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Chastity Belt Is Needed to Keep U.S. Budget Pure

Author: Amity Shlaes, Former Hayek Senior Fellow for Political Economy
May 2, 2011
Bloomberg

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That's the consoling phrase I keep hearing as lawmakers talk about implementing an automatic control on government spending in the style of the 1985 Gramm-Rudman plan. President Barack Obama, for example, has called for a “debt failsafe” that would cut spending and raise taxes if the ratio of the federal debt to gross domestic product doesn't stabilize by 2014.

Top Senate Democrat Harry Reid advocates a limit on the deficit, a law binding Congress to reduce the deficit when it reaches certain levels. Others are proposing simple caps on spending that make it harder for committee chairmen to push through extra outlays when no one is looking.

Of course the calm counsel on the need for devices is supposed to distract us from the fact that the devices are being put forward as part of a wild package that would increase the debt ceiling well above the appalling and unsober level of $14 trillion.

But what was Gramm-Rudman and what did it accomplish? A look back a quarter century makes clear that some of today's consolation Gramm-Rudmans might yield the opposite of the result their advocates intend.

The first Gramm-Rudman gesture was, just as now, a gesture of contrition. Spending seemed to be out of control, everyone blamed Congress. “It is 1985,” said a Wall Street Journal editorial, “there's congressional government, and there's chaos.”

 

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