will soon be toast as he continues to vote with the Republican study committee and the tea party representatives that apparently are most concerned about the tax benefits of the richest 2% of americans and could care less about the rest of us. Why the grass roots of the tea party supports a Party that is worried only about rich automobile dealers and hedge fund managers is a mystery to me. There must be an intelligent part of that group that realizes they are riding the wrong horse, that deficits are made up of lack of revenue from the rich as much as from too much spending. Kudos to the republican strategists for this dastardly co-optation of the tea party, but one of these days, the people are going to figure this out.
Here is a list of some of the changes that are occurring right now, and which will continue to occur until a new equilibrium economic condition is reached AND is one that is built upon actual productive activity, not upon borrowing and wealth redistribution:
1. Everything you have bought on credit is going down in value in real purchasing power terms; this is one of the symptoms of deleveraging. Items include houses, CRE, useless consumerist Chinese junk. This is not a balance sheet recession; this is a depression. The soup lines form at the mailboxes in suburbia. 45 million Americans are on food stamps; each month brings a new record number.
2. Everything you need on an ongoing basis, consumables like food and energy, and especially imported energy, is going up in cost in real terms (inflation).
3. Traditional investments you own that are dollar-denominated (stocks, bonds) are going down in value in real purchasing power terms, even as the markets may appear to be “going up.” This, again, is caused by inflation.
4. 1, 2, and 3 together mean that your standard of living is being lowered right in front of your eyes. This will continue for a long time.
5. Business becomes harder and harder. It also becomes even harder to buy something that actually works like it’s supposed to. Karl Denninger at “Market-Ticker” has reported somewhat extensively on “margin compression.” Rising producer costs and raw material costs are squeezing the margin out of products, forcing price increases at the retail level. Quality suffers. Free product tech support becomes non existent.
6. Big-ticket consumer goods markets are dead meat. Dead. Meat. GM will be broke again, and soon. The reason for this is that people will need to spend an ever-increasing portion of their incomes on food and energy. With consumers already over their heads in debt, who can afford a new car?
7. Energy markets will change. As energy prices increase, some of the more mature alternatives will become attractive. Energy is fungible, and substitution will occur.
8. The useless-degree debt mills known as “Universities” will scale down their offerings of useless degrees; an ultimately slimmer and more production-oriented economy has less use for … useless degrees. Got science and technology?
9. Social Security, Medicare, Medicaid and the rest of it will rapidly decline in real value. The checks will continue to go out, but they will buy less and less. The government statisticians will continue to lie about inflation; COLA adjustments will not be close to keeping up with real inflation. Doctors’ margins in seeing government patients will continue to drop to the point where it actually costs providers to see them. Doctors soon have no choice but to stop seeing government patients in order to survive.
10. Fewer and fewer people will ever see anything that resembles “retirement.”
It continues to astound me that it would seem impossible to me that everyone on this forum is in the top 1% of income earners in this country, for which the republican leadership works and seeks to protect, and if that is the case, how so many partisans can support the policies of the Party when it is so against their own interests? Is this really just a political game you are playing? Is ascendancy to the White House so important that you are willing to sacrifice your own financial well being? After you have seen the effects of the Bush presidency, how can you in good conscience want that to happen again?
Don’t paint me with either of the Bushies; both were unmitigated disasters.
The only solution is the one not being discussed, because it requires Congress to willingly give up power, and that is impossible. The solution? Slash government, slash government spending, free capital for private use, shred business-choking regulations at the local, state, and federal level. Businessmen will rejoice in the return of the free market; business spending will jump, hiring will commence, and actual productive economic activity will begin to happen. Real wealth will be produced, not borrowed temporary wealth-feel-good.
It was time to vote NO on the debt ceiling hike..
Obama 2012 could have been avoided.
@ Jamie
Do you know when the last war was declared? Do you know how much has been spent on “defense” since the last war was declared?
Yes, I do. Do you want to know why the wars will continue? Because the dot gov can’t afford to bring all those highly trained armed young men home to no jobs and no futures, that’s why.
Defense spending will have to be drastically cut, but almost no one, least of all anyone in defense-heavy Virginia, is willing to advocate it (I am).
Here’s the thing: these cuts are going to happen anyway. I know they are. How do I know? Simple arithmetic says so. We can make them now while we still have some control over them (unlikely), or we can allow economic reality to shove them down our throats sometime very soon (more likely).
These are the two simplest and unanswerable questions in American politics:
1. Who really believes that we can keep spending $1.5 Trillion more than we take in?
2. Who is willing to make the cuts necessary to stop deficit spending and balance the budget?
Everything else is emotional bullshit about shoving granny off a cliff, not “caring” about the “less fortunate,” “tax cuts for the rich,” etc. Michelle Bachmann is running around telling people her administration will bring back $2.00 gasoline. OMFG.
Doug Casey has a great piece on Zerohedge yesterday: “Exiting the Eye of the Storm.”
“It’s the kind of thing that accelerates a negative spiral, in good part because everybody wants the government to ‘do something,’ in the idiotic belief that it can improve things by doing more. Actually it can only help by doing less.”
“Because of the false belief that printing money stimulates the economy. The artificially depressed interest rates of today will result in very high inflation and very high interest rates in the near future. A healthy economy gets naturally low interest rates as a result of a lot of savings, a lot of capital creation. A healthy economy has stable interest rates that relate to the amount of new wealth being created, typically just above the natural rate of inflation that results from real money – gold – being mined out of the ground. Artificially low interest rates stimulate malinvestment.”
“The Fed is also keeping rates low because of the government’s massive debt problem. The U.S. is already running trillion-dollar deficits – if interest rates go up, say, to 12% like back in the ‘70s, that would add another trillion to the deficit right there. Financing a $16 trillion debt at 12%, rather than 2%, equals another $1.6 trillion of spending just for interest.”
“This really means they have no choice. The situation is completely out of control – the U.S. financial house of cards is irredeemable at this point, even with interest rates at close to zero. The whole financial structure is close to collapse, and that’s why I think we’re exiting the eye of the storm.”
Imagine that: new wealth being created, some of which was used to inject new capital into the system which was itself then re-applied to productive economic activity, producing still more real wealth. Imagine such an economy, actually growing. Imagine a sustainable middle class arising from such activity.
Which politicians think and speak in these terms? Eric Cantor? George Allen? Mitt Romney? It’s laughable. They’re a bunch of idiots shoveling pablum and platitudes at the voters. This is what passes for “leadership.”
Well thank you for your honest assessment of the field. Regretfully, saying something over and over again doesn’t make it true, but it does make it popular. Regretfully, more and more americans consider politics to be a reality show, when it fact it is the way we set priorities. The republican field is near unanimous on the most dangerous tactics that could ever be employed, and if one of them is elected and implements their platform, we are doomed.
@ Jamie,
None of the wars we’re currently engaged in were ever “declared.”
Yes, the right wing has made a real mess with true fiscal conservatives by their criticism of the President who with one speech in Cairo and some help with NATO on air cover has overthrown three dictators, with more to follow, defanged Al Qaeda with the thirst for democracy of the demonstrators, all supported by the international community and with minimum cost and loss of life. Sounds like a better approach than trying to be the world’s policeman.
It’s disappointing to see our leaders – especially those who claim to hold fast to the original intent of our Constitution support a plainly unConstitutional – albeit populist idea. Simply put, if such an Amendment to our Constitution were to be passed it would take the power of the purse away from the Legislative and give it to the Judiciary – as it would be up to the Judiciary to address any spending that would violate the BBA. This is clearly not what our Founders had in mind – and mroe to the point, the only reason we would need such an Amendment is because Congress is admitting that Congress can’t control Congress’ spending – and thus needs to get someone else involved. How about a better idea – Congress pays for the bills Congress racks up and if those bills are higher than the tax revenues, Congress deals with it – rather than kicking the can down the road or blaming anyone/ everyone else.
Mike Barrett, you deride the Balanced Budget Amendment as “bad public policy” and claim instead to support a a deficit reduction goal to balance the budget by 2023.
Several glaring problems exist within your rhetoric. First, you claim that a BBA is bad public policy, without explaining WHY this is bad policy. Have you read the proposed Balanced Budget Amendment? Contrary to widely accepted belief, a Balanced Budget Amendment does not mandate that budgets immediately be balanced. The BBA takes into consideration the concern which you expressed regarding drastic immediate cuts. Budgets would gradually be brought into balance.
Second, you state that you support a “goal” to balance the budget by 2023. Are you aware that Congress has tried numerous times to institute a multiple year plan of deficit control! The problem with these agreements, is that future Congresses are not bound to the budgets of prior Congresses! Every two years, a new Congress is elected. That newly instated Congress has the constitutional authority to pass an altered budget! Thus, these agreements are often meaningless!
The only way to force future Congresses to act within our national means is to enact a Balanced Budget Amendment. Your attempt to scare the public is countered by the facts! The budget will gradually be brought into balance. In addition, the BBA can provide for a super-majority to run a deficit and to allow for a deficit when a Declaration of War is in effect.
I advise you to do some additional fact checking before offering such grossly misguided views on the BBA. Kudos to Congressman Rigell for supporting a Balanced Budget Amendment.
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