It would be just plain foolish to deny our government the bugetary flexibility it must have to maintain our infrastructure, enforce our laws, defend our land and build a better future for us all.
“Our government should live within its means, just like I do!”
So say the people who strongly advocate amending the U.S. Constitution, making it illegal for the federal government to balance the budget with borrowed money.
It sounds like a good idea, but it really isn't. The Balanced Budget Amendment is a very bad idea. If it passes and becomes law, a majority of Americans will surely rise up and repeal it in less than half the time it took to repeal Prohibition.
First of all, scarcely anyone lives within his means. Most of us buy cars, appliances, furniture and our homes on credit. And most people pay back what they borrow.
So does our government.
Secondly, every household must occasionally borrow money in order to get through some unforeseen catastrophe. If a family can borrow to get through a temporary setback, then it can survive in the long term. Similarly, the United States borrowed heavily during World War II to defeat Nazi Germany and Imperial Japan. Imagine what the world would be like today if we had lost Word War II!
Finally, Americans sometimes borrow money to invest in the future — to start or expand a business, to buy more acreage for cultivation, to pay for college, to develop good ideas into working prototypes of inventions that will make life better for everyone, etc. Here again, our government will also see opportunities to invest resources to improve our lives. And if necessary, it must be able to borrow to make it happen.
Another amendment we can do without is the one Rep Michael Turner (R-Ohio) introduced back in 2009. Turner doesn't want the federal government owning stock in private-sector corporations, so he introducted a bill, H.J. Res 57, the “Preserving Capitalism in America” amendment to the U.S. Constitution, which would prohibit the United States government from owning any stock in corporations.
Most Americans agree with Rep. Turner, but at the same time, how could we forget that Obama's General Motor (GM) and Chrysler bailouts saved both companies and thousands of jobs?
GM is again on top of the automotive industry, posting a $9.19 billion in the fourth quarter of 2011, the largest quarterly profit in its 103-year history. GM and Chrysler have paid back most of the $80 billion the federal government loaned them in 2009. And when GM stock climbs to, say, $60 per share, the Treasury Department could realize a substantial profit by selling off all its GM shares. The Treasury has already sold its Chrysler shares to Fiat.
And now that both GM and Chrysler are making cars and profits once again, all their employees are back to work, earning money and paying income taxes. Isn't that better than having thousands of unemployed autoworkers drawing unemployment insurance benefits?
In 2008, Mitt Romney opposed federal bailout of GM and Chrysler, urging instead a “managed bankruptcy” of the two auto giants. The main difficulty, however, was that both companies needed billions of dollars to get through the bankruptcy process, and that much capital wasn't available because credit was so tight. The federal government alone had the $80 billion needed to make it happen. No private companies – not even Bain Capital – would help GM and Chrysler, so their only option would have been Chapter 7 liquidation, rather than Chapter 11 reorganization. Without President Obama's bold intervention, GM and Chrysler would be history today. But, boy-oh-boy, did he ever catch hell for it?
Rep. Turner and other Tea Party ideologues take note! The federal government can be a powerful partner in getting us through difficult economic periods! You could look it up.
We must never hamstring our country with a balanced budget amendment, or with any other amendments that limit the flexibility of our federal government to resolve fiscal problems. It would be just plain foolish to deny our government the bugetary flexibility it must have to maintain our infrastructure, enforce our laws, defend our land and build a better future for us all.