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healthpellets
07-15-2011, 07:31 PM
for the life of me, i can't come up with any reasons why it would be a bad idea.



The Republican-controlled House of Representatives will act next week on the Cut, Cap, Balance Act, GOP lawmakers announced in a press conference Friday morning.

Not only did Republicans announce the introduction of the Act, but Representatives from Kevin McCarthy of California, Speaker John Boehner of Ohio, Majority Leader Eric Cantor of Virginia and Tom Price of Georgia called on President Obama to “put a real plan on the table” to address fundamental reform and enact serious spending cuts. (August 2 not a hard deadline on debt limit)

In doing so, House Republicans put the spotlight on Democrats and the president for never putting any real plan to paper. The Republican message is, “We’ve done that.”

“Time and time again Republicans have offered serious proposals,” said Speaker Boehner, pointing to the budget proposal offered by Wisconsin Rep. Paul Ryan. “I think it’s time to for Democrats to get serious as well.”

Boehner also reiterated that tax hikes of non-starters and any deal needs to come with real reforms that restrains the growth of spending in the coming years.

Cantor responded to accusations that Republicans have been too stubborn throughout negotiations, refusing to meet the President’s compromise on spending cuts in exchange for some tax hikes. “Reports have indicated that somehow Republicans haven’t given,” said Cantor. “I tell you, that’s just not true.”

“We want to change the system here,” the Majority Leader added. “We want to be able to go home to the people who elected us and show them we’re not going to allow this kind of spending to continue.”

The Cut, Cap, Balance, said Cantor, will “provide a balanced approach so we can demonstrate that we are getting things under control.”

“We will take this bill out of the House,” said McCarthy, the Majority Whip.

House Minority Leader Nancy Pelosi reacted to the Republicans by accusing the GOP of walking away from Obama’s large package and trying to cut the deficit on the backs of “Social Security and Medicare recipients.”

“We support our President on a grand bargain and hope that can still happen,” said Pelosi. “Whatever happens, we will not be reducing benefits for Medicare and Social Security recipients.”

The Cut, Cap, Balance Act ties a vote on raising the $14.3 trillion debt ceiling to spending cuts and caps and the ratification of a balanced budget amendment. The Senate version of the bill gained traction Thursday when Minority Leader Mitch McConnell added his name to the list of co-sponsors.

Copyright © 2009 Daily Caller. All rights reserved.

Read more: http://dailycaller.com/2011/07/15/house-to-act-on-cut-cap-balance/#ixzz1SE9Wl0pZ

But i guess this guy sees it a bit different...


Why a balanced budget amendment is economic madness

By Stephen Foley
Sunday, 3 April 2011 at 12:03 am

A very bad idea is back. The idea is to amend the United States Constitution to mandate a balanced federal budget. Tax income and government spending will have to match from now on, so there will be no more credit card spending for which the nation’s children will have to pick up the tab.

That’s the populist refrain from the Republican Party’s 47 Senators, all of whom are co-sponsoring the plan. But a balanced budget amendment is terrible economics. It effectively means an end to counter-cyclical fiscal policy: when a recession strikes, the federal government would not be able to stimulate the economy by spending more. Instead, it must cut back at the same time householders and businesses are doing the same, making the recession worse. It could condemn the US to a perpetual recession, a depression even.

The ability to fight a recession with federal spending is crucial because there are so few alternative tools. Balanced budget rules are in place in most US states. In the most recent recession, enforced austerity at the state level cancelled out most of the economic stimulus introduced by Congress, and spending cuts continue to contribute to high unemployment.

As if the idea is not bad enough, the Republicans have laced their current proposal with more poisonous pills, such as a ban on spending more than 18 per cent of GDP – below the historical norm – and a provision that will make it harder to raise the national debt ceiling. They do allow automatic exemptions to a balanced budget for war spending, but not for economic firefighting. In other times, Congress would need an unlikely two-thirds majority to override the balanced budget rule.

As it is such terrible economics, the tendency has been to assume it cannot pass. It is hard, after all, to amend the Constitution. Even Republican leaders admit the idea is as much about political posturing as it is about seriously tackling the US’s long-term debt crisis. When they vote, as they must, to raise the federal government debt ceiling to avert a catastrophic default by the US, they want to be able to point to other measures to rein in spending.

I would very strongly warn against complacency. Grassroots organisations have been lined up to agitate in support of the plan; Republican governors, including at least two potential presidential candidates, have written in support in the past few days. It could easily become a touchstone issue for next year’s elections, with moderate Democrats not wanting to be seen as weak on cutting the deficit.

Also, a similar proposal came within a single vote of passing Congress in 1995, when public fears over the deficit were high but not nearly as high as they are today.

None of this is to argue that Congress does not need to bring the budget back into balance this economic cycle, or to tackle problems such as spiralling healthcare costs. But these huge, vital tasks require a subtlety and courage that hasn’t been on show this week.

Say no to blunt instruments.

http://blogs.independent.co.uk/2011/04/03/why-a-balanced-budget-amendment-is-economic-madness/

Though, I haven't seen how government spending in a recession has helped a damn thing, so not having that options sounds just fine.

HonestChieffan
07-15-2011, 07:36 PM
Its a bad idea if it assumes that there is never a reason or need to go into debt. Would you like to go on a 100% cash flow based lifestyle? Its a good idea only if contingencies are built in an accounted for.

healthpellets
07-15-2011, 07:50 PM
Would you like to go on a 100% cash flow based lifestyle? Its a good idea only if contingencies are built in an accounted for.

save for my mortgage, that is how i live.

iirc, war time is an exception to the required balancing.

RINGLEADER
07-15-2011, 07:57 PM
Who knows -- but I do love Obama's response that it isn't needed because the Constitution already requires them to do their jobs. Which is an odd retort since they're not doing their jobs when it comes to keeping America safe against all threats. Not a surprise coming from the guy who baked in spending at unheard of levels and now wants credit for trimming a little of the fat that he put on.

alnorth
07-15-2011, 08:01 PM
Its a bad idea if it assumes that there is never a reason or need to go into debt. Would you like to go on a 100% cash flow based lifestyle? Its a good idea only if contingencies are built in an accounted for.

This.

I agree with this completely, it is a stupid idea.

healthpellets
07-15-2011, 08:16 PM
This.

I agree with this completely, it is a stupid idea.

care to provide some examples as to why?

healthpellets
07-15-2011, 08:16 PM
Who knows -- but I do love Obama's response that it isn't needed because the Constitution already requires them to do their jobs. .

right. still waiting on a budget. any budget.

alnorth
07-15-2011, 08:27 PM
care to provide some examples as to why?

Sure. We have a balanced budget. Revenues = cost, budgeted for the next year.

A cat 5 hurricane plows through Tampa, goes into the Atlantic, regains strength over unusually warm waters, and comes back in to slam North Carolina as a strong cat 3/weak cat 4. It is, by far, the worst natural disaster in American history. The local communities cant cope, and not everything was insured. An immense amount of money is needed by the feds.

We can either borrow the money and figure out how to pay later, or bicker for 6 months on what should be cut, while no assistance or rebuilding money is spent.

A hard balanced budget amendment is stupid. We should instead hold our politicians accountable for letting our finances get out of whack because they spent too much and, yes, by not taxing enough.

RINGLEADER
07-15-2011, 08:28 PM
This.

I agree with this completely, it is a stupid idea.

Limiting powers of any branch would normally have me agreeing with you but these people (in both parties) have no ability to do what's right anymore with respect to this country and the debt burden they've heaped on us and generations to come. This isn't about having "some debt" -- the country is structurally unsound and in one corner we have a party that thinks they're being responsible because they're willing to give up their tenth credit card they planned to open when their first nine are maxed out in a few years while the other party thinks they're being responsible because they're willing to give up the ninth and tenth credit cards they've planned to take on once the first eight are maxed out in a few years.

There is simply no way that we can continue to pay out social security, medicare, and Obamacare the way they are designed and have any money left over for anything else. The politicians are incapable of making the tough calls we need them to make because they're politicians. Taking away their credit cards is fast becoming NOT a stupid idea.

alnorth
07-15-2011, 08:30 PM
Limiting powers of any branch would normally have me agreeing with you but these people (in both parties) have no ability to do what's right anymore with respect to this country and the debt burden they've heaped on us and generations to come. This isn't about having "some debt" -- the country is structurally unsound and in one corner we have a party that thinks they're being responsible because they're willing to give up their tenth credit card they planned to open when their first nine are maxed out in a few years while the other party thinks they're being responsible because they're willing to give up the ninth and tenth credit cards they've planned to take on once the first eight are maxed out in a few years.

There is simply no way that we can continue to pay out social security, medicare, and Obamacare the way they are designed and have any money left over for anything else. The politicians are incapable of making the tough calls we need them to make because they're politicians. Taking away their credit cards is fast becoming NOT a stupid idea.

Saying "we have way too much debt now" has nothing to do with the philosophy of encoding into the law the restriction of never borrowing for any reason.

Our government has to have the ability to run into the red in an emergency. Failing to realize that is just silly.

petegz28
07-15-2011, 08:33 PM
Debt is not a bad thing. TOO MUCH DEBT is a very bad thing.

RINGLEADER
07-15-2011, 08:34 PM
Sure. We have a balanced budget. Revenues = cost, budgeted for the next year.

A cat 5 hurricane plows through Tampa, goes into the Atlantic, regains strength over unusually warm waters, and comes back in to slam North Carolina as a strong cat 3/weak cat 4. It is, by far, the worst natural disaster in American history. The local communities cant cope, and not everything was insured. An immense amount of money is needed by the feds.

We can either borrow the money and figure out how to pay later, or bicker for 6 months on what should be cut, while no assistance or rebuilding money is spent.

A hard balanced budget amendment is stupid. We should instead hold our politicians accountable for letting our finances get out of whack because they spent too much and, yes, by not taxing enough.

OK, have a contingency fund. Most states already do. And just because there are very real examples of how forcing a balanced budget can be tough doesn't make it wrong -- especially when WE HAVE NO MORE MONEY and our ability to borrow from ourselves (or others) to pay our obligations is coming to an end. You can't function as a government very long when you have non-discretionary obligations that are more than 100% of your revenues.

Sort of goes to the heart of why taxes aren't the solution. Eventually the math stops working even if you take every penny of EVERYONE'S money.

RINGLEADER
07-15-2011, 08:37 PM
Saying "we have way too much debt now" has nothing to do with the philosophy of encoding into the law the restriction of never borrowing for any reason.

Our government has to have the ability to run into the red in an emergency. Failing to realize that is just silly.

Our government isn't running into the red because of an emergency. I don't disagree with this point and concur that it would be silly and foolish to not provide flexibility in the case of special situations like the one you laid out, war, etc. But that isn't where we are anymore.

We have $1,000,000,000,000.00+ deficits every year for as long as the eye can see -- and that's IF we meet the growth projections that we're not meeting.

mlyonsd
07-15-2011, 09:48 PM
Career politicians that print money to buy votes have proven they can do way more damage than a hurricane or any other natural disaster. Maybe if we elected adults it wouldn't be such an issue.

I'm sure there are ways to build fail safes into an ammendment to allow for emergencies. That really is a non-issue.

RINGLEADER
07-16-2011, 01:21 AM
Career politicians that print money to buy votes have proven they can do way more damage than a hurricane or any other natural disaster.

Well put.

donkhater
07-16-2011, 05:18 AM
save for my mortgage, that is how i live.

iirc, war time is an exception to the required balancing.

Thus your loophole that politicians will exploit to death. How many things are a 'crisis' nowadays? How many 'wars' are we mired in, even though Congress has never declared war and no country has attacked us?

I'm not saying I'm against the idea, but a balanced budget amendment will surely be written to provide loopholes to exploit. If you don't believe that, you haven't been paying attention to the spending addiction in DC the last few decades.

BucEyedPea
07-16-2011, 06:22 AM
for the life of me, i can't come up with any reasons why it would be a bad idea.
Well, first off, it's a bad idea, because we'd have to see how the proposal is written to even know if it's a good idea. Though in general, it cuts the heart out of the Constitution.

If these Republican congressmen say this is a way to cut spending, then they can just cut right now. They lack the political will to do so. A gimmick won't fix this and this amendment could just mean higher taxes to keep it balanced.

I also suspect this could be a massive transfer of power to the President and his Treasury Dept which would be worse—like be put on the road to dictatorship. The GOP is full of conniving snakes too. I don't trust them. While they fiddle with rhetoric, they will cave and raise the debt ceiling and taxes too.

But i guess this guy sees it a bit different...

Though, I haven't seen how government spending in a recession has helped a damn thing, so not having that options sounds just fine.

He's against it for ALL the WRONG reasons. Obviously, he's a Keynesian.

HonestChieffan
07-16-2011, 06:47 AM
Trade you a term limit for a BB and raise you 11tybazillion.

Mr. Kotter
07-16-2011, 08:07 AM
This is one of those things that SOUND great, but reality and history demonstrate to be really, really stupid. So it's not surprising that demagogues and lame-brains don't understand why it would be a bad idea, because...well, that would take perspective, steeped in education and analysis. FOX news and RWNJ talk radio aren't capable of either, so the sheeples don't have such perspective. Pretty simple really.

HonestChieffan
07-16-2011, 09:24 AM
This is one of those things that SOUND great, but reality and history demonstrate to be really, really stupid. So it's not surprising that demagogues and lame-brains don't understand why it would be a bad idea, because...well, that would take perspective, steeped in education and analysis. FOX news and RWNJ talk radio aren't capable of either, so the sheeples don't have such perspective. Pretty simple really.

It is not really stupid. It is an honest attempt to put controls in place since the people we elect are proving incapable of controlling themselves. Will it work at a federal level? I have my doubts due to the nature of the swings in cash flows and some of the long term nature of federal spending and the need to fund emergency situations. It would take a very well crafted amendment to function.

History, as you point to, would support the idea at least at the state level. It works well. And at civic levels below state it is an excellent way to ration limited funds. Schools have limits and have financial rules or we would have even greater problems than we have now.

Balanced budget amendments are not the property of the right. They have been and continue to be supported in a bipartisan manner at state levels.

BucEyedPea
07-16-2011, 09:38 AM
Balanced budget amendments are not the property of the right. They have been and continue to be supported in a bipartisan manner at state levels.

It's different at the state level though, than at the national govt. The national govt isn't even supposed to be spending money on many things. Plus the state govts cannot print money don't forget.

FD
07-16-2011, 10:47 AM
Its a bad idea that would result in procyclical fiscal policy. The Republicans aren't serious about passing it, though, just doing some standard grandstanding. They yanked a version of the BBA that had substantial Democratic support a few weeks ago in favor of one that Democrats will not support. They don't want to pass it, but are just trying to score political points, thankfully.

Brainiac
07-16-2011, 12:08 PM
Well, first off, it's a bad idea, because we'd have to see how the proposal is written to even know if it's a good idea. Though in general, it cuts the heart out of the Constitution.

If these Republican congressmen say this is a way to cut spending, then they can just cut right now. They lack the political will to do so. A gimmick won't fix this and this amendment could just mean higher taxes to keep it balanced.

I also suspect this could be a massive transfer of power to the President and his Treasury Dept which would be worse—like be put on the road to dictatorship. The GOP is full of conniving snakes too. I don't trust them. While they fiddle with rhetoric, they will cave and raise the debt ceiling and taxes too.
I pretty much agree with all of all this.


He's against it for ALL the WRONG reasons. Obviously, he's a Keynesian.
I think Keynes is getting a bad rap these days. Yes, he preached that the government should spend more than it takes in during recessionary periods in order to stimulate the economy. But he also stated that the government should run a surplus during good economic times, with the net result being neither a surplus or a deficit in the long haul.

That's not what the federal government has been doing for last four decades or so. We've had huge deficits in good times and in recessionary times. That's not Keynesian economics. That's just plain irresponsibility and stupidity.

I've got to think Keynes is spinning in his grave right now at the way his name is being used to justify trillion dollar deficits, idiotic bailouts, and insane programs like Cash for Klunkers that do nothing to stimulate the economy in the long run. Keynesian economics, when practiced correctly and intelligently, can reduce the cruel side effects of the business cycle. But to use it to justify what is going on these days is insanity, just as it would be insanity to pass a balanced budget amendment because Congress and the President are too weak and irresponsible to do the right thing.

RINGLEADER
07-16-2011, 12:14 PM
Its a bad idea that would result in procyclical fiscal policy. The Republicans aren't serious about passing it, though, just doing some standard grandstanding. They yanked a version of the BBA that had substantial Democratic support a few weeks ago in favor of one that Democrats will not support. They don't want to pass it, but are just trying to score political points, thankfully.

Really? What was the bi-partisan BBA and can you point me to a story that says what you're saying above?

healthpellets
07-16-2011, 12:17 PM
This is one of those things that SOUND great, but reality and history demonstrate to be really, really stupid. So it's not surprising that demagogues and lame-brains don't understand why it would be a bad idea, because...well, that would take perspective, steeped in education and analysis. FOX news and RWNJ talk radio aren't capable of either, so the sheeples don't have such perspective. Pretty simple really.

For all those words, there wasn't much perspective, education or analysis contained therein.

healthpellets
07-16-2011, 12:19 PM
Plus the state govts cannot print money don't forget.

Neither can the federal government. They, in their infinite wisdom, delegated that power to the Fed.

RINGLEADER
07-16-2011, 12:24 PM
I pretty much agree with all of all this.


I think Keynes is getting a bad rap these days. Yes, he preached that the government should spend more than it takes in during recessionary periods in order to stimulate the economy. But he also stated that the government should run a surplus during good economic times, with the net result being neither a surplus or a deficit in the long haul.

That's not what the federal government has been doing for last four decades or so. We've had huge deficits in good times and in recessionary times. That's not Keynesian economics. That's just plain irresponsibility and stupidity.

I've got to think Keynes is spinning in his grave right now at the way his name is being used to justify trillion dollar deficits, idiotic bailouts, and insane programs like Cash for Klunkers that do nothing to stimulate the economy in the long run. Keynesian economics, when practiced correctly and intelligently, can reduce the cruel side effects of the business cycle. But to use it to justify what is going on these days is insanity, just as it would be insanity to pass a balanced budget amendment because Congress and the President are too weak and irresponsible to do the right thing.

Nice informative post.

But the big problem with this approach is that the politicians no longer have the will to curtail their spending binge. Eventually, it will be forced upon them unless steps are taken to reduce the overall debt. If interest rates were to double or even triple we'd still be at historial lows for lending, but it would absolutely engulf our currently enormous debts to the tune of trillions over the next decade. We're against a wall and we're running out of options (regardless of what Bernake says).

But your post is a great example of how 99.9% of the media throw words like Keynesian around without a real regard to the factual accuracy of their statements. Too bad it doesn't work that way. I don't agree with this approach (government is too inefficient -- witness the recent stimulus) and think the application of tax policy is a more effective way to encourage risk capital and spur economic growth, but the facts you point out are worth knowing.

BucEyedPea
07-16-2011, 03:07 PM
I pretty much agree with all of all this.
That's good.


I think Keynes is getting a bad rap these days. Yes, he preached that the government should spend more than it takes in during recessionary periods in order to stimulate the economy. But he also stated that the government should run a surplus during good economic times, with the net result being neither a surplus or a deficit in the long haul.

That's not what the federal government has been doing for last four decades or so. We've had huge deficits in good times and in recessionary times. That's not Keynesian economics. That's just plain irresponsibility and stupidity.

Yeah, but this is why Keynes deserves his bad rap——>because he relied on politicians. This is the number one main reason he looks good on paper but has never panned out as promised in the real world.

I won't even get into why his ideas were and still are unnecessary for now. Or that all paper money ends this way.

BucEyedPea
07-16-2011, 03:09 PM
Neither can the federal government. They, in their infinite wisdom, delegated that power to the Fed.

'Cept the Fed was created by the govt to do their bidding. The Fed is the enabler because they make the excess spending possible.
Both sides work hand and hand with each other. Fed independence is a myth.