Mike Lee's Balanced Budget Amendment

[erowe1]

I just got an email from the Senate Conservatives Fund that mentioned a balanced budget amendment that Mike Lee has introduced (Rand is one of the cosponsors).

Looking over it, it looks pretty good. There are no loopholes I can see for allowing unbalanced budgets any time we have military deployed somewhere or some such thing.
http://thomas.gov/cgi-bin/query/z?c112:S.J.RES.5:


JOINT RESOLUTION
Proposing an amendment to the Constitution of the United States requiring that the Federal budget be balanced.

Resolved by the Senate and House of Representatives of the United States of America in Congress assembled (two-thirds of each House concurring therein), That the following article is proposed as an amendment to the Constitution of the United States, which shall be valid to all intents and purposes as part of the Constitution when ratified by the legislatures of three-fourths of the several States:
`Article--

`Section 1. Total outlays for any fiscal year shall not exceed total receipts for that fiscal year.
`Section 2. Total outlays shall not exceed 18 percent of the gross domestic product of the United States for the calendar year ending prior to the beginning of such fiscal year.
`Section 3. The Congress may provide for suspension of the limitations imposed by section 1 or 2 of this article for any fiscal year for which two-thirds of the whole number of each House shall provide, by a roll call vote, for a specific excess of outlays over receipts or over 18 percent of the gross domestic product of the United States for the calendar year ending prior to the beginning of such fiscal year.
`Section 4. Any bill to levy a new tax or increase the rate of any tax shall not become law unless approved by two-thirds of the whole number of each House of Congress by a roll call vote.
`Section 5. The limit on the debt of the United States held by the public shall not be increased, unless two-thirds of the whole number of each House of Congress shall provide for such an increase by a roll call vote.
`Section 6. Any Member of Congress shall have standing and a cause of action to seek judicial enforcement of this article, when authorized to do so by a petition signed by one-third of the Members of either House of Congress. No court of the United States or of any State shall order any increase in revenue to enforce this article.
`Section 7. The Congress shall have the power to enforce this article by appropriate legislation.
`Section 8. Total receipts shall include all receipts of the United States except those derived from borrowing. Total outlays shall include all outlays of the United States except those for repayment of debt principal.
`Section 9. This article shall become effective beginning with the second fiscal year commencing after its ratification by the legislatures of three-fourths of the several States.'.

[FrankRep]

The Federal Government may have to increase taxes to balance the budget though.

[erowe1]

The Federal Government may have to increase taxes to balance the budget though.

That's true. But this amendment would make it harder for them to do that than it is now.

[sailingaway]

So the fed will just print. Would be nice to address that, but I guess it won't happen. It doesn't just allow more in times of declared war, it avoids that altogether and says 'for specific expenditure' that 2/3 vote for.

I guess I don't have a problem with it as a stand alone amendment. I still have a real problem with a Constitutional convention throwing open everything from whether we become a Democracy to anything else those in the room agree on, though.

[erowe1]

So the fed will just print. Would be nice to address that, but I guess it won't happen. It doesn't just allow more in times of declared war, it avoids that altogether and says 'for specific expenditure' that 2/3 vote for.

I guess I don't have a problem with it as a stand alone amendment. I still have a real problem with a Constitutional convention throwing open everything from whether we become a Democracy to anything else those in the room agree on, though.

Yeah, but in order for them to pass those unbalanced budgets and print that money, they have to get that 2/3 vote. The loophole that previous balanced budget amendments had for times of military engagement didn't require that. It only required it in times of peace. But any time some troops might be in harms way, Congress could go on with business as usual passing unbalanced budgets with just a simple majority.

[Ekrub]

That would be good and all except the term year and budget would be distorted by the SC.

[FrankRep]

I can see the headlines how:


- Government cites Constitution as Justification to Raise Taxes
- Balancing the Budget on the Back of the Middle Class
- Constitution Puts Heavy Burden on Taxpayers

[erowe1]

I can see the headlines how:


- Government cites Constitution as Justification to Raise Taxes
- Balancing the Budget on the Back of the Middle Class
- Constitution Puts Heavy Burden on Taxpayers

Yeah, but that burden couldn't be any greater than it can be without this amendment, and it would probably be less.

As it is with unbalanced budgets now, Congress spends all it wants, and every single penny it spends is paid for by one kind of tax or another, once you recognize the inflation tax for what it is.

[sailingaway]

Yeah, but that burden couldn't be any greater than it can be without this amendment, and it would probably be less.

As it is with unbalanced budgets now, Congress spends all it wants, and every single penny it spends is paid for by one kind of tax or another, once you recognize the inflation tax for what it is.

I like how he slipped in that 18% of GDP -- major decrease in size of govt right there....

[The Dark Knight]

it wont pass

[Zippyjuan]

Just some numbers in the rare chance this were to actually pass. 18% of a $14 trillion economy would be $2.5 trillion. 2010 budget was for $3.5 trillion. The deficit was about $1.5 trillion which leaves revenues of $2 trillion.

To get a balanced budget you need to cut $1.5 trillion from here or raise taxes by $1.5 trillion or some combination. Doing it via tax increases would nearly double all taxes (and violate the 18% spending rule) and cutting $1.5 trillion from the "discressionary items" in the budget would mean cuts of over 100% (discressionary spending in 2010 was $1.3 trillion). Lets say we cut spending to get it down to the 18% level of $2.5 trillion. You would have to cut $1 trillion in spending out of the $1.3 trillion in discressionary spending giving you $300 billion for everything but interest on the debt, medicare, and Social Security. You would also have to increase taxes by half a trillion dollars (in 2009 -no figures for 2010- income taxes accounted for $1.2 trilion so if you used income taxes for your revenue they would have to increase by 42%).

FIgures from Wiki. 2009: http://en.wikipedia.org/wiki/2009_United_States_federal_budget
2010: http://en.wikipedia.org/wiki/2010_United_States_federal_budget


Mandatory spending: $2.009 trillion (-20.1%)
$695 billion (+4.9%) – Social Security
$571 billion (−15.2%) – Other mandatory programs
$453 billion (+6.6%) – Medicare
$290 billion (+12.0%) – Medicaid
$164 billion (+18.0%) – Interest on National Debt
$11 billion (+275%) – Potential disaster costs
$0 billion (−100%) – Troubled Asset Relief Program (TARP)
$0 billion (−100%) – Financial stabilization efforts

US receipt and expenditure estimates for fiscal year 2010.Discretionary spending: $1.368 trillion (+13.1%)
$663.7 billion (+12.7%) – Department of Defense (including Overseas Contingency Operations)
$78.7 billion (−1.7%) – Department of Health and Human Services
$72.5 billion (+2.8%) – Department of Transportation
$52.5 billion (+10.3%) – Department of Veterans Affairs
$51.7 billion (+40.9%) – Department of State and Other International Programs
$47.5 billion (+18.5%) – Department of Housing and Urban Development
$46.7 billion (+12.8%) – Department of Education
$42.7 billion (+1.2%) – Department of Homeland Security
$26.3 billion (−0.4%) – Department of Energy
$26.0 billion (+8.8%) – Department of Agriculture
$23.9 billion (−6.3%) – Department of Justice
$18.7 billion (+5.1%) – National Aeronautics and Space Administration
$13.8 billion (+48.4%) – Department of Commerce
$13.3 billion (+4.7%) – Department of Labor
$13.3 billion (+4.7%) – Department of the Treasury
$12.0 billion (+6.2%) – Department of the Interior
$10.5 billion (+34.6%) – Environmental Protection Agency
$9.7 billion (+10.2%) – Social Security Administration
$7.0 billion (+1.4%) – National Science Foundation
$5.1 billion (−3.8%) – Corps of Engineers
$5.0 billion (+100%) – National Infrastructure Bank
$1.1 billion (+22.2%) – Corporation for National and Community Service
$0.7 billion (0.0%) – Small Business Administration
$0.6 billion (−14.3%) – General Services Administration
$19.8 billion (+3.7%) – Other Agencies
$105 billion – Other

[erowe1]

Just some numbers in the rare chance this were to actually pass. 18% of a $14 trillion economy would be $2.5 trillion. 2010 budget was for $3.5 trillion. The deficit was about $1.5 trillion which leaves revenues of $2 trillion.

To get a balanced budget you need to cut $1.5 trillion from here or raise taxes by $1.5 trillion or some combination. Doing it via tax increases would nearly double all taxes (and violate the 18% spending rule) and cutting $1.5 trillion from the "discressionary items" in the budget would mean cuts of over 100% (discressionary spending in 2010 was $1.3 trillion). Lets say we cut spending to get it down to the 18% level of $2.5 trillion. You would have to cut $1 trillion in spending out of the $1.3 trillion in discressionary spending giving you $300 billion for everything but interest on the debt, medicare, and Social Security. You would also have to increase taxes by half a trillion dollars (in 2009 -no figures for 2010- income taxes accounted for $1.2 trilion so if you used income taxes for your revenue they would have to increase by 42%).

FIgures from Wiki. 2009: http://en.wikipedia.org/wiki/2009_United_States_federal_budget
2010: http://en.wikipedia.org/wiki/2010_United_States_federal_budget

Of course everything you said about the budgetary challenge we face is just as true right now as it would be if the balanced budget amendment passed. The difference is that right now they can freely spend as much as they want without any cuts and all of that spending will still be paid for with some kind of a tax, even if it's a hidden inflation tax.

[Zippyjuan]

I agree that a balanced budget would be a good thing- and would even like to see a suplus to pay down the debt- but it isn't going to happen. The choices which get you there are too politically difficult to make so nobody will make them. Proposing a balanced budget amendment without proposing an actual balanced budget is hypicracy and political theater. The Republicans intend to use it as a political issue in the next election "We wanted to balance the budget but the Dems were against it! They just want to keep spending!". As big as the cuts Rand Paul proposed, they would still leave a $trillion deficit and a balanced budget requires three times the cuts he suggests.

What would be interesting would be if the Democrats agreed to a Balanced Budget bill. The Republicans control the House and would have to write the budget. Force them to make the hard cuts and tax increases and see what happens. Of course the required "balanced budget" would be set for some time long into the future.