Why?
Well, for the same reason you need a credit-card limit.
Or the inhibiting factor of the potential for a bad credit score.
Or the knowledge that your mom or your dad or some sponsor aren't going to pay back your debts; you are, and with interest.
Because buying stuff is too much fun.
For any given year, our recent presidents - Reagan and forward, with the exception of Clinton - along with the Congress, have with seeming ease bought expensive things NOW for which they did not have the funds NOW.
The funds NOW are the taxes the federal government collects in any given year. To state the obvious, just like with you and me, if the federal government pays for stuff in that same year costing in excess of those collected taxes, then it borrows funds, with interest, to make up the difference.
Without any law or amendment specifically banning it, presidents prior to Reagan going all the way back to Washington expressly avoided borrowing except during a time of war or national emergency, such as the Great Depression. And, without any law or amendment requiring them to, presidents who followed the presidents who were forced to borrow during time of war or national emergency, worked diligently to pay down and pay off the debt accumulated because of those events.
With and since Reagan, everything changed. And we haven't gone back. And we need to. Our currency is steadily devaluing. Things priced in dollars are either more expensive, or their price is more volatile, or both, such as with oil. Foreign governments around the world have kept their "rainy-day fund" invested in dollars (known as their national reserves) because historically its value could be counted upon to remain, well, valuable. Now that, over multiple presidents, it's proved to be steadily less valuable - and, even more consternating, that those presidents haven't seemed to care too much about that - has prompted more and more of these foreign governments, as they observe the steadily dwindling value of their currency reserves, to "make noise" about the prospect of replacing the dollar with the Euro or some other currency. That would be a very bad thing. Trust me. Or, don't trust me, and return to the blog on some other occasion where that will be the topic. But, as economists readily acknowledge when this topic comes up, that a switch away from the dollar as the world's reserve currency would bring a rapid increase in the inflation rate and interest rates in this country.
Also, the other thing past presidents have realized is that debt doesn't look good, that it's not the hallmark of a great nation to be in debt, much less a lot of debt, much much less now the greatest debtor nation in the world, as the U.S. currently is.
And they also realized, past presidents, and as you and I realize, that, boy, that interest payment is a real bugger. You get NOTHING for that. Well, you get something, it's just that something seems like nothing pretty quickly after you bought the thing you couldn't pay for. You got the THING. And you got it NOW, and not later. But, boy how quickly the fun and seeming benefit of that wanes. And what you are left with is that interest payment. The seemingly never-ending interest payment. Past presidents saw that amount and it ticked 'em off. They quite rightly saw that as money they had to pay out of the taxes collected that year on something not at all fun, not at all on roads or national parks or space programs or ships or whatever, but pay to those holding our debt, and where an increasing number of those are foreigners, meaning those dollars won't at least recirculate in our economy, but leave our shores entirely. We become, nationally, poorer, quite simply.
Past presidents hated all of that. All of it. Reagan and forward?..including Obama now, unless he dramatically changes course..and with the exception of Clinton..don't seem to care. Think little of it. Well, those holding dollars as their reserve currency think a lot of it. A lot.
So I don't know if something entered the water supply and infected American presidents in recent times to act in such a way, or what. I just know it needs to stop. And, if it's a disease that is to blame, the same disease infected congresses over that same period. They are all..sick..in effect..and they need healing. And a federal balanced-budget amendment is the thing, I assert.
Just look at the states. Look at California, recently. They got into huge budgetary trouble, and only found the will to correct that because they HAD TO BY LAW. California, like the other states, all have state constitutional requirements to balance the budget. It's only right and correct, because one of our founding gripes against the British, and one of our founding principles for government in this country, was "no taxation without representation". Remember that? The states do. That's why they can only incur "circumstantial" debt, i.e. debt due to unforeseen circumstances, like not as much revenue coming in as they thought in a given year due to an economic downturn which heavily impacted their state, or something like that. And, once they have incurred that circumstantial debt, they do as past presidents USED to do, and pay off the debt as quickly as possible with expressed fiscal (taxes) and budgetary (spending) programs to accomplish that.
See, if you do otherwise, then it's taxation without representation, quite simply. Because, if a government borrows, then the (un)collected taxes it used to buy stuff NOW, it must raise and collect LATER. And "who", since collected taxes don't come from trees, constitutes "LATER"? Well, later voters. Voters in later years. And every year a new crop of voters turns voting age. So, at least the portion of "later voters" which new voters represent, are voters whom the previous government taxed without the expressed voting approval of those voters. Your vote IS your representation, your means to that, and so those previous governments, to the extent they loaded you up with their uncollected taxes was the extent to which they taxed you without your voting consent. This is all such a statement of the obvious, that I want to acknowledge that, so that you all don't think that I think that you don't know. I don't want to insult anyone's intelligence. I write these obvious things to underscore the indictment of historical proportions of these presidents and congresses.
Anyway. For those of you who followed news with regard to California, they passed legislation after round-the-clock negotiations across party lines which addressed their budgetary deficit with a combination of tax increases and budget cuts, both of significant size. It's the only way a deficit is ever eliminated. It's exactly the formula which the only fiscally-responsible president since Reagan used to balance the federal budget and take it into surplus during his administration.
So the proposal is a very simple one. Not new. Not novel. In fact, ubiquitous among states, cities, counties, municipalities: a requirement not to tax without representation, a requirement - but for emergency circumstances - for the federal government to not spend more than it collects in a given fiscal year.
Think of the national debates that the ability of the government to borrow for what it wants allows us to NOT have. When Reagan wanted to develop his "Star Wars" anti-missile system, he would have had to have raised taxes to pay for it, or asked for cuts in federal programs to pay for it. I think..hmmm...in either case, that might have generated some national debate.
When George W. Bush wanted to fight Iraq without any significant financial or military support of other countries, he would have either had to (1) convince those other countries to participate, or (2) raise taxes to pay for it, or (3) ask for cuts in federal programs to pay for it. I think that would have generated some debate. It would have been a healthy, and a good, and an important debate. But it would have been a lot of work, and George W. Bush wanted it now, so he borrowed the money.
You see my point. Not only does the dwindling value of the American currency threaten all of us, but the ability of our government and its seeming willingness and readiness to borrow and devalue the currency further literally denies us important national debates we would otherwise, but for its ability to borrow, have! The loss of debate, my friendly blog readers, IS the loss of representation. It's the loss in the amount of government of the people, by the people, and for the people, make no mistake.
So here's the amendment language:
The Congress shall pass no law which shall cause projected federal spending to exceed projected federal revenues for the current or a future fiscal year, but for a state of emergency declared by the President and approved by a 60 percent plus one vote in each house of the Congress; further, upon recognition that a federal debt has occurred, the Congress shall, but for such declared state of emergency, pay down the principal of the federal debt each fiscal year until the debt is fully paid.
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