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Sunday, July 17, 2011

Balance This!

So I'm watching Meet The Press today and listening to Jim DeMint (R-SC) blather on about his truly idiotic balanced budget amendment that he's been championing for a while now.  After I stopped laughing, it occurred to me that maybe, not everyone realizes why it's a stupid idea, even if it is exceedingly inane.  What does the balanced budget amendment actually do, and why is it stupid?

DeMint's proposed amendment works very simply, as follows:
If ratified, it would require the President to submit to Congress a balanced budget that limits outlays to 18 percent of GDP. In limited circumstances, such as during a time of war, Congress can waive the balanced budget requirement with a three-fifths majority. The amendment also would make it more difficult for Congress to increase the burden on the taxpayer by requiring a two-thirds majority vote to raise taxes.
Now, this is dangerous for a number of reasons, albeit entirely predictable from Mr. DeMint.  For starters, as many experts will tell you, deficit spending is very important in various sorts of economic downturns.   In a recession or depression, one of the major components leading to these conditions persisting is rampant unemployment and a crisis of consumer demand.  That this happens is not a surprise: if the people who buy consumer goods don't have money, then they don't spend money, therefore businesses also suffer because no one is buying their products, etc.  This is basic cause-and-effect and it is amazing to me that sometimes policymakers don't grasp it.

Persistent unemployment (such as we have now) further compounds the problem.  This is why policies such as unemployment insurance/subsidies are so important; when a downturn happens and people are laid off or fired these people essentially drop out of the economy for the duration of the downturn.  This is why they are known as "automatic stabilizers," as they kick in immediately to prevent damage to the economy from being too significant.  Other "welfare" programs work similarly in a recession; they keep people spending money during the downturn and smooth out the economic trough.  Federal public works programs can also work similarly, by ensuring that the recently unemployed become the more-recently-reemployed.

DeMint's plan would harm these sorts of programs by capping spending at a certain percentage of GDP, preventing deficit spending except via supermajority.  But that's not all, of course; we'd be lucky if it was only that.  Oh, nooo, Jim DeMint inflicts upon us even further hilarity - it also prevents raising taxes as well, which is of course entirely predictable.  Obviously, few people like paying taxes.  I have never met someone who sees April 15th as their favorite day of the year.  With that said, however, paying taxes is not in itself evil as long as the returns for each individual's tax dollars happens to be acceptable.  For business owners, a little bit of extra taxation can be good if it leads to increased consumption during lean times.

Also, has anyone looked at California lately?  Has no one paid attention to what happens when you make it impossible to raise taxes?  Your state can no longer fund everything.  And if you then can't borrow money either and create deficits, then everything goes crazy.  Sometimes - and I know this is hard to admit - but you sometimes really do need to raise taxes a bit to raise revenue.  You can't magically cut taxes to zero and expect infinite revenue.  That is impossible.  If you live in Grover Norquist's world where it's never correct to raise taxes, could you send me a postcard from there?  Because it is somewhere far, far away from the rest of the world.

Anyway, none of this is news.  What we're really dealing with is a sort of...postmodern governing ideology.  If the Republicans can just re-structure everything to fit their vision of how the world works, maybe reality will just re-write itself to conform!  That would sure be nice.  Is there a way I can force reality to conform to my vision that I should have super-powers?  The only difference is that we treat the GOP's policy prescriptions as if they are actually serious.  This is the biggest mistake of all.

So, long story short: if Jim DeMint gets his way, it will be A Bad Thing.

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