Try this thought for paying down the debt.
Now about that pesky debt.
At any point in time, the total value of bonds that may be issued is equal to the principle remaining in the pool. If I've done my math right, this allows us to gradually pay down the outstanding debt in that pool while - thanks to the BBA - we do not incur any additional debt.
Shoot holes in it, because this was a very quick brain dump, so there must be flaws.
Consider first that national expenditure through most of the 2000s was approximately 33% of the GDP. It spiked temporarily to 41%, but for the most part, it's been 33%. Now, I still believe that's too high and would rather see it capped - via Constitutional Amendment - closer to 27%, but the actual value is negotiable. The concept regarding a balanced budget amendment is to cap expense to a percentage of the GDP. When the latter goes up, by definition, there's more money in the overall economy and when it goes down the opposite is true and you must therefore spend less.
SLR: Hmmm ... Constitutional amendment. We do regard the document as sacred in a secular sense. It may be acceptable given sufficient discussion but it's tentative for the moment.
Now about that pesky debt.
Step 1: Separate it in its entirety into a separate fund. Year 1, the contents of that fund equal the total amount of debt plus interest owed.
SLR: thus far it follows my general thinking but it requires a legal cap as you suggest above or we wind up with the multiple credit card complex.
Step 2: Issue "Callable Debt Reduction Bonds" to the American people in 2, 5, 10, 20, and 30 year increments. The Yield on those bonds will be 80% of the yield on regular Treasure instruments for the same duration, however the yield will be 100% tax free at all levels. That makes them very attractive. Since they are Callable, in years where the GDP is higher than average, you payoff the higher yielding bonds in the mix.
SLR: I'm pleasantly surprised to see my background thinking was not so insane as it occurred to me possibly bonds may be a solution. My reservation was regarding the creation of a separate pool of debt but my acceptance is based on the only honest way for the government to raise additional funds for special purposes. I have no doubt the specifics can be resolved by reasonable negotiators.
At any point in time, the total value of bonds that may be issued is equal to the principle remaining in the pool. If I've done my math right, this allows us to gradually pay down the outstanding debt in that pool while - thanks to the BBA - we do not incur any additional debt.
Shoot holes in it, because this was a very quick brain dump, so there must be flaws.
Your suggested BBA is not precisely a disagreement but rather a healthy reservation and question as to whether there is any other way. My view of this is becoming more and more a view of the heritage we will leave and I can give a conditional acceptance from here on the Socialist Left pending further review of alternatives.
For the SLR editorial aspect, we don't expect but demand this type of review in Congress. Rational opposition builds great things but mostly what we see is politicians nipping at each other's ankles without accomplishing much of anything.
It may not surprise to know one of my most substantial projects in a professional sense was in concert with Kannafoot. There is no substitute for reasoned analysis and it may chafe at times but nothing else has ever shown me a healthy alternative and this applies from music to computer projects to managing entire governments; the principle is the same.
6 comments:
As you know, I'm an Originalist, so I don't take tampering with the Constitution lightly. Since we've only been debt free once in our history, and we've only run an annual surplus a handful of times, something must be done to change the current open purse strings concept. Nothing short of an amendment is truly binding. Even in periods of national restraint - i.e. the three Surplus years at the end of the last century - we have seen how a single event (9/11) can result in national exuberance that not only sanctions but even demands uncontrolled spending. The only way I can think of to control that is to constrain spending to a percentage of the GDP. The challenge is to prevent any ability to make an end-around. Very few people realize that the national budget that's published does not include the budget for the Intelligence agencies. Those are hidden from public view, but I'll wager a good cup of coffee that the Intelligence budget is at least equal to defense. That type of loophole must be prevented for a BBA to work.
Now, admittedly, a BBA sets up some very difficult year-end politicking over who gets what piece of that GDP pie. I'm open to suggestions on that, however one concept I'd consider is to prevent the House and Senate from either adjourning or going into recess if the budget remains unsigned. There need to be consequences for the brinkmanship that's played these days.
The Socialist Left agrees in principle and knows you carry the same trepidation regarding any alteration to the Constitution, as it was writ, so shall it stand. Your point is excellent and we see you hold the same general view of assuming it is done, what can be done to prevent future circumvention by irresponsible politicians. Frankly, we have no use for politicking as we can see it endlessly on television and it's just yak rather than rational opposition. They will never make Beatles songs that way.
I do not see the portioning of the GDP as relevant in terms of a BBA because it goes beyond the fundamental of how will you pay the bills and ensure there are constraints on unreasonable excesses thus blowing the budget all over again. We view the actual expenditures from within that budget as external and must be addressed separately lest that discussion confound the fundamental purpose.
This one may be sticky as we do not believe the government should be cloaked in secrecy because it's an open invitation to corruption. There's almost nothing we regard as valid for secrecy but that gets into the topic of the military and cloak & dagger skullduggery which is also a whole separate exploration.
It's not a sticky issue for me since I believe that every dime authorized in my name is subject to my audit. By listing DHS in the budget but then listing "Intelligence" as classified, I see deception where none is necessary. Placing a line item that tells us how much is allocated to that department does not reveal any secrets. I'm quite certain our enemies have a very clear picture of how much we're spending on Intelligence, so the only people they're really hiding it from is us. That's not acceptable.
Agreed to this specific as we are the government and keeping secrets from ourselves and absent our audit is not a free government. Your approach in which the specifics are not revealed but the amount is open is fair enough. The validity of secrecy in whichever context can be approached as a separate matter.
Astounded to see all this agreement as I don't see anything in violation of the principles of socialism in the Rockhouse interpretation. The biggest bone of contention with socialism is the perception we want to redistribute existing wealth. However, that's not our purpose as we see it as positive for all the the rich have reason to invest back into communities and grow the country rather than sitting on massive hoards like Scrooge McDuck. The basis for the position is further amplified by cruising about Fort Worth and seeing so many start-up businesses, typically operated by minorities, which are flailing for capital. I know from personal experience Mexicans are the hardest working people I ever met and I have no doubt such investment is valid ... but I do not see it happening. There is immense wealth in the DFW area but I see block after block over struggling and failed businesses and I don't see fair competition.
That's a digression but it's the basis for my thinking of any redistribution. We have heard so much of trickling down so trickle already (larfs).
I would disagree with the Mexicans are the hardest working. I would say that it is the immigrant side of most groups that are the hardest working.
I would only suggest installing a line item veto as a means to achieve the BBA goals as the fundementals look solid
Fair enough regarding immigrants and I know from personal experience after trying to keep up with the braceros (i.e. Spanish for laborer but used in CA as a derogative) picking tomatoes in the fields as a kid and they work so damn hard.
The Socialist Left wants to see the line item veto as well as the method of making law which mandates the line item veto is reprehensible skullduggery which has nothing to do with valid politics. I see it as a way to keep Congress honest. Let a bill stand on its own merit or let it die the death it richly deserves.
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