Background: This is the sixth in a series of blog posts about Mark Levin’s excellent and inspiring book, The Liberty Amendments.
I hope to convey Levin's major messages and inspire others to engage in the Convention of States (COS) project and join its underlying and growing grassroots movement to restore liberty and self-governance. I also hope to inspire you to read this book. The prior article in the series summarizes Levin’s arguments for limiting the terms for United States Supreme Court justices. The purpose is to redress bad judicial rulings, and address debilitated justices, of which there have been many in the history of the court as Levin documents.
Chapter 5 proposes two amendments - one to ensure budget integrity: Process and deadline discipline, balancing receipts and expenditures, and caps the spending at 17.5% of Gross Domestic Product (GDP). That was roughly the ratio in 2013 when the book was written; seems quaint now by comparison as you'll see below. The second limits taxes to 15% of a person's annual income regardless of source, and limits double taxation by disallowing death, VAT, sales, or other national taxes. It also changes the IRS filing deadline to the day before federal elections, to closely link those in voters’ minds.
Here is the full text of Levin’s two proposed amendments (click the arrow to expand and view):
SPENDING SECTION 1: Congress shall adopt a preliminary fiscal year budget no later than the first Monday in May for the following fiscal year, and submit said budget to the President for consideration.SECTION 2: Shall Congress fail to adopt a final fiscal year budget prior to the start of each fiscal year, which shall commence on October 1 of each year, and shall the President fail to sign said budget into law, an automatic, across-the-board, 5 percent reduction in expenditures from the prior year’s fiscal budget shall be imposed for the fiscal year in which a budget has not been adopted.
SECTION 3: Total outlays of the United States Government for any fiscal year shall not exceed its receipts for that fiscal year.
SECTION 4: Total outlays of the United States Government for each fiscal year shall not exceed 17.5 percent of the Nation’s gross domestic product for the previous calendar year.
SECTION 5: Total receipts shall include all receipts of the United States Government but shall not include those derived from borrowing. Total outlays shall include all outlays of the United States Government except those for the repayment of debt principal.
SECTION 6: Congress may provide for a one-year suspension of one or more of the preceding sections in this Article by a three-fifths vote of both Houses of Congress, provided the vote is conducted by roll call and sets forth the specific excess of outlays over receipts or outlays over 17.5 percent of the Nation’s gross domestic product.
SECTION 7: The limit on the debt of the United States held by the public shall not be increased unless three-fifths of both Houses of Congress shall provide for such an increase by roll call vote.
SECTION 8: This Amendment shall take effect in the fourth fiscal year after its ratification.
TAXING
SECTION 1: Congress shall not collect more than 15 percent of a person’s annual income, from whatever source derived. “Person” shall include natural and legal persons.
SECTION 2: The deadline for filing federal income tax returns shall be the day before the date set for elections to federal office.
SECTION 3: Congress shall not collect tax on a decedent’s estate.
SECTION 4: Congress shall not institute a value-added tax or national sales tax or any other tax in kind or form.
SECTION 5: This Amendment shall take effect in the fourth fiscal year after its ratification.
Levin quotes an award-winning, liberty-loving, and straight-talking economist about the runaway federal spending.
Milton Friedman, an iconic economist and Nobel laureate, concluded that “it is not in the interest of a legislator to vote against a particular appropriation bill if that vote would create strong enemies while a vote in its favor would alienate few supporters. That is why simply electing the right people is not a solution.” The solution is to remove by constitutional design that which cannot be accomplished statutorily—the overwhelming political incentive for reckless government spending by the governing masterminds.
Striving to achieve that end is precisely one of the aims of the COS movement.
Levin states very plainly the horrifying financial results of these feckless, reckless, irresponsible, and ruinous spenders. He also describes in detail all of the ways that Congress ignores or circumvents budget discipline to overspend, deliver poor financial results, and mortgage the financial future of future generations. 2012 was the reference year for financial data in Levin’s book as it was published in 2013; he cites 2002 and 2012 data for a 10-year comparison. 2022 figures have been added below for a recent reference and 10-year comparison, as well as additional metrics and trends that illustrate the disaster that is DC budgeting, spending, and taxing.
- Reckless Spending: In 2002, the federal government spent a little over $2 trillion (abbreviated as T throughout), or 19.1% of GDP. In 2012, it spent $3.8T, or 24.3% of GDP. In 2022 it was $6.48T, or 25% of GDP. GDP or Gross Domestic Product is a measure of the overall size of the US economy; all economic activity combined. Federal spending, income, deficit, and debt figures are typically shown relative to GDP to calibrate their size as the source of funding for the federal government. And the degree to which the federal leviathan is consuming precious financial resources, and crowding out private sector activity.
- Irresponsible Deficits:
In 2002, the budget deficit was $157 billion (B);
that is, spending exceeded all revenues (federal taxes and other receipts) by $157B. In 2012, it was $1.32T. In 2022 it was $1.38T. To highlight the lack of fiscal discipline in DC, here is the trend in a graph. Note that there hasn’t been a budget surplus since 2001.
- Unaddressed Debt. All of the overspending and annual deficits have racked up tremendous debt, requiring larger interest payments in the budget and spending each year. In 2002, total federal debt was $10.56T in inflation-adjusted 2023 dollars. For 2012, it was $21.3T. In 2022 it was $31.97T. Here is a graph of the US National Debt illustrating the stunning trend.
As a percent of GDP, these debt figures are ominous, as taxes on underlying economic activity should reduce deficits and debt. In 2002, it was approximately (abbreviated as ~) ~60% of GDP. By 2012, it was over 100% for the first time since World War II, when debt was used to fund the massive war effort. That is, at 100% debt to GDP, if every single dollar of economic activity (GDP) were collected in taxes, that would just pay off the national debt. Following WWII, debt as a percentage of GDP declined dramatically, to ~30% of GDP by 1980. Since, financial discipline went off the rails in DC. In 2022, debt reached ~125% of GDP. Explore these data and implications further here. This must be checked constitutionally; elections and laws have proven ineffective.
- Ruinous Unfunded Liabilities: The deficit spending and debt are only the tip of the iceberg. The 90+% of the iceberg looming invisibly below the surface of the water are unfunded liabilities. These are mandatory spending commitments for entitlements and to people on social welfare programs. The total liabilities are the amounts unfunded in future budget forecasts – the government does not have a plan to pay for these programs, and thus will run even larger deficits and rack up even more debt in the future. The unfunded liabilities for Medicare as of 2012 totaled $42.8T; the unfunded liabilities of Social Security as of 2012 totaled $20.5T. A recent report paints an even dimmer picture: these liabilities are growing even faster than the hockey stick graph of the total debt above, which means future debt and interest payments will grow even faster if left unchecked.
- Downgrades to the US Credit Rating: As a consequence of this fiscal irresponsibility, Levin writes “for the first time in the nation’s history, the federal government’s credit rating has been downgraded. On August 5, 2011, citing a “negative long-term outlook,” the credit rating agency Standard & Poor’s downgraded the credit rating of the United States government from the highest AAA rating to AA+.”
In addition to Levin’s points in the book, it’s critical to also point out that The Federal Reserve (aka The Fed) and US Treasury Department are bailing out a massive leak and covering huge fiscal gaps, but the boat keeps filling faster than they can bail. Raising taxes is unpopular with the electorate and thus with lawmaking politicians, and is seen by many of We the People as squandered on ineffective yet ballooning federal programs and overreach. Taxes are also completely inadequate to address the spiraling debt and unfunded liabilities, combining for over $150T by some estimates. Levin points out the fantasy of taxing the rich falls short by roughly half of what's needed; it's a complete fallacy that approach would suffice. Levin quotes the The Tax Foundation, "[e]ven if the government took all of the income earned by those who have an after-tax income of $1 million or more, the amount of revenue generated would fall far short of eliminating” the over $1 trillion deficit each year. In 2010, for example, the after-tax income of all millionaires was about $709 billion. The 2012 fiscal operating deficit was $1.32 trillion."
The result is a stealthy form of taxation: inflation. By printing more money and adding to the money supply to fill the gaps, per Levin, The Fed has a stated goal that it will devalue the dollar by 33 percent over the next twenty years (2013-2033), which will cut the dollar’s value by one-third and drive up prices and costs for all of us while reducing the value of savings and investments. (Side note: Levin also points out that the creation of The Fed itself in 1913 concentrated a vast amount of power in the hands of a very few; the antithesis of the distributed structure with checks and balances that the Constitution’s framers designed and which COS is pursuing.) The money printing and deficit spending were accelerated dramatically after the COVID pandemic. We are seeing the outcome of this financial recklessness come home to roost now with persistent price inflation. Given the current course and speed, a sovereign debt crisis for the US Dollar seems possible if not likely in the long run, which would mean more misery for all, including a massive drop in material wealth and thus a drop in the standard of living for everyone.
Let’s not let it come to that! Many involved and supporting the COS movement to curtail these fiscal abuses are motivated by these concerns. Many are worried about the future of our country and the debt and unfunded liability burdens being foisted on our children, grandchildren, and future generations. Please sign the petition at conventionofstates.com to call for an Article V Convention to propose amendments to check these irresponsible spenders in DC. And please volunteer to get involved in the movement. We and our country’s future generations need you.
