America's Accelerating Debt, Rising Interest Rates, and Fiscal Irresponsibility Require a Balanced Budget
America's Accelerating Debt, Rising Interest Rates, and Fiscal Irresponsibility Require a Balanced Budget
To say the United States faces a debt crisis is like saying that a Led Zeppelin concert is loud, or that the summers in Rangoon are hot. We are in a debt crisis of hitherto unseen proportions, the Federal government and the Biden Administration are spending like drunken sailors (with the exception that drunken sailors are spending their own money). Only lip service and phony measures are taken to address this issue.
American exceptionalism is a term lots of people like to throw around, but right now, we are exceptional largely in our fiscal recklessness.
How did the US steer so deeply into the red? Most countries have ended the spending programmes that were launched to ease the pain of pandemic-induced lockdowns. But all the $6.7tn in new spending from the Biden administration came after 2020 was over. Most of it had nothing to do with pandemic relief.
Instead, Joe Biden used the sense of crisis to launch a latter-day New Deal, building infrastructure and industry ostensibly to compete with China and combat climate change. No other government plans to spend as heavily, leaving the US all but alone on the road to deeper deficits. Fans of Bidenomics see it as smart investment. But they ignore the curve-busting scale of new spending and its potential consequences for US debt, inflation, and growth in the long run.
The US has been running deficits almost every year since the 1960s without triggering a serious financial crisis. So the conventional wisdom is that deficits don’t matter. Many economists argue that they pay for themselves if the economic growth generated by new public spending exceeds the government’s interest payments. That feat was easier to achieve when interest rates were near zero, however. Now that rates are rising, it’s almost impossible.
It’s going to get worse before it gets better, as interest rates rise and as feckless spending by Congress and the Executive Branch continues to increase.
Things may now be to the point where we cannot grow our way out, and it would be best not to contemplate a Wiemar-Republic-style inflation to inflate our way out. But there’s another possibility.
Representative Nathaniel Moran (R-TX) has sponsored H.J.Res.80, which proposes a balanced budget amendment to the Constitution of the United States. The Amendment reads:
Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That the following article is proposed as an amendment to the Constitution of the United States, which shall be valid to all intents and purposes as part of the Constitution when ratified by the legislatures of three-fourths of the several States within seven years after the date of its submission for ratification:
“article —“section 1. Expenditures and receipts shall be balanced, which may occur over more than one year. Expenditures shall include all expenditures of the United States except those for payment of debt, and receipts shall include all receipts of the United States except those derived from borrowing. Congress shall achieve balance within ten years following the ratification of this article.
“section 2. For emergency situations, two-thirds of the House of Representatives and the Senate may for limited times authorize expenditures exceeding those pursuant to rules established under section 1. Debts incurred from such expenditures shall be paid as soon as practicable.”.
I’d prefer to see section 2 include “…only in times of war, as defined by a Congressional declaration of war,” but I’ll take this. As of this writing, the measure has been referred to the House Judiciary Committee but has no co-sponsors. And, frankly, it looks like it’s going nowhere.
Way back when, the Greek King Eurystheus assigned the hero and demigod Hercules 12 tasks. While the fifth seems most relevant, that being the cleaning of the Aegean stables (clearing away manure has a lot in common with politics, the key differences being that the smell of manure is better and dealing with it is, at least, honest work); balancing the Federal budget would make the Labors of Hercules look like a puny, pedestrian effort by comparison, but it has to be done. For the continued existence of the Republic, it has to be done.
The Weimar Republic solution, at this point, may be our only other way out. It has come to that.
What’s shameful – truly shameful, especially for House and Senate Republicans, given all their talk about fiscal responsibility, is that Rep. Moran’s resolution has not one – not one – co-sponsor. And people in Washington, D.C., wonder why Congress’ approval ratings are down there somewhere between polecats and head lice.
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