Although no other two-word combination may so prompt eyes to glaze and minds to wander, the history of America can be understood as a struggle over its budget process. After colonial legislatures restricted governors’ powers to tax and spend, parliament struck back by passing the Stamp Act to tax the colonies—and everyone knows the trouble that led to.
After the Declaration of Independence, the articles of confederation gave each state a veto over federal borrowing, dooming America’s credit and stunting its growth. Even Thomas Jefferson, that scourge of big government, saw the problem. While serving as minister to France he wrote to James Madison in 1788 that America had to prove it could be trusted to pay its debts. “The existence of a nation, having no credit, is always precarious,” he wrote. Jefferson supported the Constitution, with its enhanced federal powers, partly to boost America’s reputation as a borrower.
Alexander Hamilton then persuaded him to go further. As the first Treasury secretary, Hamilton urged consolidating the debts of individual states and imposing new tariffs to pay them off. America’s debt “was the price of liberty,” he told Congress in 1790, and sound national credit would swell “the individual and aggregate prosperity of the citizens”. Or, as his avatar would exhort “Jefferson” on stage more than two centuries later, good credit was “a financial diuretic/How do you not get it?”
2023-02-02 09:18:13
Source from www.economist.com
On January 31, 2006, the Republican Study Committee, a caucus of conservative Republicans in the United States House of Representatives, released a report titled “The Inadequacy of Federal Budgeting: A Republican Perspective”. The report was written to draw attention to the inadequacy of the current federal budget process, and to propose several reforms that could improve it.
The report criticizes current budgeting practices, citing various areas of concern, such as the “inability to produce a balanced budget, the widespread and costly use of emergency budget measures, the failure to pass a budget on time, the proliferation of “train wreck” budget bills, and the poverty of federal budget oversight and accountability.”
In order to address the issues the report calls for several reforms. It recommends, among other proposals, a balanced budget amendment to the United States Constitution, a line-item veto, and regular, thorough audits of the federal government.
The report is an important document that draws attention to the need for reform of the current federal budgeting process. With the nation facing a burgeoning budget deficit, and the national debt projected to hit $14 trillion in 2020, it is clear that the issue of federal budgeting needs to be addressed in a serious and sustained way. Hopefully, the ideas expressed in the report will spark further debate and eventual reform.