Proposed Constitutional Amendment

[ebaycj]

Please focus on the general idea conveyed, not my specific wording.

#28 : If the country is in debt, it must pay towards that debt at least double the minimum required by it's creditors, before any other expenditures are appropriated. (Debt includes social security IOU's and other Intra-Governmental loans).

I think it would be extremely popular (possibly with some work on the precise wording).

What do y'all think ?

 

[MotF Bane]

Who are the creditors? What if the creditors are willing to waive payment? What if we lean on the creditors to waive payment? Congress will get around it.

 

[Matthiasa]

So you want to either raise taxes,or extend loan periods?

 

[jpeyton]

Sounds stupid. Who picked the arbitrary "double-the-minimum" number?

 

[Matthiasa]

The same person that didn't think about what the results of that would be.

 

[ebaycj]

This is why I said "Please focus on the general idea conveyed, not my specific wording". Thanks a bunch, Guys.

 

[ebaycj]

Who are the creditors?

Whoever we owe money to. This should be obvious.

What if the creditors are willing to waive payment?

I would say this would fall under "minimum payment". If the minimum payment is zero, double that would still be zero.

What if we lean on the creditors to waive payment?

I would say we would not do this simply because it would reduce avenues for borrowing, by reducing our credit-worthiness. But if you would like to put a restriction on something like this, propose a solution.

Congress will get around it.

Maybe, but what can you do? This is like saying "Why have speed limits? People will get around them". Just because there is a possibility to "get around it" does not mean it is not worthwhile to make an attempt. They haven't "gotten around" number 27, which prevents raising their own salaries while in office with no election in between.

 

[ebaycj]

So you want to either raise taxes,or extend loan periods?

I am for raising taxes that will be used to pay down our debt.

Personally I think there should be a sur-tax on everyone, while we are in debt, that specifically only pays for our debt. (regular taxes pay the "minimums", sur-tax could pay for the "double" part). Hell, put that directly in the amendment I think if this was the case, politicians would be more cautious with their spending, knowing that going into debt would automatically force this sur-tax on to their voters.

Basically what I was getting at, is an avenue to require the government to actively pay down any debt that the US might have. Bonus is that, with the sur-tax mentioned in the last paragraph, once we have no more debt, this turns into a pseudo-balanced-budget amendment.

 

[ebaycj]

Sounds stupid. Who picked the arbitrary "double-the-minimum" number?

The number was arbitrary. I'm completely open to changing it. This is why I said, "Please focus on the general idea conveyed, not my specific wording". What "arbitrary" amount would you choose to go there?

My goal was to force the paying down of the principal on our debt (instead of interest-only plus servicing costs). At some point, we would no longer be in debt.

 

[nonlnear]

Too simplistic. If creditors wanted to keep the system rolling they would just cut the minimum payments in half and keep on rolling. OTOH they would also be given a lot of power if they wanted to put the screws to the US and held debt with variable terms (or that required rollovers). Also if you're really serious about the debt problem it simply doesn't do enough. If you are that anti-debt then just strip it down to something that can't be manipulated:

The federal government may not undertake any financial obligations except those needed to continue repaying those debts that were in effect prior to this amendment, or for the purchase and development of military hardware. Also the federal government may not insure or guarantee the debts of any domestic corporation, agency, subsidiary government, foreign government, or foreign agency.

No new debt period. Don't let anyone tell you that would make infrastructure development impossible. That is a lie. If states need to finance roads, etc. let them borrow, but at their own risk. The problems with the current system occur when the same government that creates the currency can also hold the debt.

 

[JEDIYoda]

I am for raising taxes that will be used to pay down our debt.

Personally I think there should be a sur-tax on everyone, while we are in debt, that specifically only pays for our debt. (regular taxes pay the "minimums", sur-tax could pay for the "double" part). Hell, put that directly in the amendment I think if this was the case, politicians would be more cautious with their spending, knowing that going into debt would automatically force this sur-tax on to their voters.

Basically what I was getting at, is an avenue to require the government to actively pay down any debt that the US might have. Bonus is that, with the sur-tax mentioned in the last paragraph, once we have no more debt, this turns into a pseudo-balanced-budget amendment.

must be nice being 12 years old.......

 

[XZeroII]

I don't think you understand how this works. It isn't like the US recieves a monthly bill that we need to pay with a "minimum payment" (I can't believe I had to just say that). Think of it like the US as a bank and other countries give us money in the form of a CD. We take their money with the agreement that we will pay them interest in exchange for them keeping their money with us for X number of years. That's a simplistic way of thinking of it.

Also, the reason why there has never been an amendment saying that we need to have a blanaced budget is because during times of a recession we need to spend more in order to get out of it. The alternative is what happened in 1929. Monetary policy is one of the tools that the government has to prevent that kind of situation from happening again. If they can't spend more than they bring in, then their hands are tied and we will go into a downward spiral "feeding frenzy" of recession.

So while I would LOVE to see our government be more fiscally responsible (understatement of the year), what you're proposing would not work at all.

 

[Bateluer]

I am for raising taxes that will be used to pay down our debt.

Personally I think there should be a sur-tax on everyone, while we are in debt, that specifically only pays for our debt. (regular taxes pay the "minimums", sur-tax could pay for the "double" part). Hell, put that directly in the amendment I think if this was the case, politicians would be more cautious with their spending, knowing that going into debt would automatically force this sur-tax on to their voters.

Basically what I was getting at, is an avenue to require the government to actively pay down any debt that the US might have. Bonus is that, with the sur-tax mentioned in the last paragraph, once we have no more debt, this turns into a pseudo-balanced-budget amendment.

I find this idea intriguing. I'm not a fan of taxes, and we're all definitely over-taxed as is, but it would be interesting to see Congressional members explain this to the public.

"Because we spent all your money, we are going to levy a surcharge on all citizens specifically to pay back the money we overspent. In the future, we promise to utilize more effective fiscal policy."

Wouldn't take much to set off the public on this and it would cost a number of politicians their jobs.

 

[nonlnear]

Also, the reason why there has never been an amendment saying that we need to have a blanaced budget is because during times of a recession we need to spend more in order to get out of it. The alternative is what happened in 1929. Monetary policy is one of the tools that the government has to prevent that kind of situation from happening again. If they can't spend more than they bring in, then their hands are tied and we will go into a downward spiral "feeding frenzy" of recession.

So while I would LOVE to see our government be more fiscally responsible (understatement of the year), what you're proposing would not work at all.

This "need" for deficits is parroted as if it's a law of nature when it is nothing more than an observation of political reality. When the economy dips, people get demanding. In a government with nominally democratic institutions, the people have the wherewithal to demand borrowing, so it happens. There is no a priori "need" for a deficit in a recession.

It's fair to debate the merits of deficit spending to dampen the business cycle. There is a case to be made for its benefits. However to pretend that one camp's opinion is absolute fact (typically with the support of "experts" attesting to this opinion) is mere pigheadedness. Nothing more and nothing less.

 

[XZeroII]

This "need" for deficits is parroted as if it's a law of nature when it is nothing more than an observation of political reality. When the economy dips, people get demanding. In a government with nominally democratic institutions, the people have the wherewithal to demand borrowing, so it happens. There is no a priori "need" for a deficit in a recession.

It's fair to debate the merits of deficit spending to dampen the business cycle. There is a case to be made for its benefits. However to pretend that one camp's opinion is absolute fact (typically with the support of "experts" attesting to this opinion) is mere pigheadedness. Nothing more and nothing less.

Not necessarily. When the economy dips, income for the government drops. Unless we're running massive surpluses, expenses are going to outweigh income. If the goverment starts cutting expenses, it's just going to prolong the recession (by definition). Macro economics and the economics of a whole nation are VERY different from the economics of a typical household.

I"m not an expert and don't want anyone to think that. I'm using the knowledge that i have from my education and mixing in a bit of common sense. That's all.

 

[ebaycj]

I don't think you understand how this works. It isn't like the US recieves a monthly bill that we need to pay with a "minimum payment" (I can't believe I had to just say that). Think of it like the US as a bank and other countries give us money in the form of a CD. We take their money with the agreement that we will pay them interest in exchange for them keeping their money with us for X number of years. That's a simplistic way of thinking of it.

Also, the reason why there has never been an amendment saying that we need to have a blanaced budget is because during times of a recession we need to spend more in order to get out of it. The alternative is what happened in 1929. Monetary policy is one of the tools that the government has to prevent that kind of situation from happening again. If they can't spend more than they bring in, then their hands are tied and we will go into a downward spiral "feeding frenzy" of recession.

So while I would LOVE to see our government be more fiscally responsible (understatement of the year), what you're proposing would not work at all.

I know that we don't have a "minimum payment" per se, and that most of our debt is on long-term contract rate basis.

Have the sur-tax pay into an account that is used only for the payments of the debt. Have government budgetary funds also pay into this account, for the interest on the debt (minimum payment always = interest-only), and make sure that is a one-way street. When the balance of the "debt" account is greater than the amount of debt that we owe, the sur-tax goes out of effect. If we incur more debt after that, the sur-tax goes back into effect. Pay it off again, back out of effect. Make sense?

You have to admit that if this tax was in the form of an amendment that required 66% to override it, it would be VERY difficult for congress to do so. Also, it would put a stigma on deficit spending. We could still do it if necessary, but would have to start paying down the principal in addition to the interest. Congresscritters would all of a sudden be worried because any of their spending would also foist this sur-tax on their constituents.

I view this as superior to a "balanced budget amendment" because it still allows the flexibility of deficit spending, while requiring that it is paid for in a responsible manner. At the same time, in the long term, it should reduce the debt to zero or near-zero.

 

[SunSamurai]

I say tax everyone 50k now and we'll be debt free!!


BRILLIANT!

 

[waggy]

I think raising tax's is the wrong way to go. The goverment needs to cut down on the bullshit spending. take out the fruad and waste and the country would be a hell of a lot better off.


/passes the pipe..

 

[ElFenix]

the country has always been in debt and always will be. debt is a good thing.

 

[ShawnD1]

Sounds stupid. Who picked the arbitrary "double-the-minimum" number?

He's probably thinking it works like a credit card. With a credit card, the debt actually increases if you only make the minimum payment.

I think raising tax's is the wrong way to go. The goverment needs to cut down on the bullshit spending. take out the fruad and waste and the country would be a hell of a lot better off.


/passes the pipe..

Most spending is tied to huge social programs. The amount of money spent on little stupid things like bridges to nowhere is a very small percent. Wikipedia has a nice little pie chart for the 2007 budget, link
Social Security and Medicare by themselves are about 35% of the budget. SS, Medicare, Medicaid, and other unemployment benefits together are about 50%. Literally half the federal budget is for unemployed people, but keep in mind those old people did pay into it for a good 40 years before retiring so we can't really bitch too much about this. Defense and war on terror are about 20%. The rest of the budget is little slices that I don't feel like reading.

Solution:
kill all old people
edit: turn medicare into an HMO and kill them that way

 

[Matthiasa]

the country has always been in debt and always will be. debt is a good thing.

Actually there was a time... a very short time the government actually had no debt.

 

[Daverino]

Only someone with no background in economics would believe that all debt is bad.

 

[ShawnD1]

Only someone with no background in economics would believe that all debt is bad.

I thought the idea was that having debt is bad but going into debt is good. I want to build a banana stand, so I borrow some money to get it going. Once it's going and doing well, pay it off as soon as possible unless the opportunity for expansion comes up.

 

[nonlnear]

Only someone with no background in economics would believe that all debt is bad.

This is untrue. (For the purposes of this post I am assuming you meant government debt, given the context of this thread.) This is only true if you assume that the belief in a broad government mandate is somehow an inevitable consequence of an education in economics - which it isn't.

 

[Anarchist420]

I prefer a tax raise to retire debt than monetizing it. Here's an Amendment I propose:
The Federal Government shall not print, coin, borrow, or loan money.
Congress shall make no law regulating banking.
Congress shall make no law establishing a bank.
All deficits shall be paid by the states in proportion to their percentage of the population according to the U.S. Census.
Congress shall collect taxes only in platinum, gold, and silver and shall establish a platinum:gold:silver value ratio.
The Federal Reserve Act of 1913 is hereby repealed.