Lincoln * Institute

Colin A. Hanna

Colin A. Hanna

Let Freedom Ring, USA


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Let Freedom Ring

Why A Balanced Budget Amendment is Necessary

by Colin Hanna

The recent debt ceiling debate, and its ostensible resolution in the Budget Control Act of 2011, was a spectacle of dysfunctionality. There was only one genuine solution proposed during the entire process, and that was Cut, Cap and Balance. The "Cut" part of the plan referred to immediate cuts in FY 2012.

The "Cap" part outlined a gradual reduction over ten years in the overall ratio of federal spending to our total economic output, or GDP. For sixty years after the end of World War II, it has been about 18 to 20 percent, regardless of economic cycles. And the "Balance" part of the plan referred to Congressional passage of a Balanced Budget Amendment, which would then take a few years to go through the state ratification process, and then five more years after ratification before it took effect.

Cut Cap and Balance thus has a short-term element, a mid-term element and a long-term element. Citigroup's global finance unit reported on the various plans and proposals being circulated before the final plan was adopted, and indicated that Cut Cap and Balance alone satisfied the stated concerns of the ratings agencies. In other words, they implied that had the Congress adopted Cut Cap and Balance, the subsequent credit downgrade by Standard and Poor's could have been avoided.

The primary reason why Cut Cap and Balance was judged superior to all the other plans being proposed at that time was its inclusion of a Balanced Budget Amendment. The short-term and mid-term elements were soundly constructed and well-received by the global finance experts, but only the long-term solution of a Balanced Budget Amendment provided the kind of structural change that would return us to sustainable patterns of spending and borrowing. In an unintentionally accurate bit of sarcasm, Presidential spokesman Jay Carney said "The balanced budget amendment would be basically an admission by Congress that they can't do anything, right? And that's not true, as these discussions that we're engaged in right now show." Carney also said the proposed amendment is "not good for the economy, (and) it doesn't answer the problem." Hmm? I would argue just the opposite: Congress in fact showed clearly that it was unable to solve the problem when it simply kicked the deficit reduction task to a new super-committee. And how on earth is it bad for the economy to be in balance? It's good for an economy to have receipts and outlays in balance, whether we're talking about the economy of a family, a company, a city, a state or the federal government. In fact, it's the only condition that is sustainable!

So, Let Freedom Ring and several other conservative groups will work together over the next year or two to support the enactment and ratification of a Balanced Budget Amendment to the United States Constitution. The time is right. The American public understands, accepts the need for and supports a Balanced Budget Amendment, even if the President and his Press Secretary are in denial. We like the version that was introduced in the Senate by Senators Lee, Hatch, Toomey and Paul, and in the House by Representatives Walsh and Goodlatte. It includes two important restraints beyond the basic requirement that expenses must not exceed revenues: a super-majority for raising taxes, and a Constitutional cap on federal spending as a percentage of the total economy, with common-sense exceptions for war and genuine national emergencies. There's also a bogus Balanced Budget Amendment proposal being floated in the Senate by Senator Mark Udall, and that needs to be exposed for the fraud that it is — something that this commentary will address in the weeks ahead.

The Budget Control Act requires that a vote on a Balanced Budget Amendment must be taken by both House and Senate between October 1 and the end of the year, but it doesn't say what kind of BBA it should be. We will.

(Colin Hanna is President of Let Freedom Ring, USA.)