Arkady
President
Given the possibility of a Constitutional Convention to pass a balanced budget amendment, would you favor it?
http://www.slate.com/articles/news_..._teaming_up_to_call_a_new_constitutional.html
For me, it comes down to the details. I think it's a popular idea among conservatives because they see it stacking the deck in favor of their own vision of a small, weak government. Basically, pass popular tax cuts and then, when the columns don't add up, automatic spending cuts kick in, even if the cuts are unpopular enough that they'd never have passed democratically.
However, it would be theoretically possible to set the idea up to stack the deck in the opposite direction. Instead of automatic spending cuts kicking in to bring spending down to revenues, automatic tax hikes could kick in to bring revenues up to spending. Understandably, the conservatives wouldn't like this, because liberals could use it to bring about larger, stronger government: pass popular spending programs, then when the columns don't add up, automatic tax increases kick in, even if these increases are unpopular enough that they'd never have passed democratically.
In theory, you could middle-ground it. In the event of a mismatch between revenues and spending, automatic spending cuts and automatic tax hikes both kick in, designed to meet half-way. That way the amendment could not be used to stack the deck either way -- there'd be a genuinely democratic fight about the proper size and role of government.
Another issue is how you deal with situations where a deficit really is needed. For example, what about wartime? Should we really discipline ourselves with "pay as you go" during a war? We'd never have won independence or survived the war of 1812 or preserved the union with that rule. If we're unable to borrow and adversaries are, we're at a distinct disadvantage. Yet, you wouldn't want wars that aren't existential threats to create a blank checkbook. We blew trillions of dollars on a dumb whim in Iraq, and a little fiscal discipline to steer us away from that mistake would have been nice.
Standard economic theory also argues you should run a deficit during recessions and the first part of recoveries, and then offset that by running surpluses in other times. And demographic bulges can create situations where you might want to borrow in some periods and run surpluses in others. Special buying opportunities also would justify borrowing (e.g., to finance the Louisiana Purchase or the purchase of Alaska), and so could other investments that would create long-term returns.
One idea to deal with all this would be some sort of super-majority voting rules allowing for deficits and surpluses. But, that keeps it a highly politicized matter. You might instead create a mechanism for some nonpartisan group, insulated from day-to-day politics, to set the yearly deficit or surplus based on various factors, similar to how the Fed sets money supply. However, given the way right-wing heads explode when Fed control of money supply is mentioned, I doubt that will be a popular idea.
What do others here think?
http://www.slate.com/articles/news_..._teaming_up_to_call_a_new_constitutional.html
For me, it comes down to the details. I think it's a popular idea among conservatives because they see it stacking the deck in favor of their own vision of a small, weak government. Basically, pass popular tax cuts and then, when the columns don't add up, automatic spending cuts kick in, even if the cuts are unpopular enough that they'd never have passed democratically.
However, it would be theoretically possible to set the idea up to stack the deck in the opposite direction. Instead of automatic spending cuts kicking in to bring spending down to revenues, automatic tax hikes could kick in to bring revenues up to spending. Understandably, the conservatives wouldn't like this, because liberals could use it to bring about larger, stronger government: pass popular spending programs, then when the columns don't add up, automatic tax increases kick in, even if these increases are unpopular enough that they'd never have passed democratically.
In theory, you could middle-ground it. In the event of a mismatch between revenues and spending, automatic spending cuts and automatic tax hikes both kick in, designed to meet half-way. That way the amendment could not be used to stack the deck either way -- there'd be a genuinely democratic fight about the proper size and role of government.
Another issue is how you deal with situations where a deficit really is needed. For example, what about wartime? Should we really discipline ourselves with "pay as you go" during a war? We'd never have won independence or survived the war of 1812 or preserved the union with that rule. If we're unable to borrow and adversaries are, we're at a distinct disadvantage. Yet, you wouldn't want wars that aren't existential threats to create a blank checkbook. We blew trillions of dollars on a dumb whim in Iraq, and a little fiscal discipline to steer us away from that mistake would have been nice.
Standard economic theory also argues you should run a deficit during recessions and the first part of recoveries, and then offset that by running surpluses in other times. And demographic bulges can create situations where you might want to borrow in some periods and run surpluses in others. Special buying opportunities also would justify borrowing (e.g., to finance the Louisiana Purchase or the purchase of Alaska), and so could other investments that would create long-term returns.
One idea to deal with all this would be some sort of super-majority voting rules allowing for deficits and surpluses. But, that keeps it a highly politicized matter. You might instead create a mechanism for some nonpartisan group, insulated from day-to-day politics, to set the yearly deficit or surplus based on various factors, similar to how the Fed sets money supply. However, given the way right-wing heads explode when Fed control of money supply is mentioned, I doubt that will be a popular idea.
What do others here think?
