Billionaire Warren Buffett again weighed in on America’s political crisis recently, proposing a plan to return to fiscal responsibility. In a CNBC interview given last July and now circulating as a chain e-mail, Buffett suggested prohibiting Congress members from re-election unless federal debt remained within 3% of GDP. Buffett facetiously predicted a balanced budget within five minutes of passing this “Buffett II” law.
Although most debate has focused on his proposed rule and prediction, Buffett’s real insights convey a different message: The public needs to demand a balanced budget for it to happen.
In defending his prediction of “Buffett II” and its use as a solution, Buffett offered the process of the 26th Amendment for evidence. The 26th Amendment, which gave 18-year-olds the right to vote, was passed in merely three months and eight days because, as he explains, “The people demanded it.”
But while Americans show strong support for a balanced budget in the abstract – upwards of 60% and 70% of the population respond positively towards a balanced budget amendment – they strongly dislike the means needed to that end. Unlike the 26th Amendment, they are far from demanding change.
In a January Gallup poll proposing spending cuts to nine different categories of government spending, only foreign aid cuts received 50% support. All other proposed cuts to spending in the poll, including anti-poverty measures, aid to farming, and funding for the arts and sciences all met over 50% disapproval.
Tax raises likewise are met with strong opposition. Americans favor raising taxes on the rich only, but don’t want the middle class to pay that burden — only 5% believe the middle class are playing too little in taxes.
Since Reagan, the idea has been that taxes can be cut while balancing the budget. Despite the fact that Reagan oversaw one of the largest tax increases in 1982 of all time to rectify his tax cuts, the idea has stuck with our populace. Fittingly, the last Democrat or Republican presidential candidate to campaign on tax raises was Reagan’s opponent Walter Mondale.
With no imminent harm from an unbalanced budget and Americans hesitant to cut programs and pay more taxes, the public falls far short of “demanding” budget reform. Unless Americans decide that balancing the national checkbook supersedes personal gains from tax cuts and government spending, the deficit will continue to grow.
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