The U.S. federal-budget deficit for the fiscal year that
ended at the end of September, 2016, represented a reversal on the six-year run
of declining deficits. The $587 billion deficit is equivalent to 3.2% of GNP;
the previous year’s deficit had been $438 billion, which is 2.5 percent of the
GNP.[1]
The underlying reason for the altered trend has to do with democracy
itself—something notoriously difficult to budge.
The revenue loss from the extension of tax breaks for
businesses and individuals, plus the refusal of Congress to “pair the tax cuts
with some tax increases on wealthy Americans” is the immediate cause.[2]
To be sure, President Obama’s proposed tax could be viewed as being unbalanced
given the emphasis on the wealthy; refuting this imbalance came at the expense
of a larger fiscal balance, given Congress’s extension of the tax breaks. Yet
Congress could have substituted another sort of tax to counter the deficit-increasing
effect of the tax-cut extension. The refusal to mandate such balance may be due
to democracy itself.
In short, elected representatives have a political incentive
to provide fiscal benefits to constituents and a political disincentive to
extract corresponding fiscal costs. The decoupling itself can be viewed as a
vice of democracy. With elected representatives legislating, it is not clear
whether they can employ enough self-discipline to couple tax increases or
spending cuts to tax cuts. With a federal debt just short of $20 trillion at
the time, the systemic imbalance can be said to be inherent to democracy
itself, and ultimately to the refusal of an electorate to insist that fiscal
benefits be paid for in a reasonable time. Outside of dire emergencies, such as
the Great Depression and World War II in the twentieth century, the abstract
ideal of balanced government revenue and expenditures should not be so
difficult to achieve in practice; so that it is testifies to the difficulty of
self-government, whether within the psyche or the polis. The difficulty, in
other words, is systemic—in human nature itself—and thus particularly onerous
to being corrected.
The only solution I can see is the body politic
setting for itself an automatic “coupling” mechanism for “the future” (and thus
not so scary). Such a device of parchment would have to be sufficiently
protected from the urge for “something for nothing today” and yet flexible
enough should an emergency occur. The key might be a constitutional amendment
that is sufficiently rigid that it would hold under normal circumstances
(including even minor wars), and sufficiently flexible when it really matters.
Therein would lie the rub: the possibility that the accommodative feature(s)
would be exploited. A constitutional amendment subject to jurisprudence from
the judiciary might capture the balance in terms of solidity and flexibility
that so alludes fiscal balance in
representative democracy.
1. Jackie Calmes, “U.S.
Deficit Increases to $587 Billion, Ending Downward Trend,” The New York Times, October 14, 2016.
2. Ibid.
