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Balanced Budget Boogaloo

By The Reverend Published: February 8, 2013

Some people argue that the federal government should not spend more money than it brings in in tax revenues. If a federal budget is not balanced, these folks say, then our government is performing incompetently. Of course, that notion is ridiculous because the facts are that for 48 out of the last 51 years the U.S government has run deficits.

I suppose elected officials during those 48 years could have all been incompetent, or, you know, communists...or something.....but I think it would be more credible to conclude that running federal deficits has always been rather routine.

The biggest lie associated with discussions over balancing the budget is that the federal government and average families are identical when it comes to budgeting, borrowing and spending. They're not.....never have been.....and were never expected to be.

The often quoted, yet still nonsensical, saying that 'the federal government needs to tighten it's belt just like average families have been doing'....

Speaker Boehner: “American families are tightening their belt, but they don’t see government tightening its belt.”

President Obama: “Families across the country are tightening their belts and making tough decisions. The federal government should do the same.”

Sounds like those statements should be correct...but they're not.

The government is NOT like a family. The government can print money. Can your average family do that? The government can borrow almost endlessly. Is that true of the average family?

Family budgeting and spending aside....."If we in one family cut back on our spending, it won't effect our income," Robert Shiller of Yale explains. "But if everybody cuts back on their spending, it will lower the national income."

Beginning in 2007, that's exactly what happened. Millions of jobs were lost, homes foreclosed upon, credit withdrawn, home values diminished, and on and on. Everybody cut back...lowering the national income. If the federal government did not step in to supply lost spending by consumers, then a cycle of economic decline would have built upon itself until the nation aprroached real bankruptcy.

Thankfully, yet with only 3 Republican votes, Congress stepped in in early 2009 to partially fill the consumption gap opened by tens of millions of Americans cutting back....tightening their belts. Here, the government was doing just the opposite of what families were doing...and rightly so. Replacing diminished consumer spending with new spending of its tax cuts, money to states, extended unemployment, and some infrastructure spending.

During recessionary times when consumer spending is down is not the time for government to cut back on spending. That is precisely when government should borrow and spend to make up the difference in lower consumer spending.

Now, about this Balanced Budget mania that infects so many Very Serious People. If the government forces itself by law to balance the federal budget continuously, then the federal government will be throwing away its power to intercede during recessionary times. The government would be handcuffing itself, prohibited by law from increasing unemployment or food stamps, or whatever.....when that is precisely what the government should be doing during recessionary times.

Conservative schemers argue against government increasing spending during recessionary periods....because of increased deficits. That's their argument at least. But conservative ideology......reduce government to the size where it can be drown in a bathtub.....speaks otherwise.

If the federal government handcuffs itself by passing a Balanced Budget Amendment, it is the belief of conservatives that the size of government....and government services.....will be shrunk...until one day, you know, some Republican Congress is holding the government's head under the water in the bathtub.

Why would conservatives do such a thing? Why punish millions of citizens during recessionary times,....recessionary times which always come around, shackling the federal government with 'no more borrowing' restrictions because of reaching some arbitrary numerical ceiling. It doesn't make any sense....and it runs contrary to the PRACTICE of the federal government during numerous recessions.

I know it gets old....but it still seems true that many leading conservatives have only one objective....and that objective is to keep tax rates as low on the wealthy as is possible. Recessionary times marked by increased government spending to fill the void threaten the possibility of lowering tax rates, now or in the near future. If government borrows more during recessions, as it should, then the prospects of lowering tax rates are diminished.

I would submit that the entire Balanced Budget Boogaloo we've been witnessing is simply a ploy to keep the potential for a further lowering of the taxes paid by the wealthy alive and well.

Yes, that sounds like I'm accusing conservative leaders of being self serving and deceptive.

But I'm afraid it is true, nonetheless.



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