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The Balanced Budget Amendment
The GOP’s dumbest idea

by Bryan Zepp Jamieson
December 29, 2008

Back in 1980, the Republicans adopted as one of their party platforms the plank, “If necessary, the Republican Party will seek to adopt a Constitutional amendment to limit federal spending and balance the budget, except in time of national emergency as determined by a two-thirds vote of Congress.”

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 for ransom.

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 deficit spending.

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 ‘defensive war.’

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?

Posted: January 6, 2009

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