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 naïve. 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.
Happy Birthday Frederic Bastiat
2 years ago