During the more than two hundred years the U.S. Constitution has been the law of the land, it's been amended only 27 times. Thus, the Constitution is hard to change, as the Founding Fathers intended it to be.
So is it worth taking the time now to make a concerted effort to adopt a balanced budget amendment, and if successful, would such an amendment accomplish its objective?
No and no are the correct answers. It would not be time well spent anytime soon, if ever, and such an amendment wouldn't accomplish its objective, even if successful.
So why wouldn't a balanced budget amendment solve our many financial issues? Here are three of the many reasons.
(1) It wouldn't require less government spending. (2) It wouldn't even require less government borrowing. (3) Neither would such an amendment prohibit large tax increases.
And perhaps most important, future politicians would be able to set the requirement for a balanced budget aside from time to time, sometimes properly and sometimes improperly.
Today many of our individual states have balanced budget provisions. What's been the effect?
In And The Crisis Winner Is? Government, former deputy assistant Treasury secretary in the Reagan administration David Malpass has written a strong editorial concerning the effects of continuing worldwide government growth, including our own.
Malpass highlights these issues:
"Across Europe and the United States, the fiscal crisis is setting up an epic battle among government services, pensioners, government employees, creditors and taxpayers. There is simply not enough money coming in to pay all the promises politicians have made. The shortfalls and fights are challenging our democracies and shifting wealth from the private sector to ever bigger government. "
Later he deals with the lack of government spending restrictions:
"Across the U.S. and Europe, big government is winning the crisis game, adding taxes, regulatory power and whole new institutions. Voters want restraint, but there's no mechanism to control government spending, so debt-to-GDP ratios go up rather than down.
Even at the state and local level, which is supposed to be closer to the people, governments find ways to grow. In an age-old government shell game, tax increases are projected to cause big revenue gains, which governments rush to spend. When actual revenues fall short, the government blames the economy, borrows the shortfall, and proposes new taxes, creating a debt cycle.
This budgeting trick is replayed year after year around the nation. New York state demonstrated this last week with Gov. Andrew Cuomo's $2 billion increase in annual income taxes to "balance the budget." The increase in projected tax revenues will allow a major increase in state spending in 2012. And despite balanced budget requirements, New York state and local debt has surged above $300 billion."
Since most of us mere citizens sincerely want to implement fiscal sanity, what can we do?
First, we need to recognize the debilitating impact of debt and taxation on economic growth and employment. Second, we need to limit government activity to that which the government can only or best do. Otherwise government needs to get out of the private sector's way.
Unless and until we're willing to require that politicians commit to, and then actually do those things, government will continue to grow, deficits will continue to occur, debt levels will continue to increase and the economies of the world, including ours, will continue to struggle. No doubt about it.
So if, as and when we decide to get serious about debt repayment, balanced budget requirements would become surplus budget requirements. Doesn't that have a nice ring to it?
And genuine reduced government spending would always be a multiple of any legislated tax increases. Doesn't that also sound good?
But first, we need to insist that our governments stop spending so much money. That's because we don't have it to spend unless we first borrow it or increase taxes.
If we borrow the money we spend, our debt increases. If we increase taxes to get the money to spend, the economy suffers, and debt increases.
Either way, added government spending means added debt.
Stated simply, all this balanced budget talk is just that. Talk.
So let's resolve to stop listening to all the cheap happy talk about needing a balanced budget amendment and start being absolutely appalled that government spending at all levels increases each year, including this one.
When will this nonsense stop?
Apparently only when we the people cause it to stop.
Then the economy will grow nicely again, tax revenues will increase, debt levels will stabilize or even decrease, and unemployment will fall to the 5-6% range.
But that's a long way off.
Politics sucks.
Thanks. Bob.
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