S W A M P F E V E R | B Y J A M E S C A R V I L L E
The unbalanced minds
behind the balanced budget scheme
The same Republican clowns who blew our debt
sky-high in the '80s
have found a new way
to play with our economy.
once again, Congress is getting set to dredge up one of the worst ideas in Newt Gingrich's Contract with America. I refer, of course, to the balanced budget amendment that is due to hit the floor of the Senate some time this week. On the face of it, a balanced budget amendment sounds pretty good. I mean, after 12 years and $3 trillion of Reagan and Bush debt, it's nice to see that fiscal discipline is high on the national agenda. The problem is, mucking around with the Constitution ain't the way to do it. Back in the early part of 1995, the balanced budget amendment passed the House with flying colors but lost in the Senate by a single vote. This time, the Republicans have two more seats in the Senate. Sixty-seven votes seems well within reach, especially since there's a whole new crop of freshman Democrats who are terrified of getting blood-pinned with the "tax and spend" label. And who can blame them? The Republicans have done a mighty good job of making the balanced budget amendment look like the only fiscally responsible thing to do. I beg to differ. The balanced budget amendment is not only bad economics. It's also bad politics and an abuse of the Constitution. Let me tell you why. When the economy is booming like it is now, there is no good reason to be running in the red. Incomes are high, and so are tax revenues. Poverty is low, and so is the demand for food stamps and unemployment and other assistance. In good times, a balanced budget is perfectly doable. A balanced budget amendment, essentially locking our spending course on autopilot, would do little or no harm. But think about what would happen the next time the economy starts going into a dive. The Congress and the president will be virtually powerless to do anything to help get it moving again. In fact, with a balanced budget amendment, the government will only make things worse. Precisely at the moment when the government should be stepping in to give the economy a fiscal jolt, the Treasury will have to cut back on spending. Why? Tax revenues will be down, so spending of all kinds will have to go. Downturns will turn into recessions. Recessions will spiral down toward depressions. Autopilot will steer us right into the ground. You don't have to take my word for it. Last week, 1,000 economists — including 11 Nobel Prize winners — said so in an open letter trashing the amendment. Right-wingers like to claim that recessions don't pose a problem. If a recession hits, they say, Congress will simply override the amendment by a three-fifths vote in both houses. But the fact is, getting three-fifths of both houses to vote the same way on anything is no easy proposition. And think about what happened in 1990 and 1991. By the time George Bush even admitted that there was a recession, the country had already hit rock bottom. If the balanced budget amendment had been in place, Congress wouldn't even have tried for an override until the damage had already been done. Enforcement of the balanced budget amendment would also be a mess. Let's take the following scenario: What happens one year if Congress can neither agree on the way to achieve a balanced budget nor find a three-fifths majority to override the amendment? It looks as if judges — appointed, not elected — would have to get involved, taking over de facto control of the budget process. It is not a stretch to assume that the judges would simply order the president to stop signing checks. Social Security and Medicare would be obvious targets. Sometimes I think the case for the amendment rests on ridiculous rhetoric alone. How many times have you heard a right-winger saying: Families balance their budgets, why can't the government? I hear that all the time. In fact, one time I was sitting on a panel discussing the budget when a credit-card executive made that point. A credit-card executive! If anyone should know how few families in America spend only what they take in, it should be the guy who's in business to help them rack up debt! You hear the same nonsense about state governments — you know, state governments balance their books every year, why can't the feds? But even states that have constitutions requiring balanced budgets don't actually produce them. Most states wisely get around the requirements by having two different budgets — a "general-funds" budget, used for annual expenditures, and a capital budget, used for long-term spending on roads and airports and the like. Only the general funds have to be in balance. The capital budgets can run up big debt. And one other thing about the states. Even if they weren't such clever accountants, they would still be shielded from the worst of any recession. The federal government's assistance to the states has always increased in times of greater need. At least up until now. As you're watching this debate unfold, I want you to keep a few more things in perspective. Over the past four years, we've made great progress toward a balanced budget. Right now, the deficit stands at $107 billion, the lowest since 1981, before Reagan started us down the path of fiscal foolishness. Economists have an even better measure of our progress. They like to compare the size of our deficit to the size of our economy. And you know what? By this measure, the country is in better shape than it's been at any time since 1974, and we now beat every industrialized economy in the world but one — Norway, which has oil up the wazoo.
It's bad enough that Republicans in Congress refused to give the president
a single one of their votes when he set this country on this path to
deficit reduction four years ago. It's worse still that many of the
proponents of the balanced budget amendment are the same clowns who buried
us in debt in the 1980s with their pie-in-the-sky supply-side economics.
Let's not let them make things truly tragic. Let's encourage Democrats to
defeat the balanced budget amendment once and for all.
Do you agree that balancing the budget will trash the economy? Thrash it out in Table Talk. |
