The Instigator
DRM
Pro (for)
Tied
0 Points
The Contender
Dan4reason
Con (against)
Tied
0 Points

Limit the Power of Congress

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Voting Style: Open Point System: 7 Point
Started: 11/4/2013 Category: Politics
Updated: 3 years ago Status: Post Voting Period
Viewed: 817 times Debate No: 39951
Debate Rounds (5)
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DRM

Pro

The following should be added to the constitution as an amendment. "Congress shall not enact any legislation that is not budget neutral or which is not offset with savings derived from existing funds."

Our system of government has become corrupted. We must limit the ability of the government to both award favors to political cronies and to burden future generations.

When politicians are required to secure funding prior to enacting legislation they are forced to 1. look for cuts (or savings) in current programs or 2. to raise taxes. Both of these options effect the American people directly and would garner a more active and informed electorate.

A similar rule was included in the Budget Enforcement Act of 1990 and was allowed to expire in 2002. Total federal spending as a percentage of GDP decreased each year this legislation was in force. Furthermore GDP almost doubled during this same time period.
Dan4reason

Con

I accept the challenge. In my opinion, Congress should be allowed to spend money that does not have revenues for them by borrowing. This sort of spending is very useful during recessions in order to boost the economy.
Debate Round No. 1
DRM

Pro

The idea that the federal government must engage in deficit spending in order to prop up the economy in down-turns is ill-advised at best.

The stimulus projects which the government funds are rarely well-planned. They lack proper controls, monitoring, trained personnel, and a framework for evaluating there efficacy. Furthermore the spending tends to occur very late in the downturn and continues well beyond the economic crisis.

This chaos creates the perfect environment for politicians to buy votes and reward campaign contributors with lucrative government contracts. The relationships between campaign contributors and politicians are often clouded which reduces the likelihood that particular politicians will ever be held accountable for issuing political favors in the name of staving of a crisis.

If in fact there is a depression in aggregate demand in the economy, individual market participants each acting in their own self-interest produce much more efficient results than government spending. This indicates that by decreasing government spending (and thus taxes) individual market participants are enabled to efficiently allocate their capital to the most optimal endeavors.
Dan4reason

Con

While it is right that stimulus packages are not perfect, they are certainly better than the alternative which is economic meltdown. In the case of the Great Depression which started in 1929, the economy went into a death spiral for three years until 1932 when unemployment peaked at 25%. This happened because when consumers lose money since they lost their jobs, they are going to spend less. This resulted in less demand, meaning that more people will lose jobs. Demand falls because of this, and the spiral goes on and on.

Because of the depression the unemployment rate did not fall below 6% until 1942 13 years later[1]. The stock market did not recover to its original level until 1954 35 years later[2]. Income per capita did not return to its original level until 1942 13 years later[3]. Our nation lost a decade and a half because of that recession. A death spiral must be avoided.

Pro's solutions such as letting the market handle things will not work because this is a case where the market by itself goes into a death spiral. Cutting government spending won't work because the people who are receiving less money because of these cuts will spend less, reducing demand and aggravating the death spiral.

The best solution is to increase government spending by borrowing instead of collecting more taxes. This is a way of boosting demand and stopping the spiral in its tracks. In the 2008 recession, thanks to the stimulus packages, we are able to halt the spiral in its tracks in 2009 [4]. This process is not perfect as you noted but sure beats the alternative.

Wasting some stimulus money is better than increased economic disaster.

1: snohomishobserver.com/2012/09/25/certainty-for-the-rest-of-us
2: sun.menloschool.org/~nfortman/8th/decadesweb.2003/jillh/index.html
3: aneconomicsense.com/2012/07/20/the-shift-from-equitable-to-inequitable-growth-after-1980-helping-the-rich-has-not-helped-the-not-so-rich
4: bishopforcongress.com/debunction/obama-losing-job
Debate Round No. 2
DRM

Pro

Let's bring this argument back to the point. First. The argument/debate surrounding what caused the Great Depression and what brought the US economy out, is still being conducted. Economists have proffered a few theories, unfortunately we cannot conduct a controlled experiment to verify/disprove their theories.

I'll bring this back to my initial points. The Budget Enforcement Act of 1990 was in effect until 2002. During this time the US experienced 2 recessions (July 1990 - Mar 1991, and Mar 2001 - Nov 2001). Would Con please point out the prolonged "economic meltdown" that occurred during these two recessions? Or the "death spiral" that we all experienced?

On the other hand it is a fact that the Great Recession (Dec 2007 - June 2009) has seen deficit spending as high as 10% of annual GDP. This recession was also twice as long as the previous two recessions.

Recovery.gov reports that $243,547,437,392 has been pumped into the economy in the form of federal contracts, grants, and loans from Feb 17, 2009 to Sept 30, 2013. Most of this money was issued after the recession had ended. The site also reports that this created 72,246 jobs. That is a cost of $3.37 million per job. What a bargain! These fools in Washington have shown that they have no business acumen and should be restricted on how much damage they can inflict upon taxpayers.

http://en.wikipedia.org...
http://research.stlouisfed.org...
http://www.recovery.gov...
Dan4reason

Con

Recovery.gov reports that $243,547,437,392 has been pumped into the economy in the form of federal contracts, grants, and loans from Feb 17, 2009 to Sept 30, 2013. Most of this money was issued after the recession had ended. The site also reports that this created 72,246 jobs.

This website only tracks some of the bailout funds. The value of Obama's Stimulus is 830 billion excluding Bush's stimulus package or the auto bailout [1]. Many jobs created by the stimulus were not reported to the Obama Administration.

According to our best reports, the stimulus package created 2.4 million jobs. The stimulus does not only pay for wages but for materials like road construction materials, so the price per job is low [1].

I would like to see some support for the claim that stimulus spending was spent after the recession. Much of it like the bailout to banks to ensure that our financial and economic system did not fall apart was spent very quickly. I wonder how many jobs were saved because our financial system did not fall apart?

There was no death spiral from 1990 to 2002 because there was no market crash like the great depression or the great recession. The great recession was worse than other recessions because the initial crash was far worse because the financial system was collapsing.

Deficit spending is high, but this is a far better alternative to the depression that would have happened if our financial system had collapsed. This year, our deficit is down to 680 billion and is nearer to the 2004 level of 410 billion [2]. So the bailout money did save the economy from another recession, and our deficits are falling.

1: www.politifact.com/wisconsin/statements/2011/aug/01/national-republican-congressional-committee/stimulus-jobs-cost-taxpayers-gop-committee-says-in/
2: www.washingtonpost.com/blogs/wonkblog/wp/2013/10/30/congratulations-america-your-deficit-fell-37-percent-in-2013/
Debate Round No. 3
DRM

Pro

DRM forfeited this round.
Dan4reason

Con

Extend my arguments to this round.
Debate Round No. 4
DRM

Pro

I understand that the stimulus spending is apportioned to more than just labor although Stanford University's Taylor, and Cogan authored a paper analyzing the recent stimulus package in which they conclude:

"changes in government purchases have had no material effect on the growth of GDP since the time ARRA was enacted. The implication is not that ARRA has been too small, but rather that it failed to increase government consumption expenditures and infrastructure spending as many had predicted from such a large package."

I can't find records from the most transparent administration in history (sarcasm intended) showing the timing of stimulus spending. That does not however change my argument that the ability of the Gov't to engage in deficit spending should be limited.

The Gov't doesn't have to engage in deficit spending to stimulate the economy. Surpluses can lead to a rainy day fund which can be deployed as needed. And deficit spending generally weakens our ability to provide the necessary services that the government supplies because a growing portion of revenues must go to servicing our growing debt. If stimulus spending is not carefully spent on projects that make our country stronger and which provide no return, we end up paying for waste well into the future. Furthermore this weakens our standing in the world. China receives almost $74 million a day from the US debt or about $26 billion annually[2] or 16.25% of its 2013 military expenditures[3].

I misspoke when I said that politicians "have no business acumen." It takes great skill to waste the large sums of money that they do. They are in the business of buying votes and they are particularly adept at that.

[1] http://www.stanford.edu...
[2] http://www.politifact.com...
[3] http://en.wikipedia.org...
Dan4reason

Con

"The implication is not that ARRA has been too small, but rather that it failed to increase government consumption expenditures and infrastructure spending as many had predicted from such a large package."

The Obama stimulus package was 831 billion to be spent from 2009 to 2019 [1]. At the unemployment peak only 100 billion was spent and by 2011 500 billion was spent [3]. Keep in mind that this stimulus was only meant to be a slow stimulus of the economy over several years. It would have been more effective to spend more earlier so we partially agree. This is a problem that can be fixed simply with different bailout policies. Stimulus spending is necessary to turn stagnation into an upward spending spiral.

My main point is not about the stimulus of 2009, but about the bailout of 2008. Our financial system was collapsing and banks were failing. Even with the stimulus, quite a few banks failed [4]. So the government gave 700 billion to banks to keep them from failing and bringing worse financial ruin to the American people [3]. While nobody wants to give public money to banks, this was necessary to prevent another depression. Keeping a financial system from collapsing is a good reason for deficit spending.

Rainy Day Fund as Alternative

This is a good idea but I don't think this will ever happen. Judging from the history of civilization, governments rarely rack up surpluses and save them for very long. Governments and nations just don't have that kind of self-discipline. But that doesn't mean we shouldn't try. But if we are in a market crash and there is no rainy day fund, deficit spending is the only good option.

1: http://en.wikipedia.org...
2: http://mercatus.org...
3: http://en.wikipedia.org...
4: http://www.forbes.com...
Debate Round No. 5
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