Dominique Strauss-Kahn

By John Lumbard.

  What does the allegedly-amoral head of the International Monetary fund have to do with budget deficits in the U.S.?  Ever since the fall of 2008 Americans have been losing trust in their leadership and institutions.  The arrest of “DSK” pulls one more pillar out from under the roof of the temple.

The lesson that many Americans will draw from this is that wise and brilliant men can abandon their judgment as easily as anybody when sex, money, or power are involved.  It’s an exercise in wishful thinking to believe that American politicians will always do what’s best for the country instead of what’s best for their political careers, and it doesn’t take many bad apples to spoil the entire barrel.

There’s a highly-partisan budget standoff under way in Washington right now.  Each of the combatants hopes that the voters think he is standing on principal, but the truth is that they look at the whole spectacle as a circus of opportunism and self aggrandizement.  They’re happy to collect more government benefits than they pay for (as long as the party lasts), but they don’t trust their representatives any farther than they can throw them.

We are no closer to balancing the federal budget than we were two years ago, in the darkest depths of the Great Recession.  We’re collecting $2.2 trillion in taxes each year, and spending $3.7 trillion.  By now it should be crystal clear to everyone that we will not be able to step back from the precipice of fiscal calamity unless we create some mechanisms that force our leaders—our very human and fallible leaders—to do the right thing.  

The best option on the table right now, filed in both houses of Congress, is a balanced-budget amendment to the Constitution that includes a cap on federal spending.  History has proven that we can’t collect more than 20% of GDP in taxes, no matter how high we set the tax rates;  so let’s not allow Congress to spend more than 20% of GDP!

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