A Balanced Budget Amendment that will work
By Curtiss Wikstrom

     Congress may not authorize more expenditures in any given session than the amount of revenues received during that session. Except when engaged in a major war declared by Congress in which deficits are confined to excess war expenditures, if the total expenditures of the federal government exceed the revenues received during the 2 year term of a Congress, no member of that Congress may serve any elected or appointed position during the next session of Congress.  Nor may the President, Vice-President, or any Senator be eligible to serve in another term or office.  Nor may any appointed official serve in an elected or appointed position during the next session of Congress.
     No obligation or promise to make an expenditure shall be valid after the 2 year term of a Congress ends, unless funds were properly allotted and held in a safe place for such purpose during the term of that Congress.  All pension contributions from federal funds must be funded for the fiscal year when wages and salaries are earned, and placed in funds or trusts which are owned and under the control of the federal official or employee. However, except during a declared war, no pension contributions shall be paid to federal legislators, judges, elected or appointed officials, except for officers and enlisted military personnel, unless the amount of revenues received in any given fiscal year exceed the expenditures for the same year.

     Not more than 25% of the present day value of any person’s property may be taken from them, their heirs, or assigns, in taxes, fees, or any other form of taking or mandate from any and all authorities, including international, federal, state, and all subdivisions, agents and assigns thereof.

Discussion:
(1)  Congress and the Presidents have proved beyond a shadow of a doubt that the only way they will balance the federal budget is if there are strong penalties for not doing so.  Basically, if they don't balance the budget they are fired.  Presidents and Senators may finish their current term, but are then fired forever.  Congressmen are fired for 2 years from any position in the government.  But they may run for office or be appointed after that time.  However, there will be enough new faces in Congress to make it more difficult for them to return.

(2)  Congress may authorize deficits during a major declared war, but only to the extent of the excess war expenditures.  If the deficit exceeds the excess war expenditures, the entire government must be replaced.   The entire house of representatives, and the entire appointed cabinet of the President.  The 1/3 of senators up for election, and the President and Vice President if they are up for re-election.  The remaining Senators may not ever run for re-election when their term of office ends.  Nor may the Senator run for President, Vice President, Congress, or serve in the cabinet or other appointed office.  They, the President and Vice-President are out of the government forever.

(3)  Once any elected, appointed official, or employee ends their time in office, their pension consists of what was contributed to their account while in office or employed.  There may not be any pension paid out of funds from future taxes. Congressmen and Presidents will not be able to serve one term, then get a large pension for the rest of their life.  They will only get a contribution for each year that they serve during that year.

(4)  Congress may fund very large projects in the future.  But they must save to do so.  They can't borrow. If for example a very large project is to be completed in 8 years, each of 4 Congress sessions can be used to save money for that project, and expend money for progress on the project.  However, if Congress in the 5th year decides not to fund the project,  there is no authority to spend the money and finish the project. The federal government takes in huge sums of money, and this requirement will not hamper competent people from completing large projects.  But it will put a lid on the type of incompetence that we have seen over the past several decades.

(5)  An additional penalty for not balancing the budget is that elected and appointed officials will not get any contributions to their pension plans.  The only way to assure that a new form of abuse is not introduced into the conduct of the federal government is if all elected and appointed officials have an incentive to volunteer whatever contributions that they have to keep expenditures under control. 

(6)  A balanced budget amendment will only be useful to control the government in conjunction with a limit on how much the government can spend. Otherwise the government can simply increase taxes, instead of controlling expenditures.  In keeping with the rest of the bill of rights, the control should be written as an individual right.  A limit on what all governments combined can take from any one individual.  This serves to protect individuals from all governments, in addition to limiting the power and size of the government.   Limiting expenditures to a certain percentage of gross national product does not necessarily protect individuals.  And it would more than likely be set so high as to continue to let the federal government get involved in too many things that it should stay out of.  The gross national product should also be removed as something that the government tries to manipulate.  We want to take all incentives away from the federal government to "manage" the economy, or make laws in an attempt to increase the size of the gross national product.  For example, if the great singers all decided to give free concerts all over the country, they would not increase the GNP, but there would be an increase in the subjective well being of people. We don't want the government manipulating the numbers or making rules which prevent these activities or interfere with them. We don't want the government to manage the economy, nor try to increase or change the statistics about the economy.
     Present day value means that the value of our property will always be adjusted for inflation.  So if we pay $500 in property taxes today, it will need to be considered the same as $1000 paid when the value of money goes down to half its current value.

(7)  This also protects people from being robbed by governments when they die.  It protects heirs and assigns of people so they can pass their farms and businesses on to their family without giving them control before they die.

(8)  There could be a 25% sales tax with this rule.  Since sales tax is placed on the sale or transfer of property 25%  of the sale covers that property.  Property that was built of course could be taxed on its value after deducting sales taxes.  That would include labor values added.  But labor could also be taxed in the creation of property.  This would put restrictions on real estate taxes.  If there were a 1% tax on real property, every year.  The property could only be taxed for 25 years.  But all other taxes paid on it would have to be deducted.

(9)  Wage income is also property and could be taxed.  However, if income were taxed at 25%, then when used to purchase other property, there could be no sales tax or real estate tax on that property.  If all income were taxed at 25%, then a person would be exempt from sales and property taxes.

(10)  An important result of this rule is that governments would have to return many of the non-governmental services to the voluntary sector of society.  For example, social security taxes would have to end, and people would have to save for retirement through individual retirement accounts.  Taxes could no longer be used for wealth transfers.  This would not affect wealth.  For example, if each person saved for their own retirement, they would be just as well off, or better off if they pay their parent's retirement, and their children pay their retirement, and so on.  Instead of one generation transferring wealth to the previous generation, every generation would just keep their own money and own their own retirement accounts.  Costs will be saved, because there doesn't need to be the transfer agent, and all of the waste involved in the politics involved.  In addition, when people own their own retirement accounts, the have more control over their own money, and their own lives.

(11)  Wealth transfers for welfare purposes should be transferred back to voluntary charitable organizations.  The end result is that the same things get done.  They just get done voluntarily, and at half the cost or less.  Bureaucratic dictators no longer control our lives to such a large extent.  That will end an enormous amount of social and financial waste.  I would guess that more than half of the expenditures caused by government controls, taxes, and transfers are pure waste of resources.  Employees from entire agencies of the federal government could do something productive instead of interfering with what the productive people are doing.  All of the legal processes and waiting involved in getting benefits from the government will be reduced when we can just take money out of our ira or bank account for what we want.  With 25% there is still room to keep some of this in the involuntary sector.  But it is best if most of it is put back in the voluntary sector.

(12)  Schools should be made into independent entities that charge for their services.  Not only would this give people more and better choices, but it would simplify the payment processes.  Instead of taking money away from people with taxes, then taking out administrative fees at both the state and federal levels, and making demands on local school districts, the parents would simply pay the tuition charged.  Private schools normally have contributed funds for the poor who need to attend.  But the states financial involvement would be reduced to paying for those who could not afford it.  And of course, since parents paid tuition for schools, the state sales tax could be reduced considerably, leaving the money with the parents to pay the tuition.  The cost of education would go down as unnecessary personnel left for more productive work.  People would realize that free trade actually works well, and that the extensive intrusion by the state is not only unnecessary, but expensive and harmful.  The values of the schools will reflect more the values of the parents than social engineers.

(13)  Another important result is that the government would have an incentive to end all of the incentives given through taxes to condition people's behavior.  These manipulations distort the economy and cost a fortune.

(14)     With the transfer of services back to voluntary organizations, 25% of the property that we earn and produce would actually be a high figure.  In reality, the cost of government at all levels could go down to 10 or 12%.  So there is plenty of room for governments to continue to provide services through the involuntary sector, or government, as well as build up reserves to use in time of war, or for extremely large projects.  If governments do transfer most services back to the voluntary sector 25% may be too much of a temptation.  If that happens we might want to revisit the restraint and bring it down to possibly 20% to remove the temptations.  Unfortunately, getting people to agree to follow the constitution is going to be difficult.

(15)     Entities that become voluntary would actually not need to change much.  For example, if education were made independent, the local school could at first be the same building, with the same people, and same processes.  What could change initially would be the means of funding.  Retirement payments for young workers would simply go to a different place, but it would now be in their own account rather than into a tax.  Current retirees would still get their checks, and they would still be funded by taxes on workers incomes.  That tax will continue to decrease over the next 40 years until it goes to nothing. With  government spending under control, it could buy out some of the government plans, ending them sooner.

(16)  It is left to the state and federal governments to decide who gets what.  25% gives them lots of maneuvering room, especially if they shed all of the services that should be in the voluntary sector.  If the states protect their right to provide most legitimate government functions, they will have enough power to restrain the federal government. However, if they can't compromise, we might have to revisit the rule and put the split in the constitution.

© Curtiss Wikstrom  See other articles by Curtiss Wikstrom at www.curtwikstrom.com