Posts tagged “Budget”

June 30th, 2011

A Balanced Budget Amendment: What Was Once a Bad Idea, is Still Very Much a Bad Idea

by Jordan Eizenga

In March, all 47 of the Republican Senators joined in introducing legislation that would constitutionally bind the federal government to balancing its budget annually.  And this week, Republican Senate Majority leader Mitch McConnell called once again for a balanced budget amendment, a constitutional rule requiring the federal government to spend no more than it takes in as revenue each year.

A balanced budget amendment is not a new idea. Over the years there have been various proposals to amend the U.S. Constitution to impose a balanced budget requirement, but none have garnered enough votes in Congress to take the next step toward enactment: ratification by the states. 

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June 29th, 2011

by Jordan Eizenga

Some commentators have argued that the 14th Amendment of the US Constitution makes the debt ceiling unconstitutional. Section Four of the 14th Amendment states that:

the validity of the public debt of the United States, authorized by law, including debt incurrent for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

Constitutional scholars, such as Garrett Epps (the gentleman in the video), interpret this to mean that that it is unconstitutional for the federal government to renege or default on its financial obligations. According to Epps, the President could simply claim that the debt ceiling is unconstitutional and order the Treasury Secretary to issue more debt in order to pay its obligations. Yet, even if there is a legal argument for overriding the debt limit, the political argument for doing so is complicated. It is far from clear that the public would either comprehend or agree with the President’s interpretation of the Constitution. But, it is equally unclear if the public would side with obstinate Republicans who seemed willing to allow the federal government to default on its obligations.

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June 19th, 2011
The Changing Rules of the Debt Debate

by Jordan Eizenga

For months, the Republican leadership in the U.S. has made it clear that raising the debt limit is absolutely necessary. For instance, earlier this year, House Budget Committee chairman Paul Ryansaid, “You can’t not raise the debt ceiling. Default is the unworkable solution.” Yet, since then, several key Republicans – Congressman Ryan included – have expressed support for not raising the debt ceiling before the Aug. 2 deadline, even if that means that the United States will default on its debt.

Just last week, Ryan said, “If a bondholder misses a payment for a day or two or three or four – what is more important is you are putting the government in a materially better position to better pay its bills going forward.”

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June 15th, 2011
Global Spending Caps Are a Very Unserious Idea

by Jordan Eizenga

Some conservative lawmakers are calling for a cap on total federal spending as a precondition to their support for raising the debt limit. Congress must adhere to this cap or else face automatic governmentwide spending cuts. This same idea is popping up in the Republican primary, too. The bottom line is that this is an astonishingly bad idea even for those willing to undermine the entire U.S. economy by engaging in political brinksmanship over the debt limit. The only redeeming quality of a spending cap is that it sounds good in a press release.

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June 13th, 2011

We need to spend today and save tomorrow

by Jordan Eizenga

I get it. The United States federal government has high debt and deficit levels and something needs to be done to reduce our budget deficit and pare back the national debt in the long term. Despite this fact, we should not be cutting spending at all in the near term. In fact, we need to do the opposite: we need to increase public spending to spur job creation and economic growth in the near term. 

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June 10th, 2011
Ten Charts that Prove the United States Is a Low-Tax Country

by Michael Linden, Seth Hanlon and Jordan Eizenga

The United States is a low-tax country. That’s true for individuals and for corporations, and it’s true whether you compare us to other countries or the America of the past. No matter how you slice it the conclusion is the same.

Conservatives like to claim that our budget deficits are purely a “spending problem.” Said Senate Minority Leader Mitch McConnell (R-KY): “We don’t have this problem because we tax too little. We have it because we spent too much.”

It’s a popular talking point, but it simply isn’t true. Deficits do not stem from spending levels alone. They are the product of a mismatch between spending and revenue. And when revenue is as low as ours is, you end up with big deficits.

Here are 10 charts demonstrating the simple, clear truth that federal taxes in the United States are very low.

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April 28th, 2011
What You Need to Know About the Federal Debt Limit

by Jordan Eizenga

Over the past decade, the U.S. Department of the Treasury has borrowed trillions of dollars to finance military interventions in two countries, unfunded tax cuts, and, most recently, efforts to rescue our financial system from collapse and help our economy recover from the Great Recession. But there is a limit to this borrowing, which the Treasury expects to reach by no later than early July.

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April 25th, 2011

Greg Ip, Economics Editor, gives a pretty good lay of the land regarding the debt ceiling.

Smart fellow.

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April 23rd, 2011

Check out this pretty helpful animation on the debt ceiling. The only element of the video needing correction is the claim that if we fail to raise the debt ceiling, we will “almost certainly default on our debt.” That statement is far from clear. In the event the ceiling is not raised, many expect Treasury Secretary Tim Geithner to make sure we continue making interest payments on the debt. That means we’d be making cuts elsewhere to keeping paying down the debt.

Yet, failure to raise the ceiling could still hurt our creditworthiness, as some investors may see a divided Congress as an impediment to deficit reduction. That is, if both parties cannot work together to raise the debt limit, it is hard to imagine that they can come together to chart a path toward a balanced budget.

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April 8th, 2011

Potential government shutdown: How did we get here?

by Jordan Eizenga

We are mere hours away from the government shutting down due to Democrats and Republicans failing to agree on a federal budget for this fiscal year. But, a closer look at what has transpired throughout the negotiations gives you a better sense of what’s really holding things up. 

Below is a chronology, which I have partially borrowed from my colleagues at the Center for American Progress:

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