GOP Threatens U.S. Fiscal Suicide Over Balanced Budget Amendment

(Click here for larger image) The national debt of the United States tripled under Ronald Reagan and doubled again under George W. Bush. Bush and the GOP Congress cut taxes during wartime, a first in modern American history. During his

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(Click here for larger image)

The national debt of the United States tripled under Ronald Reagan and doubled again under George W. Bush. Bush and the GOP Congress cut taxes during wartime, a first in modern American history. During his presidency, Republicans voted seven times to increase the debt ceiling. As Utah Senator Orrin Hatch in 2009 described Republican orthodoxy under Republican presidents, "It was standard practice not to pay for things."

But that was then and this is now. And now with a Democrat in the White House, Hatch and his Republican colleagues are demanding passage of a Balanced Budget Amendment as a condition of raising the $14.3 trillion debt ceiling. Whether that blackmail is paid or not, either way the result would be a catastrophe for the United States.

The Balanced Budget Amendment (BBA) gambit is just the latest chapter in the Republican saga of "America Held Hostage." Earlier this month, Senate Minority Leader Mitch McConnell warned that "not a single one of the 47 Republicans will vote to raise the debt ceiling unless it includes with it some credible effort to do something about our debt." McConnell then upped the ante:

Senate Republican Leader Mitch McConnell warned on Friday that GOP senators will not vote to increase the government's borrowing limit unless President Barack Obama agrees to rein in Social Security, Medicare and Medicaid, laying down a high-stakes marker just weeks before the debt ceiling is reached.

Now, as Human Events and Politico reported Friday, America's Republican captors are threatening the shut down the government and undermine the full faith and credit of the United States if their demands for a "Starve the Beast" amendment are not met:

The Senate Republicans are preparing to tell President Obama that they want a Balanced Budget Amendment (BBA) to the Constitution passed in Congress in exchange for raising the statuary debt ceiling above $14.2 trillion.

"My hope is that we would force a vote on a Balanced Budget Amendment as a condition to voting on the debt ceiling," Sen. John Cornyn (R.-Tex.) told HUMAN EVENTS. "By next week, or shortly thereafter, we will have all 47 Republicans unified behind the effort, and then begin to reach out to our Democratic colleagues."

A BBA would force the federal government to balance the federal spending to incoming revenue each year and cap spending at 18% of the gross domestic product (GDP). For the current Fiscal Year (FY 2011), the nonpartisan Congressional Budget Office (CBO) projects that government spending will be $1.4 trillion more than revenue and account for almost 25% of the GDP.

Of course, the GOP BBA is a recipe for disaster. If codified, Republican grandstanding on the budget would not only mean draconian cuts in government services. The fragile U.S. recovery would be stopped dead in its tracks.

As a matter of simple math, balancing President Obama's proposed FY 2012 budget would mean slashing $1.6 trillion from a $3.7 trillion spending request. That inevitably would devastate federal programs across the board. As this now-dated diagram of the 2011 budget below illustrates, you simply can't get there from here without raising taxes. Taking interest on the debt and defense spending off the table (as most Republicans insist) means cutting over half of everything else the federal government does. And that includes Social Security and Medicare.

Just as important, setting 18% of GDP as a target for both tax revenue and spending is both arbitrary and unrealistic. As the chart at the top shows, over the last 30 years federal spending dipped to 18% only during the presidency of Democrat Bill Clinton. It never dropped below 21% during the tenure of supposed small government advocate Ronald Reagan. As for revenue, the CBO among others reported that the combination of the Bush tax cuts for the rich and the recession which started in 2007 drove total federal taxes as a percentage of the U.S. economy at their lowest level since 1950. Making matters worse, in December Republicans demanded another $140 billion windfall for the wealthy as their price for continuing tax relief for everyone else. (More galling still, in February the GOP's Jim Demint (R-SC) and Mike Pence (R-IN) proposed legislation which would make the Bush tax cust permanent beginning in 2013 - and drain another $4 trillion from the U.S. Treasury over the ensuing decade.)

At a time of war and economic recovery, government should be high - certainly well above 18%. And as the economic recovery progresses, the government should and must raise taxes to reduce future deficits and to pay off what will be a $3 trillion tab for the nation's unfunded wars.

But the various versions of the Republican Balanced Budget Amendment would make the necessary virtually impossible. While both the House and Senate versions allow for the federal government to run deficits in wartime, both chambers would require a three-fifths vote to suspend the spending limit and balanced budget requirement " "when the U.S. is engaged in military conflict which causes imminent and serious military threat to national security and declared by a joint resolution that is approved by a three-fifths vote of each House of Congress." Even more onerous:

Furthermore, the Senate BBA prevents future Congresses from raising taxes in order to meet the requirements of the balanced budget by stipulating that any bills with tax increases will need two-thirds votes in both chambers.

For his part, Senator Cornyn (R-TX) acknowledged his party's latest ransom demand over the debt ceiling is a political ploy. Despite some Democratic support in the past (including from then Senator Joe Biden), the BBA is not going to get through the Senate and may not even come up for a vote. And that's just fine with John Cornyn:

"If, for some reason, the Balanced Budget Amendment were not to pass, I think the voters would then know, with very stark clarity, who is for a balanced budget and who is not, and it could have a big impact on the 2012 elections."

Of course, if for some reason Republicans follow through on their blackmail regarding the debt ceiling, the results would be cataclysmic.

While the specter of a global financial cataclysm caused by the default of the United States caused most sentient mammals to denounce that prospect as "insanity" (Obama economic adviser Austan Goolsbee), resulting in "severe harm" (McCain economic adviser Mark Zandi), "financial collapse and calamity throughout the world" (Senator Lindsey Graham), "financial disaster" (House Speaker John Boehner), Mitch McConnell and his Senate Republican colleagues are determined to continue with the game of chicken. Apparently, American fiscal suicide is a small price to pay for political power.

Meanwhile, the same Orrin Hatch who admitted that when a Republican sat in the Oval Office "it was standard practice not to pay for things" is now sponsoring his own version of a Balanced Budget Amendment. As Hatch declared last week:

"A Balanced Budget Amendment to the Constitution's time has more than come."

No, it hasn't. A Balanced Budget Amendment is a bad idea whose time should never come. And to use it to hold America hostage over the debt ceiling is beyond dangerous. It's suicidal.

(This piece also appears at Perrspectives.)

About Jon Perr

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