Federal Budget Balance: Tonic or Toxin? (original) (raw)

The Balanced Budget Veto A New Mechanism to Limit Federal Spending

2003

period of surpluses shows that it is very difficult to enforce fiscal discipline within the current budget process. Strong tax revenue growth and falling defense spending during the 1990s resulted in a balanced budget in fiscal year 1998 for the first time in 29 years. But budget balance did not last long because Congress has opened the floodgates to rapid defense and nondefense spending increases in recent years. The war on terrorism has given Congress and the administration political cover to further increase the budget and sidestep needed spending tradeoffs. Large deficits may renew interest in budget process reforms to restrain spending. Indeed, in its latest budget the Bush administration proposed creating a new statutory line item veto that would be linked to deficit reduction. In the 1980s and 1990s, there were repeated efforts to impose greater discipline on the budget process by enacting both a line item veto and a balanced budget amendment to the Constitution. A balanced b...

A Modest Proposal to Balance the Federal Budget

Journal of Applied Business Research, 2013

The total debt of the United States (US) federal government now exceeds annual Gross Domestic Product (GDP). This level has historically proved problematic in other countries. The primary driver of the debt is a federal budget deficit that now exceeds $1 trillion per year. Despite forecasts of dire consequences, the deficit and debt have not been controlled, as efforts to make meaningful reductions—including plans developed by the bipartisan Bowles-Simpson and Domenici-Rivlin groups—have so far fallen prey to infighting in the political process. This paper examines one approach to eliminate the annual deficit, balance the federal budget, and reduce the federal debt. This approach increases tax revenues with a flat income tax applied to a broader tax base plus a consumption tax. Health and welfare spending is reformed using the Boortz-Linder Prebate and the Bismarck social-insurance health care plan to provide a more comprehensive safety net. Defense spending is reduced by making greater use of reserve forces following the model of Sweden, Switzerland, and Israel, by reducing overseas deployments, and by reforming procurement. Many unnecessary or counterproductive activities are cancelled, transferred to the states, or privatized. Social security is placed on a sound footing for the future. These proposals are based in large part upon programs and procedures that have produced positive results in other countries. This approach is offered not as the only or best solution, but rather to indicate that solution is possible and to lead to further discussion.