Senate defeats both balanced-budget amendment bills

[cybrsage]

The Swiss better watch out. A recent EU report threatened that if “satisfactory” progress is not made on ending Switzerland’s low tax rates within the next six months, unspecified “alternative measures” will have to be considered.

We all know what those measures are...strongly worded letters in many languages expressing their discontent with what the Swiss are doing.

 

[lothar]

The Swiss better watch out. A recent EU report threatened that if “satisfactory” progress is not made on ending Switzerland’s low tax rates within the next six months, unspecified “alternative measures” will have to be considered.

We all know what those measures are...strongly worded letters in many languages expressing their discontent with what the Swiss are doing.

The Swiss model works so well that even as the EU and its single euro currency face a crisis of monumental proportions and possible economic implosion, Switzerland’s economy is doing just fine. Its GDP per capita is about double the EU’s, while its unemployment rate is around half.

“Just who do these unelected oiks think they are? Bullying a sovereign state outside of the EU to comply with ‘their’ greedy tax practices. What they really mean is, as a centrally planned soviet-style economy, the EU cannot cope with competition,”

Some critics said the EU was using Switzerland as a scapegoat for its own self-made economic crisis. Others lambasted European leaders for terrorizing the tiny country instead of fixing the EU’s own problems — possibly by using the Swiss model that seems to work so well for Switzerland.

 

[matt0611]

Good, we wouldn't want to balance our budget or anything...what a horrible idea

 

[bfdd]

lothar, thanks for that read.

 

[IronWing]

According to the OP's link, the Rep plan called for a 2/3 majority to raise taxes. This is a push for permanent minority rule and should rightfully be quashed. It is disgraceful that Congress can't come up with a simple balanced budget amendment that doesn't include that kind of BS and doesn't include an exception for war. If taxes have to be raised right now to pay for wars, then maybe folks wouldn't be so quick to start them.

 

[fskimospy]

I think what you say is reasonable, and I might even agree with it (still undecided on the whole balanced budget amendment issue), but I'm not sure that we'd ever get balanced budgets without some sort of structural requirement to do so. The recent history of Congress, when controlled by either party, suggests a tenuous commitment to the idea, at best. So how are we to achieve balanced budgets without requiring them? Otherwise, it's like asking school children to do optional homework.

Well the primary thing to look for is the debt/GDP ratio I would say, and in light of that the US has had a number of experiences with significantly decreasing its debt ratio. I guess I would just say that we've done it in the past without one, we can do it again.

 

[bfdd]

Well the primary thing to look for is the debt/GDP ratio I would say, and in light of that the US has had a number of experiences with significantly decreasing its debt ratio. I guess I would just say that we've done it in the past without one, we can do it again.

you're such a conservative right now.

 

[fskimospy]

Having a balanced budget doesn't have to counter cyclical spending.
If they did, states like Delaware and Texas wouldn't have rainy day funds.

True, but we also know that these rainy day funds were woefully inadequate. I just don't think it's credible to imagine we would be able to build one up like that.

I don't know if you supported TARP or not (I did, big time), but if this amendment were part of the Constitution in the fall of 2008 TARP would not have passed and most economists believe that would have been an unmitigated catastrophe for the world economy. I don't think we need to give ourselves more trouble than we already have.

This doesn't even get into the fact that this amendment would immediately be used by the Republicans to cut taxes and then use the BBA to force domestic cuts. It would be giving them a huge club to wield, which is also a terrible idea.

 

[Hayabusa Rider]

Shouldn't Republicans be passing a clean payroll tax relief bill? What's with this nonsense?

For once I agree.

 

[fskimospy]

you're such a conservative right now.

Well if you mean that I believe certain structures should stay the same, then I guess so. I mean by that definition most people are 'conservatives' about most things in life. My economic views are most certainly not what would commonly be labeled as conservative however.

 

[werepossum]

For once I agree.

Problem is, both sides agree that it should be "paid for" this time. Democrats insist that a tax cut can only be "paid for" by increasing other taxes; government must never make do with less. Republicans insist that a tax cut can only be "paid for" by decreasing government spending; government can and must make do with less just like everyone else. Within those constraints there can be no clean bill. Obama got smart and decided to only continue the temporary payroll tax cut with a surtax on the highest wage earners, forcing the Republicans to raise taxes on someone. This is the Pubbies' latest attempt to counter that political move by throwing something else popular into the mix - an oil pipeline, promising jobs and additional energy security.

 

[bfdd]

Well if you mean that I believe certain structures should stay the same, then I guess so. I mean by that definition most people are 'conservatives' about most things in life. My economic views are most certainly not what would commonly be labeled as conservative however.

obviously that's what I meant and it was in jest

i prefer the status as not quo.

 

[SparkyJJO]

Why is it "bad" to require a balanced budget

 

[MomentsofSanity]

Problem is, both sides agree that it should be "paid for" this time. Democrats insist that a tax cut can only be "paid for" by increasing other taxes; government must never make do with less. Republicans insist that a tax cut can only be "paid for" by decreasing government spending; government can and must make do with less just like everyone else. Within those constraints there can be no clean bill. Obama got smart and decided to only continue the temporary payroll tax cut with a surtax on the highest wage earners, forcing the Republicans to raise taxes on someone. This is the Pubbies' latest attempt to counter that political move by throwing something else popular into the mix - an oil pipeline, promising jobs and additional energy security.

Well it's come out earlier this evening that the Dems are backing away from the surtax on incomes over 1M so it should be interesting to see what they do come out saying they accept...

 

[IronWing]

Why is it "bad" to require a balanced budget

It isn't. It is bad to muck up the amendment with unrelated pet policies.

 

[SparkyJJO]

It isn't. It is bad to muck up the amendment with unrelated pet policies.

Very true. Both sides are horrible about putting all sorts of extra unrelated crap in these bills. I think they should pass a law banning themselves from doing such things. 1 bill for every change (or related set of changes) wanted, no excess crap.

Reintroduce the balanced budget requirement bill, but without any other nonsense, and we'll go from there.

 

[Hayabusa Rider]

Problem is, both sides agree that it should be "paid for" this time. Democrats insist that a tax cut can only be "paid for" by increasing other taxes; government must never make do with less. Republicans insist that a tax cut can only be "paid for" by decreasing government spending; government can and must make do with less just like everyone else. Within those constraints there can be no clean bill. Obama got smart and decided to only continue the temporary payroll tax cut with a surtax on the highest wage earners, forcing the Republicans to raise taxes on someone. This is the Pubbies' latest attempt to counter that political move by throwing something else popular into the mix - an oil pipeline, promising jobs and additional energy security.

I guess I'm just fed up with important legislation looking more like christmas trees with "decorative" attachments, meaning hanging all sorts of things not relevant to the issue at hand. It's how business is done I know, but my patience with DC is limited.

We'll see how this looks by the time it comes up for a vote again.

 

[lothar]

True, but we also know that these rainy day funds were woefully inadequate. I just don't think it's credible to imagine we would be able to build one up like that.

I don't know if you supported TARP or not (I did, big time), but if this amendment were part of the Constitution in the fall of 2008 TARP would not have passed and most economists believe that would have been an unmitigated catastrophe for the world economy. I don't think we need to give ourselves more trouble than we already have.

This doesn't even get into the fact that this amendment would immediately be used by the Republicans to cut taxes and then use the BBA to force domestic cuts. It would be giving them a huge club to wield, which is also a terrible idea.

Some states have rainy day funds that are adequate(meaning they have >10% of general fund expenditures.)
Many do not.

Some states also have stupid rules regarding these rainy day fund, such as 25-50% of the money taken out must be funded back to it within a year regardless of whether the economic recovery occurs or not...Very stupid.

I do support requiring a super majority some states have to access rainy day funds to prevent it's potential abuse by the politicians.

In order for a rainy day fund to be adequate, it needs to:
1.) Be at least 10% of general fund expenditures, or >15% preferably. I find the notion of a "cap" to be stupid.
2.) Require a super majority(60-66% vote) to prevent it's potential abuse by stupid politicians.
3.) Get rid stupid replenishment rules.

Interesting read about rainy day funds comparing Delaware, New Jersey, and Pennsylvania from the Philadelphia Federal Reserve. Also, pay special attention to the Hong Kong model as well.
http://www.google.com/url?sa=t&rct=...sdSECQ&usg=AFQjCNE_d6q1lhsooWG_3Ec7YYqWuTXiSw

Delaware rainy day funds are great in that regard...The problem is the 5% cap they have is too low. They need to increase that to 15%.
New Jersey and Pennsylvania rainy day funds in comparison are a disgrace. That's not a rainy day fund, that's called saving your lunch money.

About TARP, I was in full 100% support of it earlier.
Now that I look back at it, I'd say I'm not so sure anymore. I'm probably more 50:50, 45:55, 55:45, or some derivative of that.
I was against the auto bailout then, and I still am now.

 

[Mursilis]

Well the primary thing to look for is the debt/GDP ratio I would say, and in light of that the US has had a number of experiences with significantly decreasing its debt ratio. I guess I would just say that we've done it in the past without one, we can do it again.

Surely you see how dubious that logic is. That's like saying Rome will never fall, because it hasn't in the past. Has the US ever had such a sustained period of deficit spending as we do now? It's the new norm, or at least has been for the majority of my lifetime, and I'm no child anymore. Furthermore, future projections don't suggest an end to deficit spending anytime soon.

 

[Anarchist420]

It would be nice if interest rates would go up and if both nominal and real GDP would go down so that we can have a recession. Advocates of higher GDP are basically just saying "let's break windows when we're in a recession".

But in any event, it's sad how anti-laissez-faire U.S. policy is.

 

[fskimospy]

Surely you see how dubious that logic is. That's like saying Rome will never fall, because it hasn't in the past. Has the US ever had such a sustained period of deficit spending as we do now? It's the new norm, or at least has been for the majority of my lifetime, and I'm no child anymore. Furthermore, future projections don't suggest an end to deficit spending anytime soon.

Of course past performance doesn't necessarily mean future results. It is still instructive however.

What I am saying is that I do not believe the United States' political system has fundamentally changed in a way that requires a constitutional amendment to eliminate deficit spending. Not only did the 90's show that this was not structurally true but I believe that a balanced budget amendment would have large unintended consequences that would be far, far worse than continued deficit spending.

 

[fskimospy]

Some states have rainy day funds that are adequate(meaning they have >10% of general fund expenditures.)
Many do not.

Some states also have stupid rules regarding these rainy day fund, such as 25-50% of the money taken out must be funded back to it within a year regardless of whether the economic recovery occurs or not...Very stupid.

I do support requiring a super majority some states have to access rainy day funds to prevent it's potential abuse by the politicians.

In order for a rainy day fund to be adequate, it needs to:
1.) Be at least 10% of general fund expenditures, or >15% preferably. I find the notion of a "cap" to be stupid.
2.) Require a super majority(60-66% vote) to prevent it's potential abuse by stupid politicians.
3.) Get rid stupid replenishment rules.

Interesting read about rainy day funds comparing Delaware, New Jersey, and Pennsylvania from the Philadelphia Federal Reserve. Also, pay special attention to the Hong Kong model as well.
http://www.google.com/url?sa=t&rct=...sdSECQ&usg=AFQjCNE_d6q1lhsooWG_3Ec7YYqWuTXiSw

Delaware rainy day funds are great in that regard...The problem is the 5% cap they have is too low. They need to increase that to 15%.
New Jersey and Pennsylvania rainy day funds in comparison are a disgrace. That's not a rainy day fund, that's called saving your lunch money.

About TARP, I was in full 100% support of it earlier.
Now that I look back at it, I'd say I'm not so sure anymore. I'm probably more 50:50, 45:55, 55:45, or some derivative of that.
I was against the auto bailout then, and I still am now.

I get what you're saying, I guess my argument was that in the case of the financial crisis we just had a rainy day fund would have 1.) been inadequate and 2.) would not have been usable with supermajority requirements. We barely mustered a majority, and while maybe a continuing financial meltdown would have spurred foolish Republicans into action eventually, who wants to take that chance?

 

[Jhhnn]

Balanced budgets are the great shibboleth of the Right when they're out of power, and something they ignore completely when in power. Reagan/GHWB quadrupled the debt, and Bush doubled it again.

It's also incredibly bad policy, particularly when the Rich have the power to create a scarcity of liquidity by extraction of money from the general economy, even with very unbalanced budgets, and when their economic might is based on an enormous balance of trade deficit.

W/o deficits, money would become very scarce very quickly, bringing the economy to its knees, as in the early 1930's. W/o deficits, the same amount of money would be spread more thinly among a growing population, also making money scarce.

All the money currently in existence was created by govts, anyway. It can't borrow money it didn't create in the first place. Enormous deficits are just an accounting of the wealth extraction at the top, the rate of wealth concentration. Interest paid is compensation for dilution of the value of the money that bondholders own.

The Swiss? They'd be an economic backwater if it weren't for the fact that they've beggared their neighbors for hundreds of years as a tax dodge. Their policy has never promoted real growth, merely promoted the concentration of financial wealth made available by growth occurring elsewhere. The fact that the ROTW puts up with them and other tax havens tells us just how much clout the Rich truly have.

 

[werepossum]

I guess I'm just fed up with important legislation looking more like christmas trees with "decorative" attachments, meaning hanging all sorts of things not relevant to the issue at hand. It's how business is done I know, but my patience with DC is limited.

We'll see how this looks by the time it comes up for a vote again.

They said on the radio today that Obama had dropped his requirement for a tax increase on the rich - evidently he hates this pipeline worse than he wants to punish the rich. Of course, this is the news; this may or may not bear any lasting resemblance to reality . . .