Tag: balanced budget amendment
Thom Tillis

GOP Senators Who Voted Trillions In Tax Cuts Now Back ‘Balanced Budget’ Amendment

Reprinted with permission from American Independent

Nine Republican senators introduced a proposed constitutional amendment on Wednesday that would both require a balanced federal budget and make it nearly impossible for the government to maintain even current levels of spending.

The resolution, backed by Sens. Cindy Hyde-Smith (R-MS), Marcia Blackburn (R-TN), Mike Crapo (R-ID), Joni Ernst (R-IA), Deb Fischer (R-NE), John Hoeven (R-ND), Jim Risch (R-ID), Marco Rubio (R-FL), and Thom Tillis (R-NC), would bar the federal government from spending more than it takes in during a given year.

While the proposed amendment would allow Congress to waive the balanced budget rules "for any fiscal year in which a declaration of war against a nation-state is in effect," it makes no exception for pandemics.

Every one of the sponsors voted to add trillions to the debt last year in emergency COVID-19 relief spending. Had this rule been in place, such action would have required a two-thirds vote in the House and Senate. The amendment contains exceptions only for cases of foreign wars or for situations where two-thirds of both congressional chambers deem it essential.

But in 2017, Blackburn, Crapo, Ernst, Fischer, Hoeven, Risch, Rubio, and Tillis all voted for the Tax Cut and Jobs Act, Donald Trump's legislation to cut taxes significantly for big business and the very wealthy.

They voted for this bill, despite knowing that it would raise deficits. According to the nonpartisan Tax Policy Center, the Trump tax law will likely "add $1 to $2 trillion to the federal debt" in its first decade by reducing revenue.

With declining tax revenue and massive new spending to address the coronavirus pandemic, the federal budget deficit for 2020 was an estimated $3.3 trillion, up from about $1 trillion the year before. To get that down to zero, as the amendment would require, Congress would either have to slash spending, increase tax revenue, or do some combination of the two.

But another provision of this group's proposal would make the second and third options virtually impossible: The amendment would require a two-thirds supermajority in both the House and Senate for the federal government to ever again raise taxes.

With the vast majority of congressional Republicans on record promising to oppose virtually any increase to individual or business tax rates, such a vote would be highly unlikely, meaning huge cuts to government programs would be required.

Yet another provision of this amendment would require a three-fifths vote in Congress to raise the federal debt limit, which would make it vastly more difficult to avoid default on the growing national debt. Several votes to increase the limit in recent years have been by a narrow majority. Experts say a default would be disastrous for the U.S. economy, which could further reduce revenue.

In a statement, Fischer explained her support for the "balanced budget" resolution, writing: "To ensure that our nation is fiscally responsible, Congress must stop budgeting crisis to crisis. Families in Nebraska and across the country have to make difficult decisions about their own budgets, and it is far past time for Congress to do the same."

Published with permission of The American Independent Foundation.

WATCH: How The Far Right Plans To Paralyze The Government With A Constitutional Convention

In the aftermath of the Citizens United decision, Lawrence Lessig called for a Constitutional convention to address the role of money in the political process. Article V of the Constitution says a convention can be convened by petitions from two-thirds of the state and reformers have often called for such an event to redress their grievances — to no avail.

However, a new movement on the far right hopes to change American history and the powers of the federal government by convening a so-called “Convention of the States,” which aims to severally limit the powers of the federal government with “a balanced budget amendment, clarified definitions of the general welfare and commerce clauses, and limits on federal taxation.” The idea is being promoted by right-wing heroes Glenn Beck, Mark Levin and David Barton. But its biggest ally is the right’s most effective tool for passing legislation in the states.

Wisconsin is the latest state to consider a petition for a national Constitutional convention using language promoted by the American Legislative Exchange Council (ALEC), the Koch-funded non-profit network of state legislatures behind Stand Your Ground and Ag-Gag laws, which make it harder to report animal abuse. And to make sure the convention, which is supposed to be open-ended, doesn’t get hijacked for non-balanced-budget-related amendments — to, say, overturn Citizens United, ALEC is also promoting a companion bill that would limit the convention.

The right’s fixation on a balanced budget amendment is just another gambit to cut taxes since most iterations include severe limits on taxation. Jon Peacock of the Wisconsin Budget Project explains how such an amendment would inflict massive damage during economic crises:

A balanced budget amendment in the U.S. Constitution would result in much longer and deeper recessions and would cause unnecessary job losses. When the economy goes into a dive and people are without jobs, the need for food stamps, health insurance and unemployment insurance rise sharply. Since tax revenue typically falls as the need for those programs rises, a balanced budget would require cuts to these safety net programs and other areas of spending at the worst possible time. That would not only take away vital help during a recession, but would also exacerbate the downturn by requiring program cuts and/or tax increases as the recession worsens.

A highly respected economic forecasting firm, Macroeconomic Advisers, considered the effects of a balanced budget amendment during a period like the recent recession. They described the impact on the economy of cutting spending at such a time as “catastrophic” — leading to depression-like conditions and millions of additional jobs lost. A balanced budget amendment is also likely to jeopardize Social Security and other earned assistance upon which retirees depend.

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The Balanced Budget Amendment: Good Politics, Bad Policy

Congressional Republicans are once again pushing for the enactment of a Balanced Budget Amendment. The Amendment, which was introduced by conservative Utah Senator Mike Lee, would require that revenues equal expenditures every year, and that they never exceed 18 percent of the gross domestic product. A two-thirds majority of Congress would be required to exceed those limits or to “levy a new tax or increase the rate of any tax.”

In a political environment where almost all spending has been demonized, it’s easy to understand how the idea of a Balanced Budget Amendment has become popular. While it may be good politics, however, the Balanced Budget Amendment would be terrible policy. As Slate’sDoug Kendall and Dahlia Lithwick put it:

“A balanced budget amendment sounds like a great idea—until you read a little U.S. history and count all the times America spent more in a fiscal year than it raised in taxes and why that was necessary for our very survival….[d]ebt helped fund the War for Independence, complete the Louisiana Purchase, and preserve the Union during the Civil War. Debt not only helped us weather the Great Depression; it also gave us the tools we needed to emerge victorious from two world wars.”

There’s a reason the Constitution specifically grants Congress the authority “to borrow money on the credit of the United States.” In times of crisis, the Balanced Budget Amendment could be a fiscal disaster.

The provision that would require a supermajority to raise taxes also ignores the intent of the Constitution, which empowers Congress “to lay and collect Taxes … to pay the Debts and provide for the common Defense and general Welfare of the United States.” As Kendall and Lithwick point out, the provision “would remove huge swaths of lawmaking power from majority rule and arbitrarily limit the size of government to a level not seen since the 1960s. Under the guise of promoting fiscal responsibility, we would be creating a government that could not govern.”

The Balanced Budget Amendment has little chance of becoming law; even if all 47 Republicans in the Senate vote in favor of it, 20 Democrats would have to support it as well. That seems highly unlikely, if not impossible.

Congress is currently looking to find $1.5 trillion in cuts to the deficit through the “supercommittee,” toying with efforts to solve the painful unemployment crisis, and trying to avoid a devastating double-dip recession. It should not waste time debating the Balanced Budget Amendment, which is a political ploy that would be disastrous policy, and will only serve to distract Congress from the important issues that it has yet to tackle.

Obama Calls For “Modest Modifications” To Entitlements

Earlier today, President Obama held a press conference about his efforts to reach an agreement with Congressional Republicans to raise the debt ceiling—avoiding an economically disastrous default—and reduce the staggering national deficit and debt.

Obama admitted that there will have to be “modest modifications” to entitlement programs—most significantly, wealthy beneficiaries of Medicare (such as Obama himself) will have to pay higher co-pays. The president also expressed a willingness to trim domestic spending, reducing it to “the lowest percentage of out overall economy since Dwight Eisenhower.”

The president firmly rejected the Republicans’ so-called “Balanced Budget Amendment,” a constitutional amendment that would slash $2.4 trillion from social welfare programs serving such groups as poor college students and disabled veterans.

Instead, Obama argued for a balanced deficit reduction plan that cuts some government spending while increasing government revenues by ending tax breaks for “millionaires and billionaires” and closing corporate tax loopholes “so that oil companies aren’t getting unnecessary tax breaks or that corporate jet owners aren’t getting unnecessary tax breaks.” The majority of Americans, even “the clear majority of Republican voters,” Obama reported, support such a balanced plan.

A Gallup poll released this week shows that 80% of American voters and 74% of Republican voters support a plan that includes some revenue increases in addition to spending cuts.

He also rejected the proposal from Senate Minority Leader Mitch McConnell to raise the debt limit without trying to lower the deficit. Obama explained that it’s necessary we raise the debt limit, but “”we do have a genuine underlying problem that our debt and deficits are too big” that cannot be ignored. Still, he supports McConnell’s plan as a last resort.

The central message of Obama’s press conference was that raising the debt ceiling and reducing the deficit is easy to accomplish and supported by ordinary Americans. In the middle of the press conference, he offered an a summary of why we’re in the current mess we are and the common sense solutions needed to get ourselves out of it:

And here’s the good news — it turns out we don’t have to do anything radical to solve this problem. Contrary to what some folks say, we’re not Greece, we’re not Portugal. It turns out that our problem is we cut taxes without paying for them over the last decade; we ended up instituting new programs like a prescription drug program for seniors that was not paid for; we fought two wars, we didn’t pay for them; we had a bad recession that required a Recovery Act and stimulus spending and helping states — and all that accumulated and there’s interest on top of that.

And to unwind that, what’s required is that we roll back those tax cuts on the wealthiest individuals, that we clean up our tax code so we’re not giving out a bunch of tax breaks to companies that don’t need them and are not creating jobs, we cut programs that we don’t need, and we invest in those things that are going to help us grow.