A republic or democracy presupposes that the majority of representatives will get it right eventually. However, we've seen in the Roman Circus and we see now that there is a weak spot to this thinking. Eventually the elected body will split into a faction that represents business interests and a faction that trades entitlements for votes. The latter faction eventually gains control to an extent that they bankrupt the whole. We are nearing that stage now. Few Republicans will oppose entitlements and both Mr. Bush and Mr. Obama are guilty of ramp ups in deficit spending.<p>Buffett's proposal would patch this historically reoccurring weakness of representative forms of government. As hnsmurf points out, it would also create a slippery slope where no representative could be reelected if they vote for X, Y and Z policies that are not systemic threats.<p>As our government is not responding to an issue which can literally ruin us all, it seems to me that Buffett's proposal is the lesser of two evils. Stability demands a solvent government.
I think people are missing the point, his suggestion is not meant to be taken literally. What he's trying to say is that reducing the budget deficit is more a question of political will than economics.
This does not address the question of whether a balanced budget is even desirable. Equating the budget of the currency <i>issuer</i> with the everyday experience of the budget of the currency <i>user</i> is a fallacy.<p>Looking at the respective balances of the three sectors of government, domestic private, and external, it is obvious that flows are conserved. Given net imports (i.e. more money flowing into the external sector than out of it), a balanced government budget can only occur if the private sector is in deficit, i.e. more money flowing out of the private sector than flowing into it.<p>Empirically, external balances change only very slowly, unless artificial trade barriers (tariffs etc.) are raised.<p>So in the end, the political choice is between deficits in the private sector, and deficits in the government sector (and of course a range of choices in-between).
One big problem I see with this: in time of war, it is often not only necessary but desireable to run a deficit. Imagine if we had been forced to run a balanced budget during WWII! I would imagine that in such dire need, members of congress would "take one for the team" and run a deficit in order to sustain the war effort, but then you have the classic "changing horses mid-stream" problem when you turn over literally the entire legislature in the middle of a war.<p>I think that a much more practical constitutional amendment would be to simply prohibit congress from appropriating funds in excess of revenues unless a war has been declared. There is a risk of congress declaring needless wars for the sole purpose of justifying deficits, but that would require the cooperation of both parties, and I would bet that the opposition party would see more potential gain in opposing the war and demagouging its supportors than in letting the majority party have their war of convenience.
Buffett's father was a 4 term congressman and an almost Ron Paul-like libertarian, btw.<p><a href="http://en.wikipedia.org/wiki/Howard_Buffett" rel="nofollow">http://en.wikipedia.org/wiki/Howard_Buffett</a>
I liked the preface to the comments section below the video:<p><i>Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.</i>
Would Warren Buffett fire the entire management of any company he owned that borrowed more than 10% of earnings in one year, regardless of circumstances? Because that is what his suggestion amounts to.
I ask this here because this is a hacker forum. Why is it that in this day and age that we still implicitly entrust another person to make decisions on our behalf? What do you think would be the kind of systems we need to build to make democracy more participative? What do you think would be the pitfalls we should avoid with such a system?
What about laws that state only Congress can declare war or the rules of the War Powers Resolution? These don't stop the executive branch from engaging in war. Similarly, Buffet's simplistic solution wouldn't stop future deficits, because the ruling party could so easily redefine what a deficit is or what the GDP numbers are.
You can fix failing schools in 10 minutes: establish that teachers can be fired if the test scores aren't OK. This has the disadvantage that it's a hell of a lot easier to go back and tweak the tests handed in (see Atlanta; see some DC schools) than it is to educate the kids.<p>But the test scores look great.
It would take more than a law to block reelection for sitting legislators - it would take a Constitutional amendment. I'd like to see Buffet get that done in 5 minutes.
Why does this populist nonsense get so many votes? Typical generalized politicians bashing. If you feel that you rep. is so evil, than just don't elect them. Better still, stand yourself and do a better job. Or at least help the guy you think will be doing a better job. It's all about the participation of the Demos, that's why they call it democracy.
That wouldn't end the deficit, that would just ensure the deficit was 0 the day before elections. Also there's a slippery slope. This same logic, if we allow it to be applied to the deficit, could be applied to other things. No congressmen could be reelected if gay marriage is legal, etc.
What if instead of a stick – no reeslection for you! – we used a carrot? What if the sitting lawmakers who voted for a balanced budget eventually get a giant financial bonus? (To minimize monkeybusiness, we could require it to have been balanced in retrospect, say via assessment 2-10 years later.)<p>People – even Congresspeople! – respond to incentives.<p>Let's assume that the goal – the fiscal stability of a balanced budget – would be a noticeable boost to our $14-trillion-plus economy. Then the incentive could be quite huge – perhaps a million dollars per congressperson per year in balance – and still pay for itself, many times over.<p>Other interests are making millions per year from the legislative 'generosity' that results in a perpetually out-of-balance budget. Why not pay directly for the alternative result we prefer?
> I could end the deficit in 5 minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP all sitting members of congress are ineligible for reelection.<p>Incentives matter, but this incentive would attract candidates who don't want re-election, perhaps old and sick people who expect to die or retire.<p>Also, how do you measure GDP? Whenever someone drinks a pint of whiskey at the bar, then drives home and kills other motorists, the whiskey sold, car fix-up costs, ambulance and hospital fees, insurance and re-insurance premiums, prison costs, and court settlements all contribute to "GDP", even though real quality of life has gone way down.<p>And of course any law passed can be repealed by the same margin.
I thought the more interesting part of the interview was when he said that social security payments should have higher priority than bond interest payments. That sounds it would result in a worse credit rating and much larger pain in the long term...
What's sad about this is we shouldn't need to pass a law, voters could easily enforce this. There is a massive problem right now with a lack of accountability, not just for the debt but for all the horrible decisions congress makes.
Right, they'll do that right after they give up their gold-plated healthcare and instead take the government offering for the uninsured.<p>Gabrielle Giffords would be permanently disabled and disfigured, unable to ever speak or move because of lack of therapy if she was an average citizen standing in that crowd, with the average american insurance or lack thereof.<p>I love how the topic is constantly steered off healthcare. Remember the mosque in NYC? Remember how all that noise suddenly disappeared?
>“I could end the deficit in 5 minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP all sitting members of congress are ineligible for reelection.”<p>I understand his line of thinking, but the question is could he pass that law? He has a substantial amount of money that could be spent on lobbying, media, etc. But how do you get people who have spent a career chasing power to sign a law that will strip them of that power?
One possibility is that the job of congressman becomes a 2 year job and you have to dole out enough goodies in two years to get a secure post-congress position.
Wouldn't the unintended consequence be that the parties become even more powerful than they are now? All the long-standing politicians would move out of official govt capacity and into essentially the same position in their parties, while unknown pawns get elected to the official positions.
Budget deficits shouldn’t be any more of an automatic trigger for re-election than the unemployment rate, the inflation rate, the number of body bags coming back from a foreign war, or any other undesirable thing.
Spending more than you earn? Idiots in charge. Cut back on essentials, keep the things that make you happy, still get re-elected. Hmm, anyone else see a minor flaw?
my god cnbc is obnoxious. 9 logos on the same screen. breaking headlines of the interview currently in progress. 5 different bars all blocking the view with equally unimportant text. and the swoush sound effects... seriously you guys. seriously.
Better idea... Vice Presidents who still hold shares in companies that still hold gov contracts despite censure..Impeachment as the whole 3.4ths of current deficit was by start of wrong wars Iraq especially..