Monday, July 18, 2011

The Balanced Budget Amendment Is Not Conservative

In my mind, conservative politics rest on two ideological poles - the present is guided by the past and the world should be managed as it is, not as it should be.

In the current financial crisis, the Republican party's favorite zombie legislation has risen again - the balanced budget amendment. It has been lurking since the 80s and like any good monster seems to pop out of the shadows just as things seem the scariest.

But is it a conservative idea? Modern politics would say, yes. Certainly, you could make the argument that the only way to deal with the world as it is would be to control spending and due to the lack of fiscal fortitude in the nation's Capitol, the only sure method is to put it in black and white in the U.S. Constitution.

However, if we take my thesis at the beginning and apply the two poles of conservatism, we arrive at a very different answer.

Practicality first. Does a balanced budget amendment actually deal with the world as it is or does it attempt to mold the world into a vision of what we want.

Steven Taylor of Outside The Beltway dives deep into the idea of a federal balanced budget and concludes it is practically impossible.Everyone wants the federal government to work like a household budget. Although it is a nice analogy and makes an easy talking point, it in no way is reality. Unlike your budget which is based on a paycheck where the amount remains virtually the same and arrives on a regular basis, federal revenue gyrates wildly based on many external factors. The Feds have a general idea of how much money is coming, but no real idea until it actually arrives. And let's not even venture down the rabbit hole of what happens if the ledger doesn't balance at the end of the year (here's a hint, the courts would get involved, what fun!)

That's one pole knocked from the tent. Perhaps it can stand on the remaining support.

Here's a fun way to win a drink in a bar bet. Ask someone how many times the U.S. has been debt free*. If they answer in any way except "exactly once", drink up!

The year was 1835. The nation was led by a man who hated debt and despised the central U.S. Bank. He proceeded to slash the Federal government, sold Federal holdings such as public lands and refused to re-authorize the central bank.

Sound familiar?

It worked. By the end of 1835, President Andrew Jackson managed for the first and only time to completely balance the budget. No debt. None.

Two years later, following financial chaos as state banks issued there own specie and speculation went wild., the country plunged into a depression, the panic of 1837, and federal debt returned but at 10 times the previous level.

The depression was not directly the result of the leveling of the debt but there is little doubt it exacerbated the crisis.

So, the one time we actually balanced the ledger, instead of jubilee, we had disaster. Does this sound like using the past to guide the present?

The U.S. has always had debt (except for those two unfortunate years in the 1830s). We had it under Washington on day one, we had it through Presidents, bad, good or indifferent. We have it under Obama today and I guarantee we'll have it under his successor.

Debt is not a good thing, but it is not a bad thing either. Modern financial systems, from the small business that depends on a line of credit to maintain payroll, up to the massive federal government, depend on debt to function. To remove it would be akin to removing all the oil from an engine. The wiser course would be to manage the level so it neither overfills to spatter everything nor falls to low, causing parts to seize.

Instead of advocating such a course of management and practicality, modern Republicans want to place debt in stark binary terms, then codify that cold equation in the fabric of our greatest law. They desire to do this despite the lessons of history and despite the great unknowns of the future.

This is not conservatism. This is radicalism.

* I understand that you could technically have a balanced budget amendment and still carry debt, however that does not reflect the context of what is promoting the current version of the BBA


Charlie said...

As you know, we disagree on the BBA. That said, I don't see the BBA and demanding we pay off the national debt as the same arguments. States balance their budget but still have bonded debt. We do at least agree that debt is neither good nor bad. And if used properly, can definitely be a good.

My concern as I've stated elsewhere is that we have to have a cap on spending, as well as force revenues at some point to match, or at least approach, that spending.

Republicans have learned they can cut revenues without having consequences. Democrats have learned they can increase spending without consequences. Both sides have also taken big pages out of the other's playbook when politically expedient (see, Medicare D; see payroll tax holiday)

There is no discipline, and the base of each party prohibits us from making adult decisons.

We need a cap, and a BBA is the only way to get us there.

griftdrift said...

Knew that would draw you out.

I don't think we differ much on the first point in regards to how we manage the fiscal stance of the government.

The problem, as I noted in my footnote, is what you and I perceive as the issue is not what is being peddled. It used to be the rhetoric and the reality were in the same ballpark. Now they are not in the same universe. Ask the average tea partier what they think this is all about and I guarantee it will be some flavor of debt is bad and we should get rid of it.

On the second point, we are much farther apart. It might take an actual amendment to force the politicians to live up to our expectations. But it being an actual amendment leaves very few outs. There are way too many unknown variables in the federal budgeting process to put such hard parameters around the process and then expect those unknowns won't have very dramatic consequences.

And we don't even know what the hell the consequences will be if the numbers don't add up at the end of the year.

Betting on future unknowns has no place in the Constitution and I certainly don't consider it a conservative solution.

We need to start working towards a "balance" of revenue and spending. Right now spending is too high and revenue is too low. There needs to be statutory moves to bring those two together.

And (much like the fabled Gramm-Rudman), if the politicians don't follow through, the consquences should be in the realm of the politics. Not the courts or whatever it would be if an amendment were in force.