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A Memo to Senator Harkin - The Importance of 18%



June 29, 2011

“Memories are short,” began Senator Tom Harkin (D-IA), who then proceeded on a misleading rant against a Balanced Budget Amendment to our Constitution. Harkin’s may look back with fond memories of the brief moment of budgetary balance during the Clinton presidency, but he seems to conveniently forget how quickly those surpluses faded into enormous deficits under Democratic Congresses.

Harkin focuses his wrath on the 18 percent spending limit in the current Balanced Budget Amendment proposal that will be voted on in the Senate in July.

“They said they want to limit government to 18 percent of GDP. I’d like to ask: Where does that number come from? Why is it 18% Why isn’t it 18.5 percent? Why isn’t it 17.5 percent? Why isn’t it 19.23 percent? Where does it come from?”

The answer to that is quite simple. It wasn’t pulled out of a hat. Republicans didn’t take a poll on what their favorite number was. They weren’t daydreaming fondly of a nice afternoon round of golf. No, 18 percent is the post-WWII average for government revenue. But don’t take my word for it. The Congressional Budget Office’s recently released Long-Term Budget Outlook says,

“Federal revenues have fluctuated between about 15 percent and 21 percent of GDP over the past 40 years, averaging 18 percent.”

Given that constitutional amendments should be designed with a long nod to the past and an equally farsighted view to the future, 18 percent seems the most logical benchmark to ensure a balanced budget.

Of course, Senator Harkin completely tosses aside history, instead choosing to answer his own question, using a conspiracy theory straight out of the X-Files.

“Let me tell you where this comes from. The last time that the federal government was at 18 percent of GDP was 1967, before Medicare really got underway. So read between the lines what the Republicans are saying, if they could get that down to 18 percent, we could do away with Medicare.”

What lines is he reading between? In actuality, the United States is teetering on the edge of default and Medicare’s finances aren’t looking much better. Charles Blahous, one of the Medicare Trustees, testified recently about the cuts that will be necessary to Medicare’s Hospital Insurance Program. “Medicare as we know it will end in 2024, absent some change in policy or some change moving forward. That’s right isn’t it?” asked Rep. Peter Roskam (R-IL).
“Yes,” replied Blahous.

The unsustainable status quo is the real enemy of Medicare. Anyone who wishes to preserve our current trajectory or ignore the needed reforms to put Washington on a viable fiscal course are the ones who truly want to, as Sen. Harkin suggests, “do away with Medicare.”

Dramatic change is needed to rein in deficit, and yes, to preserve Medicare. Senator Harkin, perhaps unwittingly, makes one of the best cases for these structural changes in his own argument against them.

Senator Harkin points out that the federal government outlays haven’t been at 18 percent since 1967. The point of this otherwise damning statistic is apparently to tell us that America cannot possibly survive at such spending levels. But with revenues averaging 18 percent over that same time-span all it shows is how consistently irresponsible Congress has been. In fact it is Washington’s inability to tailor its spending habits to revenue levels that has led to deficits 50 out of the last 54 years. It is that inability that has led us to the brink of bankruptcy that we now face.

Memories may be short Sen. Harkin, but it is long past time for Washington to enact structural reforms to curb your excessive spending habits. To that end, there are no better protection for taxpayers than Cut, Cap and Balance. I encourage the Senator to look into it HERE.

 


 

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