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"[I]f 10 percent is good enough for the Baptist church, it ought to be good enough for Congress." - Walter E.
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Posted by: TEEBONE ®

02/08/2018, 22:35:28

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The Constitutional Amendment That Would Rein in Spending


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Some people have called for a balanced budget amendment to our Constitution as a means of reining in a big-spending Congress.

That’s
a misguided vision, for the simple reason that in any real economic
sense, as opposed to an accounting sense, the federal budget is always
balanced.

The value of what we produced in 2017—our gross domestic
product—totaled about $19 trillion. If the Congress spent $4 trillion
of the $19 trillion that we produced, unless you believe in Santa Claus,
you know that Congress must force us to spend $4 trillion less
privately.

Taxing us is one way that Congress can do that. But
federal revenue estimates for 2017 are about $3.5 trillion, leaving an
accounting deficit of about $500 billion. So taxes are not enough to
cover Congress’ spending.

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Another
way Congress can get us to spend less privately is to enter the bond
market. It can borrow. Borrowing forces us to spend less privately, and
it drives up interest rates and crowds out private investment.

Finally,
the most dishonest way to get us to spend less is to inflate our
currency. Higher prices for goods and services reduce our real spending.

The bottom line is the federal budget is always balanced in any real economic sense.

For
those enamored of a balanced budget amendment, think about the
following. Would we have greater personal liberty under a balanced
federal budget with Congress spending $4 trillion and taxing us $4
trillion, or would we be freer under an unbalanced federal budget with
Congress spending $2 trillion and taxing us $1 trillion?

I’d
prefer the unbalanced budget. The true measure of government’s impact on
our lives is government spending, not government taxing.

Tax
revenue is not our problem. The federal government has collected nearly
20 percent of the nation’s gross domestic product almost every year
since 1960. Federal spending has exceeded 20 percent of the GDP for most
of that period.

Because federal spending is the problem, that’s where our focus should be.

Cutting
spending is politically challenging. Every spending constituency sees
what it gets from government as vital, whether it be Social Security,
Medicare, and Medicaid recipients or farmers, poor people, educators, or
the military.

It’s easy for members of Congress to say yes to
these spending constituencies, because whether it’s Democrats or
Republicans in control, they don’t face a hard-and-fast bottom line.

The
nation needs a constitutional amendment that limits congressional
spending to a fixed fraction, say 20 percent, of the GDP. It might
stipulate that the limit could be exceeded only if the president
declared a state of emergency and two-thirds of both houses of Congress
voted to approve the spending.

By the way, the Founding Fathers
would be horrified by today’s congressional spending. From 1787 to the
1920s, except in wartime, federal government spending never exceeded 4
percent of our GDP.

During the early 1980s, I was a member of the
National Tax Limitation Committee. Our distinguished blue-ribbon
drafting committee included its founder, Lew Uhler, plus notables such
as Milton Friedman, James Buchanan, Paul McCracken, Bill Niskanen, Craig
Stubblebine, Robert Bork, Aaron Wildavsky, Robert Nisbet, and Robert
Carleson.

The Senate passed our proposed balanced budget/spending
limitation amendment to the U.S. Constitution on Aug. 4, 1982, by a
bipartisan vote of 69-31, surpassing the two-thirds requirement by two
votes.

In the House of Representatives, the amendment was approved
by a bipartisan majority (236-187), but it did not meet the two-thirds
vote required by Article 5 of the Constitution.

The amendment can be found in Milton and Rose Friedman’s “Tyranny of the Status Quo” or the appendix of their “Free to Choose.”

During
an interview about the proposed amendment, a reporter asked why I
disagreed with the committee and called for a limit of 10 percent of GDP
on federal spending. I told him that if 10 percent is good enough for
the Baptist church, it ought to be good enough for Congress.










LIBERTY HAS NO EXPIRATION DATE

Democrats wouldn't buy a clue if it was government subsidized.





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