Cut, Cap & Balance — A Review

Last week, the US House of Representatives' Republican majority took a stand against fiscal irresponsibility with the Cut, Cap and Balance Act sponsored by Rep. Jason Chaffetz (R-UT):

1. Cut — We must make discretionary and mandatory spending reductions that would cut the deficit in half next year.
2. Cap — We need statutory, enforceable caps to align federal spending with average revenues at 18% of Gross Domestic Product (GDP), with automatic spending reductions if the caps are breached.
3. Balance — We must send to the states a Balanced Budget Amendment (BBA) with strong protections against federal tax increases and a Spending Limitation Amendment (SLA) that aligns spending with average revenues as described above.

NPR (that's National Propaganda Radio to you insiders) provided commentary, as you would expect, in the form of pure liberal rant:

The logic of CCB itself gives away the potentially disastrous stance of its adherents. Republicans are taking this very hard line not, as is so often asserted, as a way of returning to the GOP's ancient creed of deficit hawkery, abandoned in favor of supply-side free lunch nostrums in the 1980s and beyond. ...

Let's see, the 1980s – isn't that the Republican-run decade during which we added millions of jobs? Yeah, about as many jobs as were lost during the last three Democratic-run years.

Yes, it has indeed become fashionable again for conservatives to deplore the public debts being passed on to future generations, a habit that they generally lost during the administration of George W. Bush.

Not all of us, though the charge is partly justified.

But when you look at the content of the CCB proposal, pledge, or bill, it's obvious the "balance" part of the formula is entirely subordinate to "cut" and "cap," and to another phrase not in the headline: "tax limitation." CCB rules out revenue increases as an element of budget-balancing and erects the kind of super-majority requirement against future revenue increases that has done so much to frustrate budget-balancing in California.

Ah, yes, California – that paragon of fiscal responsibility on which the USA should base its policy – right!

Moreover, it makes huge cuts in spending both a statutory and a constitutional mandate, and only then, with government shrunken and taxes frozen, will it enable a balanced budget.

Less spending + no tax increases = balanced budget. In other words, "we can't spend it if we don't have it." NPR is right, that's an idiotic concept.

The vote was not unanimous; Reps. Michelle Bachman (R-MN) and Ron Paul (R-TX), voted against. They have received considerable notice for this, some of it very harsh. That harshness is totally unwarranted; this vote was a symbolic gesture by the Republican Party. The Democratically-controlled Senate promised to vote it down (another lie, Sen. Harry Reid (D-NV) tabled it, meaning he didn't have the courage to let it come to a vote). Even if it had passed the Senate, the Democrat in the White House promised to veto it, and Speaker Boehner knew it. The two presidential hopefuls likewise made symbolic their nays, and clearly stated their reasoning:

Bachman: While I embrace the principles of Cut, Cap and Balance, the motion does not go far enough in fundamentally restructuring the way Washington spends taxpayer dollars. The principles found in this bill are a step in the right direction toward the fundamental restructuring we need in the way Washington spends taxpayer dollars.
Along with cutting spending, putting in place enforceable spending caps that put us on a path to balance and passing a balanced budget amendment, we must also repeal and defund ObamaCare.
We must remember that ObamaCare is the largest spending and entitlement program in our nation’s history. That means, at a time when we can least afford it, President Obama added to our spending problem by the trillions. Without its repeal, we cannot have real economic reform. (Read more at <bachmann.house.gov>.)

Paul: This bill only serves to sanction the status quo by putting forth a $1 trillion budget deficit and authorizing a $2.4 trillion increase in the debt limit. When I say this bill sanctions the status quo, I mean it quite literally.
First, it purports to eventually balance the budget without cutting military spending, Social Security, or Medicare. This is impossible. These three budget items already cost nearly $1 trillion apiece annually. This means we can cut every other area of federal spending to zero and still have a $3 trillion budget. ...
Second, it further entrenches the ludicrous beltway concept of discretionary vs. nondiscretionary spending. ... All spending must be deemed discretionary and reexamined by Congress each year. To allow otherwise is pure cowardice.
Third, the Act applies the nonsensical narrative about a "Global War on Terror" to justify exceptions to its spending caps. ... Congress will never balance the budget until we reject the concept of endless wars.
Finally ... this Act ignores the real issue: total spending by government ... what we really need is a constitutional amendment to limit taxes and spending, not simply to balance the budget. What we need is a dramatically smaller federal government; if we achieve this a balanced budget will take care of itself. (Read more at <paul.house.gov>)

When I first heard they'd voted against the bill, I was concerned. I respect these people – I like most of what Ron Paul adds to the debate and Michelle Bachmann is my current favorite for the GOP nomination. Now that I see the reason behind their votes, I like their arguments. They are right; Cut, Cap and Balance is a good start. I would not have voted against it, but I hope the next (Republican-controlled) Congress revisits it with an eye to addressing the real fiscal problems facing the Union. Those problems include:

The size of the federal government – in a previous post, I recommended balancing the budget by sunsetting unconstitutional programs and departments. This is still a good idea.

The hypocrisy of Washington insiders – have you heard about the US Senator who's running for re-election claiming he sponsored every balanced budget amendment (BBA) of the last 35 years? This senator also voted for $7 trillion worth of debt ceiling increases, according to one reputable source. Hardly a consistently responsible record (And, for the record, every one of his BBA proposals failed.)

Curiously, Democrats used to understand this concept:

It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now . . . Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.

That was President John F. Kennedy, during a news conference in November 1962. Two months later, he repeated himself in his budget message to Congress for fiscal year 1964:

Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased – not a reduced – flow of revenues to the federal government.

In other words, as I have said many times, the solution is this: Stop electing politicians and start electing statesmen. Abandon the liberalism that 400 years of history prove is a failure and embrace the conservatism that has been the core of American prosperity for over 200 years. It's just that simple.

Thanks for listening, tune in next week for another rant.