Curmudgeon Solves the U.S. Budget Crisis

When there is no news of The Controversy between evolution and creationism, we have to turn to other topics. But in doing so we stay somewhat on topic by dealing with our larger concern — preserving the values of the Enlightenment, upon which our civilization depends.

Therefore, dear reader, we beg your indulgence as we post yet another Curmudgeonly rant about politics. Go ahead, skip it if you like and wait for something more on topic. We’ll understand. Anyway, here it comes.

We recently discussed the federal budget here: US Budget: 40 Years in the Wilderness, but other than pointing out the trend, we offered no opinions or solutions. This time it’s different.

The Curmudgeon’s solution to our current difficulty is to have two federal budgets instead of only one. We even have a catchy name for it — the Two-Budget proposal. Quite simply, it divides the current enormous budget into two separate components. Both would be presented to Congress, so they’ll have to pass two budgets instead of one.

The first of these would be called the Constitutional Budget. It would include expenditures for those activities that are clearly authorized in the Constitution — both in Article I, Section 8 and in a few power-granting amendments. That would take care of much of what is currently called “general government” expenditures (Congress, the courts, etc.), plus national defense, veterans’ affairs, Patent Office, Post Office, the mint, etc. (Don’t panic, we regard NASA as a defense expenditure.) We haven’t run the numbers, but the Constitutional Budget would deal with, perhaps, 25% of the spending in the current, all-inclusive budget.

The second budget would be for all other expenditures. We’ll avoid the temptation to give it a pejorative name, and instead we’ll just call it the Second Budget. That’s not very imaginative, but we’re trying to be neutral here (well, it’s rather obvious that the Second Budget is for what we consider the unconstitutional part of the government). The Second Budget would include all expenditures for “entitlement” programs of every nature, and also various cabinet posts that aren’t specified in the Constitution (Education, Labor, Energy, Housing and Urban Development, etc.).

We further propose that tax revenue (except for specific-purpose taxes like those designated for social security, etc.) should be first applied to the Constitutional Budget, so it’s likely to be always balanced. In fact, with taxes as high as they currently are, the Constitutional Budget should show a significant surplus, which could justify tax reductions or which could be used to retire some of the national debt. Instead, Congress will be likely to apply the surplus to the Second Budget, which will nevertheless incur a significant deficit, thus increasing the national debt.

The one item of expenditure which gives us pause is interest payments on the national debt. Such payments are clearly a constitutional obligation, and although most debt in the last generation (by our two-budget reckoning) is attributable to the Second Budget, it seems appropriate that interest on the national debt belongs in the Constitutional Budget — where it would be the second-biggest item, exceeded only by defense. That should raise some eyebrows.

What does our Two-Budget proposal accomplish? Nothing concrete, to be sure, but we think it’s a great educational tool. By showing what the government is doing — constitutionally and otherwise — and how it’s being paid for, more people will become aware of what’s going on. Will that solve any problems? Maybe not, and therefore the title of this post is far too ambitious — we haven’t really “solved” the budget crisis, but awareness of the problem is always the first step. That’s the best we can do.

For some of our previous solutions to immense problems, see The Curmudgeon’s Plan To Save The World, and then The Curmudgeon’s Health Care Reform Plan. Yes, everyone ignores us, but that’s okay. We’re used to it.

Copyright © 2011. The Sensuous Curmudgeon. All rights reserved.

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28 responses to “Curmudgeon Solves the U.S. Budget Crisis

  1. I like your two-budget proposal. It would add a much-needed perspective to our current federal spending problems.

  2. Paul Bruggink says: “I like your two-budget proposal.”

    Well, that’s two of us.

  3. It sounds like a good idea to me too.

    One spin-off benefit could be that if, for example, the safety net provided by social security was deemed to be an essential part of our society, congress might pass and the states might ratify an amendment to the constitution which would move social security into the “constitutional budget” from the “second budget.” If, on the other hand, there was insufficient support to make it part of the constitution – well, that would be interesting too and might give pause to those who consider it untouchable. Either way, the debate would be worthwhile on all of the programs falling into the second budget.

  4. In fact, with taxes as high as they currently are…

    And that’s where I stopped reading.

  5. Yeah…. Curmie…. I think you’re awesome! I really, really do, but….

    (1) Taxes are lower than they’ve been in 30 years.

    (2) All expenditures approved by Congress are Constitutional under the “general welfare” part of the Constitution. Now, I know you’re going to disagree with that, but, well…. it is what it is. When the New Deal went forward, our country was in extreme financial duress; hence, “general welfare” of the nation. Now, we are in sever financial duress; hence, budgetary expenditures to keep us from harm are, in fact, “general welfare”. It is what it is.

    And that is all I’m gonna say because I need to duck and cover! LOL!!!

  6. LRA says:

    All expenditures approved by Congress are Constitutional under the “general welfare” part of the Constitution.

    The “general welfare” provision isn’t a power of Congress. It’s a limitation on the tax power. See Madison’s Federalist #41. One brief excerpt:

    Some, who have not denied the necessity of the power of taxation, have grounded a very fierce attack against the Constitution, on the language in which it is defined. It has been urged and echoed, that the power “to lay and collect taxes, duties, imposts, and excises, to pay the debts, and provide for the common defense and general welfare of the United States,” amounts to an unlimited commission to exercise every power which may be alleged to be necessary for the common defense or general welfare. No stronger proof could be given of the distress under which these writers labor for objections, than their stooping to such a misconstruction.

    [...]

    For what purpose could the enumeration of particular powers be inserted, if these and all others were meant to be included in the preceding general power

  7. I think it’s possible that US v. Butler would disagree…

    http://en.wikipedia.org/wiki/United_States_v._Butler

    I’m no historian, tho.

  8. First, I want to point out a small mistake. While taxes are, overall, very high, federal taxes are at the lowest they’ve been in years. However, state taxes are often very high. And the federal government has very little control over these. What many people don’t realize though, is that, while the rich are technically paying a higher % of their income, the way it works out is that they are paying an amount that they can easily afford while lower income families are paying more than they can spare. And if the government would start to tax the rich more and ease up on everyone else, our budget crises would be much smaller.

  9. Caleb says: “What many people don’t realize though …”

    Check this out: Who Pays Income Taxes and how much?. The top 10% of income earners pay 69.94% of federal income taxes. The Top 50% pay 97%. The bottom 50% pay virtually nothing (well, 2.7% ).

  10. LRA says: “I think it’s possible that US v. Butler would disagree.”

    Not really. See also: Madison’s Veto of a federal public works bill, March 3, 1817. Excerpts:

    The legislative powers vested in Congress are specified and enumerated in the eighth section of the first article of the Constitution, and it does not appear that the power proposed to be exercised by the bill is among the enumerated powers, or that it falls by any just interpretation with the power to make laws necessary and proper for carrying into execution those or other powers vested by the Constitution in the Government of the United States.

    [...]

    To refer the power in question to the clause “to provide for common defense and general welfare” would be contrary to the established and consistent rules of interpretation, as rendering the special and careful enumeration of powers which follow the clause nugatory and improper. Such a view of the Constitution would have the effect of giving to Congress a general power of legislation instead of the defined and limited one hitherto understood to belong to them, the terms “common defense and general welfare” embracing every object and act within the purview of a legislative trust

  11. Ah, but although they are paying for a higher percentage, what makes them different is that they can afford to pay much more. And the tax breaks being given to the rich are undeniably unfair, and the very principle of trickle down economics behind them is fundamentally flawed.

  12. @Caleb: “And the tax breaks being given to the rich are undeniably unfair…”

    Being a retired public school teacher, I’m certainly not rich. However, I would posit that it is undeniably unfair to tax one human being at a higher percentage rate than another, simply because the one works harder or smarter or longer than the other and manages to earn more money. Tell me, Caleb, how is that fair?

    How is it fair to be taxed at a higher rate simply because you are contributing more to the health of the economy?

    We should all be taxed at the same rate — no loopholes, no deductions, no credits, no excuses. Yes, all the tax accountants will be out of work, but what’s so bad about that? They would then be free to seek gainful employment and would actually contribute to increasing productivity, rather than reducing it.

    I shall now step off my soapbox…

  13. retiredsciguy says: “I shall now step off my soapbox.”

    So that I can get on. Another thing, Caleb: It’s all very lovely for you to decide that someone can afford to pay more, and that he doesn’t “need” the money that’s being taken from him. And it’s true that some rich guy might survive for quite a while on his savings, even if you took all his earnings, so in that sense you’re right.

    But survival is only part of the picture; and it’s the most brutish part. You are looking at only what you can see, and not the consequences of your policies.

    You must consider what that guy does with what you deem to be his “extra” money (when it’s not being spent on essentials like caviar and showgirls). That surplus (we can call it that) is what gets invested. He may not be an entrepreneur. He may just leave his money in the bank, or more likely it’s in a mutual fund or something, but that surplus finds its way into investments. It’s investment capital that you’re taking away.

    That’s where new products, new jobs, and economic growth come from. If you grab all that money and spend it on bureaucracy, the only increase in economic activity is due to the sale of jelly doughnuts to clerks as they sit in their wretched cubicles and order everyone else to fill out forms in triplicate.

  14. @SC:
    Wow – well put! Can I use that to argue with my uninformed, leftist, aging hippie friends?

  15. You must consider what that guy does with what you deem to be his “extra” money (when it’s not being spent on essentials like caviar and showgirls). That surplus (we can all it that) is what gets invested in China, India, and a few other areas of SE Asia. That’s where new products are made, and new jobs, and economic growth are going to.
    The CEO of GE openly stated that he invests all he can in China, and urged his fellow investors to do the same.

    This what gets me about the trickle down theory. Since 1980 the top 1% has seen their income rise from 10% to 20% of total income, yet the middle class has seen hardly any growth. How many more years until it does reach the vast majority of people?

  16. Class envy much?

  17. So….no Air Force then?
    I understand the Madisonian argument. But if you’re going to assert that welfare programs cannot be justified by the term “general Welfare,” then you’re going to have a hard time claiming that the term “Armies” and “Navy” should imply Air Force.

  18. eric says:

    But if you’re going to assert that welfare programs cannot be justified by the term “general Welfare,” then you’re going to have a hard time claiming that the term “Armies” and “Navy” should imply Air Force.

    Jeepers, you’re right! In fact, the Army has to keep using horses and can’t buy trucks until there’s a constitutional amendment. How could I have overlooked such things?

  19. (1) Taxes are lower than they’ve been in 30 years.

    Lydia, how do you figure that? Personal tax rates? Payroll tax rates? Income tax receipts? Payroll tax receipts? Corporate tax receipts? Something else?

  20. I believe that everyone here is making good points. However, I believe this because I think that there is no easy or “good” solution to the crisis facing us. I think the only thing that can be done is to pick whatever solution will yield slightly tolerable results, and harms the least number of people.

  21. I would love to see John Stossel cover your two budget proposal on one of his shows. This is a guy who carries a copy of The Constitution and The Declaration of Independence in his pocket. I figure the more people who get this message, the better.

  22. Gabriel Hanna

    @eric:you’re going to have a hard time claiming that the term “Armies” and “Navy” should imply Air Force.

    Did you know that there was no Air Force in WWII?

    Gabe’s off his rocker, you scoff. Who dropped the bombs on Japan and Germany then, smartass, you think to yourself.

    Air operations in WWII were in fact carried out by the Navy and the Army Air Corps. Contrary to what SC would have you believe*, the Army is not Constitutionally bound to muskets and mules, nor is the Navy Constitutionally required to stick to wooden sailing ships and iron cannons.

    If we all decided to be such strict constructionists as saying that no military but the Army and Navy may exist–from your lips to God’s ears–there is no Constitutional stricture against their availing themselves of modern weaponry. Just as the Marines existed from the beginning up until today, as a component of the Navy, so could the Air Force be part of the Army as it used to be.

    (SC, I do appreciate your irony.)

  23. Liam McCumber says:

    I would love to see John Stossel cover your two budget proposal on one of his shows.

    Send him a link.

  24. Curmy, I’m glad I yielded the soapbox to you. Your points are about the negative consequences to the economy of high taxation, while my point dealt only with the philosophical unfairness of unequal taxation. Your point here, “That surplus (we can [c]all it that) is what gets invested”, says it all.

    High rates of taxation concentrates the bulk of capital in the government, with the result being that we have to look to government for all major investment in industry. We saw how well that worked in the Soviet Union, and we are seeing it yet today in North Korea and Cuba.

  25. @Curmudgeon,

    Because economics is much messier than the “hard” sciences (and that includes evolution despite the protest of pseudoscience-peddlers), I usually avoid debates. FWIW, my position “evolved” in the 90s from mostly favoring tax-and-spend approaches to mostly opposing them. Ironically, learning about evolution, and the tactics that deniers use, was a factor the “evolution” of my position (another topic for another time). Anyway, count another vote for your idea being worth a try.

  26. Nice proposal, but no one really cares about the Constitution anymore. That’s the problem. “Constitutional” has come to mean “in accordance with my political prejudices” and “un-Constitutional” has come to mean “anything I despise”.

    Running the federal government in accordance with the actual intent of the Constitution as written has become a kind of antiquarianism: a nice hobby, but not something that actual politics will take note of any more, even rhetorically.

  27. Gabe: If we all decided to be such strict constructionists as saying that no military but the Army and Navy may exist–from your lips to God’s ears–there is no Constitutional stricture against their availing themselves of modern weaponry.

    I agree that we should not be such strict constructionists in reading Art 1 Sec 8. And I agree it would be silly to prevent the use of modern weaponry in service of the common defense. Why, that would be almost as silly as preventing the use of modern social, economic, and legal tools in the service of the general welfare of the nation.

  28. eric says:

    Why, that would be almost as silly as preventing the use of modern social, economic, and legal tools in the service of the general welfare of the nation.

    Except that, without an amendment, Congress has no “general welfare” power.