BALANCED BUDGET AMENDMENT.   Term Paper ID:20227 Click to get this paper

Essay Subject: Argues for amendment as way to force govt. to balance national budget.... More...

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Paper Abstract: Argues for amendment as way to force govt. to balance national budget. Paper Introduction: In 1992, the government added another $400 billion to the national debt. It took two centuries to accumulate $1 trillion in debt, and this debt has grown to four times that amount in just the past dozen years. Interest payments alone will take up 14 percent of the $1.5 trillion budget for 1993. A recent poll conducted jointly by ABC and the Washington Post showed 77 percent of Americans supporting a constitutional amendment to require a balanced budget. Much has been tried already. All seven of the statutory laws passed since 1978 and designed to control the deficit have failed. Sequestration, budget summits, and five-year deficit reduction plans have all been bypassed. Those who doubt the value of the balanced-budget amendment should listen to the amendment's opponents. Almost every pro-spending special Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. "Balancing Act." National Review, 8 June 1992, 42-44.----------------------- [1]"A Balancing Act," Economist, 13 June 1992, 25. "Budget Amendment Pummeled As House Set toVote." Congressional Quarterly, 6 June 1992, 1592- 1593.Hager, George. The concept is offensive, opponents to thebalanced-budget amendment say, because it groups public consumption withpublic investment and requires everything to be paid out of currentrevenue. [3]Stephen Moore, "Balancing Act," National Review, 8 June 1992, 42. However, there isno reason why some flexibility cannot be written into the amendment.Indeed, in order to be ratified by the states, it will probably have tohave some flexibility. Patricia Schroeder(D-Colorado), who signed on as a co-sponsor, said she was disturbed by thelanguage adopted from Simon's bill that would have permitted a waiver ofthe balanced-budget requirement in times of declared military emergencies.Schroeder then stated that it would be unrealistic to presume that any yearwould not have a military emergency.[6] A superior version of theamendment was proposed by Sen. Cranford, "Defeat of Budget Amendment Fans Anti-DeficitFlames," Congressional Quarterly, 13 June 1992, 1685. Cranford, and George Hager, "Budget Amendment Pummeled AsHouse Set to Vote," Congressional Quarterly, 6 June 1992, 1592. Moreimportant, taxing it now would cause no one undue hardship.[12] Proponents of the balanced-budget amendment have frequently arguedthat they are only asking the federal government to live by the same rulesthat have been adopted by most states. Right now SocialSecurity is taxable for those over a certain income floor. Social Security recipients are getting 85 cents on thedollar in excess of what they put in (and thus never paid taxes onoriginally), so it is reasonable to ask why it should be exempt now. Chamber of Commerce and the Wall Street Journal editorial page,generally fierce critics of big government, have come out against thebalanced-budget bill sponsored by Sen. Clinton is correct when he states that government, like the Americansociety as a whole, spends too much on current consumption and not enoughon investment for the future. One prominent economist has suggested that thearts subsidies are an investment in the nation's cultural future andtherefore okay to finance by borrowing. All seven of the statutory laws passedsince 1978 and designed to control the deficit have failed. No one predicts that having abalanced budget each year will be painless. At any rate, a balanced-budget amendment would take some time to workits way through the state legislatures, and if one should pass in Congress,even a 1997 ratification date would be too ambitious. Acloser look at state budgets would reveal that their budgets are notcalculated in the same way as the federal budget, and, if they were, theywould not balance. Panetta, for instance, noted that $112 billion could be cut from thedeficit over five years--about a fifth of what is necessary--by subjecting85 percent of Social Security payments to the income tax. In the beginning phase, some will behurt, but, in the long run, it is what the country needs to move forwardinto the next century. In 1992, the government added another $4 billion to the nationaldebt.[1] It took two centuries to accumulate $1 trillion in debt, and thisdebt has grown to four times that amount in just the past dozen years.Interest payments alone will take up 14 percent of the $1.5 trillion budgetfor 1993. In all but nine, the government cannot carry a deficit over to thefollowing year. Bibliography"A Balancing Act." Economist, 13 June 1992, 25-26.Cranford, John R. Additionally, the New York Timeseditorial page, unlike the Post, not only opposes the balanced budgetamendment but also dismisses the very idea of a balanced-budget as an ill-conceived accounting concept. Groups like the NationalEducation Association, which claim to represent the political interests ofthe young, are leading the fray against the amendment. [6]John R. "TRB from Washington: Last Resort." New Republic, 1 June1992, 6.Moore, Stephen. Thus, the Left's objection to the Simon amendment was thatit would lead to permanently lower spending; the Right's objection was thatit would lead to higher taxes. It will take time. However, according to Stephen D. Every child born today in the United Stateswill inherit a $16, slice of the federal debt. Paul Simon (D-Illinois).[5] Theircomplaints, however, are justified. But, even ifSocial Security were fully taxable, those who depend on it for most oftheir income would barely be affected, since low-income people pay littleor no income tax--and safeguards could ensure that they would not underthis new system. Aseconomist James Buchanan stated, the deficit creates a fiscal illusion thattaxpayers are getting government largesse without having to pay for it.However, today's spending programs will not be paid for by the taxpayers oftoday, but by their children. In theory, afederal amendment would permit none of those variations. [5]Moore, 42. [11]Ibid., 45. [4]Michael Kinsley, "TRB From Washington: Balancing Act," NewRepublic, 29 June 1992, 6. If the federal government could at least adhere to the standards of thesestates, that would be some progress. Both Reischauer and Panetta are committed to a balancedbudget regardless of the initial pain it will produce--because it must beaccomplished. [7]John R. The surprise is the lack of support for the amendment on the Right.The U.S. [8]Michael Kinsley, "TRB from Washington: Last Resort," New Republic,1 June 1992, 6. Only if past expenditures can be accounted forthis year, can this year's expenditures be accounted for in a future year.Furthermore, if the government were really to start keeping its books likea normal business, it would have to include as current expenses theobligation it is undertaking to future retirees by accepting their SocialSecurity and Medicare taxes. Its principlefeature was a requirement for a three-fifths majority to approve taxincreases.[7] The main argument against the Simon bill was that it opened the wayfor Congress to tax. "Defeat of Budget Amendment Fans Anti-DeficitFlames." Congressional Quarterly, 13 June 1992, 1863-1865.________. In all but 12, the legislature has to pass a balancedbudget. Gold, director of theCenter for the Study of the States at the State University of New York atAlbany, the number of states that in effect can roll over deficits isactually much larger.[14] Gold claims that states differ considerably inthe strictness of their requirements and often can bypass the rules by avariety of special funding and capital construction budgets. "TRB from Washington: Balancing Act." NewRepublic, 29 June 1992, 6, 45.________. Robert Kasten (R-Wisconsin). What the Simon amendment would haverequired was Congress enacting a deficit-free budget, unless a three-fifthsmajority in both houses voted not to.[8] An attempt by Senateconservatives to revive hopes for the amendment collapsed in July, 1992,just three weeks after the House refused on June 11 to pass it.[9] Budgetproponents in both parties, however, are not discouraged. [12]Ibid. For example, Clinton proposes to divide thefederal budget into three parts: a past budget for interest payments; apresent budget for spending on current consumption; and a future budget forinvestments in things that will enrich this country. No one regards it as irresponsible when a businessborrows money to make investments that will pay off in the future.Therefore, there is nothing unbusinesslike about government doing the same. "Senate Move Kills Amendment To Require BalancedBudget." Congressional Quarterly, 4 July 1992, 1931.Kinsley, Michael. [2]Ibid. These groupscomplain that taking away the government's ability to borrow willnecessitate cutbacks on housing, welfare, programs for the elderly, studentloans, highways and transit, farm price supports, business subsidies, andso forth.[3] Even though the Washington Post editorial page, for example,has often called for a federal budget surplus to free up capital forprivate investment, it presents nightmare scenarios of brutal budgetslashing to scare people away from a balanced budget amendment.[4] Their complaints make a compelling case for the amendment. Unfortunately,opponents of the amendment have used this excuse to put off balancing thebudget until an amendment is ratified. This is a popular dodge. But it does not justify permanent andgrowing deficits.[11] In 1992, House Budget Committee Chairman Leon Panetta andCongressional Budget Office Director Robert Reischauer both produceddetailed descriptions of what balancing the budget by 1997 would actuallyentail. Almost every pro-spendingspecial interest group--the AFL-CIO, the National Education Association,the American Association of Retired Persons, government employee unions,and most defense contractors--has condemned the idea. Those who doubt the value of the balanced-budget amendmentshould listen to the amendment's opponents. Cranford, "State Budgets: Deceptive Models," CongressionalQuarterly, 13 June 1992, 1686 [14]Ibid.----------------------- 1 Of course, nosensible business has a rigid rule against a negative cash flow in anyparticular year, but this country has proved itself incapable ofrestricting its long-run negative cash flow any other way. A capital budget that would track thisdistinction is not a bad idea. A balanced-budget amendment that contains some flexibility is better than none at all. [9]George Hager, "Senate Move Kills Amendment To Require BalancedBudget," Congressional Quarterly, 4 July 1992, 1931 [1 ]Kinsley, "Balancing Act," 6. Some differences make it easier forstates to achieve balance, but others make it more difficult. According to Richard H. By one estimate, the federal government spends about $135 billion a yearon physical capital--roads and buildings--and another $7 billion onresearch and $38 billion on education and training. In all but six states, the governor must submit a balanced budget tothe legislature. Sequestration,budget summits, and five-year deficit reduction plans have all beenbypassed. Accounting methods provide the biggest difference between statebudgets and that of the federal government, though not all accountingdifferences work in the states' favor. He promises to gointo debt only for the third category. If the government cannot borrow, then it will tax,which is worse. They are hopingthey can turn their defeat into an opportunity for a new assault on thedeficit. Bryan (D-Nevada), it is frustrating to be able to achieve a balanced budget at thestate level and not at the federal level.[13] Those opposed to the idea ofa balanced-budget amendment state that Bryan's statement is misleading. The Simon bill and its counterpart inthe House (sponsored by Rep. The use of off-budget entities, special financingschemes, separate operating budgets--which are paid for by taxes--andcapital construction budgets--which are financed by borrowing--all makestate budgets look balanced when they would not be if all spending andrevenues were lumped together. A recent poll conducted jointly by ABC and the Washington Postshowed 77 percent of Americans supporting a constitutional amendment torequire a balanced budget.[2] Much has been tried already. The problem of the deficit is too important to ignore because anamendment prohibiting it cannot please all factions involved. Ideally, governments should not spend more than they accumulate, but fromthis research it is clear that even states that have balanced-budgetamendments do not necessarily maintain a balanced budget in the true sense. One problemwith capital accounting is that many government investments like roads andeducation do not provide a direct return to the government itself. "State Budgets: Deceptive Models." CongressionalQuarterly, 13 June 1992, 1686-1688.________, and George Hager. Anotherproblem is the vagueness of the concept of government investment whichmakes it easy to abuse. Nor can the deficit be wipedout overnight. Indeed, Rep. [13]John R. The argument is that the governmentis like a business. That calculation would make 1992's actualcash flow deficit--$4 billion--look trivial. Charles Stenholm (D-Texas) contained neithertax limitation nor a spending cap. These severe cost-cutting proposals were intended to sober up thedebate over the amendment, and they were a rebuke to many Republicans whocontinue to insist that a balanced budget can be achieved without muchinconvenience. If theyborrow for investments that do not produce enough money to pay back theprincipal and interest, they eventually go out of business. It would beunreasonable to expect all that to be paid for out of ready cash.[1 ] The trouble with this argument is that life did not start the dayClinton was inaugurated. Even businesses have to worry about cash flow in the end. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.

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