At that point, the national debt stood at under one trillion dollars.
But later that year, Ronald Reagan, a man who believed, among other
things, that military spending was off-budget and thus didn’t affect the
annual deficit, was elected, and before Clinton was elected 12 years
later, the national debt had ballooned to $5 trillion, and the grim
forecast was “deficits as far as the eye can see.” Reaganomics put the
budget in a tailspin from which we never recovered. Clinton nearly
managed it: at the end of his second term, they were actually debating
how to divvy up the vast, two trillion surplus that was projected.
Republicans, of course, wanted steep tax cuts. Dems wanted to use it to
reduce the national debt and shore up public services.
But the Balanced Budget Amendment was a /cause/ /célèbre/ through the
Clinton years. It forbade deficit spending save only in the event of
national emergency – and it required a two-thirds vote in each house to
declare a national emergency. Which, as with other such supermajority
items, meant that one third of the Congress could hold the country up
It actually did pass the Senate in 1982, on a 69-31 vote, but the House
didn’t act on it. Three years later, Congress passed the
Gramm-Rudman-Hollings Act, which mandated cuts in discretionary spending
in order to meet deficit-reduction requirements. Republicans, for some
reason, seem to think you get a more adaptable and controllable budget
process if you put the whole thing on a kind of cruise control. It only
took Congress two years to gut the law, and make it meaningless.
In 1997, it very nearly made it out to the States. The House did pass it
by the resounding margin of 300-132, but it failed by one vote in the
Senate. Most state governments would have recognized it for the
destructive turkey it was, but there was intense pressure from the far
right, which was nearing the peak of its political power just then.
It’s still a big cause among the far right. I’m looking at a 2007 entry
at a blog called “Libertarian Drive” which argues mightily that the
loopholes in the Balanced Budget amendment must be closed, and that
freedom depends on weak government and so forth. It doesn’t want
Congress to have any power to waive the amendment (and any amendment
that requires waiving doesn’t belong in the Constitution), save,
grudgingly, only in cases of defensive war where national security is
under direct and immediate threat.
This all came to mind as I was reading a Paul Krugman column today
entitled “Fifty Herbert Hoovers.” Krugman noted that one reason the
Great Depression became the Great Depression and not just another cycle
was because, as credit froze and severe revenue shortfalls appeared all
over the map, Hoover and the GOP decided that then was the time to
balance the budget. This made liquidity that much scarcer, and the crash
turned into the Great Depression.
Nearly all of the states are in a huge bind right now. They are all
experiencing huge revenue shortfalls as taxable profits plunge and
increasing unemployment digs deeply into income tax revenues. As Krugman
notes, the governors, by and large, aren’t a particularly stupid lot,
and most of them probably know about Herbert Hoover and What He Did
Wrong. But they all have – there will be a brief pause so slower readers
in the right-hand lane can catch up – constitutional provisions banning
So, at a time when state governments should be providing more public
services – especially those for the poor, the unemployed, and the sick –
they are slashing the hell out of them. Here in California, the state is
facing a $40 billion deficit that it isn’t allowed to have, and because
a supermajority is needed in the Assembly and State Senate to pass
taxes, the minority Republicans are refusing to allow that route, even
(or especially) a tax on the super-wealthy, the one group that wouldn’t
be hurt right now by a tax increase. This means that the state has no
choice: it must slash $40 billion in services at the time when they are
most needed. They are talking quite seriously about a $10 billion cut in
education, and suspending all public works projects for six months. That
means hundreds and perhaps thousands of schools closing (throwing a huge
number of teachers and staff out of work), and no highway repair or
bridge maintenance or even painting the stripes on the highways. Of
course, thousands more out of work there. Which makes the state economy
that much worse.
Just imagine the state we would be in right now if the BBA had passed,
and the states, following the political lunacy of Helms and Gramm, had
made it a formal part of the Constitution.
There are some good points. We wouldn’t be occupying Iraq right now, and
probably not Afghanistan. Even if Bush had been able to get Congress to
formally declare war, there’s no way either could be characterized as a
But Republicans, arrogant and stupid to the core, believed they had
whipped the whole notion of business boom-and-bust cycles and with “the
grownups” (as they so characterized themselves) in charge, the economy
would remain on an even keel indefinitely.
Obama, in his first year in office, will be looking at an annual deficit
of well over a trillion dollars, or three times the size of any to date.
And that won’t include the stimulus package he hopes to get through
Congress, which will pretty much guarantee a trillion dollar deficit for
the following year. And a lot of that money will go for spending that
the states, by their own constitutions, cannot spend. It will literally
save those states from utter collapse.
Back when Franklin Roosevelt, heeding the advise of the Keynesians, did
the same thing in the early 30s, Republicans scoffed and said, “you
can’t spend your way out of a depression.” In fact, not only can you do
so, but it’s pretty much the only remedy available. And luckily for
Obama, the measures he requires need only a simple majority in the
House, and 60 votes in the Senate. There are a handful of Republicans
who aren’t right wing crackpots, and among those that are, enough that
can read the writing on the wall and realize that if the Republicans get
blamed for deepening the current crisis, they will be a tiny minority
party for many years to come. They are defending 19 of the 33 seats up
for election in 2010, and those Republicans interested in re-election
are going to be keenly aware of that fact.
But imagine if the balanced budget amendment had passed.
Then stop to consider all the other “cruise control” notions the GOP
champions, such as mandatory sentencing, zero tolerance, supermajority
votes on all tax legislation, and term limits.
Such ideas never pan out in a fluid and shifting political and economic
dynamic. They are the ideas of cretins who lack the courage to deal with
problems as they arise.
Aren’t you glad, though, that the BBA never passed?