The Balanced Budget Amendment Fraud

The Speaker finally managed to get a bill through the House yesterday, being forced to add language that would force a “balanced budget amendment” through Congress before a second, and necessary hike in the debt ceiling. Naturally the Senate rejected the Boehner bill in short order, and Boehner is about to return the favor by scheduling for vote, and defeat, the Reid bill. As has been the case from day one no bill will progress unless it has bipartisan support. Other than that this group will have caused lasting, and unnecessary damage to the American economy. But what about this balanced budget amendment? States, localities, and families have to balance their budgets! Why shouldn’t the federal government be forced to do so? And is it not hypocritical of people who claim to be deficit hawks to be opposed to a “balanced budget amendment”?

The “balanced budget amendment”, as filed by the Republican caucus in the House, calls for a mandatory balancing of the federal budget. The issue here is not a balanced budget. Quite obviously Congress is off kilter on that as we speak, with the federal government running annual deficits of over a trillion dollars. President Obama has been heavily criticized by Republicans for this debt, as they continue to try to make political gain by exploiting deficits they helped to create. Republicans point to these deficits as if they fell in out of the sky, with a big spending Barack Obama on a relentless drive to spend us into oblivion. So what is the truth?

1) Federal spending is at about 24% of GDP, a historic high (up from about 20% in 2007) So Obama must be guilty as charged? Well, as Paul Krugman points out on his blog, ratios have both numerators and denominators. With GDP growth slowed and spending on safety net programs increased due to recession, Krugman shows that the discretionary increases in spending essentially amount to the Obama stimulus, which likely added about one point of GDP spending. As Krugman shows clearly there has been no “spending binge” by Barack Obama. What about federal spending in nominal terms. Here is the breakdown, liberated from the Krugman blog:

2002: $2.0 trillion
2003: $2.2 trillion
2004: $2.3 trillion
2005: $2.5 trillion
2006: $2.7 trillion
2007: $2.7 trillion
2008: $3.0 trillion
2009: $3.5 trillion
2010: $3.5 trillion
2011: $3.8 trillion (budgeted)

So contrary to Republican claims there has not been a huge hike in spending under President Obama. But there has been a huge increase in the annual deficit. So Obama must be guilty of wanton and reckless deficit spending? Lets look at the second important figure.

2) Revenues are slightly below 15% of GDP, a historic low. The drop is due to the recession, and obviously to the tax policies promulgated by President Bush. The number, a drop in the historical number of between 18% and 20%, shows just what a line of nonsense Republicans are selling when they blame Obama for deficits, and keep repeating the mantra that you have a “spending problem” and not a “revenue problem”. You in reality have a spike in mandatory spending associated with Social Security, Medicare, Medicaid, as well as spending on programs associated with the recession, such as unemployment insurance and food stamps. A good chunk of the Obama increase went to assist states and localities suffering from the impacts of the Great Recession. Despite that help State and Local governments have shed hundreds of thousands of jobs. Without the federal assistance states and localities, in many instances, would have lost much of their ability to provide services. But Republicans honestly like that prospect, since it fits with their goal to change some financially questionable practices of the states by vaporizing, rather than reforming, those governments.

So the Republican’s are attacking the deficit, and clamoring for a constitutional amendment. But no Republican I talk to can answer the following question. Why don’t the Republicans simply file a balanced budget? I realize that the Democrats would not vote for such budgets, but Democratic votes are not what is at issue. For Republicans I ask that question, and one other. Am I wrong when I represent that the much ballyhooed Paul Ryan budget has trillions in future deficit spending? If those questions can be answered then maybe I could understand the call for amending the constitution. What are the answers to those questions. Where is the balanced budget that Republicans say we need. WHERE IS THEIR PLAN?

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