Well that was a close one….The House barely rejected the balanced budget amendment, missing by just 29 votes today. Not surprisingly, the bill was sponsored by someone who thinks we’re bankrupt (via CNN):
“The American people are demanding action,” Goodlatte said earlier this month. “They know that it is crucial we rein in the skyrocketing deficit spending that is discouraging investment and threatening to bankrupt our nation.”
I don’t even have the time and energy to explain how silly this is (again) and why a balanced budget has the potential to be an economic disaster during a balance sheet recession. You would think that, after the debt ceiling debate, that politicians would have taken the time and effort to understand the basic dynamics at work here. We can’t “run out” of money. We can’t go bankrupt. But the myth that compares the government to a household or business persists. The argument should be framed around the potential harms of inflation (which, by any metric is low right now). But that’s not the focus. Instead, we insist on convincing ourselves that we’re Greece or some other entity working as a currency user. It’s really stunning.
Sadly, most Americans have no idea how the monetary system works and so they’re convinced that America is on the verge of bankrupty:
“Despite the proposal’s defeat, it remains heavily favored by the public. Nearly three in four Americans favored passage of the amendment in a July 18-20 CNN/ORC International Poll, while only 24% were opposed.
Sixty percent of Americans believe a balanced budget amendment is necessary to get the deficit under control, according to the poll.”
It’s kind of amazing to me, that this country has done as well as it has for as long as it has given the fact that our citizens AND our leaders have practically no clue how our monetary system works….