Skip to comments.The fiscal math for a Balanced Budget Amendment just doesn’t work
Posted on 02/14/2013 5:19:36 PM PST by ExxonPatrolUs
So, Senate Republicans, including Marco Rubio, are submitting legislation for a Balanced Budget Amendment. Here are the broad strokes:
Requirement to Balance the Budget: With limited exceptions, the federal budget must be balanced.
Presidential Requirement to Submit a Balanced Budget: Prior to each fiscal year, the President must submit to Congress a balanced budget that limits outlays to 18 percent of GDP.
18 Percent Spending Cap: With limited exceptions, Congress must limit outlays to 18 percent of GDP.
Supermajority for Tax Increases: Establishes a new supermajority requirement for net tax and rate increases.
Supermajority to Raise the Debt Limit: Establishes new supermajority requirement for an increase in the debt limit.
Reality check: Even with the sequester cuts, CBO predicts a budget gap of 3.8% in 2023 and thats including revenue/GDP of 19.1%, above its historical average of 18%. And spending will be at 22.9% of GDP, including nearly $900 billion of interest payments. Where will those nearly 5% of budget cuts come from if such an amendment should pass? It is hard to take the BBA seriously without a plan. And as I wrote the other day, cooking up a legit plan will be difficult. And a spending target of 18% long-term, giving the aging of US society, would require a radical transformation in the size and scope of government. Doubt the GOP has really made that argument.
A Balanced Budget Amendment is stupid. It is an admission of failure. You admit you cannot pass a balanced budget before a BBA and you definitely won’t pass one after the BBA. It takes fewer votes to pass a balanced budget than to pass the amendment doesn’t it?
Take every outlay in the federal budget and divide it by 1.05. Poblem solved. The vast majority of real, outside-the-beltway Americans won't notice any difference whatsoever. Actually, they will probably notice a small increase in their standard of living since the private sector will deploy that extra 5% more efficently than Washington.
To paraphrase Walter E Williams, some define a balanced budget as ‘give me all your money and I’ll spend all of it’......and then some.
Amen amen and amen. A balanced budget amendment is sheer idiocy for more reasons than I can count.
I agree that introducing a BBA with a Dem majority in either house is just grandstanding.
But I like the idea of a BBA in general. We have one here at the state level, and it works. Always plenty of crowing from the usual quarters when we go into recession and they have to make mandatory cuts, but cut they do. And it’s kept us out of the kind of fiscal trouble that’s plagued many states the last 5-6 years.
Like I said, its a lot easier to pass a balanced budget than a balanced budget amendment. The GOPe has no intention of proposing a balanced budget in our lifetimes.
How does anyone predict a budget for 2023? That’s idiotic. We could have collapsed by then, or maybe created an all new industry which can pay the government’s bills ten times over without the populace feeling any strain. Unlikely, but a million other contingencies could happen. Most likely gubmint will end up spending more than planned.
But states are different: they can’t print their own money.
Easy - raise the minimum wage to $60/hr and you can make a huge dent in the outlay of "entitlements". Problem solved.
Yes, it is a good thong that states can’t print their own money. Tat’s beside my point, which is that whether or not balanced budget requirements are good on the state level they are irrelevant on the national level, where gubmint is much freer to spend to its heart’s desire. Federal gubmint doesn’t have unlimited spending power, but until and unless the dollar stops being the world’s reserve currency, we get downgraded to Greek credit status, and the federal reserve cause s hyperinflation, they nearly do.
thong = thing. What a strange error.
It is a good thing states can’t print their own money.