Diary

Time to Abandon a Balanced Budget Amendment for a Debt Retirement Amendment


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For many years, conservatives have tossed about the idea of a balanced budget amendment. It is time to abandon that thought . . . for a better one.

Both parties have redefined the term “budget” to allow virtually limitless spending. Both parties have accepted the odd fiction that certain categories of spending are “off budget.” This has allowed the political illusion that deficit spending can exist within a balanced budget. In the real world, it cannot. Individuals hardly can “declare” mortgage payments and auto loans “off budget,” while carefully balancing total income against the remaining spending. Individuals cannot increase debt limits arbitrarily, print money (the Secret Service tends to frown on such self-employment), or issue bonds of dubious value. Our government ought abide by the same rules.

The recent Fiscal Year 2011 budget fiasco compels action.

The only effective way to stop real deficits is by a constitutional convention proposing a debt elimination amendment, and by sufficient states ratifying the same.

Such an amendment needs to meet four criteria. First, it must define “budget” and “debt” in terms that even Congress and the Supreme Court can understand. Second, it must mandate debt elimination. Third, it must establish an inflexible deadline for doing so, on the most rapid schedule feasible. Fourth, it must prevent Congress from raising taxes without a national referendum expressly tied to Congressional elections.

I pen the next statement with fear and trepidation, but out of a belief that it is necessary. Recognizing that few things are more permanent that temporary taxes, the reality of our present debt demands a temporary tax to accelerate the debt reduction. Encapsulating a temporary tax in an amendment that both prohibits other taxes and tax increases and mandates that all revenues from the tax retire the principal effectively prevents Congress from diverting the revenues to other purposes. It also makes the rapid debt reduction feasible.

I respectfully propose the following:

Section 1. The term “debt” shall include every obligation due or owing by the United States, regardless of contingency or date. The term “budget” shall include all revenues and all expenditures of the United States, however denominated.

Section 2. Effective on ratification of this amendment, the maximum allowable debt of the United States during the calendar year of ratification is limited to fifteen trillion dollars. If such debt exceeds that sum on ratification, the debt shall be reduced to that sum within six months of ratification.

Section 3. On January 1 of every third year after ratification, the maximum allowable debt of the United States shall be reduced by ten percent of the amount of debt existing on the date of ratification, until the entirety of the debt shall be retired. Upon retirement of such debt, the United States shall not be authorized to incur new debt, and shall generate and maintain a budget reserve of at least two years.

Section 4. Beginning on January 1 of the year following ratification, there shall be imposed on the sale of all goods a tax equal to five percent of the purchase price of such goods. All proceeds of this tax shall be used to retire the principal of any debt of the United States then existing. This tax shall expire on the first day of the month in which the entirety of the debt is retired, and may not be renewed, extended, or thereafter imposed by Congress.

Section 5. Except for the tax provided in Section 4 hereof, no other tax, including increase to any existing tax or reduction in deduction or credit resulting in any increase, shall be imposed unless the same shall first be approved by a majority vote in a national referendum held on the same day as an election of a majority of the members of the House of Representatives.