While the Senate moved closer to some kind of deal to raise the debt ceiling so that federal checks won’t bounce after Aug. 2, the House took up its cut, cap and balance bill.
The measure would affect most Register readers personally, should it become law. Let’s look at the cap and balance parts of the bill. Most who support the measure would cap federal spending at 18 percent of gross domestic product. Spending is currently running at 24 percent of GDP. It has averaged 20 percent through flush times and thin times for decades.
A reduction to 18 percent would cause worlds of pain. White House economic adviser Jason Furman told reporters on a conference call that if defense were exempted from cuts — as most Republican members of Congress propose — that kind of cap would require slashing 12 percent from the rest of the federal budget, including Social Security and Medicare, resulting in a $2,000 reduction in benefits for the average Social Security recipient.
There are some on Social Security who would feel pinched if their monthly checks were cut by $166, as such a cap might require.
Reducing federal spending by 12 percent — or by 6 percent if the Pentagon were included — would impact every farmer in Allen County and be felt in many ways by those who use food stamps, are on federal pensions of any kind, including military, who use the national parks — well, the list is very long.
The federal government provides so many services, from highway repair and construction, to care for the elderly in nursing homes, medical research and support for the developmentally disabled that it is difficult to overestimate what the impact would be on the every day lives of Americans.
That’s the “cap” part of the bill. The “balance” requirement is even more draconian. The measure would require Congress to send an amendment that required the federal government to balance its budget every year before the debt ceiling would be raised.
That, of course, won’t happen. It takes a two-thirds majority of both houses to pass a constitutional amendment resolution. The bill probably wouldn’t pass the House by that margin and would be dead on arrival in the Senate.
For the sake of discussion, however, imagine that the resolution went to the states and was approved by them. What would that accomplish? Today Congress borrows 40 cents of every dollar it spends. A balanced budget requirement would mean that Congress would be required to come up with a combination of tax increases and spending cuts that equalled 40 percent of today’s budget. Impossible.
It would make no sense to require balanced federal budgets until that discipline could be put into place without wrecking the country. If the federal budget were balanced, then requiring it to stay that way would be doable. (We had balanced budgets in 2000 and under President Dwight Eisenhowever. It is possible.)
Doable, but not desirable. Many states, Kansas among them, require that their budgets be balanced every year. But there are two crucial differences between the states and the federal government. The first is that the nation is responsible for the national defense and must have the power to spend what it takes to carry out that responsibility. The second is that the federal government should have the budgetary flexibility required to respond to recessions. It must be able to borrow to stimulate the economy when a stimulus is needed to prevent a deeper recession and ward off depression.
It is also true that governments which borrow in turn-downs should be faithful to economic fundamentals and retire those debts when their economies recover. Most nations, unfortunately, keep only half the bargain. That lack of discipline is not a sufficient argument to justify putting nations in strait jackets with balanced budget requirements that cannot be overridden when they should be to protect a country from military invasion or economic stress.
THERE IS A fundamental principle involved here. The laws we pass to govern ourselves should enable Congress and the executive to act for the good of the people as they best see fit. Laws which prevent government from serving the people well should not be passed.
It would be unwise to manacle the government of the United States of America with a balanced budget amendment to its pretty darn wise Constitution.
— Emerson Lynn, jr.
