Bob maybe likes the idea of a Constitional Amendment to Balance the Budget, but he wants 3 exceptions
- Define “balanced” to mean not more than 3% of GDP (so if the annual deficit is less than about $500 billion, declare it balanced)
- Exclude military spending
- Allow the requirement to be ignored if the economy is bad.
Now that’s leadership!
Balanced is Balanced ie Expenditures = Revenue
It includes all Expenditures
I would like a cap of 20% of GDP as the maximum expenditure.
It should also redefine the baseline as last year’s expenditures, not last years + some nominal increase.
It does need an emergency override, I would even let it be at 60% of both houses, but the next year does not include expenditures above the baseline.
I would like non-funded government spending to be excluded from GDP.
To put it in context, the US Government this year is borrowing an amount equal to an amount around 10% of GDP – yet the GDP is “growing” at only around 2% – which means the real GDP is shrinking around 8%, which is huge.
Including government spending in GDP then making a limit based on a percentage of GDP creates a positive feedback loop of ever increasing government spending subsuming the private economy. The incentive needs to be “Government can get more money to spend if their actions cause the private economy to grow”.
Setting a GDP cap is only as effective as the integrity of the people charged with enforcing it. If you try to force the government to spend -only- 20% of GDP, they’ll
– include new things in GDP that don’t exist
– change the definition of “expenditures”
– pass laws (like Medicaid) forcing states to pay for the spending the Federal government mandates