The Return of One of the GOP's Dumbest Ideas

Lord help us, is the balanced budget amendment—one of the dumbest policy ideas the right ever cooked up (and that's saying something)—actually back? Only time will tell, but today on the New York Times op-ed page, two prominent conservative economists, Glenn Hubbard and Tim Kane, try to revive it with an argument so unconvincing that I worry it's going to be embraced by every Republican in sight. If you think the sequester was a terrific idea and worked out great for everyone, have they got a deal for you.

Hubbard and Kane start by insisting that deficit panic must not be allowed to wane. "We are stuck in a bad and worsening place: sure, deficits strike fear in the hearts of economists and intellectuals, but they don't matter at the ballot box." Haven't we actually cut the deficit by more than half from its 2009 peak? And isn't creating jobs and increasing wages more important? And aren't most "economists and intellectuals" not actually driven to terror by the deficit at the moment? Of course not, silly. We must put aside parochial concerns like jobs and focus our fear on deficits, lest they one day...well, one day they'll do something really bad, but don't worry about what it is.

You never hear conservatives articulate exactly why running a deficit, any deficit, is so problematic. They rely on the fact that it seems self-evident, and in fairness, some Democrats, Barack Obama in particular, contribute to widespread misunderstanding of the subject by repeatedly comparing the government's finances to a family's finances. But the government's budget isn't at all like a family's budget. For instance, when it's faced with a crisis like the Great Recession, borrowing more and spending more is exactly what it has to do. In the last 50 years, we've had a balanced budget eight times, four of which were at the end of the Clinton years. There's no reason why the deficit has to come down to zero. If that's what you're forced to do, then you end up making problems worse at the worst moments. That's what happened to states over the last few years; because nearly every state has a requirement to balance their budget every year, when tax revenues plummeted, they were forced to slash government services and lay off hundreds of thousands of workers. This made the recession more painful for everybody (and the federal government sent billions of dollars to the states in an attempt to mitigate the damage).

If you had a balanced budget amendment in place, when a recession hits and tax revenues fall, the federal government would have to immediately cut back its spending, precisely the opposite of what it ought to be doing. Yet for years, a balanced budget amendment was Republican dogma, nearly on par with tax cuts for the wealthy and big defense budgets. Which brings us to Hubbard and Kane's new balanced budget amendment proposal. Here's part 1:

First, because reconciling expenditures and revenues would be impossible in real time, the constraint should be on expenditures only. A good rule would be this: Congress shall spend no more in the current year than it collected, on average, over the previous seven years. No more overspending in fat years and no draconian cuts to expenditures during future recessions.

This rolling average idea makes things a bit more sane, but do you see what they did there? I've highlighted it in bold. "The constraint should be on expenditures only," meaning that their balanced budget amendment would require spending cuts, but not tax increases. Why? Because these are Republicans, that's why. Here's part 2:

Second, any amendment should be simple, focused only on fiscal balance. The best mix of tax and expenditure changes is for each generation of voters to decide.

Is that supposed to mean that the amendment itself shouldn't actually write into the Constitution budgetary limits for every single federal agency for every year in the future? Well since that would be insane, I'm not sure why it has to be an explicit part of their three-part proposal. Perhaps they should also specify that a balanced budget amendment shouldn't deal with abortion and drug legalization, or that the amendment need not specify the headline font on the Department of Energy's press releases. And on to part 3:

Third, there should be an exception to the spending constraint for national emergencies.

And what would be a national emergency? Would the Great Recession count? How about the Iraq War, which the Bush administration (where Glenn Hubbard served) financed through deficit spending? This is basically a way of saying, don't worry, we'll require balanced budgets, unless requiring balanced budgets looks like a terrible idea, at which point we won't. And then we get to the end, where Hubbard and Kane finally reveal the threat posed by deficits, a threat so profound it must be met with the constitutional equivalent of permanent sequestration:

America's high and rising national debt threatens our economic health through higher future taxes, crowding out important government services, or both. The best antidote is a focus on economic growth and a balanced approach to deficit control

Ah, there we are. We must force draconian budget cuts now, because if we don't, at some point in the future we might have to...force budget cuts. And of course raise taxes, which we can't ever, ever do. So by imposing those cuts, we can "focus on economic growth," not by actually promoting economic growth, but by...um...confidence!

This isn't some dopey politician offering his opinion on a topic he plainly doesn't understand, this is two highly-placed and supposedly informed conservative economists. Hubbard is dean of the business school at Columbia and was George W. Bush's chief economic adviser. Kane is chief economist at the Hudson Institute. These are the Republican party's big economic thinkers. And this is what they have to offer.

Comments

The US has been imposing these draconian cuts for years, starting at the bottom. We wiped out the welfare system, slashed away at Social Security Disability, made deep cuts in everything from education to vital public services. We've concentrated the budget on maintaining extreme military spending while protecting the rich/corporations from the "burdens of taxation." Look at the results. Extreme (potentially life-threatening) poverty has actually doubled just since Clinton's welfare "reform," the life expectancy of America's poor has fallen below that of some Third World countries, and upward class mobility has come to a standstill. We've been in the process of phasing out the middle class with policies supported by the middle class. We're living a re-enactment of the 1920s, embracing the same agenda that resulted in the Great Depression, yet the middle class appears to think that we'll have different results this time.

You admit the rolling average idea is sane, but you don't like the second part. Do you really not understand what it means? It says you can change tax revenues, but not for the purpose of achieving a balanced budget. You could increase taxes though to allow for future increases in spending because it would obviously change the rolling average, which you already said was sane. And, yes, a ghastly recession would obviously be an emergency and would require deficit spending. As you pointed out, these people are economists. Finally you end with the conclusion that we must have draconian budget cuts. I didn't see that anywhere in their proposal, only in your supposition of a position they did not state.

Obama WILL cave. He will have to. In one week he will have no choice but to give in to whatever extremist demands the Republicans care to make or risk America defaulting for the first time in its history. The Republicans have the president over a barrel. They hold ALL the cards, including that pesky little requirement in the Constitution that any bill authorizing the government to spend money has to originate in the House of Representatives.

The Democratic Party was conceived and implemented by the only two American politicians who ever had the United States out of debt, Andrew Jackson and Martin van Buren, although the Panic of 1837 greatly diminished Van Buren's role in that accomplishment because it plunged his administration back into debt, which increased with each succeeding administration to its present level of 17 trillion dollars. So Democrats of today tell us that debt is good, solvency is evil, and the way for America to achieve true greatness is to borrow more money and pass it out to people who might vote for Democratic Party candidates. The pre-Civil War version of slavery seems honest compared to the modern Democratic Party version. The real problem Democrats have is that their only thinking member died in 1845, and since that time Democrats have had no thoughts of their own, just the ability to copy whatever political parties in Europe do.
So what are the plans of the Democratic Party?
When independent voters increase by four more percentage points, they will outnumber all party members in the United States. Since the election of 1800 Democrats have prevented independent voters from being candidates for political office through control of the federal judiciary, which rules consistently today that the provisions of the Civil Rights Act and the Voting Rights Act of 1965 only apply to political party members and that only political party members have the right to be candidates for office in the United States. The United States has lived under a judicial dictatorship since 1803 when the Supreme Court of the United States declared itself to be a supreme legislative body, imposing chattel slavery until 1862 and economic slavery since that time after Abraham Lincoln turned chattel slavery on its head by writing the Emancipation Proclamation.
Jackson and Van Buren caused the Civil War by decreasing the number of independent voters in the United States when they promoted their new political party as being essential to United States government. Today it is the Democratic Party, along with their enabling puppets, the Republicans, who are decreasing. It is impossible to see this as anything other than a good thing.

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