Saturday, November 12, 2011
Jared Bernstein and James Horney Discuss The BBA: What would be a good Fiscal Policy
A Balance Budget Amendment sounds good on paper, forcing the Federal Government to pay its bills. And stop borrowing money every time they get a new idea or feel something is underfunded. And force the Federal Government to prioritize its spending which is exactly what a budget is about. Simply recognizing that money is not indefinite and unlimited and that there's a limit to the amount of money that you have. So you better figure out what you need to do and what you don't need to do. And there's plenty of both in the Federal Budget, even socialists could recognize that. Fund what you do need to do through taxes and cutting in other areas things that you don't need. And eliminate the things that you don't need and reform things you do need. To make them work better and be more Cost Effective, thats what a budget is. If your someone who doesn't believe in Government Budgets that Government can borrow at will to pay for its operations. Then I suggest you take a trip to Italy or Greece right now and you'll see what it looks like. When Federal Governments borrow too much money and don't prioritize their Federal Budgets. And if you still believe that Government can borrow at will, then you also don't believe in taxes and see them as not needed. Because Government can just print money to pay for its operations. Whether its a Balance Budget Amendment or not, the Federal Government needs some type of system. To prioritize its budget and operations to get its debt and deficit under control. So we don't become another South Ireland, Italy or Greece.
The House Republican Leadership and I believe the Senate Republican Leadership believes in a Fiscal Policy. Thats called "Cut Cap and Balance, that cuts back the Federal Budget, caps the Rate of Growth in the Federal Government. To then Balance the Federal Budget, as well as calling for a Balance Budget Amendment. But the problem is they don't really lay out a plan to do that, its really more about goals. And cutting things that compared with the rest of the Federal Budget. Aren't very expensive and they concentrate on around 13% of the Federal Budget about 480B$. Mostly what's called Discretionary Spending in a budget of 3.7T$ with a National Debt and Deficit of pushing 15T and 1.8T$ respectfully. Leaving entitlements, defense and the Tax Code alone, thats just aint going to get it done. And they call for a Balance Budget Amendment that would probably take at least ten years to pass. But they would need a Republican Congress to pass it, not just a Republican House. And would need huge majorities in both Chambers to pass it, as well as a Republican President to be in favor of it. That would lobby for the BBA and then of course enough Republican Legislatures around the country to pass it. They are better off trying to pass something out of Congress that the President would sign instead.
I'm for a Fiscal Policy that I would call Cut Cap and Reform. Cut areas where we are spending too much money, like in defense closing Foreign Bases in Developed Nations. Pulling out of Afghanistan and Iraq, we could save 200B$ a year alone doing that. Capping the Rate of Growth in the Federal Budget by tying it to Population, Economic, and Inflation Growth. When we are not in a recession or depression. But once we come out of that, then paying back any money that we borrowed. Reforming our Social Insurance System by turning it into a Welfare Insurance System. Paid into by everybody but only the people who need it would collect from it. That includes Social Security and Medicare, Block Granting all of these programs to the States in the short term for them to design their own Social Welfare Systems. But long term making turing them into Semi Private Non Profit Self Financed Independent Community Services. That are there to help and empower the people who need them. Short term Tax Reform, eliminate most if not all Tax Subsidy's but then lower Tax Rates. Long term scrap the Income Tax and replace it with a Progressive Consumption Tax. Tax Luxury Items higher then items needed to live.
Even though we may never get a Balance Budget Amendment to the US Constitution, I could support one in theory. If it has exceptions for when the United States itself, not some Foreign Base. But the country itself the mainland, as well as Alaska, Hawaii, and territory's, like Puerto Rico. Are under attack or when we are in a recession or depression, and that would be my only exceptions. To when the Federal Government could borrow money. But I doubt that would ever pass either so we are better off at just learning. Some Fiscal Responsibility to get our debt and deficit under control and eventually eliminate them all together.