Let me put it a different way. The government has a budget. When economic times are bad, it has to operate in a deficit due to obligations and also it will spend money to get the economy back on track. When the economy is good, we bring in more than the budget (or should be doing so). At that time, in theory, we are to pay off any debt from the poor economic times and save for the next downturn in the economy. Then, in the event of a war... we borrow and set up a means to pay that off. Now that's the theory. If we have a "balanced budget" amendment it forces the government to abandon that method of operation and I don;t think it's a good idea.
The first problem I have with it, is that it's deceptive. If you (or the Republicans in government) want to fight for lower tax rates, that's fine. But it should be fought for under those terms, not dressed up as a "balanced budget amendment" which doesn't immediately imply tax rate reductions. As for reductions in tax rates in general, I think those should be on the table. But I don't believe the default should be tax reduction. I realize that will be a fundamental philosophical disagreement with you. I don't necessarily believe tax increases should be the default either; I think each should be fought for on a case-by-case basis. My feeling is that your conception of a balanced budget amendment essentially boils down to "tax reduction as the default." No, you're misunderstanding me. I'm saying that by borrowing against the debt in lean years and paying down the debt in boom years, it effectively saves in boom years to help in lean years. I don't think literally saving cash in boom years is politically feasible. I think the debt functions as a way to let boom years help mitigate lean years.
Exactly what is the govt. supposed to do with any surpluses? After it has completely paid down it's debt, it can spend it or refund it. There's no bank it can save the money, and certainly no mythical lock box. Even if it could put the money in a bank, it's absurd to take any excess from the economy and hoard it. The problem with spending it, in good times, is the old axiom. Nothing lives forever but a govt. program. And those programs might be a nice luxury when we can afford them, but they're an incredible burden when we can't. So those who've never met a govt. program they didn't like want to endlessly raise taxes. There truly is no end in sight.
Here is one groups idea - What is the National Initiative for Democracy? The National Initiative for Democracy (NI4D) is a meta-legislative proposal that would allow citizens, independently of Congress and the Executive, to propose and vote on laws. NI4D consists of a Constitutional amendment and a federal law. The Democracy Amendment, a proposed amendment to the Constitution of the United States of America, will: recognize the legislative power of the people to make laws permit the people to amend a constitution by holding two successive elections, more than six months but less than one year apart create the Electoral Trust to administer the procedures established by the Democracy Amendment and Act, outlaw the use of funds from non-natural persons (for example corporate funds) in initiative elections under this article, and outlaw non-natural persons (for example corporations) from sponsoring initiatives under this article. The Democracy Act, a proposed federal law, will: set out deliberative procedures to be used by citizens to create laws by initiative, describe the key responsibilities of the Electoral Trust which shall administer the initiative process on behalf of the people, and appropriate funds for the Electoral Trust from the United States Treasury The National Initiative does not change or eliminate Congress, the President, or the judicial system. Laws created by initiative must still stand up in the courts just like laws created by Congress. The National Initiative adds an additional check –– the People –– to our system of checks and balances, while setting up a working partnership between the People and their elected representatives. The full text of the proposed Amendment and Act are available here: The Amendment (562 words, 7 paragraphs The Act (3132 words, 59 paragraphs) http://ni4d.us/en/national_initiative
The idea is not to ever completely pay down the debt, but rather to use it lieu of hoarding money. You borrow in tough times and pay it down (but don't completely expunge it) in times of plenty. In that way, the government can effectively finance its needs in tough times with the benefits from good times. I don't think anyone has suggested the government putting money in the bank.
The govt. effectively paid down all it's debt that it could by 2001. After that, it was taking in $200B more than it spent. Exactly what do you think they could have done with that $200B every year through 2010?
What you consider "lowering tax rates by default", I believe would actually turn into "raising spending by default". I don't actually believe the government would run a surplus and then pass that on to the tax payers. It would get spent, just like it always has in the past.
What are you referring to by "all that it could?" The national debt wasn't $0 in 2001. In fact, it was still a large percentage of GDP.
The Social Security Trust Fund is required by law to invest any surpluses it runs in T-Bills. The govt. paid down every other T-Bill but those, and couldn't pay off those.
But some projections had it reaching $0 in the far distant future, because of the enormous projected years of budget surplus', so we urgently had to spend and refund the surplus. Well the surplus projections never came close to actually happening, but it's good we made sure to pre-emtively get rid of any surplus just in case.
That doesn't entirely make sense. Consider the govt. burns old worn out currency all the time and replaces it with nice newly printed money. If the govt. sat on $200B a year in surpluses, after 10 years, it'd be like taking in $2T in old currency and not printing any new money. That would drive prices on most everything through the floor since there'd be fewer dollars to buy everything that's sold. Everyone would have to take pay cuts. The only things that wouldn't drop in price would be mortgage payments, the cost of higher education, and medical bills. Yikes.
