I pledge to urge my Senators and Member of the House of Representatives to oppose any debt limit increase unless all three of the following conditions have been met:
- Cut - Substantial cuts in spending that will reduce the deficit next year and thereafter.
- Cap - Enforceable spending caps that will put federal spending on a path to a balanced budget.
- Balance - Congressional passage of a Balanced Budget Amendment to the U.S. Constitution -- but only if it includes both a spending limitation and a super-majority for raising taxes, in addition to balancing revenues and expense.
So instead of talking about how the Cut, Cap, Balance pledge, if implemented, could imperil the recovery, or massively depress growth prospects, today I'm going to talk about how it locks the United States into a policy straitjacket. It cements into place a set of horrible fiscal decisions. That's bad enough, standing alone -- but should we ever face some sort of large-scale national crisis, it could prove incapacitating. Devastating. Ruinous.
For instance: envision the coming zombie apocalypse.
The dead rise. Lifeless hordes fill the streets. A terrified citizenry flees the reanimated corpses of friends and neighbors. Second Amendment absolutists are vindicated. People actually flock to shopping malls again. And the nation, searching for leadership, turns its eyes to President Pawlenty, elected on the strength of his pledge to Cut, Cap, and Balance government spending.
Oh man, we're totally screwed.
Let's start with "cut." Where did Pawlenty's "substantial cuts in spending" come from? Tim Pawlenty, like everyone else who's tried, no doubt found it difficult to enact major, long-term cuts to entitlements and other benefit spending. One is forced to conclude that Pawlenty, like Paul Ryan, sought a huge chunk of his spending cuts in the discretionary federal budget. Ryan (whose plan is actually less radical than the pledge Pawlenty signed) wants to cut discretionary spending from 12% of GDP to 3.5% -- in other words, approximately 75% of non-entitlement government services would get the axe.
In short, under Pawlenty's pledge, pretty much every federal agency would feel the heat, and most of them would effectively cease to exist altogether. Goodbye, EPA -- it was sure nice when you were around to keep industrial waste out of our food and water! Ciao, FEMA -- if only the free market had your expertise in addressing widespread national emergencies! So long, CDC -- your dedication to preventing the spread of contagious disease was sorely missed!
Then there's the "cap." There are many problems with the cap, but probably the most glaring is how utterly arbitrary it is. Where, exactly, do you cap spending? There's no ideal level which all successful nations adopt. You have, say, Switzerland, which spends about 35% of GDP on public services -- and Switzerland is a pretty nice place to live. Then you have Sweden, which spends closer to 55% of GDP on public services -- and is also a nice place to live!
In other words, the ideal level of government spending is determined by factors unique to each nation. As demographics change -- the population ages, or shrinks, or the old and the slow and the weak are gradually culled from society -- so should the amount of government spending. As cultural preferences change -- more people want to move into the suburbs, or into the cities, or into impregnable concrete bunkers cordoned off by high-voltage electrical fencing -- so should public expenditure as a percentage of GDP.
Under President Pawlenty's cap, no such flexibility is possible. Instead, we're stuck living in an ultra-conservative version of the United States, circa 2011, forever. Pawlenty's pledge assumes that the government's role in building, running, and preserving American society will never change. Easy to say... when you don't know what dangers are out lurking in the (figurative) dark night (of the future) for you.
Finally, there's the looniest idea of all: the so-called Balanced Budget Amendment. The twist here is that it doesn't actually help us balance the budget at all. It just prevents the US from buying anything it can't immediately pay for through tax revenue.
The American people have been borrowing money as long as there has been an "American people." We borrow in times of peace, and, especially, we borrow in times of war. We borrowed money to finance the Revolutionary War, and WWII, and every war since. The Balanced Budget Amendment puts an end to all that. No more borrowing! For any reason! It doesn't matter how an intractable a foe we need to defeat -- how badly the world needs us to land troops in Normandy, or Detroit. It doesn't matter whether we need a sudden infusion of funds to fight back against a shambling economy, or shambling of an entirely different sort. Without the ability to borrow, we never had a chance.
It's worse than that, too. Not only does the Cut, Cap, Balance pledge require a total cessation of the insidious national tradition of borrowing money and then paying it back later, it also makes it virtually impossible to increase tax revenue. It demands that the Balanced Budget Amendment include a provision under which taxes can only be raised by a supermajority vote in Congress.
Have you noticed many laws passing Congress with supermajorities lately? Probably not, because it doesn't happen very often. This requirement would result in the virtual elimination of tax increases in the United States.
With no means of funding the operation of government beyond the collection of taxes, and without the ability to actually raise taxes, the provision of public services would become closely tethered to short-term fluctuations in America's prosperity.
Imagine a crisis in which millions of people lose their employers, and can no longer pay taxes. A crisis that transforms wealthy suburban subdivisions into virtual ghost towns. A crisis which reduces much of the the financial infrastructure to rubble, and devours pensions alive at a staggering rate. The government would be forced to immediately shrink in response, eliminating services and abandoning a desperate population at the exact moment everyone needed it most. As if that weren't bad enough, then consider how the diminishing government safety net -- or diminishing number of government safe zones -- would exacerbate the very crisis that's putting a crimp in revenues in the first place. With no shelter from the ravages of the outside world, even more Americans succumb to the encroaching catastrophe. The result: a feedback loop of ever-smaller and less-visible government. Pretty soon, it'll be every man for himself, scrapping it out for food, water, and ammunition. Don't go outside after sunset -- they've just turned off all the streetlights.
Balanced budgets are nice when you can have them. But people can't eat a balanced budget -- and an unbalanced budget isn't going to eat you. There are worse things than borrowing a few dollars now and then.
So there you have it. How Tim Pawlenty's Cut, Cap, Balance pledge doomed the United States... and the world.
Of course, these ideas don't have any real credence among serious policy types. But in a way, that just makes their apparent popularity among Republicans all the more unnerving. If expert consensus and common sense can't keep this sort of stuff out of the highest echelons of politics, some measure of craziness is virtually guaranteed to escape into the statute books at some point. You have to wonder if Pawlenty thinks he'll never have to stand by his words -- or if he just doesn't care to learn anything about economic policy at all. So long as he's able to make bold statements that'll win votes, it doesn't really matter if he bothers to understand the consequences of those statements. And maybe he knows that, too.
Hooverism has long been dead and buried. But for whatever reason, Tim Pawlenty and his Republican buddies seem determined to disinter its rotting corpse and jolt it full of unnatural life. Hopefully someone can put a stop to this particular zombie before it's unleashed on the unsuspecting people of America.