Balancing Act

FederalDebtby Jon N. Hall12/12/16
Convening the States, Cutting the Spending, Goosing the Economy  •  While driving down the Interstate on Nov. 17, I turned on my AM radio and tuned in to Glenn Beck. “The Beckmeister” was interviewing former U.S. Senator Tom Coburn (R-OK). I didn’t hear the beginning, but here’s the rush transcript of their entire discussion along with the first four minutes of the video at TheBlaze. Much of the interview deals with the Convention of States Project. That’s a convention provided for by Article Five of the Constitution. Some nervous Americans worry about the 143 words of that little Article. They fret that a jamboree of outlander ruffians from fly-over country could undo our ancient order.

Coburn does a good job of allaying concerns about a “runaway” convention that would “open up” the Constitution for a major rewrite. The only issues that could be addressed in an Article Five convention would have to be contained within the convention’s “application.” (Also see “Justice Antonin Scalia Supported a Convention of States,” which Beck also ran on Nov. 17; the audio is amusing.)

During his time in the Senate, Dr. Coburn had a reputation as a budget hawk.  What occasioned his appearance on Beck were recent talks about bringing back earmarks. The good doctor reminds us that earmarks are not within the federal government’s “enumerated powers.” He wants to bring back the proper balance of power between the feds and the states. But what caught my attention were Coburn’s comments about federal spending (italics added):

So here’s the point: You have this example, right after Election November 8th, that the status quo, elite careerists in Washington all of a sudden want to bring back a tool of corruption [i.e. earmarks]. So they’re tone-deaf. So the only thing — the only tool America has that’s big enough to fix the problem that we have is an Article V convention of amendments, where amendments are made that bring power back to the states […]

Remember, every year, every year, $500 billion is thrown out the window in Washington. Total waste, total duplication (phonetic), total fraud. That’s a half a trillion dollars a year. […]

Had we had really strong members of Congress — I don’t care what party they’re from — that took their oath seriously, we wouldn’t have that. We would have $500 billion more a year that we wouldn’t be taxed for or we wouldn’t be [borrowing] against for our kids.

For context, that $500B a year of wasted spending would have been more than enough to have balanced the budget as recently as fiscal 2015, which had a deficit of $438B. Get rid of the wasteful spending, and the feds would have had an extra $62B that year which they could have used to pay down the federal debt.

The wailing about “waste, fraud and abuse” has emanated from the Capitol for decades but nothing gets done about it. If Congress (wisely) doesn’t want to hike taxes, they might want to consider dusting off Mr. Trump’s old catchphrase from his TV show: “You’re fired.” Congress needs to pass legislation that makes it easier to fire people, like the federal employees who spend hours each day watching online porn.

As for the “duplication” that Coburn refers to, that should be easy: it’s simpler to get rid of a whole agency than to fire individuals. For instance, if Congress repeals Obamacare they could lay off the 16,000 employees that were hired to enforce compliance with the mandates — just scrap their entire IRS division. That might entail fewer problems than firing a single IRS employee.

On Nov. 21, the Washington Post ran Lisa Rein’s “Trump has a plan for government workers. They’re not going to like it.” Ms. Rein’s article is an important one; it has several links, and a three-minute video worth watching. It zeros in on the coming battle with the federal bureaucracy. “Draining the swamp” of duplicative bureaucrats may be a hard slog.

But one wonders just how keen Congress is on cutting spending and balancing the budget. It’s been fifteen years since Congress last ran a budget surplus, and over the last eight years they’ve run the largest deficits in our history. From fiscal 2012 through 2015, however, there was almost a trillion dollars of reduction in the deficit. But 2016’s deficit ticked back higher, and the feds project that deficits will continue rising.

Congress could cut discretionary spending to the bone, even eliminate entire agencies and departments, and it wouldn’t be enough to keep the budget balanced for very long. That’s because of so-called “off-budget” “mandatory spending”: Social Security, Medicare, and Medicaid. Without reforming these mandatory programs, it’s doubtful we’ll ever have a balanced budget. (Obamacare also falls into the mandatory category.)

On Nov. 30 the Cato Institute conducted a forum, “Cutting Wasteful Spending in the Trump Administration,” that featured Sen. James Lankford, Coburn’s successor, and other luminaries. Lankford addresses duplication in federal programs, and he has some really solid ideas about dealing with the budget. But he talks about balancing the budget in five to ten years. In my book that’s not soon enough. The other three panelists are also terrific. The video is 52 minutes and is a must-watch if you’re interested in the budget and wasteful spending.

There are two huge economic problems that the new government needs to focus on. One of them is shifting the economy out of neutral into high gear. President-elect Trump seems totally committed to reviving the stagnant economy. The other big problem is balancing the federal budget. I think the feds need to do both of these simultaneously. We shouldn’t wait for any supply-side stimuli to bring in more revenue; we need to cut spending now, and big-time.

The reason Congress needs to quickly balance the budget is because most of the federal debt is maturing soon. In fact, much of the Obama-era debt will need to be rolled over during the next four years; (consider the chart in this article). With so many trillions of U.S. debt needing to be rolled over so soon, a balanced budget would seem a minimal goal.

If Congress isn’t up to the task of cutting spending to quickly balance the budget, then the “the several States” should require it of them in with a balanced budget amendment forged in an Article Five “Convention of States.” After all, if Scalia was for it, who could be against it?

Jon N. Hall is a programmer/analyst from Kansas City. • (824 views)

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7 Responses to Balancing Act

  1. Timothy Lane says:

    It’s not just liberals who worried about a possible runaway convention. Phyllis Schlafly was always worried that the liberals would manage to hijack it, bypassing GOP strength in Congress. Admittedly, this was a more serious concern before the Plunderbund’s own strength in state legislatures collapsed.

  2. Stuart Whitman Stuart Whitman says:

    Terrific piece. This is the civil rights issue of our time!

    I’m all for a Balanced Budget Amendment. And for a more fundamental reason than the danger of debt accumulation. The blank check mentality has meant that our elected leaders (in Washington anyway) don’t have to set priorities, negotiate, and compromise. Instead they ALL get their way. And the illusion of a two party system goes on.

    “We shouldn’t wait for any supply-side stimuli to bring in more revenue; we need to cut spending now…”

    Agreed. Sorta. If we launched a annual cost-saving initiative (as the private sector does constantly) targeting 10% savings across the board and applied this towards debt/deficit reduction, we could begin paying down debt without changing total spending or revenue. That’s how we do it in my house.

    But more to your point about which comes first, the growth or the austerity, what a lot of people miss is that if Washington doesn’t spend the money it doesn’t mean the money doesn’t get spent. Similar to the realignment described above, privatizing most of the goods and services the federal government currently redistributes would not only reduce the DC based expenditure, but would stimulate the economy, increasing revenue to the Treasury, allowing for further debt relief and reducing the need to confiscate the money in the first place.

    To call this a virtuous cycle may be blasphemous to some but it’s the direction we need to go. And if it takes a Convention of States to do it I’d like to buy a few tickets. Thank you.

    • Timothy Lane says:

      A Balanced Budget Amendment would have to include restrictions on using higher taxes to balance the budget, perhaps even a cap on taxes. One proposal for balancing it is the Penny Plan, in which each department spends 1% less each year instead of increasing. (Sean Hannity is a big backer.)

      It has been said that there are really 3 parties in Versailles-om-the-Potomac: Republicans, Democrats, and Spenders. Sometimes it can be hard to tell them apart.

  3. Brad Nelson Brad Nelson says:

    From what I can understand and see, people in their personal lives are ringing up debt for somewhat frivolous things (taking a trip to Cabo, for example, rather than pay that month’s mortgage on the house…a real-world example known to me).

    Our nation is doing that as a whole. Inevitably we are going to ask Daddy (or Mommy) government to either keep the party going or to act decisively and heavy-handedly to restrain that which we are unable to do ourselves. (Anyone recognize a Founding Father quote in that idea above?)

    Just as the flood of illegal aliens is a moral problem, so is our yearly deficit and accumulated debt. In the end, we’ll need parents minding the store, not children. And inevitably (because we cannot restrain ourselves) we will cede more and more power to our Federal Minders to “just make our budget great again.” And then probably get what we deserve.

    • Stuart Whitman Stuart Whitman says:

      I think the point of the Convention of States is precisely to put parents back in charge. I’d be in favor of returning to an originalist idea except rather than limit voting to landowners, we reserve that right to taxpayers. Bring your return as a form of ID.

      Ironically, when Dr Ryan and Company force the country to swallow the medicine, conditions will deteriorate before they get better. As they did in 1982. And 1946 and 1921 before that. And hence the New Liberal Messiah will rise and point out to the masses how those greedy uncompassionate conservatives are out to destroy us. And the cycle will begin anew.

      Sorta like the way Bill Clinton retreated to Oval for a quickie while Osama Bin Laden grew up, while the seeds for the financial crisis were planted, and while he stole Newts thunder … leading to the inevitable conclusion that Bush-Cheney are the two dumbest clowns to ever be given the keys.

      I’m excited to see who the Democrats will lead with in 2020. They’ve brought us some real winners over the last decade or so.

      • Brad Nelson Brad Nelson says:

        I’ve grown cynical regarding this subject. I’m definitely of the same mind regarding the idea that in trying to formulate real solutions (assuming anyone actually does), the pain it causes will cause some demagogue (right or left) to arise who will tell us that the pain is the result of “false choices” or whatever…as they simply give us more pie-in-the-sky feel-good unreality.

        At heart, “social justice” is a parasitical view of life. It asks nothing of people and simply transmogrifies life’s realities into a simplistic rich-exploiting-the-poor paradigm. Normal people are thus relieved from moral requirements. It’s always someone else’s fault. The people who actually produce things and do good (who are never perfect or blameless) are demagogued and demonized.

        The younger generations are becoming snowflakes, aided and abetted by their parents and grandparents who helped create the frost by their disengagement from community life…ceding the ground to the most caustic, dishonest, and whining elements in society. Those elements have become so prominent and habitual that the abnormal is now seen as normal. We just have one of those coming at the end of his two terms as president. What Trump represents is still up for grabs.

      • Timothy Lane says:

        The recession at the beginning of Reagan’s administration was indeed a result of the reforms, especially the extremely high interest rates needed to (mostly) wring inflation out of the economy (with the help of the Kemp/Roth tax cuts). It was probably worsened by the fact that the tax cuts kicked in so slowly.

        The 1921 and 1946 recessions resulted from the adjustment from total war to peace. The Mellon tax cuts and other reforms didn’t kick in for another year (and were relatively mild; there would be 3 income tax reductions during the 1920s). 1946 led to the great GOP victory that year, and changes they made (such as the Taft-Hartley labor reform bill, passed over Truman’s veto).

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