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The ‘balanced-budget amendment’ is a joke, says GOP deficit hawk Alan Simpson

  • by FMR
  • 10 Days ago
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Former U.S. senator Alan Simpson, right, and former White House chief of staff Erskine Bowles testify before Congress in 2011 about how to fix America’s deficit problems. Simpson and Bowles served as co-chairs of President Barack Obama’s bipartisan National Commission on Fiscal Responsibility and Reform. (J. Scott Applewhite/AP)

One of America’s most outspoken critics of the $20 trillion national debt who has spent much of his life putting forward bipartisan solutions to reduce it has a message for Congress: Don’t pass the “balanced-budget amendment” this week — or ever.

“It’s madness. It won’t do anything to help improve the budget,” said Alan Simpson, a former Republican senator from Wyoming. “It’s just chest-pounding fakery.”

He called it the “laugh-er of the century” that House Republicans, who in the past year voted for a large tax cut that the Congressional Budget Office estimates would add $1.9 trillion to the deficit over the next decade and then passed a budget that has more than an $800 billion gap between spending and revenue, suddenly want to act like they care about deficits.

“They have already approved spending into oblivion, even the tea party guys. What a bunch of rascals,” Simpson told The Washington Post. “The guys will vote for [a balanced-budget amendment] now to cover their [posteriors].”

House Republicans plan to vote on a balanced-budget amendment to the Constitution Thursday afternoon or early evening. It is expected to fail (as it has each time it has come up, including in the 1980s when President Ronald Reagan backed it), but it is seen as a way for some Republicans to try to regain credibility as deficit hawks in the eyes of voters.

“Nearly 20 years ago, the U.S. Senate failed by one vote to pass a balanced-budget constitutional amendment. If Congress had sent the amendment to the states for ratification in 1995, we would not be facing the fiscal crisis we are today, and balancing the federal budget would be the norm rather than the exception,” said Rep. Bob Goodlatte (R-Va.), the lead sponsor of the balanced-budget amendment.


[Why America’s return to $1 trillion deficits is a big problem for you]

The amendment would mimic laws that 49 states have requiring their state governments to pass a balanced budget each year, according to the National Conference of State Legislatures. In order for the amendment to be added to the U.S. Constitution, it has to pass both chambers of Congress with a two-thirds majority and then be ratified by 38 states, a cumbersome process that would take years.

Simpson served in the U.S. Senate and 1979 to 1997, and at the end of his tenure, helped to craft the last budgets Congress enacted when spending was about in line with revenue. The U.S. government ran modest surpluses in fiscal years 1998 through 2001. Since then, the federal government has run deficits each year.

On Monday, the nonpartisan Congressional Budget Office reported that the United States is on track to run $1 trillion deficits starting in 2020, an unprecedented scenario for good economic times. If nothing changes, CBO predicts that debt held by the public will skyrocket in the next decade to the highest level since the end of World War II.

Simpson says the United States doesn’t need a balanced-budget amendment, it just needs lawmakers willing to face reality and make the necessary changes. But he doesn’t think “real math” will return to Washington until the debt becomes a national crisis because investors stop buying U.S. Treasuries or they demand much higher interest rates, a situation that would raise the cost of repaying the debt significantly. Once that happens, it would likely raise mortgage rates and small-business-loan rates, hurting a lot of American pocketbooks.

“The only thing politicians understand is losing their job. The tipping point on the debt will come when the little guy gets screwed,” Simpson predicts.


[Fiscal hawk Paul Ryan leaves behind a legacy of big deficits]

There are three key problems with the balanced-budget amendment, says Simpson. First, passing it would take a long time. It would be a lot faster for Congress to simply use its powers to balance the budget now — without any amendment. Second, few in Congress, including those planning to vote on the amendment, have actual plans to balance the budget. Third, the amendment would constrain the federal government, which could take away some flexibility in times of national crisis.

Simpson was in the national spotlight in 2010 when he co-chaired President Barack Obama’s National Commission on Fiscal Responsibility with Democrat Erskine Bowles, a former White House chief of staff for President Bill Clinton. The committee’s final report — dubbed “Simpson-Bowles” — put forward a set of concrete steps to reduce deficits.

Republicans and Democrats both deserve blame for the current fiscal mess the nation is in, Simpson said. Defense spending, a favorite of Republicans including President Trump, is “shot through with waste,” Simpson said, arguing it should be reduced significantly. Similarly, he thinks social programs such as Social Security and Medicare should be reformed so that Americans no longer get these benefits at the current age — generally about 65.

Without congressional action, the Social Security Trust Fund is expected to be insolvent in 13 years, CBO forecast in its latest report. There would still be some money left after that, but it would not be enough to pay people their full benefits, a scenario likely to anger Americans who worked and paid into the system for years.


[The unhappy states of America: Despite an improving economy, Americans remain glum]

Republicans have campaigned for years as the party of fiscal sanity, but their track record has shown otherwise, with the debt rising significantly under GOP presidents since Reagan.

Fixing the budget and entitlement programs was a signature issue for House Speaker Paul D. Ryan (R-Wis.), who started his job in Congress in 1999 when the budget was in far better shape. He has pushed reforms for Social Security and Medicare frequently, but he has not been able to get momentum on them, even from his own party. Instead, Ryan’s tenure as House speaker since 2015 has been marked by a huge expansion in government spending.

The deficit was $438 billion in Ryan’s first year as speaker. The deficit is expected to hit $804 billion this fiscal year, Ryan’s last as speaker after he announced his retirement Wednesday.

Simpson calls Ryan “one of the top-notch people in Washington” who tried to fight for a better budget but was stymied. President Trump campaigned on not touching Social Security or Medicare, making the issue dead politically for now. So did his Democratic opponent in the presidential election, Hillary Clinton.

“You knew we would end up with $1 trillion deficits when everybody running for president in 2016, the boneheads of both parties, said they were not going to touch Social Security, entitlements or health-care costs,” said Simpson, who is now in his mid-80s and retired in Wyoming. “We are now in a situation where we aren’t going to grow our way out of this.”

Read more:

Trump goes full ‘MAGA’ on the economy in year two

Source:: http://www.washingtonpost.com/blogs/wonkblog/wp/2018/04/12/the-balanced-budget-amendment-is-a-joke-says-famed-gop-deficit-hawk-alan-simpson/

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