Sunday, July 31, 2011

Who's Right, Ron or Rand?

We love them both, but Ron Paul and his son, Rand Paul certainly have their differences. In addition to some big differences in style (and I happen to love and appreciate the merits of both their respective styles), the two have a few minor differences in substance as well. One of those areas of disagreement is over the debt ceiling. So who's right, Ron or Rand?

Ron Paul has pledged again and again not to vote for raising the debt ceiling, and like all his other pledges, it's one Ron Paul plans to keep. His son Rand Paul, however, believes that the debt ceiling is likely to be raised no matter what, and sees the present debate over the debt limit as an opportunity to use raising the debt ceiling as a bargaining chip in exchange for a constitutional balanced budget amendment.

But the problem with this approach-- and this may be considered heresy by some libertarians-- is that a balanced budget amendment is not a very good solution to Washington's perennial fiscal dysfunctions. The problem with the budget is not that it isn't balanced, it's that it's too big. As Ron Paul has argued before, "A $4 trillion balanced budget is most certainly worse than a $2 trillion unbalanced budget." He's right.

A balanced budget amendment, especially a poorly-written one, could actually have the opposite of its intended effect and do irreparable harm to libertarians' efforts to limit spending and curtail the size, role, and influence of the federal government. As Rob Natelson of the Tenth Amendment Center recently argued, capping federal spending as a percentage of GDP on a state level has had the effect of creating spending floors, not ceilings.

In addition to restricting governments from spending over the capped amounts, constitutional balanced budget amendments explicitly give government permission to spend up to the amount allowed for by the spending cap, and as the federal government has done for years with the other amendments, it can easily ignore and "work around" the budget caps to spend even more.

As Ron Paul explained in a House floor speech to oppose the Cut, Cap, and Balance Act:

"By capping spending at a certain constant percentage of GDP, it allows for federal spending to continue to grow. Tying spending to GDP creates an incentive to manipulate the GDP figure, especially since the bill delegates the calculation of this figure to the Office of Management and Budget, an agency which is responsible to the President and not to Congress. In the worst case, it would even reward further inflation of the money supply, as increases in nominal GDP through pure inflation would allow for larger federal budgets."

Perhaps worse, a balanced budget amendment could forever cement the constitutionality of Washington's ever-growing welfare state, warfare state, and regulatory regimes. Much of Washington's spending is already unconstitutional, and over recent years, libertarians have been hard at work to challenge a century of bad jurisprudence by explaining that as originally understood, the General Welfare clause and the Commerce Clause which have been used to justify Washington's relentless growth are in fact, not blank checks on the federal government's power and role.

A balanced budget amendment could undo all that hard work and its potential fruits in the years to come by offering the status quo's proponents a constitutional sanction for their spending. Of course with a strict and proper interpretation of the amendment and its context within the rest of the Constitution, judges and legal scholars should know better, but such an amendment, like the aforementioned clauses, could very easily end up another thorn in the side of every libertarian, working as a crack in the foundation of our system of law to be exploited by those who want to continue the project of federalizing every aspect of life in our republic. What a bitter shame it would be.

Rand Paul and no doubt, many of his colleagues working for the passage of a balanced budget amendment, have the best intentions in mind, but their solution is unlikely to fix the spending problem in Washington. Instead of passing an ill-conceived and easily circumvented amendment to require Congress to restrict its spending to certain levels, why not go the direct route and simply restrict spending to certain levels? One easy way to do that would just be to leave the debt ceiling where it is. Unable to borrow more money, Washington will be forced to restrict its spending.

There's already a legal limit on government spending that goes beyond the revenues it takes in: it's called the debt ceiling. The solution is simple: let the debt ceiling do its job.




Wes Messamore,
Editor in Chief, THL
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