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Cap and Freeze

Tuesday January 15th, 2013   •   Posted by Craig Eyermann at 7:48am PST   •  

Which of the following three entities of the U.S. government would you say is the least responsible when it comes to the U.S. federal government budget?

  • The President of the United States
  • The U.S. Senate
  • The U.S. House of Representatives

Here are the key responsibilities of each entity:

By law, the President of the United States is required to submit an annual budget proposal to the U.S. Congress no later than the first Monday in February each year.

By law, both the U.S. Senate and House of Representatives are required to submit their own budget proposals for a vote in their respective bodies no less than six weeks later, after which negotiators from each branch meet to resolve differences between the proposals in conference.

Let’s stop here before going any farther, because it seems that only one of these three entities is doing its job. Let’s start with the latest news from the White House:

The White House has informed House Budget Committee Chairman Paul Ryan (R-Wis.) that it will miss the legal deadline for sending a budget to Congress.

Acting Budget Director Jeff Zients told Ryan (R-Wis.) late Friday that the budget will not be delivered by Feb. 4, as required by law, a House aide said.

“Late Friday evening, Deputy Director Zients confirmed that for the fourth time in five years, the president’s budget will not be submitted in compliance with the law,” the aide said.

“Zients did not indicate how late the administration will delay its submission, simply noting ‘We will submit it to Congress as soon as possible,’” the aide said.

Meanwhile, the U.S. Senate is also setting a similar record for budgetary incompetence, as it has failed to act to even begin fulfilling its mandatory responsibilities under the law for more than 1,357 days. Here’s the news from last October, when it had been only 1,279 days since the U.S. Senate last acted to fulfill its legal requirements:

As of Monday, the federal government has operated without a formal budget for three and a half years.

Senate Majority Leader Harry Reid “last adopted a budget on April 29th, 2009,” according to a Monday press release from the Senate Budget Committee’s Republican staff.

“A budget requires only 51 votes to pass and yet the Majority has refused to even meet its legal obligation to draft one,” said the release.

The debt has risen from $11.2 trillion to $16.2 trillion in the last three and a half years, according to their analysis.

Now, back to the White House, where the President is seeking lawmakers to boost the nation’s debt ceiling before the federal government overspends it, as it doesn’t have a budget to follow:

Obama in a press conference Monday though reiterated his stance, pressing lawmakers to raise the debt limit without tying it to cuts or entitlement reform.

Failure to raise the ceiling will cause a default on payments ranging from Social Security benefits to tax refunds to bond interest, depending on how long it takes Washington to raise the limit and what bills Treasury decides to pay.

So, here’s a suggestion for dealing with all these derelict politicians and avoiding these possible consequences. First, take the President’s suggestion and decline to tie a debt limit increase to cuts or entitlement reform. Instead, set the debt limit to increase once a month on autopilot so that the amount of the increase is tied to the average monthly rate of growth of the U.S. population between the two most recent U.S. Census counts (2000 and 2010 at this writing).

Then, increase the debt limit beyond that level only if and when a budget for the U.S. government is passed into law.

What this suggestion will do is cap and freeze the national debt burden for individual Americans where it is at today, at roughly $52,140 per person, unless the U.S. Congress and the President mutually act to increase that burden beyond that level. Because really, given how much money it spends today, is there really any need for the federal government to spend more than that per American?

Meanwhile, the total national debt would grow at about 1% a year, roughly the rate of population growth, which is a lot slower than typical economic growth, and which would be way down from the average 11.6% compounded rate of growth recorded during the President’s first term in office. The difference would be staggering, as the national debt would grow at a pace where it would double in size once every 72 years, instead of keeping at its current pace where it is on track to double in size every 6 years.

Left alone over time then, the debt burden per individual American would become more and more manageable as people’s incomes increase as the economy grows, even if the U.S. Senate or the President continue to be derelict in their legally mandated duties.

Unless, that is, they actually get around to complying with the law and doing that whole budget thing.

Featured Image:
Source: White House Office of Management and Budget

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January 2013