"Notes and Quotes"

One machine can do the work of fifty ordinary men. No machine can do the work of one extraordinary man. - Elbert Hubbard

Thursday, April 9, 2009

A Five Year Balanced Budget?

originally published
02/22/09
by Patrick Ruffini

The Solution to the State Fiscal Crisis: A Five Year Balanced Budget
Submitted by Patrick Ruffini on Sun, 02/22/2009 - 01:10


Back in the Contract with America days, a Balanced Budget Amendment was a major tenet of Republican policy, and a couple of times, it came close enough to passing Congress to inspire furious lobbying and vitriolic sky-is-falling claims from the Democrats.

A balanced budget requirement isn't some radical pie-in-the-sky idea. 49 out of 50 states have it. The good news is that it works -- those states are actually forced to balance their budget. The bad news is that it's often ugly, with drastic spending cuts and tax increases in many states in the current budget year.

Albeit more responsible than rampant deficit spending at the federal level, the states aren't any less short term in their thinking than the feds. In good years, state governments rush to spend the surplus only to abruptly cancel programs in a recession -- because there's no real incentive to bank surpluses against a downturn or use state rainy day funds. A budget $5 billion in surplus is just as balanced as one with $0 in surplus, so the politicians might as well spend the money currying favor with voters.

The only way I can think of to stop this problem is to extend the horizon of the balanced budget from one year to five years. Essentially, the budget would have to be in balance over the course of 5 years, covering most recessions with 2 or 3 years of recovery.

In bad times, states could deficit spend -- by no more than the surpluses of the previous four years. In good times, states would be forced to bank surpluses -- particularly if the past few years were economically tough.

One downside is that politicians use it to recreate the present, with budgets just barely in balance across the board, but more likely than not, the politically convenient thing to do would be to slip into a deficit for one or two years, thus kicking off a virtuous circle where subsequent years' budgets would not only have to be in balance, but the extra debt accumulated during a recession would have to be paid off. This could head off irresponsible spending binges in good times and keep state budgets on more of an even keel.

It's true that budgets wouldn't have to be balanced every year -- though the overall fiscal impact is the same -- but it sure beats the farce of Washington needing to bail out the states when they run off the rails.

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  • **“Nothing can destroy a government more quickly than its failure to observe its own laws, or worse, its disregard of the charter of its own existence.” – Justice Tom C. Clark (1899-1977) US Attorney General, 1945-1949
  • **"If the Constitution no longer matters, then the federal government no longer exists. The same document that restricts the federal government is also the document that created them and gives them their authority. Either it is in effect, or it is not." Gary Henderson
  • **"The hottest places in Hell are reserved for those who, in the time of moral crisis, maintain their neutrality." Dante
  • **“When anyone gets something for nothing, someone else gets nothing for something.” -Anonymous
  • ** "My desire to be well-informed is currently at odds with my desire to remain sane" Author unknown
  • ** “There is nothing so useless as doing efficiently that which should not be done at all.” — Peter F. Drucker
  • ** “If getting employer benefits without paying union dues is BAD, why is getting government benefits without paying taxes GOOD?”
  • ** “It's not that ‘the rich’ aren't paying their ‘fair share,’ it's that America isn't. A majority of the electorate has voted itself a size of government it's not willing to pay for.” - Mark Steyn
  • ** "One of the penalties of not participating in politics is that you will be governed by your inferiors." ~ Plato
  • **"Fathom the hypocrisy of a Government that requires every citizen to prove they are insured...but not everyone must prove they are a citizen."
  • **If it matters, measure it: How do you know how much you’ve slipped or improved in an area unless you measure it? How do you take something “to the next level” if you don’t know what level you’re already at? How do you set concrete goals without a sense of where you are and where you want to go? If the success of your venture depends on it, you need to find a way to measure it.
  • **The man who doesn't read good books has no advantage over the man who can't read them. - Mark Twain
  • **Political correctness is an approved form of censorship.  Based on emotional appeals at the expense of reason, political correctness mandates that inconvenient truths or facts be swept under the carpet.  Or else. Free speech, guaranteed to all Americans under the First Amendment, is on its way to becoming moot.  The political, media, and intellectual elites who control the terms of national debate and the rules of civil society have succeeded in censoring opposing views, limiting debate, and demonizing dissent.  Perception is on its way to becoming our new reality. Nancy Morgan
  • **Ronald Reagan once defined an economist as somebody who sees something working in real life and wondering if it will work in theory.
  • **"Fathom the odd hypocrisy that Obama wants every citizen to prove they are insured, but they don't have to prove they are citizens." ~ Ben Stein
  • **“America is the greatest, freest and most decent society in existence. It is an oasis of goodness in a desert of cynicism and barbarism. This country, once an experiment unique in the world, is now the last best hope for the world.”--Dinesh D'Souza
  • **No politician has any business talking about tax increases until ObamaCare is repealed. It’s the most comprehensively failed legislation of the modern era. Like a taxi that runs on plutonium, it’s costing us a fortune, and making us sick, even while it’s sitting there and doing nothing. Sold with fanciful promises and fraudulent cost estimates, it’s another expensive scheme to buy votes with taxpayer money, ending with a planned crisis the government will be only too happy to step in and “solve” by seizing even more of our wealth and liberty. Its passage stymied serious attempts at real improvements to our health-care system, including tort reform and allowing the interstate sale of insurance plans to increase competition. As with so many other delusional Big Government programs, the opportunity cost of passing ObamaCare, and passing up on reasonable plans that enhance individual liberty, rivals its staggering price tag. We’ll come trillions closer to a balanced budget by shredding it. -- Dr. Zero
  • **'If the Arabs put down their weapons today, there would be no more violence. If the Jews put down their weapons today, there would be no more Israel' -- Benjamin Netanyahu
  • ** This is almost unbelievable. Barack Obama is more concerned about Jews building homes in Jerusalem than about Iran building a nuclear weapon. --Ben Stein
  • ** I hope we have once again reminded people that man is not free unless government is limited. There's a clear cause and effect here that is as neat and predictable as a law of physics: as government expands, liberty contracts. --Ronald Reagan
  • ** "As an American I am not so shocked that Obama was given the Nobel Peace Prize without any accomplishments to his name, but that America gave him the White House based on the same credentials." - - Newt Gingrich
  • ** An ideal Federal government in our country wouldn't take much from you, do much for you, or get in your way . --John Hawkins
  • ** The banking crisis wasn't caused by a lack of regulation. It was caused by regulation that pushed banks to make bad loans. --John Hawkins
  • ** An ideal Federal government in our country wouldn't take much from you, do much for you, or get in your way . --John Hawkins
  • **Not too long ago, two friends of mine were talking to a Cuban refugee, a businessman who had escaped from Castro, and in the midst of his story one of my friends turned to the other and said, "We don't know how lucky we are." And the Cuban stopped and said, "How lucky you are? I had someplace to escape to." And in that sentence he told us the entire story. If we lose freedom here, there's no place to escape to. This is the last stand on earth.--Ronald Reagan
  • ** A final word on Tea Party numbers.  The Obama Inauguration left in its wake 100 tons of trash on the Mall that required herculean efforts by the District and the Park Service to clean up.  And it devastated the grass surfaces of the Mall that necessitated budgeting millions of dollars to repair.  Saturday’s Teapartyers left behind a west lawn and Mall that could be used for the U.S.Open.   The sparse trash that was left was neatly stashed in and closely around the too few receptacles provided.  And police reported zero arrests.-- William Campenni
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  • **There is a certain irony in an administration denouncing ordinary Americans who get together to express what they believe and to confront authority, when that administration is led by a man who began his career as a community organizer, whose job, as I understand it, is to take ordinary Americans, get them together to express what they believe, and express demands against the authorities. So it's unbelievably hypocritical. And, of course, as we just heard, this only happens when you have a conservative protest. It is called a mob. If it's a liberal protest, it is called grassroots expressing themselves. -- Charles Krauthammer
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  • ** Medicare is a huge, single-payer, government-run program. It ought to provide the perfect environment for experimentation. If more-efficient government management can slash health-care costs by addressing all these problems, why not start with Medicare? Let's see what "better management" looks like applied to Medicare before we roll it out to the rest of the country. -- Virginia Postrel
  • ** You can lead a man to Congress, but you can’t make him think. -- Milton Berle
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  • **You can lead a man to Congress, but you can’t make him think. -- Milton Berle
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  • **Being politically correct is, unfortunately, not the same thing as being correct politically.-- Bert Prelutsky
  • **If increased government spending with borrowed or newly created money is a "stimulus," then the Weimar Republic should have been stimulated to unprecedented prosperity, instead of runaway inflation and widespread economic desperation that ultimately brought Adolf Hitler to power. -- Thomas Sowell
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  • ** Torturing prisoners should never be our policy, both because it's immoral and because it's usually ineffective. But it's madness to declare that there can never be exceptions. Forget the argument about the "ticking bomb" and the terrorist who might have information that could save numerous lives. Let's make it personal. Whether you're left, right or in between, ask yourself this yes-or-no question: If torturing a known terrorist would save the life of the person you love most in the world, would you approve it? If your answer is "no," you're not a moral paragon. You're an abomination. And please make your position clear to your husband or wife, mother or father, son or daughter. Just tell 'em, "Sorry, honey, but I'd rather see you dead than mistreat a terrorist. It's a moral issue with me. --Ralph Peters
  • **The man who loves other countries as much as his own stands on a level with the man who loves other women as much as he loves his own wife. -- Teddy Roosevelt
  • **The prudent capitalist will never adventure his capital... if there exists a state of uncertainty as to whether the Government will repeal tomorrow what it has enacted today. -- William Henry Harrison
  • **The price of a postage stamp has gone up to 44 cents. The government says they had to raise the price because fewer people are using the mail these days. That's government thinking for you — "Hey nobody's buying our products . . . let's raise the price!" --Jay Leno
  • **If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand. -- Milton Friedman
  • **Since torture doesn’t work but waterboarding did work on KSM, doesn’t that prove that waterboarding isn’t torture?
  • **"The world is controlled by those who show up." --George Allen
  • **John Maynard Keynes, responded to a challenge about his changing views, saying, “When the facts change, I change my opinion. What do you do, sir?”