The House is voting today on a bill that would tie a debt ceiling increase to a constitutional amendment requiring a balanced budget and yearly caps on spending as a percentage of total economic output. Dubbed "Cut, Cap, and Balance," the plan is popular among the more fiscally conservative members of the House. But Rep. Ron Paul doesn't like it, in part because it ignores Medicare, Social Security, and military spending. Here's his four-point list of objections to the plan:
First, it purports to eventually balance the budget without cutting military spending, Social Security, or Medicare. This is impossible. These three budget items already cost nearly $1 trillion apiece annually. This means we can cut every other area of federal spending to zero and still have a $3 trillion budget. Since annual federal tax revenues almost certainly will not exceed $2.5 trillion for several years, this Act cannot balance the budget under any plausible scenario.
Second, it further entrenches the ludicrous beltway concept of discretionary vs. nondiscretionary spending. America faces a fiscal crisis, and we must seize the opportunity once and for all to slay Washington's sacred cows—including defense contractors and entitlements. All spending must be deemed discretionary and reexamined by Congress each year. To allow otherwise is pure cowardice.
Third, the Act applies the nonsensical narrative about a "Global War on Terror" to justify exceptions to its spending caps. Since this war is undeclared, has no definite enemies, no clear objectives, and no metric to determine victory, it is by definition endless. Congress will never balance the budget until we reject the concept of endless wars.
Finally, and most egregiously, this Act ignores the real issue: total spending by government. As Milton Friedman famously argued, what we really need is a constitutional amendment to limit taxes and spending, not simply to balance the budget. What we need is a dramatically smaller federal government; if we achieve this a balanced budget will take care of itself.
Later, Rep. Paul argues that it's not enough to return the country to 2008 spending levels. Instead, he says, Congress needs to take federal spending back at least a decade. Reason's Nick Gillespie and Veronique de Rugy made a similar argument here (more on that idea from Gillespie here.)