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The desire to rule is the mother of heresies. —St. John ChrysostomGovernment Debt – Does America Need a Constitutionally Defined Debt Limit?
The 2011 debt ceiling imbroglio between Democrats and Republicans produced terrible legislation approved by Congress and signed by the President. To rescind the misbegotten legislation, Obama, Pelosi, Reid, Boehner and McConnell are currently negotiating tax increases, spending cuts and manipulating the debt ceiling law. Thus, the greatest economy in the world is being held hostage by five politicians and their political acolytes. Worse, their combined economic IQs are less than room temperature. This is insane.
The following is an observation of why America is in a financial crisis. Elected officials seek power. Thus, political power prevails over prudent and responsible policies and this plagues all democracies.
"Most problems are the result of bad politics... In a democracy, you have lots of pressure groups to expand the state for reasons of money, ideology, etc. Even if they are angels in the government, which is not the case, if there is not a counterbalance in the form of proponents of limited government, then there will be a shift toward more statism and ultimately into stagnation and crisis."
Leszek Balcerowicz, the author of said observation, has made Poland economically robust. Today, Poland has the fastest growing economy in Europe, and The Wall Street Journal reports on how Balcerowicz stopped the politicians from piling up debt – a horrible policy decision:
In the late 1990s,he jammed a debt ceiling into his country's constitution, handcuffing future free spenders.
Today, Poland limits their national debt to 60% of GDP. When government debt exceeds 50%, the Council of Ministers may not adopt a new budget that has a larger deficit than that of the previous year’s. When the debt exceeds 55%, spending cuts, additional taxes, public employee salary freezes and many other methods of reducing the debt must be considered. When the debt to GDP reaches 60%, the Council of Ministers must submit an austerity budget within a month, which is to include budget freezes for local governments.
Balcerowicz fears America's has excessive debt, and is very critical of the monetary policy of the Federal Reserve. Dangerously, America is not making good policy decisions to reduce spending and our debt because China, Japan and others are still willing to purchase our bonds at a very low interest rates.
Again, Balcerowicz is quoted the WSJ:
"The greatest neglect in the U.S. is fiscal," he says. The dollar lets the U.S. "get a lot of cheap financing to finance bad policies," which is "dangerous to the world and perhaps dangerous to the U.S."
Presently, America is overloaded with bad policies – wars, deficits, debt, “quantitative easing”, Obamacare and many more. All of the bad policies were made or consented to by politicians – a long train of abuses by Democrats and Republicans. Worse, America's politicians are continuing to “kick the can down the road,” which Obama, Pelosi, Reid, Boehner and McConnell are continuing.
America urgently needs to make intelligent fiscal decisions.
Part of the negotiations between Obama and Republicans includes manipulating the law pertaining to the debt ceiling. As it appears, Poland has benefited by a constitutionally imposed debt-to-GDP ratio of 60%. America's debt-to-GDP ratio is much higher and closing in on 100% and higher. Tragically, our politicians refuse to be fiscally prudent. As part of the debt ceiling extension, moratorium or whatever is being concocted, Congress and the President need to propose a constitutional amendment limiting debt to a percentage of GDP.
America must engage in a full discussion on a debt-to-GDP limit. We must commence this discussion immediately, and seriously consider a constitutional amendment.