A National Balanced Budget? Not Likely
October 8, 2020
As a result of the 1944 Bretton Woods Agreement the U.S. dollar became the medium of the exchange for all foreign currencies. To illustrate the global dominance of the dollar since World War II, 61% of foreign banks maintain the U.S. dollar as their cash reserve. Around 41% of all the world's debt is in U.S. dollars.
There have been good and bad consequences to globalization of the U.S. dollar. To keep the world fueled with U.S. dollars, the gold standard was eliminated in 1971, and U.S. Budget Deficits have skyrocketed since.
The best the Federal Reserve can currently do is to track the amount of U.S. dollars in circulation in our nation's economy. It's impossible to control the amount and value of the U.S. dollar once it leaves our borders. It's bought and sold on Money Markets on minute by minute quotes.
The U.S. trade deficit is a major problem to the budget deficit when U.S. consumers demand to purchase cheap foreign goods with U.S. dollars without understanding that our wages must eventually be based on American productivity.
If the nation's budget deficit is an important issue with Oklahoma voters, they need to contact their elected congressional members and hold them accountable.
Last week, I discussed some states' efforts to call a national convention. Instead of addressing a Balanced Budget Amendment at a national convention, I believe these state delegates could potentially scrap the entire U.S. Constitution as the delegates did in 1787 to the Articles of Confederation. For this reason, the most conservative think tanks in the U.S. oppose a National Convention of the States.
Regardless of its potential outcome, the Oklahoma Senate voted on resolutions in 2016 and 2020 to require the U.S. Congress to call for a National Convention of the States to propose a Balanced Budget Amendment to the U.S. Constitution. Article 5 of the U.S. Constitution creates the process for this National Convention States. There has not been a National Convention of the States since the summer of 1787.
In studying the intense issues before the 1787 Convention, many constitutional scholars assert it was only by a Divine presence placed upon the delegates by daily church attendance that allowed the five major compromises that united this nation.
One of the most controversial compromises of 1787 was that of having a national currency. If the US dollar was only used within U.S. boundaries a Balanced Budget Amendment would be possible.
However, it would certainly eliminate the U.S. dollar as the global standard, deflate the U.S. economy, shrink Social Security, Medicare, and Medicaid benefits, and require federal taxes to be raised to off-set current deficit spending and accomplish a balanced budget.
A U.S. Balanced Budget Amendment is difficult to accomplish because:
1) In 1944, the U.S. dollar became the world's currency as a medium of exchange,
2) The U.S. national debt would be defaulted with such an amendment since domestic and foreign creditors would know their loans to the U.S. would never be repaid,
3) June 5, 1933, the U.S. went off the gold standard setting gold at $35 per ounce.
4) In 1971, the U.S. eliminated all resemblance to its currency to the gold standard, creating a system of "fiat" currency, and,
5) A precious metal standard other than the full faith and credit in the U.S would result.
What makes a National Convention of the States impractical is it still requires a 2/3 vote of the delegates to propose an amendment and a 3/4 supermajority of the state legislatures or state conventions to ratify the amendment.
Since 2012, I've written a column every single week explaining my votes to my constituents. In 2016, I explained why I voted against the Oklahoma's legislature's Joint Resolution requesting Congress call for a National Convention of the States. Every constituent that responded to me about the column agreed with my vote on that issue.
To most conservatives, taxation is considered government theft. When Dark Money mailers recently announced that I had voted against a congressional Balanced Budget Amendment, constituents were manipulated by the misinformation to believe that I was a liberal who wanted unlimited federal spending. That was not the truth! Of course, I want our federal government to be more fiscally conservative, but a national convention will not accomplish that.
The decline and fall of ancient governments have all been as a result of the bad decisions of its leaders, and I think a national convention is one of those.
If you have any questions or I can be of any assistance, please don't hesitate to contact me at [email protected] or call me at (405) 521-5539.