Saturday, February 13, 2010

The 20 percent solution

It is no secret that the US budget is out of control and that the country is careening toward bankruptcy. The congress and the president are spending recklessly and are doing severe damage to the US economy. They appear to have no way of containing themselves. The president introduced his budget by proclaiming fiscal responsibility while at the same time giving us a budget with mind-numbing numbers. In two years the proposed budget deficit has grown from $239 billion to $1.17 trillion while the national debt burden has grown from $5.4 trillion to $14 trillion. There is no excuse for this – despite the recession.

Estimated receipts Estimated Expenditures Deficit National Debt
2008 $2.7 trillion $2.9 trillion $239 billion $5.4 trillion
2010 $2.38 trillion $3.55 trillion $1.17 trillion $14 trillion

The president has declared to pare down expenditures on “discretionary expenditures.” In reality, all expenditures are discretionary because the congress can make it so. In fact the problem, as everyone knows, does not lie in discretionary expenditures. The problems are in the sacrosanct entitlement programs that consume more and more of the budget and propel its growth. What can be done? First, the government should roll expenditures back to the 2008 levels. One way to do this is to only fund those items in the 2008 budget at the 2008 level. Another, but suboptimal solution, would be for the president to propose an across the board cut in federal spending of $550 billion. Since it is virtually impossible to target specific programs in the budgetary process, the president would say that each federal department will receive 20 percent less and they will decide how to allocate the cuts.

Second, all subsequent budgets should limit federal expenditures to their historical average of 20 percent of GDP. I have suggested this before. But I know that congress has no appetite to cut and will always be tempted to continually increase spending. As a consequence, since the congress seems incapable of prudent fiscal management, I suggest that we amend the Constitution to limit federal government spending to 20 percent of the previous year's GDP. Government expenditures can be raised only If the president declares a national emergency – such as in the case of war – but only with a two-thirds majority of both houses of congress and then only for one year. Now I am not na├»ve. I realize that there is no chance that the US congress will initiate and approve such an amendment. However, the Constitution allows for a Constitutional amendment to be initiated by a convention of states. I then call for a grassroots campaign to have each state legislature appoint a delegation to a constitutional convention to frame such an amendment and recommend it to the state legislatures for a vote. Only a simple majority vote is required at the state level. If three-fourths of the states approve the amendment it is sent to the congress where a two-thirds majority in each house is required. I would think that ratification would almost be assured. If any member of either house voted against ratification, their political future would be imperiled.

6 comments:

John in KY said...

I will start by saying I agree with you about cutting spending by at least as much as you suggest and the difficulty of making current politicians do so. Where I disagree is how.The Constitutional Convention is a bit of a gamble because after a convention is opened on a single issue, other issues can be addressed and voted on during the convention, which could be risky with other issues. Also, I believe you have your figures or dates wrong on the national debt. The national debt was about 5.7T when Bush took office in 1/01 and 10.6T when Obama took office in 1/09. Since then the debt/deficit has ballooned in never before seen rates and we need to make huge changes in our leaders, but the best way is to do it at the ballot box. Be active in local and state govt., and let the people you vote for know that your personal mandate to them is to stop this spending and cut the size and scope of govt. If we can get better people in office( honesty before pedigree or law degree) in November, then maybe we could call a convention without as much risk of unwanted issues being sneaked in the back door.

Anonymous said...

This is fantastic. We are all ringing are hands saying "what can we do". Finally, a real solution to out of control government spending. I am going to spread the word.

H.A. Black said...

John, I am using the figures that were in the proposed budget both for 2008 and for 2010 - not the actual 2008 numbers because I wanted to do like comparisons. As to mischief occurring at a constitution convention, I know there is a danger. However, the odds of getting 3/4 of the states to ratify and 2/3 of both houses would be slim and none. A clean amendment is a different matter.

Anonymous said...

I was in your class last spring and I have been checking your blog every week or so. It is so refreshing to hear your opinion as opposed to the rest of all the Obama crazed professors at UT that are stuck in their own little worlds. I heard this is your last semester, so can you please run for office?

H.A. Black said...

I am too old to run for public office. I will spend my time talking to our politicians and politicians-to-be. However, our best hopes lie in getting the electorate to apply continuous pressure to those who pretend to represent us.

Julie said...

Professor Black is it true this will be your last semester? I so wanted my son (a freshman at UT who plans to get a degree in business)to take one our your classes. Enjoy reading your blog and reading an educated opinion on current events.