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Tea Party Senators Leveraging Debt Ceiling for a Balanced Budget Amendment

April 26, 2011 - by Donny Shaw

The upcoming debt ceiling increase is pretty much the ultimate must-pass bill. If Congress doesn’t pass it, it’s not just that some programs would be put on hold or that some federal workers would be furloughed; the entire economy would collapse much more deeply than in 2008, and we would have no chance of recovery since our international credit worthiness, our principle financial asset, would be permanently ruined. Of course, every member of Congress knows that the debt ceiling increase has to be passed. That’s why they’re hoping to use it as a means to pass other legislation that they know cannot stand on its own.

Fox News reports that Senate Republicans are planning to filibuster the debt ceiling increase unless the Senate passes a constitutional balanced budget amendment:

Guided by their belief that the nation is headed for a long-term fiscal calamity, Republicans are promising a fight — one that may make the battle earlier this spring over government funding resolutions look small in comparison.

Sen. Jim DeMint, R-S.C., vows to “tie the Senate in knots” unless it passes a balanced budget amendment. And while he and Senate Republicans may lack the votes for passage, they wield some leverage — Democrats need some Republican support to raise the debt ceiling.

[…]

All 47 Senate Republicans have signed a pledge to vote for it, and there are indications that as many as nine or 10 Senate Democrats may be leaning towards yes votes, too.

The last time a balanced budget amendment was introduced in the Senate, in 1997, it failed by just one vote.

Proponents believe the public pressure for such an amendment has grown enormously since those years.

The Republicans’ balanced budget amendment is S.J.Res.10.

Besides requiring budgets to spend no more than they bring in in revenues, it would cap federal spending at 18% of GDP, which you can see in the graph at right is a level not seen since the early 1930s. It would also make it more difficult to balance the budget by raising taxes or closing tax loopholes by requiring a 2/3rds majority vote in both chambers for “any bill that imposes a new tax or increases the statutory rate of any tax.”

As difficult as it is to pass a constitutional amendment (both chambers must pass it with 2/3rds majority), the Republicans have the advantage here. It only takes two or three senators working together to filibuster a bill to death. The balanced budget amendment has the support of 47 Republicans, so DeMint can likely get help from othe Tea Party members, like Sen. Rand Paul [R, KY] and Sen. Mike Lee [R, UT], or Sen. Orrin Hatch [R, UT], the amendment’s chief sponsor. And note that DeMint doesn’t just want a vote on the amendment; he is threatening a filibuster unless the amendment actually passes.

QUICK UPDATE: Sen. Lee has already pledged to filibuster the debt ceiling vote unless a balanced budget amendment passes. Game on.

Sens. DeMint and Paul are pictured above, pledging their allegiace to the flag, at a Tea Party Caucus meeting.

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Comments

Displaying 1-30 of 40 total comments.

luminous 04/29/2011 1:20am

ott, when they opt out then can take a voucher equal to the cost of the basic policy to the plan of their choice!!

luminous 04/29/2011 1:19am

Now the insurance companies their can either use the government negotiated public option rates, or choose to negotiate their own. So their not at a disadvantage to the public option.

France also bans claim denial to doctors for services covered under the basic req, that is if they dispute a claim they have to recover the costs from the patient not burden the doctors staff.

Also you can buy as much insurance above the basic minimum as you want, so their not limited if they want more then the basic plan. Now in most single payer systems(incl Canada) you are able to buy supplemental insurance, but the French approach is likely more effective for service availability.

Now the French(All Payer) system doesn’t obtain all the savings that single payer does, bulk payments and global budgeting save an epic ton of money, but it seems to be a good compromise with the ideals of America and the realities of a global economy.

luminous 04/29/2011 1:07am

I did say that, however I will note that most Canadians can get to an American hospital in less then a few hours drive so its not so much in the same category.

The French system is really neat, it has the standard features of a universal system, that is their is taxes provide all French citizens with a basic minimum policy which they can obtain via their public option, however they can opt out and choose a private plan.

And the big difference from most other systems is their (not sure what they call it mind you) adverse risk insurance. Now this isn’t an insurance for people its an insurance for the insurance companies. They all pay into it(including the public option) and it pays out to equalize the average cost of each patient for services covered under the basic minimum.

Their is no incentive to kick people out because their ill, in fact the incentive is shifted to maximizing the customer base and customer retention.

cont.. grumbles about 1000char limit

fakk2 04/29/2011 12:53am

Oops, should’ve checked all the copy/pasting, here’s the missing first link:

2002 APHA Study

fakk2 04/29/2011 12:52am

Good Health Care
2002 AJPHA Study don’t see anything odd about some Medical tourism
9/11/09 NYT Interview on France’s Health Care System

Bad Health Care
8/7/09 WSJ Article on France’s High Health Care Costs
11/6/07 CMAJ Article on Facing Hard Choices

Neutral
6/8/09 Medical News Today overview of France’s Health Care System
4/14/08 Healthcare Economist overview of France’s Health Care System

fakk2 04/29/2011 12:51am

You understand their system pays for those right?, those trips are not out of pocket!…I don’t see anything odd about some Medical tourism

Yes, but if I remember correctly, you said on 1/23/11: Nor do I think anyone should be required to go on an international excursion to get supplies, services, or drugs

About France, lots of conflicting information, and since I hadn’t considered imitating their policies before, I will need to research it a bit more (the initial information does look promising though. So as far as their health care system goes, for anyone reading this, I’ll list some references:

luminous 04/29/2011 12:02am

“Who wants to ferry citizens across the border to get MRI’s because it’s quicker like Canada does?”

You understand their system pays for those right?, those trips are not out of pocket!, Their a Nation with 1/10 the population of our Nation I don’t see anything odd about some Medical tourism, more then enough Americans head to Asia and other places for “traditional” cures nothing funny here we have lots of excellent doctors and hospitals after all(for those that have the green anyway).

“Why should we imitate that when it’s not working?”

Ehh? The next closest first world Nation in spending is half of what we spend(France FYI). Second in the case of the French system they have better outcomes, longer life spans, shorter avg waiting times, and vastly more options in providers, in addition to a public insurance they can opt out and choose a highly regulated private plan as well, Their system is an All payer system not a single payer system.

Hows that “not working”?

fakk2 04/28/2011 11:02pm

Luminous, fundamentally I believe both you and I want the best for America. Specific policies is where we differ. I believe in a return to isolationism, as hard and painful and horrible it will be, I believe if we can move back to a large degree of isolationism, for 10 or 20 years, then we will be better off and in a more strategic bargaining position with other countries. What I gather from your comments is you believe we have to beat them at their own game, which would include becoming like them. I don’t like the idea of imitating what they’re doing, especially because they’re not in a very good position themselves if we’re only looking at their country or union. Who wants to live like China/Japan? Who wants to be fractured monetarily like the EU? Or so PC like Great Britain we can’t wear crosses around our neck? Who wants to ferry citizens across the border to get MRI’s because it’s quicker like Canada does? Why should we imitate that when it’s not working?

fakk2 04/28/2011 10:58pm

BTW, feeling generous, here’s a link to a study on Reagan tax cuts, with a side note to Clinton increases. It states the wealthy paid a higher burden, the poor paid a lower burden, and revenue increased under Reagan. They even point to the tax cuts studied by the CATO Institute, saying the Reagan cuts, much like Mellon cuts of the 20s, and the Kennedy cuts of the 60’s:

increased tax payments by “the rich,” also increasing their share of total individual income taxes paid. Unfortunately, estimates of ERTA by the Democrat-controlled CBO continued to show falling tax payment by upper income taxpayers, even after actual IRS data had become available showing a surge of income tax payments by affluent taxpayers.

fakk2 04/28/2011 10:51pm

What good would point anything out be?

I would think the good would be to show the merit of what it is that you are saying. At the very least it would show anyone reading this that you’re not talking about things you don’t know about, but have specific examples to draw from that provide a counterbalance to anything else said, or any other examples. I can say 2 + 2 = 5, but unless I have someone showing how, or someone at least explaining how, then I’m taken as a fool. BTW, I have seen where 2 + 2 =1, very long and complicated, but REALLY cool.

And, honestly, if you have outside sources pointing to your argument, then yes, it can be considered “partisan opinion making”, but that’s someone’s outside opinion on your sources, which may or may not stand true for everyone reading this.

I would like to know why they pick the years 1920 – 1928 as well. When you hear back from them, please let me know.

luminous 04/28/2011 10:38pm

You really don’t get it, I would love for the free market good old libertarian law of the jungle sorta thing, but if we are the only ones playing by that set of rules we will lose every time.

China isn’t going to play by our rules, nor is Europe, or anywhere else for that matter. And the longer we ignore this the more we are going to lose to what China and Europe and Everyone else defines the “free market” to be.

This isn’t about fairness, This is about our Nation being pillaged by the lowest bidder. This is about Competing with Nations that use sovereign wealth funds, tariffs, subsidy programs, nationalize resource industries, and ultra cheap government ran health care systems to force businesses into their borders at our great disadvantage.

How long are you going to let everyone else use weighted dice while using normal dice yourself? The corruption of your free market is astounding and the fact you disagree with the government responding to that corruption is astounding!

luminous 04/28/2011 10:24pm

And what good would pointing anything out be? Yes I could likely go and find myself some good articles written by Paul Krugman or the CBO or any number of other economists, and what good would that do in this argument?

I point out logical fallacies, provide ignored surrounding facts, context, and when and if I think it will help in an argument links to some other article.

However that doesn’t matter in this case, anything I would choose to show would be derided as little more then partisan opinion making. This is little different then how I take you links to the not well respected CATO institute.

I would like to know why is it they pick the years 1920-1928, leaving out 1929, ignoring the build up to 1929. And why is that the only thing pointed out in the study? In a good study you have more then one set of data, where is the Reagan tax cuts for comparison, or the Bush cuts?

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luminous 04/28/2011 5:51pm

I want a system that actually works and it is perfectly workable in our democracy, What I see is a myriad of countries around the world that use every trick in the book to gain the advantage in trade and economy while we have our fingers stuck in our collective ears screaming LALALALALA pretending that the free market has anything todo with trade with China, Europe, South America or anywhere else.

I see all the Nations with cheaper health care then we have, ALL have a huge amount of government involved in their systems, and nearly all of them are universal.

I see the constant failures of private investment savings model of retirement, Social security was created because of the failure of private pension plans, it has clearly worked wonderfully and now it should be expanded.

BTW, BIG is idea promoted by Milton Freedman, Friedrich Hayak, James Meade. Not exactly socialists there. The monthly prebate in the “fair tax” is an example.

http://en.wikipedia.org/wiki/Basic_income_guarantee

luminous 04/28/2011 5:24pm

Fakk2,

Funny how CATO’s study their ends in 1928, nothing major happened in 1929 that would ruin that studies conclusions did it? *cough*great depression*cough*, increases in revenue prior to the great depression where caused by an explosion in profits from speculation in an unregulated stock market, not from lowering taxes.

I never said transfer pricing was illegal, It is unfair to corporations that can’t engage in the practice. We really should pass more rules on this practice not further enable it or ignore it. Also I am not entirely opposed to partly replacing the corporate income tax with a combination of VAT, carbon, and financial market exchange taxes.

Reagan, Bush Sr, Clinton, and Bush Jr all increased the debt. Clinton did have the Debt going in the right direction at the end of his term, But notice HE RAISED TAXES, Every time our debt increases it is after a TAX CUT, every time it goes down its after a tax increase. I really don’t see where this is hard to understand

eth111 04/28/2011 7:41am

Luminous, It would appear that you are a strong proponent in the benevolent dictatorship model of government, or at least that is how your comments come across. The primary issue here is the government. If the government takes $10 dollars out of your paycheck and then hands you $8 two weeks later, you are not $8 richer, you are $2 poorer as a result of the transactions.

Has GE gamed the system (bought favors as Jack points out above), yes. Are they paying significantly less in taxes that most other companies, yes. Did the major Wall Street players (who birth all of the Fed Chairmen) game the system and create the financial disaster in 2008, yes. Does that make ALL corporations evil and bad, NO.

We need to start making sure that we are identifying corporations and companies that are doing business without the benefit of government favors and giving them our business, not the ones on the government teat. GE is one of the biggest teat suckers in America today.

eth111 04/28/2011 7:27am

Jack, Important distinction is that the moneyed interests are attracted by the government functionary having the ability to sell favors. I agree that it has spun way out of control, which is why I mentioned that it is a positive feedback loop.

That being said, since the American public has become apathetic until just recently, the election process doesn’t serve its inherent term limit function. Therefore, what is needed is a 12 year limit on “service” in Fedzilla. Break it down however you want, but you only get 12 years as part of the machine.

Abaratarrr 04/28/2011 4:10am

a balanced budget amendment would increase the value of the dollar immediately, prices for everything would come down. It would slow down if not reverse the decline the the value of US dollars (which has lost what, 40% of there value in the last 8 or so years?).

prices for gas and food would drop, the stock market would go down but but only because the value of the dollar would increase as compared to the value of stocks. It would be a huge blessing for those on fixed incomes, they would be able to get more food, hard goods and better housing for the same dollars they currently receive. The rest of us would be able to eat a little better

It won’t be so great for big banks, defense contractors and the military industrial complex which makes me think that this amendment has a snowballs chance in hell of passing

Imagine our government only demanding 18% of our labor allowing the rest of your labor to go towards your own interest like putting a kid through collage or retirement

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BIGMOUTHMOM 04/27/2011 11:19pm

I will keep this simple, without a balanced budget our country economically is going to cease to exist, at least according to the GAO, I believe it was 2024 or 2027. Other economics experts agree with this some may differ as to how much time we have before the ultimate collapse. Those who are worried about subsidies for the “greater good of society” do not seem to grasp the urgency of this countries financial problem. Let us use our common sense and come together on this issue to save the next generation from living in a third world country.

patriot1789 04/27/2011 5:41pm

fakk2 I would support having a flat tax but it would still tax income. I believe when you tax income you tax incentive. This is why I think a fairtax would be better. A national sales tax that collects tax at the retail level and taxes only 1 time. So you would get to keep 100% of your paycheck which creates more incentive to work hard. Under the fairtax you could invest tax free, go to school tax free, and save tax free. All used goods would be tax free. And with the monthly prebate of 208 dollars per person(with a social security number) you pay no tax on food and clothing. This would effectively tax illegals and criminals that the flat tax wouldnt. Also the flat tax requires the IRS to know your income. Under the fairtax you never have to file taxes ever again. Thus the government would never know what your income is and nor should they.

As for the balanced budget amendment I support it. If its coupled with tax reform like the fairtax I see an end to recessions for a long time.

luminous 04/27/2011 4:09pm

I should have included trade reform, and tax info sharing in free trade agreements =).

luminous 04/27/2011 4:00pm

“If we take that away, then they start paying taxes.”

That is a fiction, any rate above 0% will be fought. Hell their are many corps they will fight any rate that doesn’t end up paying them.

“How does this translate into people losing health care or retirement?”

Their access to those benefits is contingent on the tax benefits that go to corporations for providing them. Until how those benefits are delivered is reformed that will be the result.

Pass single payer health care, increase SS to double its current payout rate, Use part of SS to fund a National sovereign wealth fund to buy businesses and keep them in the USA, and finely a BIG fund and then we can have a flat tax. Util such time as these items are politically possible a flat tax is simply a national suicide pact.

luminous 04/27/2011 3:36pm

Say you have 3 nations, Nation A charges 40%, Nation B charges 20%, and Nation C charges 5%. You want to open a sandwich shop which Nation do you pick?

The conservative will tell you Nation C, The Liberal will tell you Nation A because of the benefits provided. In fact both are wrong answers. The correct answer is all 3, Their is no shortage of investment capital and all 3 countries will provide more then enough profit.

The really smart business guy however will figure out that Nation A and C don’t share tax book info, So he sets up a scheme where it looks like the shop in A bought all of their ingredients from the shop in C at a lose and hands that book to A’s IRS, Then in C he writes up books that show they bought all of their ingredients from A at a lose and hands that book to C’s IRS.

At the end of the day all of his businesses on paper are operating at a lose, in reality he is screwing everybody.

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luminous 04/27/2011 3:27pm

You don’t need a million dollar accountant team on a $10 million a year income, with software aids a CPA is more then enough to handle such a paltry account.

Anyway the issue isn’t small time Millionaires, if anything the small time Millionaires get a bit screwed because they can’t exploit the system like the internationals can.

Really the key to exploiting the tax system in disgusting ways is by own subsidiary corporations in multiple tax jurisdictions that don’t share information about filings.

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luminous 04/27/2011 12:53pm

I am talking all deductions, credits, writeoff’s, subsidies, etc. I won’t argue that our system isn’t corrupt as hell(it is) but the fact of the matter is all of those tax goodies do things.

Remember that with a tax rate of 36% every dollar saved via deduction represents about 3 dollars in total spending.

The $450 billion(as of 2007) in health care related deductions only represents about a quarter or a third of the spending created via that deduction, meaning about $1.2-1.5 TRILLION dollars.

Similarly the $100 billion in retirement investment deductions equates to $300 billion or so.

GE paid 0% last year(actually we paid them $1.5 billion), I am sorry but 0% is still less then 15%, the “flat” tax won’t bring a dime back into the US from the off shore tax heavens.

This flat tax idea is simply the plan under which 150 million Americans lose their access to health care, lose the ability to retire, and still have their job replaced by robots, and China.

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