Dr. John Diamond makes an interesting rebuttal to our column “Competence, not amendment needed to fix the debt,” which responded to his op-ed “A plan to move past debt status quo.” Unfortunately, we are still troubled between the linkage between the facts and his arguments.
First, the budget in 2000 was in surplus. This is a fact. Citing “common knowledge” that the surplus was the result of increased revenue does not change that fact. In 1997 there was a move in Congress to amend the Constitution with a balanced budget amendment, and three years later the budget was in surplus. Why didn’t the dastardly politicians spend this surplus?
Second, his appeal to “common knowledge” worries us. In the second part of his rebuttal to our column, he attributes the decline in the debt to GNP ratio to the increased production in the 1950s resulting from the baby boomers that entering the labor force. He states:
“The authors point out that after World War II the national debt was greater than GDP, but that by 1960 the debt had been reduced to 55 percent of GDP. It is the ‘since we did it once, we can do it again’ argument. The argument against this comparison is simple: This is not the 1950s. In the 1950s, baby boomers began to enter the labor market, causing the U.S. workforce to swell. This increase in workers led to large increases in GDP and productivity, which helped shrink the debt-to-GDP ratio.”
The U.S. Census Bureau defines baby boomers as children who were born after the Second World War between 1946 to 1964. In 1960, the oldest baby boomer would have been 13 or 14. Does Diamond really think that children born in between 1946 to 1964 were responsible for the productivity increase in the 1950s? Of course, Diamond can invoke Humpty Dumpty in Lewis Carroll’s “Through the Looking Glass” to define baby boomers: “‘When I use a word,’ Humpty Dumpty said, in a rather scornful tone, ‘it means just what I choose it to mean — neither more nor less.'” However, most people would accept the Census Bureau’s definition.
Diamond also states that our column implies “paying down the current debt of $14.3 trillion is the biggest problem we face.” We see nothing in our column that leads to such a conclusion. We did not even address that issue. Our column was about the implications of a constitutional amendment that would require a supermajority for the government to run a budget deficit.
Finally, he argues that a balance budget amendment “should be flexible enough to allow for short-term fiscal policy responses in times of crisis and automatic stabilizers.” Is this even possible? The automatic stabilizers in the economy are defined by legislation on appropriations and taxation. Can such legislation be defined in a constitutional amendment? This is an interesting question. Imagine a tax code defined by a constitutional amendment passed at the time of Thomas Jefferson.
Dagobert Brito, Ph.D., is the Peterkin Professor of Political Economy at Rice University and a Baker Institute Rice scholar. Robert Curl, Ph.D., is the Pitzer-Schlumberger Professor of Natural Sciences Emeritus and a professor of chemistry emeritus at Rice University, as well as a Baker Institute Rice scholar.