Many Republicans have been concerned about the federal deficit since George W. Bush turned a surplus into a deficit with increased spending and tax cuts but as soon as Barack Obama was elected president this concern quickly transformed into an obsession.
To many, this has become such a dire situation that 20 states are now calling for a constitutional convention to include a balanced budget amendment into the US constitution. The most recent state to add fuel to this balanced budget fire is Michigan where Republican Governor Rick Snyder stated in his state of the state address “Hey we balance our budget at home, we balance our budget at work, why can’t the federal government balance theirs?”
While most Republicans would probably agree with the governor’s statement, the reality is this just isn’t true. Companies and households do not balance their budgets. Of the 500 companies in the S&P 500 only 23 are debt free. The same is true of households, where 69 % hold some form of debt. So if the truth is that neither companies nor households balance their budgets then using the Republicans own logic it follows that the government doesn’t need to either.
The real question shouldn’t be about a balanced budget but rather how the money is spent. As the CNBC article on corporate debt explains “Wall Street doesn’t seem to care if companies are carrying debt on their balance sheets – as long as they are putting that money to work.” Smart companies will incur debt if that debt has a return on investment. This is also the case with the government.
In the 80′s Ronald Reagan oversaw a 3.1 increase in government jobs which stands in stark contrast to the 2.7 reduction in government jobs under President Obama. Regan also increased the national debt by 186% which dwarfs the 44% increase by Barack Obama, the 101% increase by George W. Bush and the 32% increase by Bill Clinton.
What Reagan understood was that during down times investments in government jobs, even at the expense of the national debt, keeps more people working and spending money which prevents the private sector jobs losses that compound the problem.
Of course many Republicans act like there is only one side to the government balance sheet. Since 2000 real government revenues have fallen by $249 billion. Similarly since 2009 real government spending has fallen by $226 billion.
The data shows that the Bush tax cuts cost the government $2.8 trillion. Studies also show that tax cuts, not hikes, cause an increase in the size of government and the national debt. These real world realities run 100% counter to the talking point Republicans continue to try and sell year after year. Perhaps the real problem isn’t the money the government spends but the lack of money the government collects.
Additionally, Republicans supported nearly unlimited funding to fight wars in Iraq and Afghanistan without any of the tax increases associated with past wars or spending cuts that they insist are required currently for any new spending. These wars have already cost US taxpayers $2 trillion and are expected to cost another $2 to $4 trillion.
Does anyone really think that a balanced budget amendment would have stopped George W. Bush from going to war? After all everyone seems to agree that “in case of emergency” the government could simply ignore the balanced budget requirement of any balanced budget amendment.
This possibility is one of the biggest problems with a balanced budget amendment. Republicans think we must have this amendment because we can’t trust congress to act responsibly yet who are the architects of the balanced budget amendment that 20 states want enshrined into the constitution? The very same congress that can’t be trusted in the first place. Also, does anyone seriously think that these big spending politicians with a 10% approval rating aren’t going to find loopholes that will render this amendment moot?
No one argues that the government shouldn’t be more prudent with its money, but a balanced budget amendment does almost nothing to address the underlying problems that lead to wasteful spending. Make an amendment that prevents the typical quid pro quo between politicians and large donors, keeps the military from paying $1,000 for a hammer, stops fraud in government services, cuts medical costs to match world norms, eliminates corporate welfare, and ends the billions in cost overruns.
Odds are, such an amendment still wouldn’t pass since there is way too much money at stake, but the reality is that Republicans really don’t want a balanced budget because if they couldn’t feign concern for the national debt when Democrats were in charge they would be stuck talking about immigration, women’s rights, marriage equality and a host of other topics that exposes the bigotry of their core values.