2013-02-11 – Yesterday I talked about a constitutional amendment that would slow down, but not eliminate Congress’ power to enact unbalanced budgets. The reason I don’t want to eliminate the power is that the country sometimes faces challenges that are best met by borrowing. War and recession are two of these challenges.
Opponents of deficit spending like to say that the government should be required to live within its means, just like citizens. But citizens do borrow. I’m not talking about slackers and freeloaders. Citizens borrow to buy homes, for example. Often the amount of a home mortgage is significantly larger than a single year’s salary. Doing this has a certain amount of risk, but steps are taken to minimize the risk (usually) and everything turns out fine. College loans are another example of this type of borrowing.
But there is a difference between this type of economically-sound borrowing and they type of borrowing the government does. Individuals are normally required to pay off their loans. The government can usually keep rolling them over.
This potential to roll over debt makes it difficult to draft a constitutional provision to require the government to really pay off its debt. It could easily be evaded, provided that Congress could muster the two-thirds majority that I discussed yesterday.
But here’s something that couldn’t be evaded.
I propose that Congress be required to make a payment into a kind of rainy-day fund equal to five percent of all other spending, including interest on any outstanding debt. This would change the definition of a balanced budget. This would mean that all “balanced budgets” would really be five percent in the black.
So, in good times, our debt would be slowly paid off (just like you slowly pay off your mortgage or student loans), but in bad times there would be an ability to borrow to get the country through.
Just think, if we would have had something like this during the Bush administration, Congress wouldn’t have had such an easy time blowing the Clinton surplus.
Of course, none of this is going to happen. They can’t even shut down the filibuster rule, which seems clearly unconstitutional to me.
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