Restoring America&#039;s Fiscal Constitution

John Merrifield; Barry W. Poulson

doi:10.5771/9781498553544

Summary

Restoring America’s Fiscal Constitution estimates the potential impact of new fiscal rules on the U.S. economy over the next two decades. The new rules would require a cyclically balanced budget and an expenditure limit. The study shows that over the forecast period, the budget could be balanced and the total debt-to-GDP ratio reduced to the 60 percent tolerance level under this scheme, but this fiscal consolidation can only be achieved using a combination of fiscal reforms that go far beyond what has been proposed by Congress and the President.

The first chapter explores the theoretical foundations of a fiscal constitution. The orthodox public finance view of public debt is contrasted with a public choice perspective. This is followed by chapters surveying the new fiscal rules enacted in other countries to address debt issues. Several chapters provide a historical perspective on U.S. debt, including a critical appraisal of our fiscal rules. New laws are proposed to address the debt crisis, and a dynamic simulation model is used to estimate the impact of the proposed laws on the U.S. economy. The final section provides a roadmap for enacting the proposed constitutional and statutory fiscal rules.

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Bibliographic data

Copyright year: 2017
ISBN-Print: 978-1-4985-5353-7
ISBN-Online: 978-1-4985-5354-4
Publisher: Lexington, Lanham
Language: English
Pages: 242
Product type: Book Titles

1. Contents No access
2. List of Figures No access
3. List of Tables No access
4. Acknowledgments No access
5. Introduction No access
1. THE KEYNESIAN REVOLUTION No access
2. THE MONETARIST REVOLUTION No access
3. PUBLIC CHOICE PERSPECTIVES No access
4. Ricardian Equivalence No access
5. The Leviathan Model No access
6. The Median Voter Model No access
7. The Political Business Cycle No access
8. A Deficit Bias No access
9. Debt Sustainability No access
1. EXPENDITURE RULES EMERGE AS THE ANCHOR OF A SOUND PUBLIC FINANCIAL MANAGEMENT SYSTEM No access
2. MODELING DEBT BRAKES IN THE MONOPOLIST STATE No access
3. DEBT BRAKES DIRECT DEMOCRACY AND FEDERALISM3 No access
4. THE SWISS DEBT BRAKE: THE GOLD STANDARD FOR FISCAL RULES No access
5. Origins of the Swiss Debt Brake No access
6. The Swiss Debt Brake No access
7. DIRECT DEMOCRACY, FEDERALISM, AND THE SWISS DEBT BRAKE No access
8. CONCLUSION No access
9. NOTES No access
1. A PROGRESS REPORT ON THE FISCAL COMPACT No access
2. SWEDEN’S DEBT BRAKE: A QUALIFIED SUCCESS STORY No access
3. Origin of Sweden’s Debt Brake No access
4. The Medium Term Budgetary Framework (MTBF) No access
5. Sweden Modifies Their Debt Brake No access
6. A Critique of Sweden’s Fiscal Rules No access
7. THE GERMAN DEBT BRAKE: FISCAL RULE MAKING FROM THE TOP No access
8. Origins of Germany’s Debt Brake No access
9. The German Debt Brake No access
10. Fiscal Federalism in Germany No access
11. A Critique of the German Debt Brake No access
12. CONCLUSION No access
13. NOTES No access
1. TRENDS IN U.S. FISCAL POLICY Federal Debt No access
2. Federal Deficits No access
3. Federal Revenues and Expenditures No access
4. AMERICAN PRESIDENT’S COMMITMENT TO A BALANCED BUDGET No access
5. INVESTING IN INFRASTRUCTURE No access
6. THE MILITARY INDUSTRIAL COMPLEX REVISITED No access
7. THE BIRTH OF A TRANSFER SOCIETY No access
8. THE BIRTH OF A BAILOUT SOCIETY No access
9. NOTES No access
1. DEFICITS AND DEBT FOR AS FAR AS THE EYE CAN SEE No access
2. THE FATAL FLAWS IN U.S. FISCAL POLICY: ENTITLEMENT PROGRAMS No access
3. Social Security Expenditures No access
4. Major Health Care Expenditures No access
5. FISCAL IMBALANCE AND THE FISCAL GAP No access
6. CLOSING THE FISCAL GAP No access
7. IS U.S. DEBT SUSTAINABLE? No access
8. TESTING FOR DEBT SUSTAINABILITY No access
9. IN SEARCH OF A FISCAL TAYLOR RULE No access
10. AN ALTERNATIVE FISCAL PATH No access
11. CONCLUSION No access
12. NOTES No access
1. THE ORIGINS OF AMERICA’S FISCAL CONSTITUTION No access
2. Emergence of the Imperial Presidency No access
3. Congress Fights Back No access
4. The Growth of Mandatory Spending No access
5. REFORMING THE BUDGET PROCESS No access
6. Ensure Fiscal Sustainability No access
7. THE DEBT LIMIT No access
8. BALANCED BUDGET RULES No access
9. Statutory Balanced Budget Rules No access
10. Constitutional Balanced Budget Rules No access
11. EXPENDITURE LIMITS No access
12. The Balanced Budget and Emergency Deficit Control Act of 1985 No access
13. The Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987 No access
14. The Budget Enforcement Act of 1990 No access
15. The Balanced Budget Act of 1997 No access
16. The Statutory Pay-As-You-Go-Act of 2010 No access
17. Budget Control Act of 2011 No access
18. The American Taxpayer Relief Act of 2012 No access
19. The Bipartisan Budget Act of 2013 No access
20. The Bipartisan Budget Act of 2015 No access
21. The Budget Resolution FY 2016 No access
22. Concurrent Resolution on the Budget for Fiscal Year 2017 No access
23. THE ARTICLE V MOVEMENT No access
24. CONCLUSION No access
25. NOTE No access
1. FISCAL CONSOLIDATION Discretionary versus Mandatory Spending No access
2. A Capital Investment Fund No access
3. An Emergency Fund No access
4. DYNAMIC SIMULATION ANALYSIS No access
5. The Dynamic Simulation Model No access
6. Data and Simulation Parameters No access
7. Reality vs. the 2015 Counterfactual No access
8. Sensitivity Analysis for the 2015 Counterfactual No access
9. CONCLUSION No access
10. NOTES No access
1. THE CONGRESSIONAL BUDGET OFFICE LONG TERM FORECAST: A CRITICAL APPRAISAL No access
2. DYNAMIC SIMULATION ANALYSIS WITH THE MERRIFIELD/POULSON (MP) FISCAL RULE No access
3. DYNAMIC SIMULATION ANALYSIS WITH HIGHER RATES OF ECONOMIC GROWTH No access
4. DYNAMIC SIMULATION ANALYSIS WITH MAJOR HEADWINDS: SLOWER ECONOMIC GROWTH, AND HIGHER INTEREST RATES No access
5. SENSITIVITY ANALYSIS No access
6. SEPARATING MYTH FROM REALITY IN DISCUSSION OF THE DEBT CRISIS No access
7. ALTERNATIVE FISCAL RULES COME UP SHORT No access
8. CONCLUSION No access
9. Scenario 1 No access
10. Scenario 2 No access
11. Scenario 3 No access
12. NOTES No access
1. MODEL LEGISLATION Balanced Budget Amendment No access
2. Merrifield/Poulson Statutory Rule No access
3. HOW THE BALANCED BUDGET AMENDMENT AND MERRIFIELD/POULSON RULE WOULD WORK No access
4. The Expenditures Limit No access
5. The Deficit/Debt Brake No access
6. The Compensation Account No access
7. The Emergency Fund No access
8. The Capital Investment Fund No access
9. The Amortization Account No access
10. The Fiscal Responsibility Council No access
11. ECONOMIC CONSIDERATIONS No access
12. Would the Proposed Fiscal Rules be Destabilizing? No access
13. Would Congress Simply Raise Taxes? No access
14. Would Funds be Available for Investments in Infrastructure? No access
15. Would Funds Be Available for Emergencies? No access
16. Would the Government be Downsized? No access
17. Would Entitlement Programs be gutted? No access
18. Would the Budget Process Change? No access
19. Would Congress Circumvent the Fiscal Rules? No access
1. HISTORICAL BACKGROUND No access
2. IS A BALANCED BUDGET AMENDMENT CONSTITUTIONAL? No access
3. Substantive Limits No access
4. Procedural Limits No access
5. Enforcement Provisions No access
6. Economic Theory No access
7. ARTICLE V No access
8. ARTICLE V ADVOCACY GROUPS No access
9. Balanced Budget Amendment Task Force No access
10. Convention of the States No access
11. Compact for America No access
12. U.S. Term Limits No access
13. Restoring Freedom.org No access
14. Friends of the Article V Convention No access
15. The Delegate Limitation Act No access
16. Countermand Amendment No access
17. Wolf PAC No access
18. National Popular Vote Plan No access
19. Private Citizens No access
20. OPPONENTS OF ARTICLE V No access
21. CONSTITUTIONAL CONSIDERATIONS No access
22. Can an Article V Convention be Limited? No access
23. Should an Article V Convention be used to address the Fiscal Crisis? No access
24. Would Congress Attempt to Railroad an Article V Convention? No access
25. Would the Federal Courts Assert Jurisdiction in Dispute Relating to Article V? No access
26. What would a Constitutional Convention be like Without a Thomas Jefferson, James Madison, or Alexander Hamilton? No access
27. NOTES No access
Appendix A No access Pages 207 - 216
Appendix B No access Pages 217 - 220
References No access Pages 221 - 236
Index No access Pages 237 - 240
About the Authors No access Pages 241 - 242