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How Would Congress Balance the Budget In Just One Day?

By Jon N. Hall - November 8, 2010 11:59 AM

If an emergency arose where Congress had to balance the federal budget in just one day, how would they do it without printing money?

Congress couldn't do it by increasing revenue, as economic growth takes time to work and tax hikes would tank the economy. Congress would have to radically cut spending. But what would Congress cut?

Because it's an emergency, there wouldn't be time to debate how to finesse the cuts. Congress wouldn't be able to use a scalpel to surgically cut spending -- they'd have to use a meat cleaver.

Since total federal revenue is about equal to total mandatory spending, Congress could balance the budget by eliminating all "discretionary" spending. In which case, the only thing remaining would be the mandatory programs: entitlements, unemployment, welfare, and interest on the debt. Everything else would go: Defense, CDC, the Supreme Court, you name it. Congress wouldn't take this course because cutting all discretionary spending would eliminate Congress itself.

Also, we don't want to reduce the federal government to nothing but a check writing system for the welfare state. Congress would therefore be forced to cut their beloved entitlements. But that's the easiest, quickest way to balance the budget: If Congress simply eliminated Social Security, Medicare, Medicaid and SCHIP, they'd be right at balance. But Congress wouldn't do that; retirees would vote them out of office.

The sure way for Congress to balance the budget is with across-the-board decrements of 41 percent in every check the feds write.

December 1, 2010 is the deadline for the National Commission on Fiscal Responsibility and Reform to vote on its recommendations on how to deal with our federal deficit crisis. Unfortunately, the Commission is only "charged with identifying policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run." What the Commission will produce is a set of spending cuts and tax rate hikes, and they will not balance the budget, neither in "the medium term" nor in "the long run."

One thing the Commission should produce (and make public) is a contingency plan for balancing the budget immediately. America mustn't wait for some emergency before creating such a plan. A plan would be needed for emergencies such as war. Not the limited war we've been prosecuting for the last nine years, but total war. And if the Chinese stop buying American treasuries, Congress would take a meat cleaver to the budget -- simply because we have no plan.

A contingency plan to immediately balance the budget would isolate and minimize pain. It would list those budget line items that would be surgically excised in their entirety and it would devise formulae for how the remaining items, including entitlements, would be reduced. A serious contingency plan would specify how to balance the budget overnight.

If faced with a crisis requiring painful cuts in federal spending, most Americans would expect Congress to cut pork and earmarks before Defense. A contingency plan should itemize our values, forcing Congress to at long last prioritize. Without a contingency plan, the Commission's recommendations will be another exercise in evasion and deferral, and shouldn't be taken seriously.

America used to have a plan for everything. Nixon had a plan for taking over the Saudi oilfields. We probably even had a plan for invading Canada. But recently, Defense Secretary Gates confessed to not having a plan for Iran. (Let's hope that isn't true.)

If you think the Commission should produce a contingency plan for balancing the budget immediately, email them at commission@fc.eop.gov, or visit www.fiscalcommission.gov.


This article first appeared on NewsRealBlog.

Jon N. Hall is a programmer/analyst from Kansas City.

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