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2:23 pm CST - January 21, 2011

Posted under The Scoop

DeMint Proposes Balanced Budget Amendment

By Robert Romano – GetLiberty.org

In a recent email to supporters, Senator Jim DeMint (R-SC) proposed tying an upcoming vote to raise the $14.294 trillion national debt ceiling to a balanced budget amendment. Not a bad idea.

After all, why tie an increase in the debt ceiling to a single year’s budget cuts, when it could be tied to a requirement that all budgets be balanced? The DeMint proposal would require future Congresses to live within their means, and would be the first ever constitutional limit on Congress’ power of the purse.

The proposal still appears to be in a rough draft form, but the email gives some basic details. The amendment would “Require Congress to balance the federal budget each year… [p]revent Congress from spending more than 20 percent of GDP… [and] [r]equire a 2/3 super-majority vote to raise taxes”.

So, really, it’s a balanced budget/spending limit/tax cap amendment. This is a very good start in the right direction. It would limit how much Congress could spend in addition to requiring that the budget be balanced. That’s important because what good is a balanced budget without a cap on spending? If there were no limit on spending, Congress could just spend as much as it wants, and use confiscatory tax increases to balance the budget. Instead, under the DeMint proposal spending would be limited to 20 percent of the economy. And tax increases would require broad, bipartisan support.

The debt promises to leave future generations in an intractable situation if Congress does not stop spending now. With the $14 trillion national debt fast approaching 100 percent of the Gross Domestic Product, it is time to rein that debt in before it becomes impossible to ever pay back.
However, more could be done in the context of a constitutional amendment to guarantee the end result the American people desire. Here are some suggestions of what a comprehensive proposal could look like:

  • Restricts spending and taxation to no more than 20 percent of economic output, except upon a formal declaration of war.
  • Contains a balanced budget requirement.
  • Requires a two-thirds supermajority in order to raise taxes.
  • Upon a formal declaration of war, Congress shall be allowed to borrow upon the full faith and credit of the United States, but borrowed monies shall be kept in a separate war fund. The war fund would only be used for defense and security appropriations. Non-defense spending during war could additionally be limited to 10 percent of economic output.
  • In the event of war, the balanced budget requirement would still be applied to non-defense spending. It would be up to Congress to then determine how much revenue to dedicate to the war effort, and how much for domestic spending, and therefore how much it felt comfortable borrowing for the war fund.
  • When there is a surplus of revenue, the proceeds could be dedicated by Congress at least 25 percent towards debt repayment. All other surplus revenue would be returned to taxpayers in the form of tax refunds.
  • The national debt may not exceed 60 percent of economic output. When it does, 15 percent of revenue shall be dedicated every year to debt repayment of principal owed. The 60 percent of GDP borrowing limit, and the 15 percent of revenue to debt repayment requirement, could be waived only upon a declaration of war.
  • At all other times, including times of war, at least 10 percent of revenue shall be dedicated to debt repayment of principal owed, until the debt is retired, at which time spending and taxation in peacetime could be reduced to no more than 18 percent of economic output.
  • It shall be illegal for the government to create money in the central bank to purchase national debt securities, or for the purposes of debt repayment of principal owed and interest owed.

Besides the balanced budget, spending limit, and tax cap, this proposal would go further by specifically restricting the growth of the debt. Right now, states flout their balanced budget requirements by borrowing money, and counting it as revenue.

So, in addition to a spending limit, there needs to be limits on borrowing, too. Restricting all borrowing to war spending would be a good way to do that. Then, the nation could get its fiscal house in order. Congress couldn’t spend more than it takes in, except during war, and then only for the war.

Interest owed would have to be paid out of revenue. This would prevent the Treasury from borrowing yet more money just to pay the interest payments on the debt, which now total over $200 billion. By the end of the decade, they will cost almost $1 trillion.

The proposal would also guarantee debt reduction: The principal owed gets repaid over time out of revenue, 10 percent of revenue every year, no matter what. This is important because the national debt has grown every year on end for the past 52 years. If there is no provision requiring that it be paid down, it probably never will be.

And it would be illegal for the Federal Reserve or any other organ of the government to print money to pay the debt. This would prohibit the current practice of the Fed to purchase U.S. treasuries, of which it already owns more than $1 trillion, and eliminate all future attempts to pay the debt with monopoly money.

Overall, this would drastically improve the nation’s fiscal outlook.

If enacted, about $300 billion would be dedicated to debt repayment on principal owed every year based on current dollars and budget figures. The $14 trillion national debt would be retired in 46 years if revenue failed to grow. If the economy booms, and revenue booms, it would be paid off in about 30 years or less.

By tying such a proposal to a must-pass vote on increasing the national debt ceiling, congressional Republicans could ensure that Congress would almost never need to increase the debt ceiling again. And it would fulfill their Pledge to America to “pay down the debt” by requiring that it be paid down over time.

Congress will never willingly rein itself in. The lesson the American people are learning is that unless the Constitution specifically requires frugality, parsimony, and fiscal prudence, it will never happen. Now is the time for strict constitutional restrictions that will save the nation from certain insolvency.

Robert Romano is the Senior Editor of Americans for Limited Government.

19 Comments

CWJensen
3:22 pm CST
January 21, 2011

A Balanced Budget and a $14,000,000,000.00 that Y’all is an OXYMORON.
30-46 years to retire the DEBT?
Bull Crap are these people OUT of their minds?
Pledge to politicians MEANS open the DOORS the the BLIND MICE have bought the LIE.
JIM DeMINT obvious has drank the KOOL AID and needs to be scratched of the list of PATRIOTS.
The proposal guarantees the USA will continue to print worthless money and HOPE to pay back debt with deflated $$$$$$$$$$ while the average Joe and Jill bend over and grab their anlkles.

NO MORE INCREASES in our NATIONAL DEBT.

garywfbg
8:33 pm CST
January 21, 2011

CW—I’m a businessman, not a politician so I may be missing something. If my business had this kind of debt, the only solution is to set this FIXED debt aside and make payments, initiate austerity measures to insure it’s paid for and more debt is not created AND monitor the business thru financials to make sure it remains profitable . Isn’t that basically what Jim DeMint wants?? The only other option is bankruptcy. We can CUT, CUT, CUT but if we don’t have a vehicle to pay for this debt already created, the ready ink will eventually drown us. If you know something I don’t–please advise??

JALINA STUTTE
8:35 pm CST
January 21, 2011

DeMint is a true consevative and would make a great president in 2012. He loves this country unlike the Bushes, Clintons and obamas!

alicia
9:11 pm CST
January 21, 2011

Right, Gary. I agree. The only matter in your argument that gives me pause is relying on the balance sheet. That’s obviously necessary, of course, but who to trust with it? The CBO is essentially nothing but a rubber stamp.

I have a problem with the provision in the article requiring a supermajority in order to raise taxes. Didn’t we just survive a supermajority that darn near killed us?

A balanced budget is a start; but they must also shrink government and relax the countless regulations, thereby providing a stable climate for business to prosper. If all this were to happen, the debt would be retired rather quickly.

In the final analysis, it’s up to each of us to require that our Senators and Representatives measure up.

CWJensen
10:15 pm CST
January 21, 2011

I AM A MATHEMATICIAN ………………………….X WILL NEVER = X + $14,000,000,000,000.

Sulla
11:01 am CST
January 21, 2011

Balanced Budget Amendment is bull. The problem is spending, damn it. Balanced budget amendment merely gives the Comsymps cover to raise taxes on the few people who still have jobs. Stop the spending. Don’t try to hide behind pseudo virtue of “balanced budget”. We have plenty of money — Federal tax receipts are near records. But we have a profligate, criminal class known as Congressmen (and women) who buy votes with our money.

garywfbg
11:09 am CST
January 21, 2011

CW–the amount is staggering–I agree, but all debt is relative. The revenue vs the debt are out of wack, but the revenue is a staggering number, also as is the debt–all are relative. There are a number of things you could do to relieve this debt, and quicker than you think. Right now the options aren’t very many, but time has a way of changing situations, that’s when you maximize your advantages and reduce this thing. Due to the revenue versus the debt, it CAN br paid off and X will = 0– when is the big question? 30 years is a very conservative figure–I think–easy for all to understand–like a mortgage payment, pay it off early , if you can. Of course everything is based on the economy being ok without recession and/or depression.

PS It won’t be paid off with this bunch of no-brainers in the Whitehouse and Democrat thuggary lies–things will collapse. What DeMint is offering, with the austerity measures is a proper way out.

CWJensen
10:13 am CST
January 21, 2011

Gary
NO all debt is not relevant………….Neither is all pain or suffering.
Before you were BORN I was living through the RESULTS of OUT of CONTROL spending trying to buy our way OUT of a Depression.
Believe me YOU DO NOT want to experience that.

CWJensen
10:18 am CST
January 21, 2011

BTW
The GOVERNMENT does KEEP it’s PROMISES so CONSERVATIVE figures are NOTHING but more LIES.
Do you BELIEVE the Health “CARE” figures or just pick and choose those you would like to believe?

CWJensen
10:30 am CST
January 21, 2011

Alicia

The Outstanding Public Debt as of 05 Feb 2007 at 11:46:17 PM GMT is:
$ 8 , 7 0 1 , 0 2 7 , 4 5 7 , 9 6 4 . 5 4
The beginning of the Demon Rat Control of Congress.
http://www.usdebtclock.org/
The debt today
SORRY WE CANNOT WAIT
203,000,000,000 a year just to pay the interest SO the cuts would would have to exceed 203,000,000,000 for any $ to pay down the debt.
BTW
WATCH that debt and interest increase while our CONGRESS debates a “balanced” budget.

CWJensen
11:52 am CST
January 21, 2011

Thought you might like to see who is buying into the USA banking industry.
http://online.wsj.com/article/SB10001424052748704754304576096002767228880.html?mod=WSJ_hp_LEFTWhatsNewsCollection
MAYBE there is HOPE ?

garywfbg
7:09 pm CST
January 21, 2011

CW–I said “relative” not relevant–meaning its a big debt, but a years’ revenue is also big . This debt is very relevant. :)
BTW–If we set this huge debt to one side, we should negotiate the interest at 0 or the very most 1%. We are negotiating from a position better than the creditors, so use our advantage–we owe so much, most countries will be grateful to just get back their principle in leu of default–so we should set the terms— just a thought.

PS I agree we need to act NOW—the longer we wait, the more it costs. The Democrats should be ashamed of the way they ran this up–what a bunch of thugs. The RINOs that spent with them are no better.

CWJensen
9:06 pm CST
January 21, 2011

I MISSPOKE I WAS ADDRESSING THE WORD RELATIVE AND MEANT TO USE RELATIVE.
That being said GOOD LUCK WITH NEGOTIATING A LOWER INTEREST RATE.
IF YOU HAVEN’T NOTICED the interest rate on treasuries has been going up so they can sell them.
Brazil is now paying almost 12%.

The only way to recover our COUNTRY is people like this:
http://radtkeforsenate.com/2010/12/why-am-i-running-for-the-us-senate/

CWJensen
11:01 pm CST
January 21, 2011

BTW
Look at the DEBT clock
The Debt is almost equal to the GNP…………………economist consider that the tipping point.
Every one in the WORLD admits that EXCEPT our Government. (at least publicly).

CWJensen
8:43 am CST
January 21, 2011

Mr. Ryan, who won an open seat in Congress in 1998, lives in his hometown with his wife, Janna, and three young children. When asked about speculation that he may run for president, Mr. Ryan has been known to respond: “My head isn’t big enough, and my kids are too small.”
You want consider someone to solve our nation’s financial problems check out:
http://online.wsj.com/article/SB10001424052748704279704576102490181486806.html?mod=WSJ_hpp_LEFTTopStories
He is someone worth looking at ALTHOUGH he seems to have spend to much time in Washington.
I will be very interested in LISTENING to his RESPONSE to Deceiver tonight.
WE NEED TO BE VERY CAREFUL THAT THIS TIME WE GET IT RIGHT.

Christian Archer
9:22 am CST
January 21, 2011

CWJ, Rep. Paul Ryan is a lightning rod in the Republican Party that we should keep our eyes on. He’s going to be a major player in this nation’s budget proposals. That’s a great article about him that you just posted above. According to the article, the Demoncrats are just daring Republicans to align themselves with Paul Ryan’s innovative and aggressive budget ideas.

garywfbg
3:49 pm CST
January 21, 2011

I watched Greta on Fox interview Paul Ryan on TV a few days ago—I was really impressed. Greta is an attorney and could not plausibly argue a different viewpoint; all she could do basically is listen while he persuaded her and us watchers He and his team could absolutely fix things. Greta, being a good Democrat could only hope there was someone in her party that was half as smart and half as convincing—Obama is the best they have and he is a lightweight with no clue. I don’t know a lot about Mr. Ryan, but his positive optimisim coupled with a good delivery is a breath of fresh air after the 4 years of crap we’ve been getting—I like him and I also have a good gut feeling he would be good for the country.

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