Budget Deficit

Whatever Happened to a Balanced Budget?

Deficits aren't in the trillion dollar range anymore so that's supposed to be good.

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White House

The federal government is projected to run a deficit of $534 billion in fiscal year 2016, and that's supposed to be a good thing. President Obama boasts that he's seen "deficits cut by two-thirds,"—because in 2009, the deficit topped $1.4 trillion. By comparison, it was $458 billion in 2008.

"There are 1011 stars in the galaxy," physicist Richard Feynman said more than thirty years ago. "That used to be a huge number. But it's only a hundred billion. It's less than the national deficit! We used to call them astronomical numbers. Now we should call them economical numbers."

The federal government used to run deficits largely only during wartime and financial crises, although that changed after World War II. In recent times, the only balanced budgets were from 1998 to 2001, under Bill Clinton and a Republican Congress, and the federal government went right back to deficit spending when Republicans took control of Congress and the White House under George W. Bush.

Balanced budgets used to, at the very least, be an issue that got exposure during the election cycle. Not so this time. In the dozen or so primary debates I watched this season, I don't think I heard a balanced budget come up once in a substantive way.

The Republican party platform calls for a Balanced Budget constitutional amendment, but such an amendment would be even more difficult to pass than anything resembling a balanced budget. That makes it more of a rhetoical flourish than a serious policy goal. The Republican presidential nominee, Donald Trump, meanwhile, rarely talks about balancing budgets. His idea for reducing the national debt (to which annual deficits contribute) is negotiating for the federal government's creditors to accept less. When it comes to spending, he says the Democratic nominee, Hillary Clinton, doesn't go far enough—Trump's response to her $275 billion infrastructure spending plan was promising he would spend twice as much.

There is a candidate who is expected to be on the ballot in all 50 states who has made reducing spending a cornerstone of his campaign—Libertarian nominee Gary Johnson, who has repeatedly said he'd be open to any proposal to cut spending that came out of Congress. His fiscal record as two-term governor of New Mexico (where the state constitution mandates a balanced budget) isn't good enough for some "Never Trump Republicans," who appear more interested in fighting more battles in the culture war and fighting more real wars than getting behind the only candidate taking trillion-plus dollar government spending seriously.

NEXT: The Libertarian Party Has Qualified for 39 More Ballots Than Evan McMullin

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    1. The thing is, no Republican candidate except Trump would have the balls to use that as an attack on Hillary. And even he might not. But an independent group?

      Timing is everything here. You want your dirtiest low blows to land in early to mid October, I believe. Any earlier, and they go into the memory hole. Much later, and you’re missing the early voting crowd.

      1. Any earlier, and they go into the memory hole.

        Or YouTube.

      2. Unfortunately the lady in question is not telegenic enough to be a compelling character in mass-media.

        An example of what I mean is hubby Slick’s indiscretion list and outside of Monica, they rate in the American conscience from Gennifer Flowers on down by their 10-scale, no matter the actual story.

        Chandra Levy is another example. Chandra was pretty, that compelled the media fixation. If Condit’s taste for indiscretions had been for fatties, he would’ve been left alone. Matter of fact, fatty would’ve been left alone in the park where Chandra met her grisly end for same reason. Its all connected as the big wheel keeps on turning man.

  1. The Republican party platform calls for a Balanced Budget constitutional amendment, but such an amendment would be even more difficult to pass than anything resembling a balanced budget.

    Anyway, it would just be ignored like earlier amendments.

    1. Not to mention, how would you even enforce this amendment?

      If Congress goes $1 into debt in a way that somehow doesn’t facially violate the myriad of exceptions written into the proposed amendment, who would have standing to even start a lawsuit? A regular citizen who pays taxes? They currently don’t have standing to challenge allegedly unconstitutional budgetary policy. Maybe a congressman (though I’m not sure how/why)?

      What exactly would a remedy be if you get past the substantial procedural hurdles? A court isn’t going to issue an injunction, paralyzing everything in government; nor “trim” the budget to acceptable levels as that would be an absolutely absurd intrusion by the judiciary into the legislative function.

      1. Yep. I’m afeared the only way this will be “fixed” is though catastrophe.

        Although I understand Obama is open to good ideas and Hillary is fighting for us.

  2. Regardless of the deficit number, the national debt just keeps going up at the rate of @ $1TT per year.

    1. Doesn’t matter – we’ll just print more! Don’t you read Vox??

    2. Meh. That’s only one platinum coin per year.

    3. It’s almost like we’re being lied to or something!

  3. His idea for reducing the national debt (to which annual deficits contribute) is negotiating for the federal government’s creditors to accept less.

    Ironically, in a best case scenario, forcing a haircut on outstanding treasuries would skyrocket interest rates overnight and the federal government will end up no “richer” as a result.

    Worst case scenario, the financial system collapses since treasuries are considered solid AAA assets held by pretty much everybody.

  4. New normal for budgets is billions of dollars being the responsible position, but trillions being the lefty progress-position.

    Where else does fiat money naturally go? Financial evolution of USA reminds me of life of a giant star – for a long time burning bright and stable.

    And then the star left the main sequence in ’72. And in the fiat red-giant stage all the metrics have gotten stupid-huge, eating themselves into ashes for one last bubble-push before the whole operation goes entropic in an instant.

    Then boom, as the biggest stars tend to do.

    1. Will there be a time differential in surrounding states?

    2. giants don’t burn a long time, and long burning stars don’t go boom. an otherwise attractive analogy.

      1. United States isn’t even half a millennium old though. Ate best chunk of a whole continent and the world-ocean in about two centuries, along with a toady client list by the dozen the world over who slave away for nothing but paper.

  5. Balanced budgets used to, at the very least, be an issue that got exposure during the election cycle. Not so this time. In the dozen or so primary debates I watched this season, I don’t think I heard a balanced budget come up once in a substantive way.

    And you won’t. We have given in and given up. We are full on Keynesians. And only on the spending part of Keynesianism.

    1. Still waiting for that multiplier effect to kick in. A few more decades might do the trick?

  6. The majority of the debt matures within the next 4 years. Rising short-term rates would put a crimp on the budget, but the music of 0% interest rates will play on forever, won’t it?

  7. Johnson increased spending 7% a year. That’s hardly a stellar record. What’s that? You want to take mandatory spending off the table? Sorry, it counts. It’s certainly more valid than claiming the US had a surplus in 98-01. Don’t look at the liabilities we’re accruing, just look at it on a cash basis, i.e. as long as I’ve got checks I’m not broke.

    1. Did Johnson increase spending, or did the legislature that overrode his hundreds of vetoes? He got high B’s from the Cato Institute on fiscal policy when he was governor, which indicates a fairly good performance.

      1. You mean the way Reagan is reponsible for all the spending sent his way by congress? Reason sure thinks so.

        1. Did Congress override Reagan’s vetoes, or did Reagan sign off on the spending bills?

          And my original question still remains–did Johnson increase spending (along with the legislature), or did the legislature simply override his hundreds of vetoes?

          If you’re going to characterize Johnson as a big spender, I want to know if it’s accurate or not.

  8. I would like to see a budget law that simply forbids total nominal spending to increase in any fiscal year following a fiscal year with a budget deficit.

    Democrats always pretend that tax increases will close the budget gap, but that has been shown to be untrue historically and around the world (for example, most European countries have much higher taxes as a percentage of GDP than the U.S., and they are still running deficits). The reason is that politicians invariably respond to higher tax revenues by spending more, leaving yet another budget gap. My simple budget rule would put a constraint on these spending increases.

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