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Balanced Budget Amendment - Good Idea? Bad Idea?

Balanced Budget Amendment - Good Idea? Bad Idea?

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obvious Child

obvious Child

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In my personal opinion, a balanced budget is a bad idea for two basic reasons:

Politicians will hide expenditures in off balance sheet financing making an accurate understanding of where the government's financial picture really is. Making our government even more corrupt and less beholden to the people.

But secondly, my biggest concern is that it would be a death of a thousand cuts. During a recession as tax revenue dries up, the government would be forced to cut spending. Assuming no change to automatic stabilizers, spending would actually increase forcing even greater cuts. We'd deepen the recession by being forced to either raise taxes or dramatically cut spending. As economic activity declines due to aggregate demand falling, even less revenue would come in causing even more cuts. In theory, there's a real possibility that a balanced budget requirement would result in default as there would be no spending left except for debt servicing and any reduction in revenue from that point would result in insolvency. Basically, the balanced budget requirement would be death by a thousand cuts. To alleviate this, emergency spending would bypass the requirement but that begs the question of why even bother with the requirement in the first place if emergency spending simply bypasses it entirely?
 
In all honesty I voted it as a bad idea.

But I would describe it more accurately as a "novel" idea or perhaps an "ideal" idea.

Its simply not practical, not in this day and age anyway, not for the worlds largest economy.
 
Jetboogieman said:
In all honesty I voted it as a bad idea.

But I would describe it more accurately as a "novel" idea or perhaps an "ideal" idea.

Its simply not practical, not in this day and age anyway, not for the worlds largest economy.
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They will pass amendments to amendments to allow either side when in power to over fund their own pet projects or unbalance the budget when they choose...
 
A budget is a budget.
Household or national..
Neither can be "balanced" if we wish to grow....to improve...this is the portion that must be done very carefully.
Wars have nothing to do with growth nor improvement...
Both budgets should be balanced.....but....only if the man or the nation wishes to stay mired in the stone age...
 
In my mind it would really depend on how the amendment was written, what its particulars were, and how its system worked.

I have been a proponent of a flat tax system with no deductions. Based on this, I would have the CBO come up with an estimated revenue number for the next year, reduce it by 10% and then use that as the maximum expenditure number for Government spending the next year. All additional revenue would be used initially to pay down the deficit and then once the deficit was gone, be put aside for emergency war funding in the future. Additionally, I believe that any balanced budget amendment should require all expenditures to note which one (or more) of the 18 specific itmes laid out in Article I, Section 8 of the US Constitution it is related to. If one cannot be found, the Clerk of the House would not be able to accept it.
 
Personally I think it would be a great idea, as it would force several functions that government seizes against the people's will to be privatized, thus allowing a more efficient market to take control. Budget deficits exist because you...well, all of us...allow Washington a book of blank checks without the need of justification or accountability.
 
It would be a great idea, but it should be updated according to changes.
To change it, it would require at least 60% of the senate, which I think is pretty good.
 
The counter to the argument is...15.5 trillion in debt and counting with no end in sight...good idea or bad idea?

Passing a balanced budget startiiiiiing...NOW! Go! is a bad idea. Legislation mandated spending cuts and targeted tax increases to pay down the debt is a GOOD idea. restructuring the fed and state governments is a GOOD idea. Reaching a 'balanced budget' which allows for, say a 10% overage spending in the event of disaster or war with the provision that taxes increase the following year to pay down the debt is certainly a workable solution.
 
You always here the general public talk about holding Washington accountable, but nothing is ever done. At my work, by job is dependent on my performance. If I don't produce results, I don't get to keep my job. Why isn't government run like this?

I like what Warren Buffet said...

"I could end the deficit in 5 minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP all sitting members of congress are ineligible for reelection.”
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I agree. There should be a set of standards that all branches of government have to meet and if they're not meeting those standards, they're fired. Let's REALLY hold these assholes accountable.
 
VanceMack said:
Passing a balanced budget startiiiiiing...NOW! Go! is a bad idea.
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Well yeah, but when has Washington ever had a "startiiing...NOW! Go!" mentality? They move slower than a Special Olympics race.

Frankly, I'd rather seem them outsource the budget to those who know what the hell they're doing, and focus more on trade balancing.
 
If it were balanced over the long-term (the business cycle) as opposed to being balanced on an annual basis, I'd be in support of it.
 
VanceMack said:
...... Reaching a 'balanced budget' which allows for, say a 10% overage spending in the event of disaster or war with the provision that taxes increase the following year to pay down the debt is certainly a workable solution.
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No. That money should be put away AHEAD of time, and since there is NO PROVISION in the US Constitution for Federal spending on disaster relief, foreign or domestic, it should be for potential military spending only (in time of war).
 
Good idea, Balancing the budget.

Bad idea, juggling knives while riding a really tall unicycle and wearing a pink tutu.

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Gipper said:
Well yeah, but when has Washington ever had a "startiiing...NOW! Go!" mentality? They move slower than a Special Olympics race.

Frankly, I'd rather seem them outsource the budget to those who know what the hell they're doing, and focus more on trade balancing.
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Thats the point though. People hear 'balanced budget amendment' and dont realize that the passage does not mean the end and collapse of all things financial. It creates a target and path to accomplish the goal. It doesnt mean steering this wildly carreening and out of control economic vehicle straight into a wall.
 
Tigger said:
No. That money should be put away AHEAD of time, and since there is NO PROVISION in the US Constitution for Federal spending on disaster relief, foreign or domestic, it should be for potential military spending only (in time of war).
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Me...Im not overly comfortable with giving congress a 'slush fund'.
 
VanceMack said:
Thats the point though. People hear 'balanced budget amendment' and dont realize that the passage does not mean the end and collapse of all things financial. It creates a target and path to accomplish the goal. It doesnt mean steering this wildly carreening and out of control economic vehicle straight into a wall.
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However, I thoroughly believe that if you put this into the hands of the private sector, given proper parameters, they could do it at pretty close to overnight speed...at least relatively speaking. What would take Washington 3-5 years, I'd have faith in Big Biz doing in 6-9 months.
 
Gipper said:
However, I thoroughly believe that if you put this into the hands of the private sector, given proper parameters, they could do it at pretty close to overnight speed...at least relatively speaking. What would take Washington 3-5 years, I'd have faith in Big Biz doing in 6-9 months.
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I'm not even sure if that's a plausible scenario. Yes, I agree the private sector allocates resources more efficiently than any government-run bureaucracy, but the reason we even HAVE government is because the vast majority of its functions do not belong in the private sector to begin with.

So I'm not exactly certain what you mean when you say "put the budget in the hands of the private sector," since many in the private sector benefit from that spending anyway. Shall we put regulatory functions in the hands of the private sector? How about homeland and national security? Ya feel me? It's not a plausible scenario. It doesn't even make sense to put the federal budget in the hands of the private sector to begin with.
 
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Gipper said:
However, I thoroughly believe that if you put this into the hands of the private sector, given proper parameters, they could do it at pretty close to overnight speed...at least relatively speaking. What would take Washington 3-5 years, I'd have faith in Big Biz doing in 6-9 months.
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That's funny, I'm pretty sure that they'll do whatever they can to put it into their own bank accounts. That's what a lot of them did with the stimulus money.
 
VanceMack said:
Me...Im not overly comfortable with giving congress a 'slush fund'.
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It wouldn't be a slush fund. Until the deficit was gone, it would be REQUIRED to be spent on that. Once the deficit was gone, it would require a DECLARATION OF WAR to touch those funds.
 
Stillballin said:
I'm not even sure if that's a plausible scenario. Yes, I agree the private sector allocates resources more efficiently than any government-run bureaucracy, but the reason we even HAVE government is because the vast majority of its functions do not belong in the private sector to begin with.
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Oh, absolutely. I don't think there's any contention that the vast majority of current government functions can't, or shouldn't be, privatized. However, there are still several that should. In fact, one has been a hot-button for many years. Social Security is a prime example of something that needs privatization. As an accountant, I'd have myself a little wet dream if the IRS was mostly obliterated and large accounting firms (Big 4) handled the bulk of the legwork. I think a lot of regulatory commission could be dissolved if we really wanted to trim fat and work toward a balanced budget.
 
obvious Child said:
In my personal opinion, a balanced budget is a bad idea for two basic reasons:

Politicians will hide expenditures in off balance sheet financing making an accurate understanding of where the government's financial picture really is. Making our government even more corrupt and less beholden to the people.

But secondly, my biggest concern is that it would be a death of a thousand cuts. During a recession as tax revenue dries up, the government would be forced to cut spending. Assuming no change to automatic stabilizers, spending would actually increase forcing even greater cuts. We'd deepen the recession by being forced to either raise taxes or dramatically cut spending. As economic activity declines due to aggregate demand falling, even less revenue would come in causing even more cuts. In theory, there's a real possibility that a balanced budget requirement would result in default as there would be no spending left except for debt servicing and any reduction in revenue from that point would result in insolvency. Basically, the balanced budget requirement would be death by a thousand cuts. To alleviate this, emergency spending would bypass the requirement but that begs the question of why even bother with the requirement in the first place if emergency spending simply bypasses it entirely?
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I say a good idea as long as there are the conditions added-

1.There must be a spending cap based on the previous year's collections.

2.There must be a tax cap so that those in office can not inflate what is collected in order to inflate spending.

3.It must be balanced with no new tax increases or future predicted tax increases,all possible cuts must be made.This is to ensure that no one can screw us or or screw our children or descendants with debt and higher taxes and that cuts are actually made.

4.There must be an exception for severe natural disasters or if another nation attacks us or declares war on us and to help alleviate the potential tax burden a natural disaster may have a rainy day fund shall be set up. That rainy day has the following stipulations-
A.It will be illegal to use that rainy day fund for anything else other than war or severe natural disaster.​
B.It will be illegal to propose that money in that rainy day fund be used for something else.​
c.It will be illegal to propose that funding for that rainy day fund be diverted to something else unless that rainy day fund is filled up to fund at least half another Afghanistan or Iraq war and half a natural disaster .​
 
Gipper said:
Oh, absolutely. I don't think there's any contention that the vast majority of current government functions can't, or shouldn't be, privatized. However, there are still several that should. In fact, one has been a hot-button for many years. Social Security is a prime example of something that needs privatization. As an accountant, I'd have myself a little wet dream if the IRS was mostly obliterated and large accounting firms (Big 4) handled the bulk of the legwork. I think a lot of regulatory commission could be dissolved if we really wanted to trim fat and work toward a balanced budget.
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ah okay thanks for the clarification.
 
Wars have everything to do with the National Debt, did you know that?
 
Even the balanced budget amendment recently proposed didn't just say "Income will equal expense. - The end".

Have an emergency? The budget included emergency funds. Need more than that? We can give you more, we just need to make cuts in another area of the budget.

You want a large capital project that requires debt? Okee dokee, just figure enough in the budget to amortize the debt (not just carry it, figure payments to pay it off). It's bad policy to treat the Federal Budget like a sub-prime no doc no interest loan (oh, wait, it was federal policy that did allow that kind of borrowing and re-finance policy to send us into a tail spin).

You want flexibility? Great - as our economy (earnings) grow, you'll have more money to spend. Prioritize.

Is there an area of expense that's growing too fast to keep up with? Sounds like a sign of bad policy. Make the tough decision. Do the work you were sent to Washington to do. Change the policy to fit the money that's available.

What happens if you just borrow money at will? Eventually, you won't be able to borrow more money. That will balance the budget for you. What we're getting ready to essentially do is paint ourselves into an involuntarily balanced budget. Can't borrow more money? Budget balanced the hard way.
 
SlackMaster said:
You always here the general public talk about holding Washington accountable, but nothing is ever done. At my work, by job is dependent on my performance. If I don't produce results, I don't get to keep my job. Why isn't government run like this?

I like what Warren Buffet said...



I agree. There should be a set of standards that all branches of government have to meet and if they're not meeting those standards, they're fired. Let's REALLY hold these assholes accountable.
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The only problem with this idea is if congress suddenly found themselves with a budget shortfall they would simply ratchet up taxes to meed expenditures insuring their eligibility for reelection. We have to have some sort of checks and balance or each cycle congress will increase spending and then increase taxes to the point we drive our highest income tax bracket out of the country leaving less and less wealth in the country to tax. At that point the system will have failed because we cannot tax the middle/lower class enough to cover expenditures.
 
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