The media is claiming our national leaders are preparing new legislation to reduce unsustainable federal deficits and escalating public debt in order to avoid the fiscal cliff by January 1. The media reports preparations include Obama and Republican House Speaker Boehner talking for several hours. The lame duck Congress has extended its last session a whole week before Christmas vacation.
The media can’t be serious those actions represent serious reform.
New legislation from such frenzied, brief deliberations should be replaced by thoughtful fiscal reform. Otherwise, I believe we’ll kick the problems down the road to new generations.
I’d like to see a bipartisan commitment to long term reform that freezes the debt and approves a balanced budget by 2016, backed up by a balanced budget amendment. Isn’t that what we want?
The $11.6 trillion public debt is almost unmanageable right now and must be at least frozen as soon as feasible. On-budget federal revenues for 2012 are projected to be $1.9 trillion. Our debt is over six times our revenues, equal to the size of our debt versus our revenues in 1946 after WWII.
It’s massive, but manageable if we act immediately. Washington kept our public debt almost constant after WWII as receipts rose for the next twenty years. By 1966 debt was only 2.4 times tax revenues, a reasonable load.
Tax revenues tripled from 1946 to 1966 because of explosive economic growth after the war, but economists don’t predict rapid growth for our economy at this point. That means controlling the debt through balanced budgets is even more important.
Eliminating budget deficits would take time. The Treasury estimates this year’s deficit will be $900 billion. In order to get to a balanced budget by 2016, we’d have to cut the deficit to $600 billion by 2014, $300 billion by 2015 and zero beginning in 2016.
Those deficits would add $1.8 trillion to the federal debt before we can begin to hold it constant.
Plenty of commissions and economists are suggesting ‘eminently reasonable’ ways to succeed whereby Republicans accept new taxes, Democrats accept Social Security and Medicare/Medicaid reform and we all accept alternatives to avoidable wars.
We’ll all pay. We should pay. We’ve let Congress blame the other political party and do nothing.
By the time the 2016 budget is approved, we should have passed a carefully constructed balanced budget amendment.
Yes, a constitutional amendment. How can we trust Congress to have the fiscal discipline to maintain balanced budgets after looking at their record? The Office of Management and Budget’s historical tables of total receipts versus total outlays shows we’ve had federal deficits in forty-five of the last fifty years. We have to conclude Congress needs constitutional mandates to consistently balance revenue with expenses.
Constitutions require balanced budgets in fifty states. Countries have them.
Yale-educated economist Ed Dolan dismisses recent balance budget amendments proposed by Republican leaders and recommends we consider balanced budget plans used by Sweden and Chile. Sweden’s plan requires balanced budgets over three-year periods. Sweden currently enjoys surpluses and declining debt, a turnaround from its budget crisis in the 1990s.
The US had budget surpluses in the 1990s, remember? In 2001 Congress destroyed them with irresponsible tax cuts without spending cuts.
Chile ‘s balanced budget rules include automatic stabilizers that raise revenues to moderate and extend growth cycles and spend reserves to stimulate recession cycles. Economists call the plan procyclical.
We should unite on a frozen debt, a balanced budget and a procyclical balanced budget amendment no later than 2016.
Otherwise we’re kicking the deficit and debt can down the road again.