Wednesday, February 9, 2011

Beware of the Balanced Budget Amendment

Currently, there are multiple Joint Resolutions in the House - 112th Congress, for a balanced budget amendment. There appears to be two which have the most support, H.J.Res.1 with 109 cosponsors and H.J.Res.2 with 178 cosponsors.  They are basically the same but do have a few minor differences. HJR1 includes a Section about limiting spending to 20% of GDP (Gross Domestic Product - the sum of the production for the country in a given year) unless 2/3 vote for increase. #2 does not have this section. #1 requires 3/5 vote to increase taxes where #2 requires a majority. Other sections appear to be identical.

Many are pushing to get one of these through Congress and passed onto the States for ratification.  Although it all sounds good, let's make sure we are doing the right thing before we add to the Constitution.  Here are some of my concerns:
1. Most all sections of the amendment can be made of no effect by a vote of Congress. So, as tricky (or deceitful) as they have shown themselves to be, I would imagine they would find some way around the amendment when they wanted.

2. HJR1 limits spending to 1/5 of GDP. Just as the official inflation rate has been manipulated to look better by excluding fuel and food prices, and as the unemployment rate is massaged by excluding those not receiving jobless benefits, I would expect some sort of manipulation in the GDP number, also.

3. It still allows for a 3/5 vote to increase the debt limit. So, there is nothing that would stop Washington from borrowing more.

4. The President is to submit a balanced budget based on proposed revenues. We already see gross distortion in estimating income and expenses for the things they want.

5. The whole amendment can be waived in any year when war is declared, or when there is a military conflict which causes a serious military threat to national security. So, if this had been in effect for the past nine years, it could have been waived each year as we are at war. It would have done nothing to control the excess spending we are experiencing.

6. The real kicker - the revenue and outlay numbers for the "balanced budget" do not include limiting the borrowing of more money and do not include the payments on debt (interest). So, we could and probably would continually go further in debt each year; in fact, we would almost have to because they would be doing a budget where all tax revenue is spent on budget items, exclusive of the debt repayment. So, where do we get the money to pay the interest and principle for the debt? We would have to borrow it.

7. None of this would take effect until at least 2017. So, from now until then, if ratified, spending could continue out of control. Debt would continue to be increased.

I would love limits on government spending but for some reason, I do not trust this to actually work or do us any good for the next few years.  It does not seem right to add an Amendment to the Constitution which is full of exceptions and built-in over-ride allowances.  What we need are people filling the seats who will do the job we sent them there to do. Stop spending, NOW. 

Congress controls the purse strings.  There is nothing to stop them from demanding a balanced budget, right now.  If getting control of spending is something they believe is good, "just do it!"  NO waiting and NO excuses!

Tuesday, February 1, 2011

The Garbage Can - Again

It has been quite awhile since the last "Garbage Can" posting so I thought I should do a catch-up.  For those of you who do not know, these are conglomerations of various subjects (all political) rolled up neatly into one blog article.

1.  The USA is fast approaching it's authorized debt limit of $14.3 trillion ($14,300,000,000,000.).  Within the next few weeks one of two things will happen:  either the government will have to stop borrowing more money and begin to control their spending, or Congress will have to vote to increase the debt ceiling.  Who can be the first to guess which one will happen? tic toc tic toc - buzz!!  We have a winner!  Yes, Congress will vote to authorize additional borrowing.  When President Obama gave his State of the Union (SOTU) speech last week, he talked about the necessity to control spending and get our debt under control.  The very next day, the administration (that is Obama's branch of government) sent to Congress their next budget.  This budget projects an additional $1.5 trillion deficit for this coming fiscal year.  Guess what BO used as the title for the budget - "A New Era of Responsibility:  Renewing America's Promise".  Makes me glad they did not decide to go the irresponsible route.  BO also predicts, in the budget, that OUR debt will reach $20 trillion by the year 2015 and will equal the gross domestic product (GDP) by 2020.  He is definitely on track to reach his 2015 goal.  He has mastered the art of massive spending, tripling and quadrupling what President Bush did in his record breaking, highest year; his first two years in office.

2.  Congress (the "R"s and many of the Tea Party darlings and even a handful of "D"s) has proposed a Balanced Budget Amendment.  This is referred to as "House Joint Resolution 1" (HJR1).  What they are considering is passing in the House and Senate this resolution and presenting it to the States for ratification.  If enough States ratify the amendment within seven years, it would become another Amendment to the Constitution.  When you take a look at what it is called - "Balanced Budget Amendment", you have got to agree that it sounds mighty good.  But, I have to be just a tad pessimistic.  Basically, every aspect that would restrict government spending has a built-in loop-hole that can be used, by them, to exempt one year after another.  It limits spending to 20% of GDP, unless they vote (66%) to override that in certain years.  Expenses cannot exceed income, unless they vote (60%) different.  The national debt cannot be increased, unless they vote (60%) to do so.  The annual budget submitted by the President mush show that the projected income will cover the planned expenses (we all know they would not fudge the projected income numbers).  Bills to increase taxes would have to pass by 60% of the votes. 

Here is one I really like:  Congress may waive (50% vote) having to abide by the amendment in any year war is declared or there is a serious military situation.  (So, if we had this as an existing amendment, it would have been waived for the last nine years while we were at war and all the spending we are dealing with could have still happened.)

Now the real kicker:  when calculating the projected income and planned expenses, which have to be balanced, these numbers do not include additional borrowing or payments of interest on our debt.  So, it will establish a system whereby all projected income will be spent on expenses, without paying interest.  This will mean that each year we would, at least, have to borrow an amount equal to our interest expense.  So, it builds in an ever-increasing national debt into the system.  The 2010 budget included $164 billion to pay interest (over $500 per person in the country), which was 18% more than the prior year.  Since that time we have borrowed more money (trillions) so this number will continue to increase each year.  And, as far as this amendment being the solution to our current, out-of-control spending in Washington, even if passed and ratified, it would not take effect before 2016 at the earliest.

3.  New York is one of the examples of states that is in serious trouble, financially.  NYC is just as bad.  Still, Mayor Bloomberg just spent $100,000 of New York taxpayer money to send undercover investigators to Arizona to see if they could buy guns at a gun show.  Money well spent - they came, we sold them guns.  Now, for some reason, he is claiming some big victory for this venture.  AZ is exposed!  Individuals sold other individuals guns without a background check - Oh My Gosh!  Just one problem with the "big" announcement, it is all legal.

4.  Cannot forget about Egypt.  The President of Egypt (Mubarak) announced that he will not seek, nor would he accept his parties nomination for re-election next September.  This follows over a week of mass protesting in the streets of the main cities.  There are so many people protesting that it amounts to 1 out of every 250+-, yes, about 0.3 percent of the population.  It is another case of the squeaky wheel.  The masses are demanding he leave, now.  The country is in crisis - looting, robbery, burning, injuries, over 100 dead...  Whether or not this began as an uprising by the real people in Egypt, it is being co-opted by Muslim extremists.  They have learned what the Left in this country knows, "Never let a good crisis go to waste!"

The Muslim Brotherhood has muscled themselves into position as a "player" when the seat of government becomes vacant, which will probably be very soon.  "Brotherhood" what can I find wrong with that?  Well, they are already issuing a statement to get the Egyptian people ready for a war with Israel.  The are a very radical faction of Muslims who vow that Jihad (holy war) is their way to get things done.  They want Sharia Law to govern the world.  If Egypt falls into radical control, they will control the Suez Canal, through which much of the oil headed to Western nations passes.  Most of the rest passes through a narrow channel that can easily be controlled by Iran.  If you think gas prices are high now, just wait.

4.  Egypt is not the only Arab country in turmoil.  Today, the King of Jordan dismissed his government.  His country has also been experiencing protests over the past few days.  These two countries (Jordan and Egypt) have been among the few in the region who have had decent relationships with the USA.  The Middle East is in a state of transition, several nations are on fire and the direction they appear to be headed is even more radical.  These two countries are the only border nations with Israel which have not been actively seeking the destruction of the Jews. 

5.  The BO administration keeps telling us the economy is in recovery mode.  This, while unemployment remains well above 9%, gas prices are on their way up, food prices are increasing, many states are facing bankruptcy, banks prepare to release some of their "shadow inventory" of foreclosed homes onto the market, personal bankruptcies are high, more foreclosures are planned for this year, and our Federal Government cannot stop borrowing and spending more and more money.  In spite of what they tell us, it appears that everything they are doing is geared at bringing our economy to it's knees. 

Now the good news...

God is still in control!
Sleep well!