I have been against the balanced budget amendment since I learned about it in economics. The reason to oppose it is simple. It hamstrings what the government can do during a recession. In 2001, when the economy was slowing Bush cut taxes (the wrong way) to help jumpstart the economy. Under the balanced budget amendment Congress would have to remove some kind of program to be able do that. But now I’m beginning to change my mind about the balanced budget amendment. Not because the arguments I just listed are incorrect, but because it appears Washington is unable to restrain spending even in the face of a fiscal catastrophe.
My only fear about passing the amendment now is that it might be too late already. Even if the government was in balance this year there would still be long-term problems with debt the U.S. has accrued over the past three decades. However, a balance budget amendment would force Congress to either raise taxes or reduce the size of government. Supporting a balanced budget amendment isn’t the best choice, but the only one that will force Congress to confront the problem. It is also an attainable goal. Congress was only a few votes short of passing the bill during the Clinton administration.
The GOP would be wise to make this part of their platform for the upcoming elections. The balanced budget amendment enjoys a lot of populist support and Americans are clamoring for fiscal restraint in Washington. The amendment would change the tone in D.C. for the next 20 years. It’s time politicians start figuring out how we pay for all these entitlements we’ve dreamed up over the past 60 years and stop worrying about adding more
Democrats have been beating the “squandered the surplus” horse for about four year now. When pressed for a reason the surplus vanished in the late nineties the deafening silence tells the story. I have written on many occasions that the deficit is narrowing, but at this point I don’t think it’s something to worry about. The long term problems with Social Security and Medicare are a larger threat to the economy. However there appears to be no one in Washington prepared to deal with the problem.
The Economic Report of the President shows the federal deficit for 2004 was 3.6 percent. A narrowing of more than 1 1/2 percentage points in such a short time is itself a story.
The U.S. deficit is worth comparing, for starters, with the data for European nations. In the Maastricht Treaty of 1992, European leaders set a deficit goal of 3 percent of GDP. EU member countries have had trouble meeting that target since.
A shortfall of 2 percent of GDP is also news in the U.S. context. Sure, there was the surplus in the second half of the 1990s. But 2 percent is below the average for the federal deficit between 1980 and 1995.
The 2006 elections are coming up and if a person is voting on the economy there’s really no choice. Democrats are stuck campaigning for large government programs, and economic isolationism. Both of these ideas are bad for the economy and for the “middle-class” the party claims to champion. The economist Greg Mankiw sums up the economic stance of the Democrat party quite eloquently in his blog.
So Lamont seems to think the U.S. economy is suffering and the primary reason is competition from poor workers in China.
This rhetoric scares me. Wages, benefits, and labor and environmental standards are primarily a function of the level of economic development. Complaining about poor countries’ low wages and benefits is essentially blaming the poor for being poor.
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