Thursday, November 17, 2011

Nancy Pelosi: 'Leader Pelosi on GOP's BBA Constitutional Amendment'

Source:House Minority Leader Nancy Pelosi (Democrat, California) talking about the House Republican Balanced Budget Amendment.

"This week, the House is considering a GOP "Balanced Budget" Constitutional Amendment (H.J.Res. 2) which would destroy jobs, drastically cut Medicare and Social Security, and give federal judges power to raise taxes and make spending decisions.  H.J.Res. 2 not only provides that there be a balanced budget every year, unless three-fifths of the Congress votes for a specific excess of outlays over receipts; it also requires a three-fifths vote of the Congress to raise the debt ceiling.  It is likely that H.J.Res 2 would require balancing the budget by about FY 2018 (it states it shall take effect beginning with the fifth fiscal year beginning after its ratification; if ratification occurs in 2013, balance would have to be achieved by FY 2018.)" 

Anyone who believes that taxes are necessary in any country to fund government, understands that government's can't borrow indefinitely. And at some point bills have to paid, not borrow money to pay other bills, but actually pay up your bills. Otherwise taxes wouldn't be necessary and we could just borrow indefinitely to pay for anything. And I don't know anyone who believes that. The question is how do we pay our bills and to what point does our credit run out. 

If the United States were to pass a Balanced Budget Amendment to the U.S. Constitution tomorrow, not just Congress, but at least thirty-four States, two days from now we would still have a Federal debt of 15T$ and a Federal deficit approaching 2T$. A year from now we would still have a debt and deficit approaching those numbers, because Congress wouldn't agree to cut 2T$ from the Federal budget for one year. They may agree to cut 200B maybe 500B, pass tax reform that raises new revenue to cut the deficit in one year. 

If we passed a deficit reduction plan not over five years or so, but a year from now we would still have a deficit of over 1T$. And maybe even five years from now we would still have a deficit. So passing a BBA alone does not balanced the Federal budget, it just requires the Federal Government to do that. But doesn't lay out how to do that, just tells them they have to do it. But leaves it up to the Administration and Congress who lately can't agree on the time of day or the weather outside (It's chilly. No, it's cold!) on how to balanced the Federal budget. So any BBA would at best be a first step in balancing the Federal budget. 

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