You probably already know that the national debt is bigger than our whole economy. But relax, because things can always get worse! And they will, regardless of whether Biden or Trump gets elected in the fall. Each has a proven track record of spending like a drunken sailor and most projections show that debt will grow to between 181 percent and 340 percent of GDP over the next few decades. Reason's Nick Gillespie discussed all of this and more with Brian Riedl, a budget expert at the Manhattan Institute. Riedl explains why massive and growing debt is really bad, why reducing it is really hard but really important, and why young people should be really pissed.
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Watch the full video here and find a condensed transcript below.
Gillespie: We know who the candidates are going to be. It's going to be Biden vs. Trump. They both have track records that you have been tracking as a policy analyst at the Manhattan Institute talking about debt and deficits. You, last fall, released a big book of charts and doom and deficits. The Congressional Budget Office [CBO] is projecting $119 trillion worth of deficits over the next 30 years. And that's optimistic.
You note that we have gone from the national debt being $3 trillion in the year 2000 to $27 trillion in the past quarter century. According to the CBO calculations, depending on what happens, debt will be between 181 percent and 340 percent of gross domestic product [GDP] in another 30 years. So we got a lot of debt floating around here. Why are debt and deficits bad?
Riedl: Modest and sustainable deficits are not bad. It's like any sort of borrowing. It's OK to go into debt for your mortgage. It's OK to borrow for school. I am not a balanced budget absolutist.
Every year's deficit adds up to the national debt. Modest borrowing is not bad. It doesn't raise interest rates very much. It doesn't cost taxpayers much. The problem is debt gets out of control when it grows faster than the economy forever. It's just like a family. If your debt is growing faster than your income forever, it's not sustainable. And for most of the period after World War II, the debt was about 40 percent of GDP, which most economists considered sustainable. It didn't raise interest rates very high, and the interest costs as a share of federal spending were manageable.
The problem is now we've gone from 40 percent to 100 percent, and we're going much higher. If that happens, the dangers are, in a basic macroeconomic angle, higher interest rates. Because the more savings the government borrows, the less savings are available for everyone else to borrow. And that'll bid up interest rates and reduce investment. But what becomes even a bigger issue is how Washington's even going to be able to borrow that much money. Is there enough savings for Washington to even lend? And if they are able to borrow it, are the interest costs going to be so high that we could have a situation where 50 percent or 80 percent of your federal taxes are just paying interest on the debt rather than getting anything of value?
Gillespie: What about the idea that long, persistent, and growing national debt decreases long term economic growth?
Riedl: Absolutely. Again, modest debt doesn't make much of a difference. But, if you think of it, there is a certain pool of savings in America and in the global economy. That savings usually would be borrowed for home loans, car loans, business loans, investment to grow the economy. But the more the government borrows this money, the more they soak up the savings. And instead of spending on investment, they spend it on consumption. They're going to give it to seniors to consume.
There's going to be fewer money for home loans, car loans, student loans, and business loans. Ultimately, because investment is the lifeblood that drives the economy, when you starve the economy of investment dollars, you're going to get less business investment. It's going to create fewer jobs. There's going to be lower wages and lower growth. And you could argue we've already seen this. Japan has a debt of 200 percent of GDP. Their economy has been a basket case for 30 years.
Gillespie: Both the federal government and the Federal Reserve System are ostensibly independent. They've just said, "OK, well, we're just going to keep printing money. We're going to create money out of thin air." Is that also unsustainable?
Riedl: Yes. In fact, of the growth in debt over the past decade or so, about $4 trillion to $5 trillion of it has essentially been funded by the printing press. The Federal Reserve's holding of Treasury bills, which they essentially buy with printed money, has gone up $4 trillion to $5 trillion. The Fed is actually looking to unload that $4 trillion to $5 trillion. But if they didn't, let's say they keep printing money, you're just going to get hyperinflation.
The [Modern Monetary Theory] MMT crowd says you can always just print more money and the debt goes away. You can't expand the money supply by tens of trillions of dollars without creating significant inflation. My worry is long term. There's going to be a lot of pressure in Congress to go that direction. [It's] what's called fiscal dominance, when interest rates are set more to keep borrowing costs low than to stabilize the economy. That's my worry.
Gillespie: What is driving the debt? What is driving persistent deficits?
Riedl: The debt up until now has been driven by all sorts of factors. When you go from $3 trillion to $27 trillion, there's going to be a lot of blame to go around. We've had Social Security and Medicare costs rise. There have been wars, tax cuts, just yearly runaway spending. The pandemic cost about $5 trillion. But moving forward from where we are now, there's one answer: Social Security and Medicare. Over the next 30 years, the Social Security and Medicare systems will run a shortfall of a $116 trillion.
Gillespie: As we mentioned, we're looking over the next 30 years at $119 trillion in total deficits. It's all Social Security and Medicare.
Riedl: The long term budget is roughly balanced if you take out Social Security and Medicare deficits. We do not really have a budget problem. We have a Social Security and Medicare problem.
Gillespie: In your book you mention that there are specific episodes where things cost a lot of money. It's fascinating. After 9/11, there wasn't the type of spike there was after the 2008 financial crisis. There was a massive blowout of debt finance spending. And then there was, of course, COVID. Broadly speaking from 1960 to 2022, spending was 20.4 percent of GDP.
So the government is spending 20.4 percent of the equivalent to the economy; revenue average over that same time was 17.4 percent. So that explains where we're at now. But you're saying going forward, it's going to get worse. And it's almost all because of old age entitlement.
Riedl: Right. You mentioned revenue has averaged 17.4 percent of the economy since 1960. It's projected to rise above that depending on whether or not we extend the 2017 tax cuts. Revenues are going to be 18 percent or 19 percent of the economy over the next 30 years. That's above average.
The problem is spending is going to jump all the way to 30 percent of the economy under the rosiest scenarios that the CBO can come up with. So people can have their own value judgments, like, "Well, I think revenues are lower than they should be." But if you're just looking at the moving variable driving deficits, it is 100 percent above average spending. There is no below average revenues projected for the next 30 years. We're going to have the highest sustained revenues in American history under the baseline. But it can't keep up with spending jumping 10 percent of GDP.
Gillespie: One of the things that you talk about in your book of charts—you have a piece recently at The Dispatch that talked about this—is that this is not a Republican or Democratic issue. It is both parties. How do Democrats tend to spend money? And then how do Republicans tend to spend money?
Riedl: Democrats like to do big bursts when they get a new presidency. For instance, Barack Obama came in, spent trillions of dollars on stimulus, then did Obamacare. The next year, you get this big burst of activity. And then it was similar with Joe Biden. Biden comes in, spends $4.8 trillion in new legislation in 20 months, which is remarkable.
Gillespie: And as remarkable as that is, he came in promising $11 trillion in new spending. So he got halfway there.
Riedl: He got halfway there in 20 months. And, who knows, had the Democrats had a good election year in Congress, they could have gone further. Democrats not only do these bursts, but Democrats also are the defenders of the status quo with entitlement costs. The quiet driver of deficits is Social Security and health care costs rising 6 percent or 7 percent a year. And Democrats are the adamant party that says we can never touch that. So even if they weren't passing their bills, that Social Security and Medicare 6 percent or 7 percent a year buries us.
Gillespie: So what about Republicans? How do they jack up spending?
Riedl: Republicans talk a good game. But if you take a look at 2017 and 2018, Republicans had the trifecta. They had the House, the Senate, and the presidency. They didn't reform entitlements at all. There was a little bit of push to repeal Obamacare that failed. There was no Social Security reform, no Medicare reform, no Medicaid reform. Instead, they came in, cut taxes, and busted the discretionary spending caps with a 13 percent hike in one year.
When Republicans get the trifecta, when Republicans control the government, the first thing they want to do is reward their constituents. They're not thinking in terms of deficit reduction. They're thinking in terms of handing out benefits to constituents, whether it's big defense hikes, big discretionary hikes, or tax cuts. You don't get the fiscal spinach from Republicans when they control everything. They consider it time to party. Republicans need to be judged by their actions, not their rhetoric. You listen to Republicans give speeches, "We're going to balance the budget. We're going to reduce wasteful spending, and we're going to cut waste, fraud, and abuse." It's all empty rhetoric. If you look at Republicans, not only is their past record terrible, but their current proposals to reduce the deficit don't even reduce the deficit. Every Republican presidential candidate has an economic plan that increases deficits, every one of them.
The House Budget Committee released a budget blueprint that was entirely gimmicks. The Freedom Caucus, for all their talk, has released no actual blueprint to how to balance the budget. In fact, Republicans take 75 percent of spending off the table. They say, "We're not going to touch Social Security, Medicare, defense, veterans, and interest." They immediately take 75 percent off the table. So it's hard to trust a party that cuts taxes, increases spending, and then moving forward takes 75 percent of the spending off the table and won't tell us where they'd cut the other 25 percent. I think you need to judge them by their actions, not their empty balance the budget rhetoric.
Gillespie: Are there Democrats who are more serious about fiscal responsibility?
Riedl: There are some. What are the modern equivalent of blue dog democrats? The blue dogs were wiped out under Obama. There is a quiet group of Democrats, about two or three dozen of them in the House, that are trying to work with Republicans kind of under the table on budget process reform, Social Security and Medicare reform. They're very quiet about it.
In the Senate, you have [Sens.] Joe Manchin [(R–W.Va.)], Michael Bennet [(D–Colo.)], and Mark Warner [(D–Va.)]. There are some Democrats who at least talk a better game than even Republicans. But there hasn't been, of course, much action. The Democrats who are reasonable on this issue are unfortunately overshadowed by the loud progressives who cost their party any credibility when you have [Sen. Elizabeth] Warren [(D–Mass.)], [Sen. Bernie] Sanders [(I-Vt.)] and [Rep. Alexandria Ocasio-Cortez (D–N.Y.)] demanding $40 trillion in spending.
Gillespie: How important is the presidency when it comes to increases or decreases in spending?
Riedl: The president cannot cut spending himself or herself. The president does not have the full power of the purse. And that's why I think sometimes presidents get too much blame when spending rises. When they tried to cut spending, Congress wouldn't cut it. That being said, you can't cut spending without the president being involved. The president has to sign the bills. And the president also has the bully pulpit to frame the issue. If presidents would actually invest political capital in spending cuts, they can create the framework in order to help us get there. They can't do it themselves. But again, the problem is we haven't really had a serious fiscal conservative president in memory. Not only are they not a help, they're usually a barrier to spending cuts.
Gillespie: The budgeting process that comes out of Congress was reformed in the mid-'70s or early '70s. People in Congress don't follow it. Is that part of the problem?
Riedl: The 1974 Budget Act has been neutered into oblivion. One way to think about how it works is every year Congress is supposed to pass a budget. They never do.
Gillespie: And they're supposed to pass a budget before that budget year starts.
Riedl: Right, they're supposed to pass the budget in March for the following October 1.
Gillespie: How many times does that happen?
Riedl: Rarely. And then after that, you're supposed to pass 12 appropriations bills that actually fund the programs. The first problem is the appropriations bills only fund discretionary spending, which is 30 percent of the government. The budget process takes 70 percent of spending on autopilot out of the process. We're talking Social Security, Medicare, anti-poverty programs, Medicaid, farm subsidies. They're not even part of the budget process. They're just set aside on permanent autopilot.
Congress spends all year tearing itself apart over the remaining 30 percent that's discretionary spending. And then you have situations like now where we're almost six months into the next fiscal year, and we still don't have discretionary appropriations for this year. We're still just running last year's numbers on autopilot. So the '74 Budget Act simply doesn't work anymore. If its goal is to help Congress set priorities, make tradeoffs, and shape a holistic view of the budget, it's nonfunctional.
Gillespie: What gave rise to the '74 Budget Act? And does that have any lessons for how we might reform things today?
Riedl: The '74 Budget Act resulted primarily from Nixon trying to impound money. There was a huge constitutional crisis under Nixon, where he was trying to impound money that had been already appropriated by Congress. Impoundment means the spending has already been signed into law and the president says, as chief executive, I'm not spending the money.
Gillespie: What was he trying to not spend money on?
Riedl: That I do not know right now. But the Supreme Court essentially shot down impoundment and said, if the law says to spend it, the president doesn't have a choice. That's why the Budget Act was called the Budget and Impoundment Act. But also what was happening back then is the budget was expanding. We were just past the Great Society. You had huge new government programs and a totally unwieldy process. It was just kind of all funded on an ad hoc basis. So the combination of the Great Society and impoundment drove the '74 Budget Act.
Gillespie: Is there anything that might spark a reform of the budgeting process?
Riedl: The challenge right now is everybody in Congress knows the process is broken. The debt limit, the government shutdowns, that often motivates members to say that this is no way to run a country. We keep having debt limit crises. We keep having government shutdown crises. The problem with budget reform that we've run into is there have been a lot of commissions in Congress and a lot of working groups and a lot of special blue ribbon lawmaker commissions. Nearly every reform they come up with dies because somebody's ox gets gored. Some committee is going to lose power, whether it's that the Appropriations Committee is going to lose to the Budget Committee or that the Budget Committee is going to have to give power to Appropriations, or the Ways and Means [Committee] is going to lose some authority over some of their entitlement programs.
Budget process starts out idealistic and good government, and it ends up devolving into a turf war between members over who can control what, and the whole system falls apart. One way of doing it, potentially, is enact reforms that don't go into effect for five, seven, eight years so that members who are voting on it don't have to worry that they won't be the committee chairman anymore.
Gillespie: What's the role then of public opinion? In your theory of social change, does it come from people protesting bad budget processing and things like that?
Riedl: You know, I have a sign up in my office. I believe it's a quote that says, "Do not think that public opinion doesn't matter in the long run. It's the only thing that does matter." And ultimately, I have worked 20 years trying to adjust public opinion because when I worked on the Hill, I worked for six years in the Senate as chief economist of Sen. Rob Portman [(R–Ohio]). And when you're working in Congress and you talk to lawmakers, they will tell you the same thing. We know all these problems. We know it's unsustainable. But if I try to do anything about it, the voters will kill me.
So one of the reasons I left the Senate was I'm like, "OK, if everything comes down to public opinion because lawmakers are just weather vanes, we have to fix public opinion." The challenge addressing public opinion on deficits is nobody believes it and nobody feels it. And they've been hearing concerns of deficits for a long time. But they don't feel it as much. I mean, there's been a little bit with interest rates. My fear is that we're not going to get real budget reform until the pain starts to hit us hard enough that people feel it.
Gillespie: And that will be inflation.
Riedl: Inflation, rising interest rates, the bond market cutting us off, stock markets falling, and the danger, of course, is by the time you've gotten to that point, it's too late to fix it in any way that's not totally brutal. But I have spent 25 years trying to motivate people, even looking for a Ross Perot type or something to motivate people.
One of the reasons it's harder to get people motivated on the deficit now than, say, in the 1990s is in the 1990s, the deficit was smaller, and you could fix it by reforming programs that didn't matter as much. Today, the deficit is $2 trillion and driven almost entirely by Social Security and Medicare. It's really hard to motivate people to address the deficit when they realize that's the ox that's going to be gored. It's going to be Social Security, Medicare, and middle-class taxes. You're not going to be able to tweak your way to this like you did in the 1990s.
Gillespie: Before we go into what is to be done—and I want to talk about some of the proposals that you've articulated over the years—let's talk a little bit about Trump and Biden.
By the time George W. Bush left office, he ended up adding $10.3 trillion in deficits, beyond what was expected. Obama added $4.6 trillion in a 10-year budget window. Trump in four years had $3.9 trillion extra budget deficits that he added to the baseline. Biden, I guess, in his first 20 months, because it's still going on, added $5 trillion. So does that tell us anything essential about these people or the parties they represent?
Riedl: You don't just want to look at what the deficit was when they arrived and when they left because you might inherit a budget where everything is on autopilot getting better or everything's on autopilot getting worse. But you can further divide up these changes between legislation vs. the economy. And if you do that, Trump comes out a lot worse. Trump actually added $7.8 trillion in deficits, but he was able to save $3.9 trillion through faster economic growth, which cut the impact in half.
Gillespie: Obama came in with a terrible economy, and I think we would both agree that the actions that came after him slowed down the recovery. But by the time Trump came into office, things were picking up.
Riedl: Sure, exactly. Especially in those first three years, the economy overperformed.
Gillespie: And Biden also inherited a bad economy.
Riedl: So if you go by just legislation and you further take out the economy, Bush's legislation added $7 trillion in borrowing, Obama $5 trillion in borrowing, and Trump nearly $8 trillion in just four years. So what you see is that Bush and Trump added more than Obama, and much of Obama's debt was actually extending the Bush tax cuts. But Biden really came in all guns blazing. Like I said, he added $4.8 trillion in 20 months. He added as much debt in 20 months legislatively as Obama did in eight years. And so I think things are getting worse. That's why I'm concerned about a Trump-Biden rematch, because you have two presidents with two of the worst fiscal records of the past 100 years.
Gillespie: What is the option beyond despair when we look at the 2024 election?
Riedl: I think one hope you can have on spending in deficits is gridlock. I think if you get a full Republican government or a full Democratic government, you're going to see massive deficits. If you get gridlock, you might have some hope that even if neither side cares about the deficit, they don't want to increase the deficit the other way. Republicans don't want spending hikes. Democrats don't want tax cuts.
But other than that, the real danger coming up after this election is we have an epic fiscal cliff coming next year. Next year, the tax cuts expire and are up for renewal. That's about $4 trillion over 10 years. The recent Obamacare expansion that Biden signed expires. The discretionary spending caps expire. The infrastructure bill expires, and we hit the debt limit. So it's going to be interesting to see whether we have a unified or divided government in a situation where we have $6 trillion or $7 trillion in renewals coming, and whether or not they're going to try to constrain or blow this out of the water.
Gillespie: Talk a bit about how gridlock has operated in the 21st century. Because Bush came in and ultimately, by 2004, he had a united government. But in 2006, he lost control of the House and the spending slowed down toward the end of his term. Obama, as we discussed, basically elected a Republican Congress. There was a massive increase and then a kind of flatlining. It didn't quite work that way with Trump, although he also managed to fracture control of Congress. But is gridlock viable and is it good?
Riedl: Historically, gridlock is the only thing that has reduced spending and deficits. I can go a little earlier to the 1990s when President [Bill] Clinton came in and spent his first two years trying to nationalize health care. It was a disaster. Newt Gingrich comes in 1994, and all of the sudden, the entire debate is over how to balance the budget. And four years later, the budget was balanced. Clinton was dragged kicking and screaming by Republicans into this. Similarly, as you mentioned, Obama in the first two years did about $1.5 trillion in stimulus bills plus Obamacare. And it was after Republicans took the House in 2011, the next six years were six of the best years we've had. There was very little expensive legislation passing. It was Boehner and Obama at each other's throats on spending, and you had legitimate deficit reduction.
It kind of fell apart under Trump after Trump lost in 2020 because you had the pandemic. And also, the Trump Republican Party had changed so much that they were happy to team up with Nancy Pelosi to increase spending, even outside the pandemic. Like I said, even when Republicans had unified government, that version of the Republican Party was happy to make deals with Democrats that said, if you give us a 10 percent hike in defense, we'll give you a 10 percent hike in domestic discretionary spending. So, we went off the rails there. But historically, the GOP has worked really hard to constrain Democratic presidents. That's probably been the top formula for spending restraint: a Republican Congress constraining a Democratic president.
Gillespie: Let's talk about the '90s, because we managed to have balanced budgets for three years in a row?
Riedl: '98 through '01.
Gillespie: So, what happened there and how did that come about?
Riedl: There's a lot of mythology about the 1990s balanced budgets. There is a certain view that it was a massive amount of fiscal consolidation. The fiscal consolidation was actually pretty minor.
Gillespie: What do you mean by fiscal consolidation?
Riedl: Policies to reduce the deficit. You had President Clinton raise taxes in 1993, but it was only about half a percent of GDP out of a deficit that was about 5 percent of GDP. You had some modest spending restraint. But the real reason the budget got balanced and balanced faster than anybody predicted was, a) the end of the Cold War created a defense dividend. Defense spending absolutely plummeted from about 5 percent or 6 percent of GDP down to 3 percent of GDP.
At the same time, you had a big revenue bubble in the late '90s when the stock market was on fire. The defense savings and that temporary revenue bubble provided about 90 percent of the deficit reduction in the late '90s. If you want to give Clinton and Gingrich credit, it was basically staying out of the way. They didn't pass big, expensive bills. They didn't do big tax cuts. They didn't do big spending hikes. They stayed out of the way and let the defense savings happen and the revenue bubble happen.
Gillespie: And Gingrich never talked about that partly because he didn't want to be seen as
cutting defense spending.
Riedl: Right. He didn't mention that. But, you wonder then, why did the budget become unbalanced in 2001? Well, all the savings were due to a revenue bubble and defense cuts, and then you have the revenue bubble burst and then you have 9/11. The revenue bump went away at the same time the defense savings went away. You were suddenly right back to where you were 10 years earlier.
Gillespie: And then you have the added kind of secret future costs by expanding Medicare.
Riedl: And then the Bush spending spree. I think one thing that gets lost on a lot of individuals is when Bush ran on compassionate conservatism in 2000, that theme was a repudiation of Newt Gingrich. Because there was a concern that Republicans were being too aggressive cutting spending, even though they really didn't successfully cut that much.
Gillespie: Yeah, but they cut defense spending.
Riedl: Right, they didn't cut social programs at all. But there were government shutdowns. So Bush was trying to repudiate that. Bush was announcing in 2000, unlike meanspirited Newt Gingrich, I'm compassionate and I'm going to increase spending. And he did. We had no Child Left Behind, farm subsidies, a huge highway bill. Domestic discretionary spending was rising about 8 percent or 9 percent per year in addition to the defense programs. So Bush made it clear at the outset in 2000 that he was going to be a big spender.
And then 9/11 just kind of put it on the acceleration. Even if there were some fiscal conservatives in the Bush White House, the prioritization of 9/11 defense funding meant that they didn't really didn't have much leeway to play hardball with Democratic spenders. In fact, when you talk to people from the Bush White House, they will tell you, we didn't want to increase discretionary spending as much as we did. But we needed our Homeland Security and defense funding from Democrats, and we had to give them what they wanted.
Budgeting is about tradeoffs. It kind of always reminds me of [the saying], "If we can afford to go to the moon, we can afford to do something else." No, because if you do A, you cannot afford to do B.
Gillespie: In 2021, we were spending $59,188 per household. Currently it's at about $48,000. So it's come down from the peak, but not that far.
Riedl: [It's] still much higher than before the pandemic.
Gillespie: Yeah. And then it's projected in another 10 years or so to be up to $55,000. That kind of figure, does that crystallize for people that government spending is out of control?
Riedl: It does. When I talk to audiences, they can't believe the numbers. I say the government is spending at the peak of the pandemic $59,000 per household and right now about nearly $50,000 per household. And I frame it to audiences [like this]: Imagine what you could do if you were able to keep even a fraction of that money for yourself in the first place without sending it to Washington. And that crystallizes it for people just how big it's gotten. I remember when George H.W. Bush was president, we were spending $27,000 per household. That seemed high. And that's all adjusted for inflation.
But I think that should crystallize it for people. And it reminds me of a report and Wall Street Journal op-ed by my colleague at the Manhattan Institute, Judge Glock, who showed how much of people's taxes come back to the same household in benefits. I think he was estimating around 20 percent directly come back to the same household and much of the rest of it indirectly comes back to the same household. And it's really kind of dumb to send this money to Washington, have them cut an administrative haircut, and then send it right back to you.
Gillespie: This is current spending, the way the federal budget is split up: 34 percent currently goes to Social Security or Medicare, 19 percent goes to anti-poverty programs, 13 percent to defense, 10 percent to interest, and then there's 23 percent in another category. What are some of those?
Riedl: The other category? Basically education, infrastructure, border security, health research, housing. All that kind of stuff.
Gillespie: This is only going to get bigger, but a third of federal spending is Social Security and Medicare.
Riedl: And that's going to go way up.
Gillespie: And interest will likely go up if interest rates continue to climb and things like that. In the early '60s, defense spending was close to half of federal spending. And it's not so much anymore because we spend less proportionately on defense, but it's also because we spend so much on everything else.
Riedl: We've gone from one-half to one-eighth of the budget on defense.
Gillespie: What do we do in order to pay for this type of spending? Can we tax our way out of it?
Riedl: It is mathematically impossible to tax our way out of this. In order to stabilize that long term, you need non-interest savings that gradually rise to about 6 percent of GDP outside of interest. I did a report last year on taxing the rich that showed that, realistically, you can only get about 1 percent of GDP and higher revenues. If you set all upper income taxes at the highest possible rate at the revenue maximizing level, and you adjusted for the economic damage that would create, you get 1 percent to 2 percent of GDP.
Just to put a finer point on this, if you seized every dollar of every billionaire's wealth in America, their home, their car, their stocks, their vacation houses, their yachts, their businesses, you could fund the government one time for nine months. That's it. If you assessed 100 percent tax rates over $500,000 a year, you still wouldn't balance the budget. So taxing the rich should be on the table because everything needs to be on the table, but when I hear lawmakers say all we have to do is tax the rich and it'll pay for everything, that is spectacularly, mathematically false.
Gillespie: In your book you show actually that according to data from the Organisation for Economic Cooperation and Development (OECD)—and the OECD are advanced economies. The United States actually has the most progressive tax code. We are taxing the rich. The rich pay a higher percentage of government revenue in the U.S. than in any other country.
Riedl: Substantially more. And it's because we tax the rich at a similar level as other countries. In fact, our highest rates are actually higher for other countries. But we tax the nonwealthy so much less than other countries that it makes us more progressive.
Gillespie: The upper 10 percent of income earners in the U.S. pay about 90 percent of the taxes.
Riedl: The highest 20 percent of earners pay 90 percent of all income taxes. The bottom half collectively pays zero.
Gillespie: So does that mean in order to balance the budget, we have to tax the middle class or we have to tax a wider range of income earners?
Riedl: Here's the part that makes me really unpopular with all our audiences. If you try to build a stable budget for the next 30 years—and I don't mean stable, I don't mean balance the budget, I mean just one small enough deficit that the debt share of GDP stays at about 100 percent—you can't really get there on spending cuts alone. You have to cut that 5.5 percent of GDP. You can't really find 5.5 percent of GDP in reasonable cuts. You're going to have to have some revenue. And if taxing the rich is limited, there's going to be higher middle-class taxes. This is just a mathematical reality.
As I explained in my Dispatch article, you can't stabilize the debt with revenues at 17 percent of GDP. Spending is going to 30 [percent]. You're not going to get spending all the way down that low. And you can't get there from taxing the rich. So, middle-class taxes are going to rise.
Gillespie: Yeah, so what's the median household income now? $76,000? Something like that? What will they be paying in taxes 10 years down the road vs. now?
Riedl: It remains to be seen. I can't give a number. I think people are surprised to hear, though, that the median earning family in America today pays an effective income tax rate of 2 percent. And people say I pay more than that.
If you actually adjust for what they actually pay with the child credit, and sometimes the [Earned Income Tax Credit], the middle earning family pays an effective income tax rate of 2 percent. And then they pay an effective payroll tax of about 10 percent when you count the employer portion. So they do pay payroll, but it's going to go up from that. And the question eventually is, are we going to do most of this through payroll taxes and a value added tax, which is like a national sales tax, or through income taxes?
Gillespie: And in Europe, that is everything, right?
Riedl: We are the only country in the OECD that does not have a value added tax. I would like to keep it that way.
Gillespie: Why? What's bad about a value added tax?
Riedl: Value added taxes are actually more efficient than income taxes, if you're starting a government from scratch, because you're taxing consumption. The danger, though, is value added taxes are a cash cow. Once you start with a 1 percent rate, it's so easy to raise it to higher rates and collect a huge amount of revenue. And my concern is, I wouldn't mind replacing the income tax with a value added tax, but I don't want to get to the point where families are paying large income taxes and large value added taxes because then you're burying families. A lot of conservatives have said if we're going to switch to a consumption tax, the income tax needs to be destroyed, burned, and salted the Earth first.
Gillespie: The income tax is not that old, right? In a way, we could conceivably do that.
Riedl: It's 100 years old, the income tax. But yeah, if you're starting a government from scratch, your bets are better.
Gillespie: Can we grow our way out of this?
Riedl: No. And this might be news to Vivek Ramaswamy, who said that he was going to balance the budget by growing the economy 6 percent per year, which was absolutely absurd.
The first challenge is, we can't get that much additional economic growth, because when you look at the economic growth rates of the '50s, '60s, and '70s, most of that was rising population. The population is set to pretty much level off for the next 30 years. We're going to have almost zero growth of the work force population, which means all the growth is going to have to come from productivity. You're not going to get 4 percent, 5 percent, or 6 percent growth entirely from productivity. Mathematically, that doesn't work. You would need to do it like we did in the past with people. But the other side is, while economic growth does reduce the deficit, it also increases Social Security, Medicare and Interest costs.
Your Social Security payment is tied to your lifetime wages. The faster the economy grows, the more your wages grow, the bigger benefits you get. On Medicare, higher income is associated with higher health care consumption. Also, faster economic growth typically brings higher interest rates. And when you're in debt that much, every point interest rates rise has an enormous effect on deficits. So don't get me wrong, faster economic growth is very good and it can modestly reduce the deficit. But as long as entitlement spending and interest costs rise alongside, you're not going to get a huge deficit reduction.
Gillespie: So why don't we just cut Social Security and Medicare? Social Security was a New Deal program. It was a Depression-era program. Medicare was called the last act of the New Deal by President Lyndon Johnson. Those are programs that were designed for an economy in which you were more likely to be poor if you were an old person, if you were past retirement age. You also didn't live as long. Wouldn't it make sense to say, OK, what needs to be on the table, first and foremost, is this massive growing blob of space?
Riedl: Mathematically, it's going to have to come from Social Security and Medicare. Thirty years from now, Social Security and Medicare are going to be running a deficit of 12 percent of GDP. Just these two programs are going to be running a deficit of 12 percent of GDP if you count the interest costs that they create in the budget.
You can't raise other taxes and cut other spending enough to close 12 percent of GDP gap. The challenge, of course, is even if everything is on the table, most savings are going to have to go with the actual policy driving it. The problem is the politics. You have Republicans even tripping over themselves to say they won't touch Social Security and Medicare because the voters will kill them, because there is this perception that you're just getting back what you paid into the system, which is absurdly, patently false.
Gillespie: How is that false? Are you getting more back?
Riedl: Social Security benefits are designed to become substantially more generous each generation, even adjusted for inflation. On Medicare, it's even a bigger gap. The typical retiring couple today gets back triple what they paid into Medicare. And that's after you've adjusted in the net present value. So you can't say, "Oh, [it's because of] inflation and interest." No, even adjusted for all that, you get triple. But there is this perception that there's a savings account for me in Washington that is just going to send me back by money.
The reality is seniors get back more than they paid in. The programs are becoming more generous every generation. And baby boomers today are the richest generation, the richest age group, in the richest country in the world in the richest time in history. As a matter of fact, retiree income over the last couple decades has grown four times faster than the income of workers paying the benefits. So, Social Security and Medicare right now largely redistribute money up the income ladder, not down. Yes, some seniors struggle and you can design reforms. And I've designed reforms that protect struggling seniors. But it's really absurd that seniors making $1 million a year after retirement are still getting generous benefits.
Gillespie: This was also an issue with COVID relief. You had families making up to $400,000 cashing checks from various benefits for COVID. We've completely lost the distinction between even just median income families, much less struggling families, and people who can afford it.
Riedl: Right. And keep in mind, when we're talking about senior income, seniors making half a million a year or $400,000 a year after they retired, this isn't even wage income. This is interest and Social Security income. These are net worths far into the millions.
Gillespie: But, the youngest boomers are 59, I guess, right? So, they're moving into retirement and they will die. And I think about that on an almost daily basis as a boomer myself. But they're going to give a lot of that money back to people, right? They have so much, they're going to leave it to their kids. Does that affect these calculations?
Riedl: It can, over time. I mean, if you assume a certain degree of inheritance, especially simply housing values. Boomers have so much home equity, and frankly, they're hanging on to the home equity a little too much to make the housing market difficult for their kids. But eventually, when they go, those are going to be inherited by their kids. And those huge 401(k)s are going to be inherited by their kids. That should make it a little easier. I'm Gen X. That should make it easier for Gen X and millennials to get by with less. And I've been telling people for years, if you're a Gen X or a millennial and you're assuming that Social Security is going to be there forever in its current form with no savings, you're just not paying attention. You should save as if Social Security and Medicare are a bonus because the programs will exist, don't get me wrong, but I wouldn't take the little mailing you get from Social Security with your future benefits too literally.
Gillespie: How do we activate Gen X, but especially millennials and Gen Z, to get motivated about this? How do we reach them to start creating that movement for social change on this policy?
Riedl: That is the million dollar question. It's kind of remarkable that we are facing the largest intergenerational transfer of wealth in world history. And while young people are often voting on the trendy issues of the day or not voting at all, seniors are going to the polls in record numbers and robbing them blind. And young people are completely oblivious to the fact that seniors are robbing you blind while you're voting on side issues. You have to get their attention. And one thing that I try to point out to younger progressives, and I haven't had a lot of luck, is whatever priorities you have in the future—not having your taxes go up, family leave, child care, health care, climate safety net—you're going to get squeezed.
There is no way we can pay for any of the priorities you have. If we're giving $116 trillion in extra benefits to senior citizens, the math doesn't work. One thing that a lot of conservatives think about with motivating young people is climate change. Young people are so focused on climate change, even though it's something that's 30 to 40 years off—you don't feel it now, and some years it gets a little better and some years it gets worse—but young people are totally attuned to these long term climate projections and their effect.
And conservatives are often asking, well, how do we get them to focus on long-term debt projections, which is a danger to them—I don't want to say just as much as climate. I don't want to get into that debate, but it's real. And the costs that are in the system are not theoretical projections. The seniors walk among us and they have the letters saying how much they get. If there's a way we could motivate them the same way they're motivated on climate, that would be a success. But we haven't had much luck.
Gillespie: What about younger conservatives? And to be honest, I don't care about progressives or conservatives. I care more about libertarians, and they seem to be somewhat in sync with these ideas. If you're right of center, and you're not as suspicious of capitalism, or you're not as motivated by climate change, what works to grab people?
Riedl: If I knew, I would have grabbed them by now. I think there is a certain perception, at least among right-of-center young people, that Social Security and Medicare are unsustainable. I don't think you have to really convince them of that. I think you have to get them to care about it though. And when I talk to young people on the right, to be honest, they're a little too focused on Twitter, the culture war, and Trump owning the libs that you can't really get much policy focus. They get it, but they're just not motivated on it yet. And again, if I knew a way to reach them better, I'd love to do it.
Gillespie: How do you reach your own generation of Gen X? It was very popular in the '90s, as I recall, that members of Gen X were more likely to believe in UFOs than that they were going to get collective security or Medicare. Are they still keeping the faith or are they lost in the hurly burly of everyday life?
Riedl: I think Gen X now has it in their DNA to be skeptical that Social Security and Medicare are going to be there for them. When I talk to people in my generation, they're not necessarily motivated to do anything about it, because I think when you talk to Gen Xers, there's bigger things going on in the world that are getting their attention politically. There is Trump, Biden, all the culture war stuff. That's what they're voting on. But they're aware that we're facing problems.
Gillespie: The leading edge of Gen X is really going to be in the pinch point when all of this blows up.
Riedl: We're going to be the ones hit with the drastic changes when you have to do it. But you mentioned the '90s with Social Security. That was the time to fix it. You know, the reason to fix Social Security in the '90s was not because the program was going to go bankrupt in the '90s. It was always going to go bankrupt around 2030.
But that was the time to phase in the reforms while people were young. And we missed the window in the '90s and early 2000s to gradually phase in reforms for boomers. And because we didn't, now we're going to have to do the more drastic reforms. And as you mentioned, when there's a ratchet of benefits, we're going to be the ones being ratcheted because we didn't do the reform 20, 30 years ago when we were warned to do it.
Gillespie: Do you think we'll be in a better place fiscally, or in terms of budget, a year from now, five years from now, 10 years from now?
Riedl: We're going to be in a worse place just because I think deficits are looking to get much bigger—$2 to $3 trillion deficits. I don't see Congress going in the other direction. Things are going to get worse until either voters wake up or the financial markets cut us off. I'm really hoping it's the first option, that voters wake up, but I'm just not seeing it.
This interview has been condensed and edited for style and clarity.
The post Brian Riedl: Who Bankrupted Us More—Trump or Biden? appeared first on Reason.com.
]]>For the first time in 100 years, no one was elected speaker of the House on the first ballot when the new session of Congress opened on Tuesday—thanks to a breakaway faction of Republicans who denied Rep. Kevin McCarthy's (R–Calif.) bid to return to the top post in the House of Representatives.
McCarthy finished second to Rep. Hakeem Jeffries (D–N.Y.) in the first round of voting, but neither candidate reached the magic number of 218 needed to win a majority. Rep. Andy Biggs (R–Ariz.) received 10 votes on the first ballot, while Rep. Jim Jordan (R–Ohio) picked up six votes and three other lawmakers got one vote each. In all, 19 Republicans voted against McCarthy, who can afford to lose just four votes and maintain a majority of the closely divided chamber.
In a second round of balloting, Jeffries got 212 votes while McCarthy received 203, and Jordan consolidated the 19 Republican votes against McCarthy.
But why, you might be wondering, would a group of Republicans trigger this sort of chaos?
On Tuesday morning, Rep. Scott Perry (R–Penn.), one of the renegade Republicans, laid out the answer to that question in a lengthy statement posted to his Twitter account. Perry said that the group of Republicans opposed to McCarthy was seeking "firm commitments" from McCarthy on four "concrete policies" they wished to bring to a vote.
Those policies, according to Perry: A balanced budget, passage of the Fair Tax Act (which would replace the federal income, payroll, and estate taxes with a national sales tax), passage of a proposal crafted by Texas Republicans that aims to crack down on illegal immigration, and the imposition of term limits for members of Congress.
Additionally, Perry said that McCarthy was asked to support two changes to how the House operates. First, to require a two-thirds vote to approve earmarks, which would have to be voted on individually. Second, to allow amendments that would cut spending to be introduced on the House floor to any legislation.
As a set of proposals, it's a bit of a mixed bag—though the immigration element would be a massively expensive attempt to limit the free movement of people. It's also a bit crazy that lawmakers have to resort to once-in-a-century tactics just to get congressional leaders to consider balancing the budget.
But it is certainly not a radical or wildly irresponsible list of demands. More transparency and accountability on earmarks—something that hasn't really materialized despite the promises of those who pushed to end the earmark ban—would certainly be welcome. Floor amendments to legislation would be a step toward restoring the so-called "regular order" of moving legislation through Congress, another welcome and overdue reform.
In that same Tuesday morning statement, Perry said McCarthy effectively forfeited his chance to be speaker by refusing to go along with those requests. Later on Tuesday, Perry and his fellow breakaway Republicans followed through with that threat.
What happens now? It's unclear. There will be a third vote in the House, and perhaps many more. In 1855, it took 133 ballots before a stalemate for speaker of the House was broken.
"We are going to continue to vote until Kevin's the next speaker," Rep. Dave Joyce (R–Ohio), a McCarthy supporter, told CNN after the second round of balloting on Tuesday.
It might look chaotic and weird, but actually, this is just fine. It's democracy. For the moment, and maybe longer, think of the House of Representatives as functioning more like a multi-party democracy than the two-party duopoly that we're used to seeing.
In multiparty systems, two or more parties have to come together and form a coalition in order to achieve a governing majority. That requires some horse-trading and usually involves drawing up a semiformal document outlining what policies the coalition will work together to craft (and sometimes, equally importantly, which policies will be off-the-table).
For the purposes of the speaker election, Perry and his fellow renegade Republicans are operating like a minority party in a multiparty system: offering their support in exchange for getting to put a hand on the steering wheel of the future coalition government. If McCarthy doesn't want to make a deal with them, he might have to seek a coalition government with a centrist faction of Democrats. Failing that, Republicans might try to find someone else within their ranks who can get the requisite 218 votes from the chamber.
However it plays out, Tuesday's election for speaker of the House probably illustrates how Congress' next few years will look. Slim majorities in both chambers mean breakaway factions of Democrats (in the Senate) and Republicans (in the House) will be able to exert considerable influence over policy making. And it's at least a little bit refreshing to see some Republicans using that influence to talk about, well, actual policies.
The post Why Are Some Republicans Revolting Against Kevin McCarthy's Bid To Be Speaker of the House? appeared first on Reason.com.
]]>This year, Sen. Rand Paul's (R–Ky.) effort to balance the federal budget didn't even get a floor vote in the Republican-controlled Senate.
Paul's so-called "Pennies Plan" failed a procedural vote on Monday evening when only 22 senators voted in favor of a cloture motion that would have brought the bill to a final vote. A majority of Republicans and all Democrats voted against proceeding to a floor vote on the bill. It's another sign that fiscal responsibility is all but dead in Congress, even as the national debt heads toward record highs and the budget deficit approaches $1 trillion this year.
"We teach our children that money doesn't grow on trees, and then they grow up watching politicians pretend otherwise," Paul said before the vote. "Meanwhile, our debt soars past $22 trillion, endangers our country, and artificially limits what our nation can achieve."
Paul's proposal called for cutting 2 percent from the federal budget for each of the next five years and would reduce federal spending by about $11 trillion over the next decade—even though spending would rise after the first five years. It's an adaptation of the so-called "Penny Plan" that Paul has been pushing for several years, though he now says an additional penny in cuts for every federal dollar spent is necessary to get the budget to balance.
Indeed, the gap between what the federal government spends and what it takes in is growing wider. During the first seven months of the current fiscal year, which began in October 2018, the federal government ran a $531 billion deficit. That's a 38 percent increase over the same period of time last year.
According to an analysis from the nonpartisan Committee for a Responsible Federal Budget, about 60 percent of this year's expected deficit is the result of policies—mostly last year's huge increase in spending that shattered those Obama-era budget caps—put in place by current legislators and signed by the current president.
The share of debt held by the public currently stands at about 78 percent of gross domestic product (GDP), a shorthand measure of a country's economic output in a single year. The numbers are actually worse than that, because "debt held by the public" accounts for only $15.8 trillion of the $21 trillion national debt. The rest is held by parts of the federal government, such as the Social Security trust fund.
Alarm bells are starting to sound. The Government Accountability Office (GAO) warned in April that America's current fiscal situation is "unsustainable." The GAO estimates that the amount of debt held by the public is on track to surpass the all-time high of 106 percent of GDP within the next 13 to 20 years.
Meanwhile, Congress seems as apathetic as ever, if not more, about the growing pile of federal debt.
Most Republicans go back to their districts and say they support balanced budgets, Paul said on the Senate floor before the vote, "but they're not really for balanced budgets if they vote for budgets that don't balance."
Paul also took aim at Democrats, who he accused of pushing for pie-in-the-sky spending plans that promise everything from free college tuition to greater government spending on health care and retirement entitlements. Those proposals will add trillions of dollars to the national debt or will require massive tax hikes, Paul said.
"These proposals are ludicrous," said Paul. "We have so much debt from what we are already trying to give you, and these people want to double, triple, and quadruple that. It's a recipe for disaster."
Last year, Paul was able to get the balanced budget proposal to the Senate floor after striking a deal with Senate Majority Leader Mitch McConnell (R–Ky.) during an earlier budget impasse to get the bill on the floor. Paul called that vote a "litmus test for conservatives," and most of them failed it as the measure went down in flames, 76 to 21.
Before Monday's vote happened, Paul predicted that not a single Democrat would vote for his proposal and more than half the Republicans wouldn't vote for it either.
He was right.
The post Bipartisan Senate Effort Predictably Kills Rand Paul's Plan to Balance the Federal Budget appeared first on Reason.com.
]]>Reason TV met up with Sen. John McCain (R-Az.) outside the Values Voters Summit in Washington, D.C. The conference is an annual meeting mostly Christian religious voters and leaders.
McCain told Nick Gillespie that he thinks a government shutdown over Planned Parenthood is pointless, heaped praise on outgoing House Speaker John Boehner, and said marijuana legalization should be decided at the state level.
The 2008 Republican presidential candidate said the F-35 fighter plane is not just the "first trillion-dollar weapons system" but a "classic example" of a government boondoggle, that Kim Davis was wrong to keep other Rowan County clerks from issuing gay marriage licenses, and that we should not increase legal immigration.
"You come and visit me in the office," McCain tells Reason. "And I promise you we'll have a good fight."
The post John McCain on Boehner's Resignation, Kim Davis, Drug Legalization, Planned Parenthood appeared first on Reason.com.
]]>Mark Meckler, a California attorney, started his political activist career as a co-founder of Tea Party Patriots in 2009. He's since come to believe that national policy changes to shrink the expense and overreach of the federal government can be best—and likely only—achieved via an Article V convention to amend the Constitution.
Last month I interviewed Nick Dranias, running an alternate version of a project to call for an Article V convention under the name "Compact for America." Here's how I described the basics of the Article V process:
Most of us are familiar with the way the Constitution actually has been amended in the past—via 2/3 votes of both houses of Congress followed by ratification by ¾ of the states. But Article V says there is another way: "Congress…on the application of the legislatures of two thirds of the several states, shall call a convention for proposing amendments" which again have to be approved by ¾ of the states. The "shall" is interpreted by many legal scholars to mean that Congress has no real say in the matter at that point: if the states ask them to set up that convention, they legally must.
Meckler is running a distinct project to convince 34 states to pass resolutions to convene such a convention under the name Convention of States. Meckler believes a sea change in the governing philosophies of the Supreme Court (shifting from any consideration of the Founders' original intent, a change he thinks started dominating about 115 years ago) as well as Congress and the executive branch make severe structural changes via amendment necessary to rein in government's size, scope, and expense.
Meckler is proud of public support for his notion from a range of conservative and libertarian-leaning figures, from talk radio host and bestselling author Mark Levin to Sarah Palin to Tom Coburn, including libertarian law professor Randy Barnett and conservative law professor Robert George at Princeton University.
Senior Editor Brian Doherty interviewed Meckler by phone earlier this week about the project's progress and why we can't count on the federal government to rein itself in. Following is an edited transcript of that conversation.
Reason: What problem are you trying to solve with the Convention of States project?
Mark Meckler: The Constitution acted upon and interpreted by the Supreme Court and Congress and the president is systematically, dramatically different [from what the Founders intended], with the Commerce Clause being the best example. The Commerce Clause was meant to be narrowly designed to regulate interstate commerce, and we now think of that as meaning the regulating of business or trade. In 1787 it specifically meant the shipment of goods.
That power was meant to be narrowly construed to regulate the shipment of goods across state lines, so the Constitution gave the federal government the power to deal with [interstate shipment of goods].
But over the last 115 years, that clause has been interpreted so broadly as to justify huge swaths of federal legislative power. [One thing that could come from Article V convention] is that we could redefine [the Commerce Clause] so that it means what it was intended, literally change the language so it says power to regulate the shipment of goods across state lines.
Reason: Some of the things you are trying to achieve via the Convention of States have been conservative and libertarian movement goals for a long time. What made you decide the Article V approach was best?
Meckler: It was primarily seeing the results achieved or not achieved by the conservative and libertarian movement. The best example is the Reagan administration. One of the things he said he'd do is eliminate the Department of Education. But the structural behemoth is too difficult to move and the department ended up growing. You put a guy like Reagan who was professing conservative and libertarian beliefs but government moves in the opposite direction. Electing good people isn't enough.
I come from a Tea Party background. I found [there] a great desire for some sort of plan, what to do to really fix things. It was a natural evolution from there. We screamed and yelled and protested and it felt good and met like-minded folk which was exciting as the media denied we existed. We did political action, went to work for candidates and donated and canvassed and did standard political stuff and in 2010 we saw the biggest swing in the majority in the House since 1938. But as far as actual government change, almost nothing.
For me that was a signal that maybe that was not the best approach. [Tea Party] folks went local, at the local and state level more was accomplished, but at the national level, we saw little change. Now I'm not a Republican, but we see them win the Senate in 2014 and again, we see little change in the direction [of smaller government]. I had left the Tea Party in February 2012; I felt the organization I helped found was slipping into the same old political morass about raising money and what was accomplished in my opinion wasn't much
I got introduced to the idea of an Article V convention, ended up doing reading on it and crossed paths with Lawrence Lessig at Harvard. He advocates it and he's a progressive, but he believes as I do that government has spiraled away from control of the people. I cohosted a conference [on the idea] with Lessig [at Harvard Law School in 2011]. At the time I didn't have much historical knowledge so my position was mostly neutral. [After being convinced of its merits by Mike Farris of the Home School Legal Defense Fund and chancellor and founder of Patrick Henry College in Virginia] I adopted the Convention of States as a project of [my organization] Citizens for Self Governance.
The history of Article V is important. George Mason [at the first Constitutional Convention] pointed out the flaw, that Congress had been given the right to propose amendments but not the people through the states. He asked a rhetorical question, are we so naïve as to believe that if the federal government becomes a tyranny that it will propose amendments to restrain its own tyranny? Madison's notes reflect there was no debate and the vote [to include that power to call an amending convention for the states in article V] was unanimous.
Reason: Unlike other Article V movements like the Compact of the States approach pushing merely one balanced budget amendment, you want to restrict the convention the Convention of States proposes to one general overarching subject rather than one amendment. [The subject is defined on the Convention of States FAQ as "for the purpose of limiting the power and jurisdiction of the federal government."] Explain exactly what you want the Convention of States to accomplish.
Meckler: Our first subject matter is fiscal restraint, which is broad enough to include any balanced budget amendment, spending caps, [but the specific shape should be hashed out in] debate meant to take place at the deliberative event [the convention itself].
The second is to limit the jurisdiction and scope of the federal government. 66 percent [in some polls] say it's too big and does too many things. Our third subject matter is term limits, 80 percent of Americans say we should have term limits, and Congress won't propose an amendment to limit its own terms but we the people can do it through Article V. [Term limits are] another area of broad consensus, like balanced budget amendments, and helps build broad consensus [for an amending convention].
We [as an organization] generally stay away from [proposing] specific amendments [that the Convention might consider in pursuing its subject goal]. What I hear on the streets, not in political circles but from regular folks, [is a desire for an amendment saying that] any bill [out of Congress] can only be about a single subject. People understand the problem legislators face with huge omnibus bills on dozens of subjects. Many in Congress are forced to vote for something bad to get something good. Another amendment I hear broad support for is term limits for the federal judiciary, including the Supreme Court.
Reason: How far along are you toward the goal?
Meckler: 38 states have introduced resolutions [that need to be passed by both houses, but not signed by governors] and they have passed in Georgia, Florida, Alaska and 10 days ago we added Alabama. I think it's certainly much easier in states that are Republican controlled to get passed, but that's less about ideas than about the public intellectuals who support it.
For Democrats, if they go to the website and see Levin and [Glenn] Beck and [Sean] Hannity, the reaction generally is, that's something I probably wouldn't like. But as a starting point that's a better place to be since in 31 states both Houses, if you include [unicameral] Nebraska, are controlled by the Republicans.
Reason: The biggest objections I've seen from people who might agree with your goals but not your methods are that a convention called via Article V could become a "runaway convention" and do all sorts of horrible things.
Meckler: That idea has been around for a long time, and if you trace the source of it's generally from the John Birch Society [who Meckler considers a disreputable crank organization whose paranoia about communism has been extended to undue paranoia about an Article V convention]. It's a radically irrational fear. The most important point is the Framers set up a high bar. 38 states will have to ratify any amendment that comes out of the convention. So it takes only 13 states to fail to ratify any amendment, and regardless of your political persuasion, just run the numbers.
Conservatives are worried people might propose [if they ignore the rules set for the convention] things that limit liberty and they have to believe that 13 of the most conservative state Houses would ratify amendments that overturn the Second Amendment or whatever, that's literally absurd and impossible.
Same for folks on the left, if they are worried that conservatives in the convention might propose, I don't know, banning gay marriage, if they believe that could happen in the convention, and they think 13 state Houses wouldn't block that, that's an outrageous presumption. The convention will not [make any amendments stick] that are not accepted by a vast majority of state Houses. [Meckler's detailed arguments against "runaway convention" fears can be examined here.]
Reason: The presidential race is sucking up most of the political oxygen for next year or so; any intersection with that from your project?
Meckler: Huckabee has endorsed the COS specifically. Rand Paul is in favor of using Article V to impose term limits and a balanced budget amendment. Rubio was asked on Hannity about the Convention of States and said he's for anything states can do to take power away from the federal government. [People on] Fox have said recently it's a good question for the presidential debates. I think that's all happened because so many activists are engaged on the issue. We've got 700,000 active people doing things, we have got Facebook reaching over 2 million people.
In some states we've far exceeded our goals [on activist support], some fallen short, on the broad scale we have support from 97 percent of state legislative districts, which is something I never expected to get. In Texas we made it through the House but got stuck in committee in the Senate. There was really nasty maneuvering in the Senate, our folks flooded the state legislature with 20,000 emails in four days, overwhelmed them 15-1 with calls in favor.
We can build a grassroots infrastructure that's hard to beat but we've also proven some [legislators] don't care; they don't listen to their constituency. It's a good lesson; our grassroots have learned they might have to remove some folks from office.
The post "Electing Good People Isn't Enough" appeared first on Reason.com.
]]>Forcing the federal government to keep to a balanced budget has been a dream of the fiscally conservative, or those just worried about ruinous debt, for decades. "Force" is the operative word—there seems little hope that Congress will embrace consistent fiscal discipline on its own. Various organizations and movements are working to restrain government spending (and sometimes pursue other goals) via an "Article V convention."
What's that? Most of us are familiar with the way the Constitution actually has been amended in the past—via 2/3 votes of both houses of Congress followed by ratification by ¾ of the states. But Article V says there is another way: "Congress…on the application of the legislatures of two thirds of the several states, shall call a convention for proposing amendments" which again have to be approved by ¾ of the states. The "shall" is interpreted by many legal scholars to mean that Congress has no real say in the matter at that point: if the states ask them to set up that convention, they legally must.
One such group pushing for a such a convention, working under the name "Compact for America" combines that obscure procedural method with another one: the interstate compact, which the Compact for America website explains thus: "When states enter into a formal contract to legally obligate themselves among each other in an organized effort to achieve a common goal, such a contract is called a 'compact.' Currently, there are over 200 compacts in existence, and each state is typically a member of 20 or more compacts."
Nick Dranias is president of the Compact for America Educational Foundation, Inc. He's previous been general counsel and constitutional policy director for the Arizona-based Goldwater institute, as well as previously working as an attorney with the Institute for Justice for three years and in private practice in Chicago.
Dranias and his group are working to get 38 states to pass a bill entering into a compact that not only calls for a constitutional convention, but locks them into the one thing that convention can do. As their website states, "The Compact approach allows for the specification of the text of the amendment to be advanced by the limited convention it organizes under Article V of the U.S. Constitution–avoiding the very difficult sales pitch that 'we have to organize a convention to find out what it might propose.'"
Many fear that there is no legal way to prevent such a convention, once it starts, from doing whatever the hell it wants (see: how the convention that formed our own current constitution was just supposed to amend the Articles of Confederation). A collection of concerns and opposition to any attempt to craft a new constitutional convention, even for conservative or libertarian goals, can be found from the John Birch Society's New American magazine. On Compact for America's website can be found detailed discussions about their goals, their safeguards, as well as a copy of the introduced congressional resolution to call the convention when 38 states demand it. [UPDATE: Dranias and his team don't use, or like anyone else using, the term "constitutional convention" for what they are trying to do, since they are not trying to craft a new constitution, but merely to make one amendment to our existing one. As a term of art for a convention designed to affect the constitution, this writer considers the adjective "constitutional" to be apt enough in informing a lay reader about what sort of convention is being called for by Article V.]
Senior Editor Brian Doherty interviewed Dranias by hone earlier this week about the Compact, what it hopes to accomplish, its procedural safeguards, and how far along it has gotten. Following are edited excerpts from that conversation.
Reason: What problem are you trying to solve with the Compact for America?
Nick Dranias: The abuse of unlimited borrowing capacity by the federal government is the root cause of unlimited federal power. Unlimited borrowing creates the illusion of unlimited resources, and that illusion in a mostly non-philosophical society is a propellant for the growth of government without bounds.
Against someone willing to give everyone what they want for no immediate cost on the federal credit card, the limited government politician will be outcompeted and is going to lose. That is my personal motivation in tackling national debt.
Right after the TARP debate with 80-90 percent of citizens opposed to the bailout of banks and corporations across party lines being ignored by Washington, it became readily apparent to me it didn't matter what the will of the people is [with the current spending process]. The only solution I could find that could tackle the structural flaw of unlimited borrowing would be a constitutional amendment, done away from Washington and closer to the people, via Article V.
But Article V amendment [via a convention called by the states directly] has never worked. [Calls for such conventions] have prompted Congress to act [to pass amendments itself that the states later ratified]. Why in 220 years has no one succeeded in convening, much less passing an amendment, via a convention called by the states? I realized that the process is kind of ridiculous.
It's a Rube Goldberg machine, a series of contingent speculative events [including 2/3 of states applying for a convention, all passing laws to send delegates, sending them and having the convention actually occur and hoping something good results, having Congress pass resolutions to call the convention and hoping 38 states will ratify the result] and for anyone to succeed in that process would seem to be virtually impossible. So I asked myself how to fix that, and the answer was to use the Compact process, which is already used to make formal binding contracts between states. This would get all of them pre-committed to doing what they are supposed to do and pass that one agreement to get it down legislatively in one fell swoop with just one bill.
That is the genesis of the Compact for America approach to Article V conventions. It consolidates all the different stages into a single bill on the state side and then into one resolution for Congress and one convention to meet and vote up or down on one amendment in one day. It makes Article V user friendly. I call the original way [of calling an Article V convention] without the Compact the "legacy" approach, and the Compact approach is 2.0.
Reason: One of the biggest fears you hear even from people sympathetic to the notion of binding Congress to a balanced budget is a "runaway convention" that once convened might just do whatever they want.
Dranias: Most runaway convention fears are fear of the unknown. But the compact precommits all states to everything that will happen in complete detail. Compacts have already seen 200 years of case law and I've never seen case law this uniform, I researched them for five years and I've never seen any compact overturned. The Compact process has been thoroughly tested. If opponents of Article V tried to undermine a Compact, they'd create a legal precedent that undermines hundreds of existing compacts [involving things from metro transit authorities to dealing with hazardous waste].
Reason: How does the Compact approach lock in what a constitutional convention can do?
Dranias: First benefit of the Compact approach is it [predefines] the amendment it is committing states to advancing and ratifying; you know the policy product in advance which makes it more like a ballot measure. But unlike a ballot measure, the [amount of people] you need to persuade to get behind it is comparatively very small. We're looking at a target of 7,500 state legislators, then targeting their staff so multiply that by four then target key influencers around them, think tanks and the like so multiply by two then you're looking at 50-60,000 [people] in states [to convince]. Looking at the Congress side, 435 congressmen and their staff and the concentric circle of influencers and think tanks around them, it might be 20-30,000 people so a total of 100,000 [nationally] you have to persuade it's good policy [to pass the Balanced Budget Amendment]. So you have a known and smaller universe of people to persuade than in any major state [for passing a ballot measure].
The Compact approach consolidates in one piece of legislation everything we are trying to do. You don't have to come back separately and have the legislature pick delegates [to send to the Convention]. The Compact for America involves every state precommitting to ratifying [the amendment if the convention passes it and Congress chooses legislative ratification]. The compact when signed on commits everything [in the process] from beginning to end once we jump that initial educational hurdle [on convincing states to sign on to the Compact].
The default setting [of the Compact], we recommend the governor [of any given state] be selected as [delegate to the convention]. And [at the convention] the first order of business before anything else happens is every delegate must vote into place rules that limit the convention to 24 hours and one up or down vote on this particular amendment. Anything else as the first order disqualifies that state automatically and everything they do is void and every state attorney general is mandated to get an injunction in state or federal court in the northern district of Texas to stop the convention. So we will know before anything is done if we have a runaway convention, the moment they vote [for anything other than adopting the set rules confining them to voting on the one balanced budget amendment.] That is the most important structural protection the Compact provides.
Reason: How is your amendment structured to enforce a balanced budget?
Dranias: We're trying to create a structure that incentivizes the wrong people to do the right thing, to enforce a balanced budget by requiring a limit on borrowing without relying on the good grace or morality or character of those in power. We don't want to depend on an estimate they can game all day and night or debate accounting methods. A clean spending limit, a pay-as-you-go spending limit is the backbone to a balanced budget.
Recognizing there can be volatility in cash flow sometimes [from taxes], we recognize in order to make pay-as-you-go work ironically you must have borrowing capacity. [We'd limit borrowing to] a very specific line of credit. We suggest an absolute dollar amount. Things like formulas based on GDP can be gamed so we limited spending to what taxes bring in at all points in time except for borrowing from this limited line of credit, set initially at 105 percent of what's outstanding in federal bonds on ratification [of the amendment]. So if $20 trillion is outstanding [in debt] you get $21 trillion, a one trillion cushion at current borrowing rates, that's 1-2 years of additional borrowing at current levels. It gives a transition period, Congress will see it coming as [ratification] gets to the last few states [needed to trigger the constitutional convention].
The backbone of the amendment is not complicated: you can't spend more than taxes bring in, but you can borrow from this line of credit, and if you run out of that [borrowing] capacity, then [spend] no more than taxes bring in. If that's not enough flexibility and we run out of borrowing capacity for whatever reason, irresponsibility, a war happens, aliens attack, whatever, well, you might overshoot borrowing capacity given spending habits that exist and you get hit with a crisis, then we built in flexibility [through one exception] but not one Congress controls. It's a fundamental conflict of interest that Congress is both appropriator and the guy setting credit limits. The guy agreeing to spend money will of course agree to lend himself money to spend. So we can't have Congress in the position of controlling any exception.
So our solution is to engage the states. Any increase in that fixed debt limit requires approval of a majority of state legislatures within 60 days. That's not to say that states aren't influenced by federal grants, but their conflict of interest is far more attenuated than anyone in Congress. We think that will encourage Congress to have an entirely different perspective on borrowing capacity if Congress is no longer able to guarantee itself whatever borrowing it wants. It will dispel the illusion of unlimited resources and give them a narrowly self-interested reason to pay down debt so they don't have to go hat in hand to the states. We are aligning the interests of the political class with husbanding borrowing capacity and we believe the incentive will be strong enough for a balanced budget to be the norm.
The last element is a tax limit. This is not meant to be a right wing wet dream, it can't be, as much as I'd like, we have to get 38 states in play, can't just do "no new taxes" in the amendment. We devised a tax limit based on only allowing taxes to be raised when it's a choice between a bill to our kids and a bill to us, if we have exhausted all plausible spending reductions.
Two-thirds of each house of Congress must approve any new income or sales tax of any kind, which is a very high hurdle. A simple majority vote would still apply to closing loopholes, deductions, but lots of loopholes are defended by powerful special interests, so it will still make spending reductions much more attractive even with a simple majority. Another exception is they can get rid of the income tax entirely and replace it with a consumption or user non-VAT sales tax and raise revenue through the roof if you want. But the price is to give up income taxes. We also don't apply the supermajority rule to duties, excises, fees, fines, we believe those are better sources of revenue; they are more voluntary, consumption based, and more transparent. All taxes suck, all are bad, but there are worse and better so we incentivize the push for revenue through a narrow gap where [Congress would] encounter strongest special interest [opposition] and if you get through those, then you do the least damage.
Reason: Where does your effort stand now?
Dranias: We got four states in so far [Georgia, Mississippi, Alaska, and North Dakota], after 16 months working on this, just six months with me working full time. We have six more states in play [with the bill in active consideration] at the moment. [Missouri, Texas, North Carolina, Michigan, Alabama, and Ohio] We hope to have filed later this year in Maine and Wisconsin. [In a few states, including Arizona, Arkansas, and Wyoming, they passed one house of the legislature but not the other].
We want eight [to have passed] by the end of the year, as we want to average 7-8 states a year [signing on to meet the current sunset provision deadline of the bill of 2021].
All the states where it has passed are Republican controlled, though we have bipartisan support to some extent. The challenge has been [opponents] framing anybody for a Balanced Budget Amendment as a radical right wing person even though we know many Democrats [also support a BBA]. When a fiscal crisis rears its head it will become obviously a nonpartisan problem and we think we can break through in bringing on reasonable Democrats who don't want to see the system crash and burn. We've divided 40 states into three tiers, and then a tier beyond that we aren't focusing much on, California would be one of those, but that can change. We are focusing our resources opportunistically, and not spending much time on [for example] Vermont, Connecticut, or Rhode Island.
An interesting thing about the legislative process we are finding out, a third of the time, the outcome is completely unrelated to the merits of the policies or anything else we can anticipate. [Dranias says in at least one state sheer antipathy toward the legislator who sponsored their bill got it choked in committee by other legislators, and in other states they were stymied by what he considers rather paranoid fears of the "runaway convention" leading to a veritable coup d'etat.] But we pulled ahead of [an alternate effort to create a new constitutional convention called] Convention of States whose resources are 10-30fold ours and with them playing in 38 states while we focused on 12 states. We lost four after getting through one chamber and picked up two [this year] then got six more in play and we suspect by the end of year end we end up batting .500, not bad for an innovative policy proposal.
Reason: How's your fund raising?
Dranias: We've raised nearly $1 million since October when I left the Goldwater Institute. We can't disclose most of our donors; they want their identities protected. One donor that I have permission to identify publicly is the Rodney Fund, which made made seed money possible. Back in July I was writing for the Heartland Institute [the Fund's founder] saw a white paper I published there and started calling, leaving messages about how he wanted to do this, to save the country. He made it clear he wanted to support the Compact approach to Article V, he believed that Article V 2.0 made the whole process plausible. And if the concept is proven for a Balanced Budget Amendment, maybe the same process could get us subsidy bans, NSA snooping bans, all kinds of things you can find cross-party supermajority support to get through 38 states.
The challenge is we need realistically to do this with maximum effect, we need to raise $14-15 million more. The upside is if think about the cost of an average ballot measure in California they average $15-20 million. By virtue of the consolidated nature of the Compact approach, to get an amendment to the U.S. Constitution as long as your political product crosses party lines and ideology, you can get to that with no more the cost of a ballot measure in California.
The post Getting a Balanced Budget via Article V Constitutional Convention: 2.0 appeared first on Reason.com.
]]>A lingering question from the so-called Great Recession is why, when things went south, some places were so much harder hit than others. Nevada, for example, saw its unemployment rate jump up by more than 7 and a half percentage points. Some other states meanwhile had increases of less than 2 percentage points.
One explanation, according to a new study from Daniel Shoag of Harvard's Kennedy School and Stan Veuger of the American Enterprise Institute (AEI), is that states with low levels of "policy uncertainty" fare better. It turns out that a lot of confusion about things like whether tax rates are about to change dramatically and whether government coffers can weather a downturn without plunging the state into red ink can have brutal effects on a local economy. Intuitively, this makes sense: If it's unclear how revenues will be appropriated in a coming year, or what new regulatory changes may be on the way, businesses may be reluctant to invest and hire.
In practice, this means there are steps that state governments can take to insulate their workforces against future shocks. The paper identifies a number of variables that were correlated with higher policy uncertainty and—perhaps as a result—greater unemployment spikes during the recession.
"Some of them are hard," explains AEI's Veuger, "because it would include things like, you never want to have a lame-duck governor when a recession hits. That's impossible [to control]. But having a budget deadline is good. Finishing your budget on time is good. There are a lot of straightforward good government measures that do seem to dampen the effects."
Some examples from the paper of things that were associated with higher levels of both uncertainty and unemployment included:
Things that were negatively correlated with both uncertainty and unemployment included:
The lesson: If you lost your job in the last recession, part of the reason might be your state legislature's inability to get its act together and do things like turn in budgets on time. And if you're worried about losing your job in the next economic downturn, now might be a good time to start agitating for statewide reforms like balanced budget requirements and cushier emergency funds.
The post To Help People Keep Their Jobs During Recessions, It's the Uncertainty, Stupid appeared first on Reason.com.
]]>POLL TOPLINE RESULTS FOUND HERE
When it comes to the conflict between Israel and Hamas, 53 percent of Americans believe the United States should be less involved in negotiating a long-term peace agreement — 36 percent feel the US should stay out of the negotiations entirely and 17 percent say the US should be less involved than it is today. Twenty-one percent feel the US should be more involved in peace negotiations and the same number want the US to continue its current level of involvement.
Thirty-seven percent of Americans approve of the job President Obama is doing on foreign policy, while 53 percent disapprove. Overall, 43 percent of Americans approve, and 52 percent disapprove, of the job the president is doing.
Just 18 percent of Americans approve of the job Congress is doing, while 75 percent disapprove. There's little enthusiasm for either party to take over Congress this November. Thirty-four percent of Americans say they would prefer that neither major party control Congress, 33 percent hope Republicans control Congress after the 2014 elections, and 29 percent want Democrats in control.
Eighty-three percent of registered voters — 84 percent of Republicans, 73 percent of Democrats and 59 percent of independents — tell Reason-Rupe they are certain or likely to vote in November. If the congressional elections were held today, 42 percent of likely voters say they'd vote for the Democratic Party's candidate in their district and 41 percent would vote for the Republican candidate.
Nearly four out of 10 likely voters, 39 percent, say the economy is the number one issue influencing how they'll vote in the November elections. Perhaps surprisingly, education is the second most important issue to voters (16 percent), followed by foreign policy (15 percent), immigration (10 percent), and health care (10 percent).
In terms of economic policies, 74 percent of Americans would like Congress to focus on policies to promote economic growth, while 20 percent favor policies to reduce income inequality.
Fifty-five percent of Americans tell Reason-Rupe they have a favorable opinion of capitalism. Meanwhile, 36 percent of those surveyed, including 33 percent of independents and 26 percent of self-described Tea Party supporters, have a favorable opinion of socialism. Half of Democrats, 50 percent, have a favorable opinion of socialism, nearly identical to the 53 percent who have a favorable opinion of capitalism.
The American public appears to be open to a series of constitutional amendments that have been proposed. Eighty-four percent of Americans favor requiring members of Congress to be subject to all of the laws they pass. Nearly three-quarters of Americans, 74 percent, support an amendment requiring the federal budget to be balanced. And 57 percent favor the so-called Citizens United amendment that would allow Congress and states to regulate campaign contributions and spending. However just 26 percent of those who support a campaign finance amendment would still favor it if it gave Congress or states the power to regulate activities such as publishing books or blog posts that support or oppose political candidates.
Fifty percent of Americans say they're open to allowing states to repeal federal laws if half or more of the states, representing at least half of the country's total population, vote to repeal a law.
When asked about the size of government, 54 percent of Americans favor a smaller government providing fewer services. Forty-two percent favor a larger government providing more services. The public is split on the government's role in promoting values — 49 percent say government should not favor any set of values but 47 percent believe government should promote "traditional" values.
The Reason-Rupe national telephone poll, executed by Princeton Survey Research Associates International, conducted live interviews with 1000 adults on cell phones (500) and landlines (500) August 6-10, 2014. The poll's margin of error is +/-3.7%. Full poll results can be found here, including poll toplines (pdf) and crosstabs (xls).
The post NEW POLL: 42 Percent of Americans Think Obama Has Expanded Presidential Power Too Much; 53 Percent Want the US Less Involved in Israel-Hamas Peace Talks appeared first on Reason.com.
]]>The groups say the plan must balance the budget within 10 years and not include higher taxes.
"Conservatives should not raise our nation's statutory debt limit unless Congress passes and the president signs into law real reforms and immediate spending reductions that place America on a path to balance within 10 years without raising taxes and keeping the budget in balance," a memo from the groups says.
The post Conservatives Demand Balanced Budget in Debt Deal appeared first on Reason.com.
]]>Earlier this month, a vote in the House of Representatives fell short of the two-thirds majority needed for that measure. But we haven't seen the last of it. If Republicans capture the White House and the Senate next year, expect another push.
This may seem like the right moment for the amendment. In 1976, the national debt was $629 billion. Today, it exceeds $15 trillion. As our elected leaders continue spending more than the government takes in, a constitutional amendment looks like a fail-safe way to make them stop.
If only. One flaw is that it doesn't actually balance the budget. It merely requires Congress and the president to do so. But they can already do so—and they consistently fail to get serious about the deficit even when they face a stark obligation.
Last summer, it was hitting the debt ceiling. This week, it was the automatic cuts that would take effect if the congressional supercommittee couldn't agree on ways to reduce the deficit, which it didn't. In both cases, fiscal irresponsibility triumphed.
The reason politicians don't balance the budget is that they and their constituents aren't ready for the unthinkable realities this option would entail: higher taxes, reduced government benefits, or both. Those choices won't get any less excruciating if a balanced-budget amendment is ratified.
Given that reality, we could expect elected officials to find ways to evade the restriction. The amendment would allow a deficit if both houses agree by a three-fifths vote. Not only that, but a mere majority could authorize red ink when there is "a serious military threat to national security." And when is there not?
Even if Congress didn't suspend the requirement, it would have no trouble getting around it. What if it looks like you're going to run a deficit? You change your estimates to reduce your spending and boost your income. Voila! Deficit eliminated.
Or you put off spending until after the fiscal year ends, to balance this year's books. The Illinois state government has used this ploy for years, deferring pension contributions and making vendors wait months to be paid.
The experience of states does not inspire confidence in a balanced-budget rule. One common trick, says economist Josh Rauh of the Kellogg School of Management at Northwestern University, is to underfund public pension funds by inflating expected returns. By his count, the underfunding for all 50 state governments totals $3 trillion.
Nor would the amendment curb the power of Washington. If it becomes harder for Congress to tax and spend, rest assured, advocates of big government will find other ways to get what they want.
Instead of passing laws to spend money for some purpose, they will pass laws forcing businesses, nonprofits, states or local governments to spend money for that purpose. The cost will be off the federal books, but it will still be there.
Even the strongest requirement is only as good as its enforcement. And there is no good way to enforce a balanced-budget rule. If Congress and the president may choose to toss it overboard every year, who's gonna stop them?
Probably not federal judges, who generally flee from matters that are the responsibility of the elected branches—which spending and taxing definitely are. If Congress and the president run a deficit in defiance of a constitutional command, this is what the judicial branch is likely to do: nothing.
Sounds terrible, but the alternative would be worse. Does anyone want federal courts ordering specific spending cuts or tax increases—in other words, usurping the primary functions of the elected branches? That's what judicial enforcement of a balanced-budget amendment would mean.
A balanced budget would be a good thing, so it's tempting to think a balanced-budget amendment would be a good thing. But it wouldn't be—any more than it would be a good thing to pass a constitutional amendment requiring strong bones and healthy teeth. It wouldn't succeed, and it would distract from what we need to do to reach the goal.
Steve Chapman blogs daily at newsblogs.chicagotribune.com/steve_chapman.
COPYRIGHT 2011 CREATORS.COM
The post The Balanced-Budget Amendment Delusion appeared first on Reason.com.
]]>Seventy seven percent of Americans believe the federal government should have a spending cap that prevents it from spending more than it takes in during a given year—62 percent believe this strongly. In addition, 69 percent favor a constitutional amendment requiring a balanced federal budget, with 50 percent strongly favoring such a reform.
Please tell me whether you agree or disagree with the following statement: "The federal government should have a spending cap that prevents it from spending more than it takes in during a given year."
Would you favor or oppose a constitutional amendment to require a balanced federal budget?
Respondents were asked about their preferred solution to reducing the $14.3 trillion national debt. At 57 percent, the most preferred solution was to focus on reducing spending, and possibly increasing some taxes. Only 23 percent wanted equal emphasis on both tax increases and spending cuts, while only 15 percent wanted to primarily rely on tax increases. Moreover, the plurality response at 37 percent was to decrease spending with no tax increases.
Overall, these results suggest that although the public is not necessarily averse to some revenue increases, the majority wants Washington to focus on reducing government spending.
Click here for full survey results.
Survey Methods
The Reason-Rupe Q3 2011 poll collected a nationally representative sample of 1200 respondents, aged 18 and older from all 50 states and the District of Columbia using live telephone interviews from August 9th-18th 2011. The margin of sampling error for this poll is ± 3 percent. The margin of error for the GOP presidential race numbers is ± 4.79%. Interviews were conducted with respondents using both landline (790) and mobile phones (410). Landline respondents were randomly selected within households based on the adult who had the most recent birthday. Sample was weighted by gender, age, ethnicity, and Census region, based on the most recent US Census data. The sampling frame included landline and mobile phone numbers generated using Random Digit Dialing (RDD) methods and randomly selected numbers from a directory-listed sample. Click here for full methodological details. NSON Opinion Strategy conducted the poll's fieldwork. View full methodology.
The post Fifty Seven Percent of Americans Want Washington to Focus On Reducing Spending appeared first on Reason.com.
]]>Seventy seven percent of Americans believe the federal government should have a spending cap that prevents it from spending more than it takes in during a given year—62 percent believe this strongly. In addition, 69 percent favor a constitutional amendment requiring a balanced federal budget, with 50 percent strongly favoring such a reform.
Please tell me whether you agree or disagree with the following statement: "The federal government should have a spending cap that prevents it from spending more than it takes in during a given year."
Would you favor or oppose a constitutional amendment to require a balanced federal budget?
Respondents were asked about their preferred solution to reducing the $14.3 trillion national debt. At 57 percent, the most preferred solution was to focus on reducing spending, and possibly increasing some taxes. Only 23 percent wanted equal emphasis on both tax increases and spending cuts, while only 15 percent wanted to primarily rely on tax increases. Moreover, the plurality response at 37 percent was to decrease spending with no tax increases.
Overall, these results suggest that although the public is not necessarily averse to some revenue increases, the majority wants Washington to focus on reducing government spending.
Click here for full survey results.
Survey Methods
The Reason-Rupe Q3 2011 poll collected a nationally representative sample of 1200 respondents, aged 18 and older from all 50 states and the District of Columbia using live telephone interviews from August 9th-18th 2011. The margin of sampling error for this poll is ± 3 percent. The margin of error for the GOP presidential race numbers is ± 4.79%. Interviews were conducted with respondents using both landline (790) and mobile phones (410). Landline respondents were randomly selected within households based on the adult who had the most recent birthday. Sample was weighted by gender, age, ethnicity, and Census region, based on the most recent US Census data. The sampling frame included landline and mobile phone numbers generated using Random Digit Dialing (RDD) methods and randomly selected numbers from a directory-listed sample. Click here for full methodological details. NSON Opinion Strategy conducted the poll's fieldwork. View full methodology.
The post Fifty Seven Percent of Americans Want Washington to Focus On Reducing Spending appeared first on Reason.com.
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