Tuesday, July 19, 2011

More deficit nonsense

Bruce Bartlett has the details on the balanced budget amendment Republicans in the House are about to try and pass:

Assuming such a proposition is a good idea, how practical is it? For one thing, the term “economic output” in not defined in the committee report. Presumably, it means gross domestic product. But this is not a term defined in law; nor could it be. GDP figures are constantly being revised as new data become available and economists change their concept of what it means.

Another problem is that Congress cannot know what GDP will be in the coming fiscal year and it must necessarily pass its appropriations bills before the fiscal year begins. This means, as a practical matter, that Congress must base its spending on forecasts of GDP, which are often wrong and sometimes by large magnitudes. And of course it is impossible to control spending on entitlements or interest on the debt on an annual basis.

So not only is it a terrible idea, they haven't even drawn it up in a practical way. But let's focus on why its a terrible idea. Under this amendment, any revenue increases would have to get 2/3 approval of Congress. In other words, tax increases would be nearly impossible. So if by some miracle Republicans actually took this amendment seriously and tried to balance the budget they would have to massively cut spending, and not just 10 years down the road, right now. And of course, that entails big cuts to entitlements, if not outright abolishment of things like medicare, medicaid and social security.

That's the end game of this amendment, which luckily won't pass the Senate. If they found a way to make the mechanisms work, which as Bartlett points out, would be difficult, they would basically be outlawing tax increases and entitlements. And they want to do this while unemployment is high and the economy is only very slowly growing. Its just an amazing confluence of completely unnecessary and completely ideological nonsense from a party that claims to care about jobs.

I am now exhausted from talking about the deficit. Its bad enough I have to listen to this crap from Republicans, the same people who drove up deficits under Reagan and the second Bush. But I also have to hear it from a Democratic president and Democrats in Congress. Granted, Obama did make a decent argument about why he is focused on the deficit right now. But I still say he is too focused on it given the circumstances I mentioned above. At this point I don't have much to say other than to let your representatives know they have their priorities out of whack.

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