Another Path To Solvency

By John Lumbard.

The legislatures of seventeen states have recently passed a bill calling for a constitutional convention that would be focused solely on the drafting of a balanced budget amendment to the Constitution.  Each of these bills explicitly states that it will be declared null and void if the Supreme Court rules that the convention cannot be limited to the drafting of a balanced budget amendment (BBA).

Next up is New Hampshire, where the bill has already passed the House.  Tomorrow, May 9, it will be taken up in the NH Senate (http://www.gencourt.state.nh.us/bill_status/quick_search.html — type in HCR 40).

No this would not mean budget cuts in time of recession, and no it’s not a mandate to leave spending untouched while raising taxes to cover unlimited wants;  there must have been a hundred of these bills proposed in the last two or three decades, and they’ve figured all those things out.  In 1997 an amendment came within a single vote of capturing 2/3 majorities in both houses of Congress, but the balanced budgets of the late 90s caused the passion to flare out.  Since then our debt has grown from 5.5 trillion to 15.5 trillion.  If interest rate were to rise anywhere near their highs of the last few decades we’d have to pay more than a trillion dollars a year in interest alone.  At that point a vicious spiral becomes almost inevitable.

A supermajority of American voters is already in favor of a BBA, and in recent months BBA bills have been filed in Washington with huge numbers of co-sponsors stepping forward from both sides of the aisle.

If you still have questions about the pros and cons of an amendment read this article, and then start writing letters to your representatives.  We’re only 3 or 4 years behind behind Greece, Portugal, and Spain, if investors take a pessimistic view, and we can’t look to Germany to bail us out.

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