Balanced Budget Amendment

Narrowing the Focus

July 9, 2011July 20, 2017 Joseph Dewey

This entry is part 29 of 31 in the series 2011B

Before we look at what will work in keeping our government responsible as far as creating and spending money is concerned let us first look at what will not work.

(1) Elect good fiscally responsible people to represent us.

The people have been attempting to do this ever since the beginning of the Republic but to little avail. Many a time we have sent someone to Congress, who promised to be responsible, sounded responsible, seemed to be responsible in his own life but as soon as he got a taste of the power of the unlimited spending resources of government he changed from Doctor Jekyll to Mr. Hyde, from Mr. Nice Guy to a werewolf howling at the moon, from a person of good works to a vampire sucking the life blood out of our economic system.

Many people look on our elected officials as a whole with utter disgust and contempt. For years now Congressional approval rating has often dipped below 20% sometimes reaching as low as 13% – by comparison making any president in history seem like Mr. Popularity.

Unfortunately, it is usually the “Other Guy” who is despised and wanted out of office whereas their own representative is viewed more sympathetically.

As evidence, take the situation in November of 1998. 401 of the 435 sitting members of the U.S. House of Representatives sought reelection. Of those 401, all but six were reelected. Those who rated Congress as a whole lot lower than pond scum sent their own guy back to office at a rate of 98%.

I guess we could say the local guy gets an approval rating of 98% whereas the whole body of Congress rates lower than a snake oil salesman.

If these statistics were not proven history then one would think they were fiction created by a lunatic but since they are factual we need to question why there is the great contrast.

I think that many will agree with this assessment. The local representative is re-elected not because he is Mr. Clean, but he spends a good deal time and money in convincing his constituents that he is on their side. He’s able to convince his voters that it’s the other guys who are the ones messing things up and their only chance of cleaning up the mess is to send him back to continue the fight.

The people thus send their guy back to Washington thinking he is one of the few that is not part of the problem. Unfortunately, they generally do not see correctly that their representative is just as big a problem as the other guys and the problem is all but a few get addicted to borrowing and spending. The few who do maintain some common sense in this area are demonized and rejected by their fellow representatives and this is followed by the media portraying them as Scrooges and hating all the wonderful things they refuse to spend money on.

On this point we conclude that, yes, we must send the best people we can find to Congress, but that is not enough for even many of the ones with good intentions become addicted to unlimited spending.

The adults in the room, the common people with common sense must step forward and discipline these addicts so they do not ruin us. More on this later.

(2) Pass legislation that will limit borrowing and overspending.

The idea that this can be done is as big of an illusion as the dream that all we need to do is vote for the best people and all will be well.

We have had many legal constraints in the past and our trusted representatives have overridden them all. A metallic standard was supposed to restrain Congress but that has been overridden by the stroke of a pen. Today we have a legal debt ceiling which has proven entirely useless. Congress just raises it routinely and its effect is as if it did not even exist.

(3) Pass a balanced budget amendment.

People think that this will surely work because an amendment to the Constitution has a lot more teeth than mere legislation passed by Congress such as the debt ceiling.

Wrong again. An amendment may produce some results for a time but they would be temporary and then our spendoholic representatives would find a way to subvert it – and sometimes with good reason. We may find ourselves in a war for survival and in that situation a balanced budget may be suicide.

Believe me, we would not have to be in a war of survival to tempt our spend-loving friends into bolting from a restrictive amendment. All it would take is a short period of time with no spending fix to assuage their addiction and a way would be found around such a nasty amendment.

If you don’t believe me just read the Constitution where it currently says in Article I, Section 10, that “No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts.”

When’s the last time you heard of a state giving or receiving payments in gold or silver? Indeed this became a very inconvenient restraint so a way was found to go around it by reading an implied meaning into the document. The same would happen with a balanced budget amendment. Our fearless leaders are creative enough to find a way around any law or amendment that is passed.

So… if all the commonly proposed solutions will not work what are we to do? Is there anything that can be done to move us toward sounder money management?

Yes, there is. Our problem is that we keep looking toward the governing body that created the problem to solve the problem. If your business partner borrows and spends the company into near bankruptcy do you continue to give him your full trust hoping he has the common sense to solve the problem?

No. Of course not. His lack of sense has taken you to the edge of a cliff. You cannot trust that he will now take you to safety.

Yes, it helps a little to get the best possible people in office and to make laws that attempt to restrain insanity but such steps are very insufficient to cure the disease. Outside help must be called in.

And where do we find such people? They are all over. They are called voters and most of these people do have the needed common sense.

•The average voter knows better than to borrow more money than he can pay back.

•The average voter knows better than to spend more money than he has available.

•The average voter knows that his family wants many things he cannot afford so he has to set priorities in spending – unlike Congress that thinks it has to borrow whatever it takes to give us all the things we want.

•The average voter is not a member of an elite club like Congress where he is under pressure to spend lots of money to be one of the group.

•The average voter does not have to raise large sums of money to be elected and is not beholden to pressure groups.

•Best of all, the average voter balances his budget and lives within his means.

We cannot trust those who created the problem to solve the problem. The employer of all branches of government, the voter, must step in and assume the ultimate responsibility.

The big question then is how is this to be accomplished?

The best long-term solution is described earlier in my chapter on Molecular Politics. This is a plan for the voters themselves to take charge and set the elected representatives in line with the will of the people. Even if this catches on it may take a significant period of time to be fully implemented. We may not have that much time to save our country from economic destruction. The question is – what can we do in the immediate future to turn our economy around and place it on a sound basis?

The rise of the Tea Party gives us evidence that the voice of the people can have a strong influence on our elected representatives and the legislation they support. Unfortunately, they have been portrayed as the extreme right wing of the Republican Party, but according to a Gallup poll taken April 5, 2010 only 49% of them identify themselves as Republicans of any stripe. 51% say they are either Independent or Democrat. Of that 51% 8% are Democrats and 43% are independents.
http://www.gallup.com/poll/127181/tea-partiers-fairly-mainstream-demographics.aspx

While it is true the Tea Party is more conservative than liberal its reach extends far beyond the conservative wing of the Republican Party, or the party itself. Because it is a threat to the status quo it is portrayed as fringe when its goal of cutting spending is very mainstream.

The idea of cutting spending is so mainstream that even the very liberal Daily Kos published this world wide problem on their site:

“Asked (in a Financial Times/Harris Poll) if public spending cuts were necessary to help long-term economic recovery, 84 per cent of French people, 71 per cent of Spaniards, 69 per cent of Britons, 67 per cent of Germans and 61 per cent of Italians answered Yes. In the US, 73 per cent of Americans agreed. …
http://www.dailykos.com/story/2010/07/14/884103/-Poll:-People-want-government-spending-cut,-but-

A Fox News poll asked participants if government spending was out of control and 78% answered yes.
http://www.foxnews.com/politics/2010/02/26/fox-news-poll-percent-say-government-spending-control/

It is not surprising then that since the Tea Party started out emphasizing the non partisan idea of controlling spending that they drew a lot of people from outside the Republican party.

Since its launch a number of Tea Partiers have placed emphasis on social issues, religion and various non economic issues and have drew fierce criticism from the Left and have lost some support.

This illustrates the truth that narrowing down the field to one major non-conflicting popular subject at a time creates the possibility of constructive political change. If an advocate tries to get support for cutting spending then he has a base of up to 78% to work with. BUT if he throws in something unrelated such as abortion then that support may be cut in half making his possibility of success with the masses almost nil.

The Tea Party’s influence has been significant but it has been limited by several factors:

(1) They are now identified with much more than economic issues and are seen as a conservative movement that also embraces social issues. This turns off many in the Middle and, of course, the Left.

(2) They do not have a well-defined mission that is spelled out with simplicity that all can understand.

(3) They do not have a step-by-step plan to accomplish specific goals.

(4) They are not unified. A Tea Party group in one area of the country may have different goals and priorities than in another part, even though many of their beliefs are similar.

On the positive side they have sprung from the grassroots of people concerned about the very real problem of overspending and this foot in reality and popular support gives them power, even though it may be somewhat scattered.

A problem in winning over independents to a political cause is any choice seems to involve a number of issues. The citizen may agree with eight points but be repulsed by two of them and thus his support is very tepid. Many do not want to identify with Republicans, Democrats, The Green Party or the Tea Party because there is something in each movement that rubs them the wrong way.

Those who are not highly polarized need selections available that are honed down to one non-conflicting category per choice. This is what we must do. Citizens must pick various categories and gather supporters around them.

The economy is the most pressing issue as I write this and thus the need follows for the creation of a major non partisan group that will push for common sense economic reform.

Eventually there could be dozens of such groups pushing for various changes that have majority support that, in the past, had been sabotaged by elected representatives who had sold out to pressure groups.

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The Fed and Common Sense

March 21, 2011July 19, 2017 Joseph Dewey

This entry is part 5 of 31 in the series 2011B

We have spent a lot of time covering the gold standard for a good reason. Most people who want a return to some type of gold standard are reasonably informed and are thinkers. They understand the importance of having a sound monetary system, of not overspending and the genius incorporated into the original Constitution. Having one of these on your side is more potent than a dozen of those who formulate their views from media soundbites.

Therefore, I have presented what I consider to be logical information on what will and will not work as far as gold as a standard goes. I will add a few more things as we continue. For instance, the market value of gold could be used as a standard to formulate the value of a dollar to increase the stability of the current or future fiat system.

We’ll discuss more later about how the dollar could be backed but for now we’ll continue on the ten points that are under consideration to create a sound money system. The gold standard was merely the first consideration. Let’s take a look at the second.

(2) Eliminate the Federal Reserve.

A great number of books, articles and treatises have been written on this subject. Since I am trying to present ideas and information that may be new to readers I will only cover this briefly as a simple Google search will bring up a plethora of material.

A good deal of the information is either from conspiracy theorists or from those just who loath the organization and want it abolished.

It didn’t help that it was created during the progressive era of Woodrow Wilson and passed in 1913, the same year that instituted the Income Tax. Then it was supposed to create enough malleability with currency so a depression could not happen again yet it was powerless to either prevent or cut short the greatest depression in our history.

In addition, there is something about its name that really get’s its critics blood boiling. It is called The Federal Reserve. They say it is called such to deceive us into thinking that it is an arm of the government, but they maintain this is a big lie because it is a private corporation ran by greedy bankers. Some believe the insiders make an unfathomable amount of wealth that is hidden from the public and this is why it has never been audited.

Ron Paul has always been suspicious of the Federal Reserve and has introduced H.R. 1207, The Federal Reserve Transparency Act, which would require it to be audited and force it to operate in the light rather than the dark.

Some critics give a distorted view of the Fed when they stress that it is a private business, as if it were entirely divorced from the government and keeping all the profits. It might more accurately be called a quasi governmental organization for all members of the Federal Reserve Board, including its chairman and vice-chairman, are chosen by the President and confirmed by Congress. The government also sets the salaries of the system’s highest-level employees. This doesn’t happen with a purely private business.

In addition the U.S. Government receives all of the Fed’s annual profits, after a statutory dividend of 6% on member banks’ capital investment is paid. The Federal Reserve returned $78.4 billion to the U.S. Treasury in 2010. This was an increase of $31 billion over 2009 because of earnings on stocks that they bought up to pump up the market.

Congress has oversight with them and can change the rules at any time, but overall the Fed has, at present, pretty much unrestrained freedom in dictating the rules for America’s currency and banking systems.

So if the Fed must return profits to the U.S. Treasury, and their salaries are controlled by Congress, why do conspiracy theorists paint the Fed as a sinister entity that is stealing America’s prosperity with insider bankers becoming wealthy beyond the imagination?

Part of the reason is that some critics do not fully understand the linkage between the government and the Fed. But for those that do the problem is the Feds’ secrecy. Yes it is true that a set amount of profits go to the government and their salaries are set by them but because they can operate under the radar with so much secrecy it is suspected that insiders have giant expense accounts and channel funds in directions that will enrich them.

The Fed also plays the stock market to assist the economy and who knows how many employees trade with insider knowledge.

If the Fed were fully audited on a regular basis and all its dealings were available to the public then we could know the truth and we could lay the basis for a more honest and stable economy.

Another problem is that the Constitution gives Congress the authority to create money. Many feel that it is wrong for them to have given away this power to a secretive semi private organization. Thus there are many calls for the elimination of the Federal Reserve and to ether give the power to create money back to Congress or directly to the people. We’ll talk more about this later on.

(3) The third suggestion to strengthen our economy is a balanced budget amendment.

This sounds like it should be a no-brainer, but is it? Why hasn’t Congress ever taken this seriously?

There is a great mystery surrounding the fact that Congress just cannot balance their budget or even come close to living within their means. They are like a teenager who has been given a large credit card and then he decides to blow the whole thing on everything that feels good to him. Then when the limit is reached he comes home to Daddy (the taxpayer) and pleads for more money.

The mystery is this. The people we elect are the among the best and brightest of us, yet they act like stupid teenagers in their job performance, especially as far as spending money goes.

These people are not stupid as rocks so why are they fulfilling their jobs with the competency of drug addicts higher than a kite waiting for their next fix?

It appears that our representatives are either out of their minds or just plain hate America and all taxpayers.

We know that this is not literally true, but we also know there has to be a reason for such self-destructive behavior, but what that is seems elusive. It is amusing to see Joe Q. Public of average intelligence watch these screwups and exclaim in exasperation, “What’s the matter with these guys? They are spending millions on golf videos for the Irish, elevator attendants to push buttons for lazy congresspeople, research to see if volunteering is helpful, millions for unneeded golf courses for military brass when we are short changing the brave soldiers who are risking their lives for us, bridges to nowhere projects and the biggest boondoggle of them all – a nearly trillion dollar stimulus that was used for political payback costing $228,000 for each job created and causing untold misery for many others who lost jobs. Are these guys out of their minds?” asks Mr. Average? “I know better than to waste money like this. Why do they not know?”

There are two reasons for this apparent stupidity. The first was mentioned previously in chapter three and that is our President and Congress see, as part of their job description, that they are supposed to spend money to please voters. Since every employee wants to do a good job then our elected officials feel they have to spend lots of money to receive praise from their employers, the taxpayers. Unfortunately, this illusionary job description is reinforced when they bring home the bacon to their home state and the few who are on the receiving end give lavish praise whereas the ones paying the bills are too busy working to protest much. Representatives therefore receive the lopsided idea that they are performing well by sinking us into unprecedented debt.

The second reason for the stupidity is addiction. Now if a person is not exposed much or has little access to smoking or drug use the chances are that he will not become addicted. But if everyone around him is a user then it becomes difficult to resist and most will join the crowd.

Spending money can be an addiction like drugs. There are many shopaholics that just cannot resist spending more money than they can afford.

Congress is a club where most members are spendaholics and when a person who is not an addict arrives he is met with two major temptations. First he is given trillions of dollars to spend. Maybe in the past the most he has blown has been a couple grand, but now we’re not only talking millions, but thousands of millions and even millions of millions – or trillions.

If spending money created a high for him in the past then being a member of Congress will blow his mind.

The second problem that sucks him into addition is he is surrounded by spending addicts who gleefully spend money like they are little gods with unlimited power.

Anyone with a weak will who goes to Congress doesn’t have a chance. He will become addicted.

Will he vote for a balanced budget or term limits? Not likely. He may talk a good game but when it comes down to taking action the true addicts will side with keeping their power to spend intact.

And what would happen if we did pass a balanced budget amendment? Does a mere law prevent an addict from getting his fix?

Not really.

Did the constitutionally mandated gold and silver standard prevent us from throwing it out the window and then spending money we didn’t have?

Even so, unless we cure the addiction of Congress and the Presidency they will find a way around any terms of a balanced budget amendment just as they have other limitations that have been there in the past.

In a health emergency it may be necessary for a non addict to take some drugs. Even so, during a war or national emergency it may be necessary to spend extra money. Because of this and the willingness of the addicts to break their own laws a balanced budget amendment may cause as many problems as it solves.

One thing we agree on is that our elected officials must run this country as efficiently and with as much common sense as a wise family. They may borrow money now and then but they operate their budget on common sense principles. Government must do the same and we the people must be the last line of defense in making sure they comply.

Read This entire series. Here are the links.