Ken Blackwell posted on his Facebook fan page a column by his friend, and the Republican Senator from Utah, Mike Lee. Senator Lee wants a balanced-budget amendment, and five other Senators on the Judiciary Committee agree.
This week, 58 senators – including all 47 Republicans, 10 Democrats and Sen. Joe Lieberman, an independent – recognized this urgent need and expressed support for a balanced-budget requirement. I have put forward a proposal that would require a balanced budget every fiscal year; limit federal spending to 18 percent of gross domestic product; and require a two-thirds vote in Congress to increase taxes, raise the debt limit or run a specific deficit.
I made the comment, “We never would have been able to have supply-side economics during Reagan if we had a balanced-budget amendment.” Nobody responded.
Unfortunately, the nation’s debt has sky-rocketed to levels high enough to be mistaken for a Ron Paul supporter at a Phish concert (I kid). Now we are at the point where even the people who say, “deficits don’t matter” are thinking, “holy hell, this deficit is out of control.” In fairness to Vice President Cheney, he was saying that deficits don’t matter in the short-term because he was responding to the naysayers from all sides of the aisle that have never been fond of supply-side economics. It might behoove us to remember that then-Chief of Staff Dick Cheney was on the ground floor of the supply-side revolution when, according to legend, Arthur Laffer drew an inverted U-shaped curve on a napkin at lunch. The Laffer Curve was used to articulate how lower tax rates might produce higher tax revenues.
In the 1970s and early-1980s it was a party of the Right Fight Club (the rule is to never speak of Party of the Right Fight Club) with the supply-siders arguing that the deficit will work itself out with the tax cuts (as it started to do) while the old guard was arguing that balancing the budget was the way to go, hands down. Irving Kristol and the Neoconservatives argued that the traditional right’s fetish with balancing the budget meant a deep-recession in the 1980s, and a pessimistic vision that would even make John Derbyshire, the king of conservative pessimism, balk.
Our current condition is one that should cause considerable alarm. However, I am not of the opinion that a balanced budget amendment is the solution to our woes. Ronald Reagan’s magic would not have been exercised had a balanced budget amendment been instituted (well, not his economic magic, if that is your thing) while he was in office. Balancing the budget is a good goal, and a deficit as large as the one we are facing is potentially devastating to our country. Yet we survived as a Republic without a balanced budget myriad times before, without considerable harm to ourselves. There may be times where we need to do so again, and I cannot say that I have enough faith in 2/3rds of the legislator being able to agree on a time when the government is allowed to carry such a debt (as would be the rule, according to Senator Lee). I know the Senator uses the time following the 9/11 attacks as anecdotal evidence of the Congress coming together, but I think it is far fetched to believe that Congress could do so barring another horrendous attack, which will hopefully never happen again.
Financially, The United States of America is heading the way of Greece, Britain and France. Rebellion and fiscal implosion are possible (likely?), and a dedicated third party is almost definite, if we don’t balance the budget by 2013. Unfortunately, few Members of Congress are willing to take the political risks necessary to balance the budget at all, never mind by 2013.
Fortunately, at least some Republicans are willing to take a stab at eventual balance of the budget. Rep. Paul Ryan (R-WI) has his Roadmap, but I do not consider it all that serious since it adds debt for over 50 years before balancing the budget. We can’t afford that. What we can perhaps afford is the Ryan-Rivlin proposal which, as Veronique de Rugy shows here, significantly diminishes the cost of health care over the next 40 years and saves hundreds of billions annually while doing so.
Unfortunately, it’s not enough to worry about the long-term debt if we can’t get past the short-term. This is where the decent, though not nearly expansive enough, Spending Reduction Act kicks in. Proposed this week in The Washington Examiner by Senator Jim Demint (R-SC), the House’s Republican Study Committee (RSC) Chairman Jim Jordan (R-OH) and the RSC’s Budget and Spending Taskforce leader Scott Garrett (R-NJ), it aims to cut $2.5 trillion in discretionary spending over the next decade.
However, no plan to balance the budget is complete without looking at national defense and budgetary fraud, and this is where Senator Tom Coburn (R-OK) enters the field of play. First with his various attempts to combat $100 billion in Medicare and Medicaid fraud (see one example from the last Congress here), and secondly with his detailed memorandum last year, Coburn is a one-man wrecking machine in the Senate.
If even half of the potential savings in these efforts are realized, the federal budget would drop by over $200 billion right away. Add in the medium-term and long-term impacts of defense and health reforms and we might actually have a balanced budget before Indiana governor Mitch Daniels hits his second term. (Of course, with Chris Christie as his vice president, maybe it will happen even faster. One can only hope.)