Category Archives: Debt and deficits

Congress: Better, sort of

By Steve Brawner
© 2014 by Steve Brawner Communications, Inc.

You could say that what Congress accomplished this month was a vast improvement. You also could say it wasn’t nearly good enough.

On Tuesday, President Obama signed a 1,600-page, $1.1 trillion “cromnibus” bill passed by Congress. The “cr” is an abbreviation for “continuing resolution,” which is a short-term funding mechanism that will be used for the Department of Homeland Security. “Omnibus” is the mechanism funding the rest of the discretionary budget – in other words, not entitlement programs such as Social Security and Medicare, which are on autopilot. Homeland Security is funded only until February so Republicans can try to undo Obama’s immigration order.

This is a step forward because Congress finished this task without a government shutdown, though the deadline for one came pretty close again. Next year will be a circus like always, but at least Congress won’t be playing Russian roulette with the economy for a while.

Unfortunately, important provisions were slipped into this spending bill that weren’t related to the budget. One, written by the big bank Citigroup, amends the Dodd-Frank law passed after the bank bailout and will let banks engage in riskier behavior backed by your tax dollars. If they make money, they’ll keep it. If they lose money, you’ll bail them out. Another provision increases the amounts that big donors can give to the Democratic and Republican National Committees tenfold, from $32,400 to $324,000.

Moreover, Congress relied on a few gimmicks to make the numbers work. The Committee for a Responsible Federal Budget, in fact, has found $30 billion it says violate the spirit of the sequester and the 2013 Murray-Ryan agreement. Without going into too much history, the sequester is a series of automatic spending cuts affecting non-entitlement programs. Murray-Ryan set spending caps for two years and raised spending levels above the sequester.

Google it if you need more. It’s hard to write about this stuff.

Thirty billion dollars is less than 3 percent of $1.1 trillion, so again, it’s not too bad. Still, it’s not great. One provision shifted $7 billion from regular defense spending, which is capped under the sequester and Murray-Ryan, to war spending in Iraq and Afghanistan, which is not.

This is one of many reasons why we should be reluctant to fight all these wars.

In addition to the cromnibus, Congress also passed a one-year bill extending 55 tax breaks retroactive to the beginning of 2014. These were deductions for wind energy production, big business foreign profits, schoolteacher supplies, college tuition, etc.

Some of those may be worthy policies, but there are several problems with doing it this way. First, the tax extenders bill reduces revenues to the federal government by $41.6 billion over 10 years – money future taxpayers will have to cover because Congress didn’t also cut $41.6 billon in spending. Next year, the tax breaks probably will be extended again, further adding to the debt. Also, by extending the tax breaks year after year instead of just cutting taxes permanently, Congress can hide how much these actions actually increase the national debt over time.

“It really is no more complicated than me going home and saying to my kids, ‘I’m going to ask you to pay for this $42 billion because we didn’t want to,’” Maya MacGuineas, CRFB president, said in an interview.

Finally, the whole point of a deduction is to encourage behavior. All of these tax breaks expired at the end of 2013. Waiting until the end of the year and then re-enacting them retroactively created uncertainty and made it harder for businesses to make the investments Congress is trying to encourage. If the credits are a win for the economy, then Congress should have extended them through 2015 so beneficiaries could include them in their plans moving forward. Congress did not do that.

Being a member of Congress often means choosing between two options that are less than ideal. For the record, here’s how Arkansas’ members voted on the two bills. On cromnibus, the yeses were Sen. John Boozman, Sen. Mark Pryor, Rep. Tim Griffin, and Rep. Steve Womack. The no votes were Rep. Rick Crawford and Rep. Tom Cotton. On tax extenders, everybody voted yes except Cotton.

The United States, or these United States?

By Steve Brawner
© 2014 by Steve Brawner Communications, Inc.

The federal government will not reform itself. We’re past the point of electing different politicians or enacting different policies. Instead, the government’s underlying structure must be changed through a constitutional amendment process never before used in American history.

That was the message of Michael Farris, head of the Convention of States Project, during testimony before the House and Senate State Agencies and Governmental Affairs Committees Wednesday.

The Constitution has been amended 27 times using one process – Congress proposes a change, and three-fourths of the states ratify it. But Article V of the Constitution also includes another provision where two-thirds of state legislatures, or 34, would call for a convention. Delegates would consider constitutional amendments, each state having one vote. Proposed amendments would have to be ratified by three-fourths of the states – 38, in other words.

That method has never been used successfully, but Farris says it’s the only hope to fix a broken system. His group is asking states to pass resolutions for a convention that would consider how to impose fiscal restraints on the federal government, limit its powers and jurisdiction, and impose term limits on members of Congress and Supreme Court justices.

So far, Alaska, Georgia and Florida have passed nearly identical resolutions to that effect, and Farris’ group plans a hard push in about 20 states, including Arkansas, this upcoming year. Rep. Bob Ballinger, R-Hindville, said he or someone else will introduce the resolution in 2015 if it has enough support.

Farris assured legislators that Article V’s high standards for ratification – 34 states to call a convention and 38 states to ratify – mean only amendments with broad popular support would have a chance of being ratified.

That being the case, the movement must expand beyond its current base and way of thinking. Its leaders and supporters appear to be almost exclusively very conservative individuals. During a presentation to a home-schooling group Wednesday, Farris suggested one change would involve clarifying the Constitution’s “general welfare” clause so that, “If the states can spend money on it, the federal government can’t.”

That would give a lot more power and responsibility to the states, but it also would mean ending Medicare and Social Security as we know it at the federal level. Such a change would be impossible to sell politically in a lot more than 13 states.

Legislators had varying reactions to Farris’ testimony. Rep. John Walker, D-Little Rock, a well-known civil rights advocate, said the same states’ rights argument was made on behalf of slaveholders and segregationists. Farris said that wouldn’t happen again and that legislators could instruct their delegates not to repeal the Constitution’s civil rights amendments. Later in the session, Rep. Douglas House, R-North Little Rock, and Rep. Jim Nickels, D-North Little Rock, said delegates could ignore whatever instructions legislators gave them. To that, Farris replied, “We’re really dealing in international law here is what this is is because it’s a meeting of sovereign states, and there are recognized principles of international law that govern, and there are no … exceptions in international law or in American law.”

Sovereign states being governed by international law? Such thinking would be a huge leap for a lot of people. Prior to the Civil War, the United States was a plural entity, as in “these United States.” Afterwards, it became a singular: “The United States.” The emerging national identity enabled the country to become the world’s greatest economic and military power. But it’s also led to a bloated, irresponsible, and unresponsive federal government. No state manages its business as badly as the federal government does, and many, including Arkansas, do it much, much better.

A rebalancing of power is needed, though not to the extent that Farris supports. An Article V convention may the best hope of doing that because, as he argued, the government will not reform itself. And with only 13 states required to kill any measure, what’s the worst that’s likely to happen? A bunch of people gather in one place and argue forever without accomplishing anything?

We already have that. It’s called Congress. So if this just turns out to be a big waste of time, we can live with that. What we can’t live with is not trying. Thanks to Article V’s parameters, a convention probably can’t hurt, and it might do some good. I’m for it – a convention, at least, and then let’s see what amendments are proposed.

Remembering history on the eve of war

By Steve Brawner
© 2014 by Steve Brawner Communications, Inc.

“Those who cannot remember the past are condemned to repeat it,” the philosopher and poet George Santayana wrote. They also forget the good stuff, too.

Prior to Dec. 7, 1941, Americans were divided on how to respond to the escalating global conflict. That division ended with the attack on Pearl Harbor. Congress declared war on Japan with one dissenting vote. Germany and Italy declared war on America. America declared war on Germany and Italy.

In the months that followed, Americans volunteered for service or registered for the draft. During the war years, civilians across the country participated in scrap metal drives, bought war bonds, and accepted the rationing of certain foods and household items. They could hardly buy a tire because the rubber was needed by the boys overseas. Taxes, which already were high, rose even higher to a top rate of 94 percent. No one, and I mean no one, could go about their lives pretending a war wasn’t happening.

On Wednesday night, President Obama announced that the United States is expanding its efforts against its newest enemy. As with Japan in World War II, the Islamic State, or ISIS, has been committing atrocities for a while now in Syria and Iraq, but American opinion was not galvanized until Americans were killed, visibly. In 1941, it was the bombing of Pearl Harbor. Now, it’s the beheading of two journalists.

Obama announced that the United States will, among other actions, lead a broad coalition against ISIS, conduct airstrikes in Iraq and Syria, and will deploy 475 additional military advisors in Iraq. He asked Congress for “additional authority and resources” to train and arm Syrian rebels. “America, our endless blessings bestow an enduring burden” of leadership, he said.

This effort will be a fraction of the federal budget, but it will not be free. There is no question the resources will be provided. The question is, from whom? Like much of what the United States has done since 1980 – including a bunch of military actions, particularly in Iraq and Afghanistan – the money likely will be borrowed. Because our blessings are not actually endless, we’ve made a habit of asking for our children and grandchildren to pay for our current needs.

Whether it involves foreign policies like the wars in Iraq, or domestic crises such as relief after Hurricane Sandy, America’s response has been consistent for decades: There’s a need, often a legitimate one, and so we meet it. Unfortunately, we tend not to count the costs, and if we do, we tend to pass them on.

I am not opposed to what the president is proposing – and unlike many, I expect he’ll do a decent enough job of carrying out his plans. But the costs of this exercise should be budgeted, and they should be offset by spending cuts elsewhere or by revenue increases. No more wars that we ask our kids to pay for.

There’s a tendency to glorify World War II. That’s a mistake, because we need to learn from actual history, not an idealized one. They had a draft back then because they couldn’t get enough volunteers. They raised taxes because they couldn’t just pass the offering plate and collect enough to pay for the war. At the end of the war, the national debt had increased to 109 percent of the gross domestic product – higher than it is now.

But Americans back then at least tried to pay their own way. They did this at a time when the entire world was in flames, when much of the available workforce was overseas, when many were grieving lost loved ones, and when the Great Depression was still a fresh memory. Everyone sacrificed – not just those who wore a uniform.

Now, like so many times in recent years, the United States is about to kill some bad people in a far-off land. Let’s hope it makes the world a safer, freer place.

If it does, it would be our world that benefits – the one we’re living in now. That means we should be the ones to pay for it, not our children and grandchildren. They already will be looking back through history at us, and, hopefully, learning from our mistakes so they don’t repeat them.

Impeach us all

By Steve Brawner
© 2014 by Steve Brawner Communications, Inc.

Impeaching the president would be bad for the country in many ways. It should not happen, and it will not happen.

But we columnists like to use this kind of thing to make a point, so here goes.

If the U.S. House of Representatives somehow were to vote for impeachment, there would be no point in asking whether or not the Senate would remove the president from office. Conviction requires a two-thirds vote in that chamber, and no Democrat there would vote for that.

Instead, a better question would be, if we’re going to start stripping constitutional duties, why stop with the president? Maybe we all should be replaced.

The president has failed to provide leadership on the most important long-term issue facing the federal government, one that will really matter long after the Benghazi and IRS scandals are long forgotten. The national debt was $17.68 trillion on Aug. 11 – more than $5 billion more than it was the day before and more than $11 trillion more than it was in 2000. The $500 billion that will be added to the national debt this year will be the best fiscal year the nation has had since President Obama took office. The debt is now equal to about $56,000 for every American man, woman and child. It’s still rising, and it will continue to rise unless something in Washington changes.

The country must have a serious conversation about its wants, needs and expectations, because it’s clearly living beyond its means. The president started that conversation by appointing the bipartisan National Commission on Fiscal Responsibility and Reform in 2010 to make recommendations for addressing the problem. At the time, he seemed interested in the subject. But no one in the White House is talking about fiscal responsibility and reform now.

The president sets the tone, but Article 1 of the Constitution gives Congress the responsibility for taxing, spending, and paying off debts. Clearly, Congress has been failing to fulfill those responsibilities for a long time. For the past few years, it has lurched from fiscal crisis to fiscal crisis, jeopardizing the full faith and credit of the United States and blunting the country’s economic recovery. Like a college freshman who parties all semester and then crams during finals week, it rarely acts anymore without an absolute deadline.

And yet despite the fact that, according to Gallup, only 13 percent of Americans approve of the job Congress is doing, being a member is a secure job. According to the Center for Responsive Politics, 90 percent of House incumbents and 91 percent of Senate incumbents running for re-election were sent back to Washington in 2012. Voters did not care that, during the fiscal year leading up to that election, the federal government had spent almost $1.3 trillion more than it had collected. In fact, they rewarded that behavior.

Ultimately, the White House and Congress reflect the will of the people, and the will of the people is to borrow and spend. Polls have made it clear that Americans are at least aware that the national debt is a problem, but they also oppose meaningfully cutting spending or raising taxes. In a survey last year by the Pew Research Center, respondents were presented 19 areas where spending could be cut. None were favored by a majority. Members of Congress and the president know this.

The Constitution reserves impeachment for “treason, bribery, and other high crimes and misdemeanors.” Americans today – the president, the Congress, and the voters – together have made the decision to steal trillions of dollars from our children and grandchildren. Stealing is a crime – in this case, a high crime. We’re committing treason against the future country they will inherit.

So maybe it’s time to stop talking about impeaching just a particular president and start talking about impeaching us all. We voters have proven unable or unwilling to perform our duties, and so perhaps those duties should be stripped from us and entrusted to the next in line – every American currently under 18. Put kids in the White House and in Congress. If we won’t make their future a priority, maybe they will.

I’m kidding, I guess. But at least my 12-year-old and nine-year-old know that stealing is wrong.

Real Americans tackle ‘Big Bad Budget’ in film

By Steve Brawner
© 2014 by Steve Brawner Communications, Inc.

If you and seven other Americans with different backgrounds and beliefs were given a weekend to balance the federal budget together, could you do it?

That’s the premise behind “Big Bad Budget,” a film that producer and host Tom Carroll calls a “high-brow reality show.”

Carroll, who owns an Albuquerque, N.M.-based marketing and PR firm, rounded up four local Republicans, three Democrats, and a Democrat-leaning independent. They were given information about the federal budget to digest for a week and then were brought together over two days in June 2013. Their mission was to balance the budget by finding $750 billion in spending cuts and/or tax revenue increases. The negotiations were filmed and then edited down to an hour.

Like other reality shows, there’s some conflict, though there’s no yelling or tearful confessionals. The two tribes – I mean, parties – were separated at times to strategize, and Carroll pulled individuals aside for brief interviews.

The show gave differing viewpoints a chance to be aired. Republican Seth Heath said this about food stamps: “Poverty isn’t supposed to be comfortable. It’s supposed to be painful. Otherwise you have no desire to achieve and to become a successful person.” Wanda Small, a human resources consultant and a Democrat, said most people are trying to succeed. While arguing against cutting unemployment benefits, she said one temporary position she tried to fill paying $10 an hour drew more than 150 applicants. “Nobody wants to be in a situation where they have to get a handout,” she said.

I’ll spoil the ending: They balanced the budget by raising tax revenues by $250 billion and cutting spending by $500 billion, including $200 billion from defense, or about a third of the defense budget. The vote was 7-0, with one abstention. Heath accepted higher taxes along with smaller spending cuts than he preferred. Small agreed to reduce unemployment benefits from 99 weeks to 18 months and to cut Social Security by $75 billion.

It’s hard to miss the point.

“Congress needs to see that it needs to put its own personal interest behind the national interest, and if regular Americans can get together and over a short period of time with the information make the hard decisions, then why can’t Congress?” Carroll told me.

Granted, the comparison with Congress is imperfect. The participants had only one task – make the numbers add up. Members of Congress must balance many competing interests, and not just personal ones. Quickly cutting $200 billion from the defense budget would send shock waves through the economy, for example.

Still, the show demonstrates that, when Americans are given the facts and a reason to work with people with whom they disagree, a consensus can emerge. The first thing that happened was the Democrats proposed cutting $10 billion from the Department of Homeland Security. Republicans, annoyed at government intrusion in general, quickly agreed. Both sides proposed spending cuts and tax increases early in the process because they knew compromise would be required. There was some venting, and then it was just a matter of giving and taking and finding common ground.

“Big Bad Budget” has aired in Albuquerque and is being shopped around public television stations. AETN has recorded the show but hasn’t decided if it will run it. Carroll hopes it will be available on Netflix. It’s available on DVD at bigbadbudget.com.

Something like this needs to happen in cities across America and include more than eight Americans. Congress reflects the will of the people, and we the people don’t understand the national debt very well. According to the polls, we don’t want to cut spending or raise taxes. You can’t balance the budget without doing one, the other or both.

On the other hand, the show demonstrates the inadequacy of polling. Questions are usually asked over the phone and in isolation, such as, “Do you favor raising the such-and-such tax?” By itself? Of course not. In this case, Americans made difficult choices because they had an opportunity to make thoughtful decisions in the context of the big picture. They raised taxes, but they cut spending twice as much and balanced the budget.

Failure to compromise meant failure, period. They didn’t want to fail. So even though this wasn’t exactly like Congress, much applies. In Albuquerque and in Washington, people are more likely to succeed when given the right incentives. If it really had to, Congress could balance the budget. As Carroll said, “Right now they’re stuck in their positions, but if you told them that they had to do it or they’d all be thrown out of office, they’d do it in a weekend.”

Here’s the trailer.