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News for Norther Colorado and the world

Friday, October 31, 2014

Udall Should Re-Think his Amendment

 

By Isabella Woods

There is no doubt that US Senator Mark Udall has a strong political pedigree, and he always seems like quite a likeable fellow.  He’s strong on the environment, civil liberties and support for veterans, and keen on adopting a bi-partisan approach to most issues.  Now he wants Congress to agree to change the constitution by accepting his balanced budget amendment.

Amendments, and more Amendments

The Senator is of course not the first to make such a proposal, although we more often associate the call for a balanced budget with Republican, rather than Democrat politicians.  Indeed, only last month the House Republicans in Washington failed to get the two thirds majority they needed to pass such an amendment, even though they garnered the support of twenty five Democratic congressmen on the issue. In addition, Senator Udall’s amendment is only one of two that will be considered by the US Senate.  The other is sponsored by Senate Minority Leader Mitch McConnell (R-KY), and is similar in nature to one that failed in the House,

A Question of Balance?

Most states, including Colorado, have incorporated some variant of a balanced budget amendment into their constitutions, and there has been a long history of states petitioning the Federal Government to do likewise.  At a national level there have been numerous attempts to curtain Government spending. As long ago as 1936 congressman Harold Knutson of Minnesota, fearful of President Roosevelt’s New Deal spending, proposed a per-capita cap on federal debt.  With the exception of a few surplus years under the Clinton administration, there has been a growth in Federal spending deficits since the nineteen seventies, which in turn have increased the National Debt to levels once undreamed of.  This has given fresh momentum to the idea of legally constraining the Federal budget in some way, and Acts of Congress with this purpose in mind were passed in 1985, 1987 and 1997.  Over the medium term they have not been successful, and so the campaign for constitutional change has strengthened.   The idea is attractive to many of its advocates because unlike a simple Act of Congress it could not be easily by-passed, and they believe it will secure sound public finances into the future, and will limit the size and activism of Federal Government.  Newt Gingrich, current contender for the GOP nomination, has long been associated with such efforts, although he may have some difficulty in living up to Ronald Reagan’s advice on the matter, which was that, “We might come closer to balancing the Budget if all of us lived closer to the Commandments and the Golden Rule.”

Economic Lessons

In contrast to the Republican sponsored amendments, Senator Udall’s does at least offer some protection for Social Security, and would also prevent tax cuts for the wealthy if the budget was not in surplus.  At the same time, it would only permit deficits at times of economic or other crises, but with a three fifths majority needed in both houses.  The Senator mean well, but I’m not sure that the he really has a grasp of the economic or indeed political consequences of his proposal.

On his website he tells us that his amendment would “…require the federal government to balance its budget every year – the same way Colorado families do every day.” Umm?  Folksy, but government finances don’t work in quite the same way as the family budget.  If individually we think we’re overspending, we naturally cut back a little or perhaps try to earn a little more in some way, and normally at any one time maybe a few percent of us are in that position, or even in real difficulty due to illness or some other crisis in life.  At those times, despite our personal prudence the economy goes on much as before, because most other people continue spending as before.  If Government cuts back when things are tough, then that has an affect on millions of people, not just those working for them, but those in the private sector who supply government or depend on government contracts.  Confidence falls, the middle classes worry about their jobs or about what else may be around the corner, everyone tightens their belts, and a downward cycle begins.  Much the same scenario develops if taxes are raised across the board at such a time, because ordinary people feel poorer.  Only the wealthy are insulated, everyone else suffers.

So maybe it’s just a little more complicated than the Senator appears to believe.  Perhaps a better analogy for how budgets and deficits should work is to compare it to buying a car. If a car is essential for you to go to work to earn money, then maybe it’s worth taking out a loan to buy the car, knowing that you will then have a job and can pay it back over time; and because you have a job you’ll be spending on other things that will help secure employment for others.  Naturally, if you’re sensible, you’ll also keep saving a little so that when you need to replace the car, the next loan will be smaller.  There’s no doubt that Federal Government has to learn how to be more efficient, and remember to put some monies away during the good times, to help when the inevitable rainy day does comes along, but putting a straight jacket on Federal finances is simply a way of ensuring that when times are hard, they will be harder than they need to be, for more people, and for much longer.

Political Gift

Politically, it’s also a lot more complicated than the Senator makes it seem.  If right now, when America’s economy is in the doldrums, with millions of people unemployed, houses repossessed, investment stagnating, and with the world economy teetering on the brink of another global recession, the Congressional ‘Super Committee’ on debt couldn’t reach agreement, then why does he imagine it will be any different in the future.  A three fifths majority in both houses would, unless our political landscape is miraculously transformed in some way, be completely unachievable, excepting if America was at war.

Senator Udall may like the bi-partisan approach, but in this instance he has made a serious mistake.  The Republicans almost certainly won’t vote for his amendment because it doesn’t go as far as they would like, but they would be shrewd if they did, because they would achieve many of their cherished aims.  With the amendment in place, when in power they could happily cut spending to produce budget surpluses, thus enabling them to cut taxes.  It would be political suicide for the Democrats to oppose the idea of Government ‘Giving you back your money’ as the slogan would probably have it. Equally, if the Democrats held sway, the GOP would have an effective veto on the Federal Government running a deficit, which would mean that increased spending could only come from increase revenue.  Any attempt at raising taxes would enable the Republicans to characterise their opponents as being profligate with tax payers’ money, and unless the Democrats had very solid majorities in both houses, they would be unlikely to be successful in getting through such proposals.

Think again Senator Udall, because your amendment could just turn out to be a slightly fluffier straightjacket than the one the Republicans are offering to put on government.

Observer (London)      February 5, 1983.

Washington Post         November 11 & 18 2011

Markudall.senate.gov

Olivia Lennox is a freelance writer and political blogger. Writing for clients like travel companies and a furniture retailer, her real passion is US party politics and the history of the American government.

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