A Balanced Budget Amendment. We Need You Now!

Posted by root | 4 Aug, 2011

The crisis of default is over. The debt ceiling has been raised. The expenses of government have again been shifted to future generations. the American people are the losers in all of this and unfortunately are no better off today than they were a week ago. Washington is so used to smoke and mirrors and sleight of hand that passing this legislation and calling it spending reform seems okay. But it isn’t.

Here’s what just happened. Imagine an income of $1,000 and expenses of $1,500. Also imagine that the credit card is at its limit, maxed out. So what’s next? Well, in Washington, the President and Congress cut expenses by $100. Income is still $1,000 but spending is now 1,400. This is called reform. Then the President and Congress get a new credit card with a higher limit and continue to spend money the country doesn’t have and is not likely to ever have. This too is called reform. This doesn’t make sense to me, but to the President and some members of Congress it makes all the sense in the world. In fact, I think it is safe to say that President Obama is in over his head.

First and foremost the debt ceiling debate was all about politics. President Obama desperately wanted to make certain that this issue would not be front and center in Congress during the 2012 election season. He succeeded thanks to Republican compromise but only in a limited way. Nothing will stop the Republican nominee from talking about the debt ceiling and the dangerous territory the United States has entered into by increasing the debt ceiling without meaningful budget cuts. Although the President has run from the tough issue of a balanced budget, he cannot hide from it.

In a moment of politics at its worst, President Obama used scare tactics by telling seniors that they many not get their social security checks timely. No one inside the Washington beltway really believed that would happen. This is because even with a default there would still be sufficient revenue coming into the Treasury that our debt obligations can be met, social security checks can go out timely, and our soldiers can be paid. Although the U.S. borrows approximately 40% of the money needed to pay its everyday bills, 60% of the money needed to run government, real money such as taxes, still comes into the Treasury each month. So, if seniors didn’t get their social security checks as they always have, it would only be because President Obama made an arbitrary decision not to pay social security recipients. Fortunately, that moment will now never occur.

The Tea Party was about politics too. But in a very different way. It succeeded in giving Republicans control of the U. S. House of Representatives. Their message was simple, “Fiscal Responsibility.” While the debt deal is lacking in so many ways, it was the Tea Party members of the House who stood their ground and forced the inclusion of an up or down vote on a Balanced Budget Amendment to the Constitution. So yes, the Tea Partiers are guilty of playing politics, but this may just be the best politics to come out of the debt ceiling debate.

The bottom line of this legislation is fairly simple. The debt ceiling is raised and Washington’s spending spree can continue past the 2012 election. The $1 trillion in cuts over the next ten years mandated in the first phase of cuts is miniscule in relation to the federal budget. The average $100 billion in cuts over each of the next ten years is equivalent to the spending in Washington in just ten days of the year. So, even with the additional cuts that may come in the future, the real impact of the cuts will not be significant, and deficit spending will continue. These small cuts will make no impact on balancing the federal budget at all.

The good news, thanks to the Tea Party, is all members of Congress will vote on a Balanced Budget Amendment to the U.S. Constitution. Everyone will be on record. The American people must live within their means and so must Washington. We will find out who in Congress agrees with this philosophy when they vote on the amendment.

p.s. Prior to closing today the Dow Jones was down by much more than 400 points. Yesterday wasn’t much better. Thanks, Washington. Thanks, a lot. This is not the kind of “Change We Can Believe In.” Let’s hope tomorrow is better.