As you can imagine, a GOP balanced budget amendment ties spending to revenue; i.e., the government’s budget cannot exceed the revenue it collects.  Democrats, however, view the problem from the opposite direction: the government has to collect as much in revenue revenue as it spends.

To do this, you would, of course, need to first pass a budget, then you would need to either have dynamic tax rates or a fixed amount of tax per person.  In other words, if you had a revenue-based tax, you would have to solve for (1) people don’t know their revenue until year end, especially those who have investment income or own their own business; (2) the fact that the government spends money like a drunken Kennedy.

The simpler solution, then would be to have the tax burden spread evenly, per capita (this ridiculous idea is how our federal government was supposed to work before the income tax amendment). At a “budget” of roughly $4T and a population of roughly 300M (including the unemployed, the retired, and infants, toddlers, kids and tweens), would mean a tax burden of about $13,333 each.  So, a family of four would have to pay $53,333 per year.  Billy better get that paper route.

This, of course, runs afoul of Democratic principles, which, as far as we can tell, can be reduced to “rich people are evil.”  We can safely dismiss this as not “progressive” enough.  In deed, it wouldn’t even tax those evil corporations that do all those evil things, like employ people.

So, a Democratic version of a balanced budget, would therefore have to keep the progressive structure of our income tax code, but would need to vary the actual rates, depending on its spending.  For the ordinary citizen, this means you wouldn’t know your tax bill, or even your rate until the end of the year when you knew how much the government actually spent.  At the end of the year, the government would announce it’s spending and would tell you what you owed:

Hello, Mr. Taxpayer! So good to see you. So, we spent a little more than we thought this year. We really wanted to do a study on penis size in the gay community, and there were a few other critical items, not to mention the bank bailouts, auto bailouts and Obama’s family trips. And it’s not fair to means test for things like social security and medicare, so your tax bill comes to….let’s see here…working family of four–ooh over a $100K in family income–Mr. Fancy Pants!  Let’s see, carry the eleventeen–$107,568.12.   Will that be cash or check?

Sounds crazy, but that’s what the government does today.  Of course, it’s not on an annual basis, that would result in something all politicians hate–accountability.  No, today, the government dispatches its tax collectors into the future, where they shakedown your grandkids, their children and their children and their children.

Of course, no one seems to be talking about how this is all one man’s fault: Harry Reid.  In December, he could have had his lame duck Congress increase the debt ceiling, but he chose not to, wanting to hang the problem around the neck of the Republicans. Wish granted, tough guy.

So, after much posturing and hyperbole, the President and Senate Democrats continue to summon demons and threaten little old ladies with their stories of government default. The GOP-controlled House has come up with an imperfect plan, but one that will cut spending and allow the government to function for 6 more months–a month longer than the average debt ceiling increase.

In response, the President has threatened to veto the Boehner bill,  and Harry Reid had all 53 Senate Dems sign letter to Boehner promising to kill his short-term solution.

So here’s the analogy:  You’re lost at sea.  The sharks are circling, and there is blood in the water.  You’re holding a family heirloom and refuse to let go.  Five minutes ago, your best friend sailed past in his 80 foot yacht and said “I see you’re having problems, but I don’t want you messing up the carpet.  Someone else will be along soon.”  You are literally about to go under the waves for good and your mortal enemy then goes by in his leaking dingy and throws you his only life preserver and says, “this should hold you for a while, drop the heirloom and I’ll be back in a few minutes, once I fix this leak.”

Do you throw the life preserver back at him and drown out of spite?  If Yes, you may be qualified for what counts as leadership in the Democratic party.

Imagine Obama owns a petroleum refinery.  The gas station is on fire, but the fire has not yet reached the fuel storage–it’s just the side building at the moment.  Speaker Boehner and the GOP are a fire brigade, and they control the supply of fire suppressant.

The fire suppressant works, but if you use too much of it, it will destroy the refinery and the town.

Obama has, for the past year, been screaming a flailing his arms about how the fire will destroy his refinery and this little town.  Boehner is willing to give him enough suppressant to put out the fire, but that’s all.  He offers the refinery a deal: we’ll give you enough suppressant to put out the fire, but you have to get rid of some of your gasoline.  It’s endangering the town, and the next fire might not be stoppable.  Boehner says, “we’ll suppress the fire long enough for you to get rid of some of the gasoline.”

Obama, however, wants enough suppressant to put out not just the current fire and the next one and the next one.  He wants coverage until his refinery permit is approved next year (i.e., becomes a lame duck).  He also wants enough suppressant to cover his petting zoo, where he keeps his donkey.  Obama also refuses to get rid of any gasoline, as that’s the source of his power (i.e., profits; i.e. government largesse is what keeps Democrats employed).  “Look,” Obama says, “if you don’t give me enough suppressant, I’m going to have a hard time getting my refinery permit.  People might think I’m a danger to the town.”

So I ask you, who is more unreasonable?  The man who suggests a short-term solution that solves the problem for now, or the flaming idiot who wants to cover his ass at the expense of others?

Today, the rating agencies are taking the government’s failure to right its own financial ship seriously.  Moody’s and S&P are considering reevaluating the U.S.’s AAA rating–the same rating Krugman objected them giving to asset backed securities.  Krugman and others are, of course, livid and are once again crying conflict of interest and impugning the rating agencies’ integrity.

Now, let’s not be naive.  Part of the downgrade threat is Moody’s and S&P exacting a little revenge on the administration and the party that dragged it through Congressional hearings last year and sullied their names.  But that doesn’t make the risk any less real.  Anyone who puts the risk of U.S. default at zero is delusional. Obama wanted the rating agencies to be hard on debt issues, well, this is what happens to debt issuers who spend like drunken politicians.  The government should not be excused from the risk of default simply because it can, literally, print money.

Whether or not you believe the rating agencies unethically inflated the ratings of ABS’s in the past, making the same mistake for the government today would not be any better.  Unless MIT has made some advances in ethical accounting, two wrongs still don’t make a right.

Obama: You must be that little Conservative brat I taught a lesson to all those years ago. You’ve been chasing me your whole life only to fail now? I think that’s about the worst thing I’ve ever heard.

GOP: “Cut, cap and balance.”

Obama: “Stop saying that!”

GOP. “CUT. CAP. BALANCE.” [calls bluff]

Obama: “I’ll give you anything you want!”

GOP: “Offer me money.”

Obama: “Yes, more government spending!”

GOP: “Power, too, promise me that.”

Obama: “All that I have and more!”

GOP: “Offer me anything that I ask for.”

Obama: “Anything you want…”

GOP: “I want my future back you sonuvabitch.”

My name is Inigo Montoya. You destroyed my country. No prepare to retire.