Balanced Budget Amendment Hurts Americans- Revise Free Trade Instead

[Fearless]

You know, at first the idea of a balanced budget amendment to the US Constitution seems like a good idea, maybe even a cure all great idea that will end our debt issues for good. This is what small government Republicans want you to think. And, consequently, it is completely FALSE.

As near as I can tell, the purpose of this amendment would be to be a budgetary safety net during bad economic times. It would keep spending at or below revenue in times of low revenue.

Those words are key "in times of low revenue". It also needs to be stated that constitutional amendments supersede all laws .

So let us apply it to our federal budget today. We are in a place where revenue is much lower than expenditures. It seems that this kind of amendment would be helpful now right?

Wrong.

In balancing the budget currently, it is clear that cuts need to be made and/or revenue needs to be found. It is a mathematical certainty that to balance the budget (as required by our fictitious amendment) that one or both of these two things need to be done.

Let us start by looking at "raising revenue". In the short term, this can only be accomplished by raising taxes or selling assets. I think we would agree that selling assets is the shortest term solution we can come up with as it is finite in quantity. The United States did this historically with lands in the Western United States for a variety of reasons. But, it really isn't a viable long-term option. We can't make land to sell.

Raising taxes will also raise revenue if done correctly. But, raising taxes on the consumer will actually harm the economy further. We currently have an economic situation in this country where there is plenty of supply of goods and not enough demand for those goods. Taxing the middle and working classes will cause them to have less money to spend, causing the government's revenue to decline in other areas (corporate and small business tax revenue).

Taxes can be raised on the wealthy and on corporations. However we also run the risk of businesses fleeing the country or else sending jobs over seas if it is raised too high. In the short term this is bad, but in the long term it can be good, IF we as a nation revise our import tariffs.

In theory, free trade is the best thing we can have. HOWEVER, the table isn't balanced. So long as foreign nations have the ability to undercut American businesses, free trade agreements are a catastrophic failure. We need a free trade affirmative action plan to balance the tables. We need to raise prices on goods that are imported so that American companies can compete. Detractors will say that this makes things more expensive for Americans. It does. BUT, it also provides them with the quality income that they will use to pay for it by creating higher paying jobs in America. The way it is today, a lot of people can't afford what is imported either. They have no job. There is plenty of supply but no demand.

Getting back to the budget amendment, we have a second option in regards to our hypothetically existent balanced budget amendment, and that is to cut spending. So where do we cut spending exactly? We can end tax subsidies to companies that undercut American producers. That would be a very good idea. We could remove tax loop holes which allow corporations like GE to pay NOTHING in taxes while receiving BILLIONS in federal subsidies. This would help, but it wouldn't solve the entire problem and it wouldn't solve the immediate debt issue.

We need to balance the budget this year (in our hypothetical). We have several major expenditures that we can cut that will solve the remaining budget shortfall. Those include in alphabetical order: disaster aid (FEMA et. al.), education, federal law enforcement agencies (including the CIA, DEA, FBI, and TSA, etc.), Medicaid, Medicare, military spending, Social Security, and other similar sources.

The question is where are we most likely to cut funding? I contend that with our current Congress, funding is most likely to be cut ON SOCIAL PROGRAMS first, leaving a vast majority of federal agencies and military spending completely or essentially intact. I believe that a balanced budget amendment will FORCE GOVERNMENT TO SHRINK.

With a balanced budget amendment kiss the following programs goodbye: federal student loans, heating oil subsidies (for consumers), public school funding, Medicare, Medicaid, and Social Security payouts, food stamps, welfare funding, national parks, free and reduced school lunch and dozens more.

The wars will continue. Military spending will continue. Federal subsidies of corporations will continue. The American people will bear the brunt of this proposed amendment. WE WILL BE HURT AND CORPORATIONS WILL CONTINUE TO PROFIT.

There are other solutions, as I have mentioned above, we need to create a sort of affirmative action plan for free trade agreements that balances the table for us. This will bring jobs back to this country, bring consumption back to the middle and working classes (as they will have the money to do so again), and the government will return to a budget surplus as tax revenue will soar. With this extra money we can pay off our debts, protect our elderly, children, and under-served, AND leave this nation in a good economic condition for our children and our children's children.

[David Gill]

1. It goes against every legitimate economic theory

Republicans love to think that the world is black and white. Not all debt is bad. If debt is incurred for a worthwhile cause that makes a good investment in the country- especially at a time when aggregate demand is crippled by a massive recession- then it's the smart thing to do. These Tea Partiers crying for a balanced budget amendment probably all have mortgages on their homes or cars, but I'm sure they dont see those deficits as dangerous.

Instead of an amendment that ties our governments hands behind its back, why don't they just elect some smart people who know the fundamentals of economics. They don't have to be Nobel prize winners, but knowing the first thing about macroeconomics would be nice.

[FreakinDJ]

2. The Balanced Budget Amendment is a "Political Ploy"

for the GOP/TeaFarty to keep their talking points and same Failed Logic the topic of political speech for the 2012 elections and foreseeable future.

Numerous Constitutional Law Experts agree this is nothing more then political grandstanding and hopefully you will too.

[Fearless]

3. That is exactly what I said... it will hurt America.

[JDPriestly]

4. Ending free trade would be great.

But Federal Insurance and Compensation Act taxes (FICA - Social Security taxes) are not part of the ordinary tax revenue. The government has borrowed the surplus of FICA taxes that have been paid since about 1985 or so.

Your analysis appears to simply count the accumulated FICA (Social Security taxes) in with other taxes. That is where the Republicans err. That is why Americans mistakenly think that Social Security is a cause of the deficit.

If you drastically cut Social Security, Americans will rebel against the FICA taxes. That is because they are extraordinarily regressive. If you earn $16,000 per year, you pay the same PERCENTAGE OF THAT $16,000 on FICA taxes as a person who is earning $16 million per year. The FICA tax on the first approximately $106,000 is paid by everyone who is subject to the tax -- that is pretty much all who receive their wages as "income." And those who are self-employed pay that tax as self-employment tax. (Employers prior to Obama's recent budgets paid a similar, matching amount of FICA-like tax for each employee.)

So, actually if you cut Social Security way back or did not pay out Social Security, the program would end, and the government would have even less revenue to do its accounting tricks with. So we would appear to be in worse shape than we are now.

The only solution is to end free trade and return to reciprocal trade agreements. Countries should agree to buy goods from us that equal in value what they sell to us.

Otherwise, other countries should agree to never call their debt. (They won't.)

Because, one of the "benefits," if you will, of defaulting would be that other countries might be less ready to extend credit to us. That might force us to stop buying so much from them. We buy on credit, after all. If China, say were to call our debt.

Americans would have less money to spend on junk imported from China. I can think of very one prominent American retail chain that would probably have a lot of empty shelves and close some stores.

Another possible benefit would be that our currency would be devalued. Again, that would mean that foreign products (including raw materials) became much more expensive. But it also would mean that we would be forced to be more innovative and creative.

How about composting instead of putting oil-based products into our soil as fertilizers. Curtailing imports might end corporate farming and cheap food. But it might bring a renaissance in victory gardening and small farms. We might eat steak less often and beans a lot more often. But that might be a healthy thing not only for our bodies, but from a societal, cultural point of view.

Oh, and how would it be for us if we imported less oil and walked, cycled and used public transportation more often? Do you think that if gas prices went up to $9 per gallon, we might actually see a few people start to use their vans as pay-per-ride vehicles?

Not such a bad idea if you want to ask me.

Ending free trade might actually loosen the natural entrepreneurial spirit in America that has been destroyed over the past 50 years.

I would love to go back to the days when you actually knew the name of the family that owned the shoe store down the block. Things were a bit more expensive -- but then so were wages for a lot of people.

Only the big corporate CEOs would take pay cuts in that situation. And there would be lots of entry-level jobs for students and jobs for older workers -- not high-paying jobs, but at least some work.

Americans are still fundamentally creative and resourceful. Ending free trade would free Americans to be who we really are in my opinion.

On edit, California tried this. It failed.

We can't raise taxes without a super, super majority vote. And of course, the Republicans religiously vote against raising taxes ever, no matter how much debt we have.

It has been a disaster. Our state has terrible debts.

Fact is, we have hefty sales tax. It is imposed at the point of sale, which is, of course, now in some other state. California has passed a law saying imposing taxes on internet sales -- but how will California enforce that law? Hard to do.

So, governments need the flexibility to respond to economic changes, changes in the way we spend money,

What if we had a really major crisis and had to raise money very rapidly. That is what happened in WWII. The government would need to have the freedom to raise taxes.

Sorry, but a no more taxes amendment would be disastrous.

It's a no go. Just another stupid idea that appeals to simple-minded Republicans. Can't think beyond their TV schedules.

[starroute]

5. But they also want to cut federal agencies

There have been a number of bills of that nature already introduced by House Republicans. One would drastically slash funding to the census bureau, even though it's essential for the collection of economic data that businesses rely on. One would cut funding to the SEC, which would actually cause the government to lose money in terms of uncollected penalties. They're trying to cripple NASA and do away with the successor to the Hubble telescope.

It isn't just social programs that Republicans hate. It's also anything that might either (1) regulate business, (2) provide functions for free that some business might otherwise be able to make a profit on, or (3) simply make government seem useful and efficient in the eyes of its citizens.

This balanced budget amendment is a terrible idea, but it's terrible in even more ways than you can imagine unless you start with the premise that Republicans want to completely wreck our government.