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National Right-wing Groups are Directing Our State Legislature Again

Jun. 6, 2017
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Another attack on our democracy is swirling around the state capitol these days and that is a bill promoted by the right-wing, corporate-funded national group, ALEC, to add Wisconsin to the group of states calling for a constitutional convention to amend the U.S. Constitution to mandate a balanced budget. They need 34 states to call for the constitutional convention and currently there are 29 signed on, all states with legislatures dominated by Republicans.

There are a number of problems with this idea and there are very good reasons why America has had only one constitutional convention. That was in 1787, and it was chaired by George Washington. If we have a constitutional convention, you can’t limit the potential changes to one topic. Everything is on the table, especially the Bill of Rights and its First Amendment. Free speech, freedom of the press, right to assemble and a woman’s right to reproductive choice are among the list of items the right wing wants to change.

Even if you make the unrealistic assumption that the constitutional convention would stay limited to a balanced budget amendment, that in itself would be a disaster. If the federal government had a balanced budget amendment, we would find ourselves in a depression—not just a recession but a depression—in the next decade or two. We basically have a version of a free market economy, and free market economies have business cycles. Since entrepreneurs and businesses make individual choices and invest heavily in a growing economy, they eventually produce far more than people or businesses are willing to buy. This overproduction causes layoffs and laid-off people buy fewer goods and services and the economy begins to spiral downward. There are basically two ways to end this downward spiral: have the economy hit bottom, go into a deep depression and eventually begin to start growing again by itself which can take years and years; or have the federal government step in and deficit spend. Once the economy has recovered and is generating a surplus, the government can pay down the debt.


Guaranteeing Another Great Depression

In the 1930s, we learned how to manage the business cycle and have not had a depression since then. Franklin Roosevelt’s New Deal helped to lessen the Great Depression, but it was only when we entered World War II and had massive government spending that we fully recovered. For about four decades after the end of the Depression, there was pretty much agreement across the political spectrum on the fact that the government plays a necessary role in managing the flow of the economy to prevent another depression. Unfortunately, things changed in the Reagan years when the right wing ideologues were in control. Despite our learning how to manage our economy, there are those wealthy special interest groups that choose to ignore what we have learned and push for austerity, so they could have lower taxes. There are enough of their well-funded legislators who basically do not understand how a complex economy works, but are happy to listen to those who fund their campaigns.

For those who are overly concerned about the deficit, the solution is straight forward: fair taxation, and that means that the wealthy pay their fair share. The problem arises because whenever the Republicans get in power the first thing they want to do is cut taxes for the wealthy and a little for the rest of us, whether the country has a surplus or a deficit. The last time we saw a surplus was toward the end of the Clinton administration. The reason we had a surplus under Clinton was that he raised taxes on the wealthy and at the same time he created an environment for growth that saw 23 million new jobs created during his eight years. Then, the Bush administration came into office and we had massive tax cuts for the wealthy and two unfunded wars. So, if we want to lower the deficit we know what to do, and that is to raise taxes on the wealthy. Raising taxes on the wealthy has very little impact on economic growth because they will spend what they want to spend whether they pay a little more in taxes or not.

In the end, this idea of a balanced budget amendment is ridiculous and it is sad to see all of these state legislators falling in line and supporting an idea that will create a depression and severely hurt their constituents. Any honest Ph.D. economist, meaning one who is not on the payroll or a consultant for some special interest group, understands that a balanced budget amendment is a recipe for disaster.


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