Thanks to a calendar quirk (or two), Federal income tax filings are due on April 17th this year. With that in mind, a few factoids:
The Federal government takes in a lot of the economy. Federal receipts as a share of GDP: 17.1% in 2017
But it spends much more than it takes in. Federal spending as a share of GDP: 20.5% in 2017
A gap that is smaller than the overall economic growth rate is probably fine -- that's basically just borrowing a year ahead.
But the economy doesn't grow at 3.4% [i.e., 20.5% - 17.1%] with any consistency at all. We're spending way, way, way beyond our means.
Plus we're in an extraordinary time of low interest rates that isn't guaranteed to last. The low interest rates have subsidized the borrowing and made it less painful than it would have been otherwise.
The accrued charges on the borrowing are going to be inescapable and painful. This is a problem much, much worse than any trade deficit.
We have to mind the gap:
No party is innocent. Everyone has been part of this, almost entirely without exception, since the 1950s. Both parties, independents, voters, and elected officials alike.
I am starting to come around to an idea I've always been reluctant to embrace: A balanced-budget amendment to the Constitution.
I'm still not fully on board, but I'm running out of alternative solutions.
I oppose the "convention of the states" some people want to use to push a balanced-budget amendment through. Far too high a risk of far too many unintended consequences.
It would have to include an emergency provision for cases of war -- and we would then need to resume the practice of actually declaring war.
It ought to include a provision for capitalizing long-term expenditures -- things like civil works projects (infrastructure) that last for 25 or 50 years or more. Borrowing long-term for things that pay off long-term isn't a bad idea.
I don't know how it would be enforceable without trying to impose some kind of oversight board empowered with super-checks-and-balances, and I don't like that idea.
And I truly don't mind a small deficit -- around maybe 1% of GDP. Something largely to be erased by economic growth, so the language wouldn't have to be absolutist.
But consider this: If we were in surplus as much as we are in debt right now, the public would be in open revolt, demanding refunds. Right now, just in explicit debt, we're $21 trillion in the hole, which is $64,300 per person. That is an appalling figure for something we are quite capable of fixing.