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POULSON: How to Solve the U.S. Debt Crisis

Solving the U.S. debt crisis will be challenging. It will require bringing expenditures into balance with revenues in the long term. The federal government has failed to do this for decades. Under law, deficits and debt are projected to continue to grow at an unsustainable rate for the foreseeable future. Statutory fiscal rules still need to halt unsustainable growth in debt.

For example, in the 1980s and 1990s, Congress implemented statutory fiscal rules designed to reduce the debt burden. In those years, federal expenditures were balanced with federal revenues, decreasing debt burdens. But in 1999 and 2000, Congress circumvented the rules by allocating funds to emergency spending. 

And in 2002, Congress ended this charade by simply allowing the fiscal rules to expire. This allowed Congress to pursue discretionary fiscal policies, boosting spending far above that permitted by the regulations. The statutory fiscal rules enacted by Congress in recent years have suffered a similar fate. The fatal flaw in statutory fiscal rules enacted by Congress is that rules passed by one Congress are easily circumvented or suspended by a subsequent Congress.

In contrast to the United States, other countries have enacted effective fiscal rules. The most successful is Switzerland. The Swiss constitution requires voter approval for increased taxes and debt. In the 1990s, Switzerland experienced a debt crisis. Swiss citizens responded by enacting a debt brake as a constitutional fiscal rule through a referendum, with support from 85 percent of voters. The Swiss debt brake caps the growth in federal spending at the long-run growth rate in national income. It mandates that the federal government bring expenditures into balance with revenue soon. If the government incurs a deficit, the deficit must be offset by surplus revenue in subsequent years. The debt brake was enacted in 1998 and has allowed the Swiss to cut the ratio of national debt to national income in half. The Swiss could respond to the financial crisis and the coronavirus pandemic without a massive increase in deficits and debt, such as that incurred in the United States.

The Swiss debt brake has been copied in other European countries. It is now part of the fiscal rules imposed by the European Union. Northern European countries have been more successful in implementing the new fiscal rules than the southern countries. Ultimately, the success of the new fiscal rules depends upon support from citizens. When citizens approve new fiscal rules as constitutional provisions, as in Switzerland, it is more difficult for elected officials to circumvent or suspend the rules.

If the United States had enacted a debt brake, we could have reduced debt burdens just as the Swiss have. The question is how to enact more effective fiscal rules. Congress has proposed many fiscal rules as constitutional amendments for decades. However, Congress has never achieved the two-thirds’ majority required to submit these proposed amendments to citizens for ratification.

U.S. citizens can follow the lead of Switzerland and incorporate a Fiscal Responsibility Amendment in the Constitution. Article V gives citizens, as well as Congress, the right to propose amendments. Citizens and their state representatives have proposed Fiscal Responsibility Amendments for more than half a century. In 1979, two-thirds of the states had proposed such amendments. At that point, Congress was required to call the amendment convention, but Congress failed to fulfill this obligation under Article V.

This year, citizens may finally see some light at the end of this tunnel. House Budget Committee Chairman Jody Arrington, R-Texas, introduced a resolution requiring Congress to count state resolutions and call the amendment convention.

It is now up to the people and their state representatives to exercise the power granted to them in Article V of the Constitution. With a Fiscal Responsibility Amendment in the Constitution, citizens could determine how much government they want and are willing to pay.

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Officials Claim Delco Health Department Spared from State Budget Stalemate

As the Pennsylvania state budget stalemate drags on, entities that depend on state funding will soon begin feeling the pinch.

But officials said the new Delaware County Health Department is not one of them.

“Delaware County Council is reviewing all of the county and state-funded agencies and the impact that a prolonged state budget impasse would have,” said Adrienne Marofsky. “The Delaware County Health Department is not currently impacted by the state budget impasse. Overall, the programmatic DCHD services are federally funded. All monthly grant invoices are being processed and paid, and there is no disruption to services provided by DCHD.”

The county health department’s 2023 budget will cost $18,294,538 for 2022-2023, with its “primary funding sources” being “grants and reimbursements.”

The new department has been controversial since its inception. And an analysis of the functions that county officials claimed credited to it showed they were performed by the state, such as COVID-19 vaccines, and that many were given before it even opened, meaning the tally was 2,364 rather than 172,000.

Also, a Johns Hopkins student who examined health services in the county found it could do better by creating improved organization around services already provided by the state instead of creating its own health department.

Townships in Delaware County previously balked at the proposal that the health department take over health inspections overseen by local inspectors. In some cases, the fee hike on those inspections was projected to top 500 percent.

Multiple Delaware County towns asked the Court of Common Pleas to block the plan’s implementation. The court maintained an injunction against the inspections for much of 2022.

In October, Common Pleas Judge Spiros Angelos formally barred the county from conducting inspections in first-class townships. However, lower-level municipalities will still be subject to county health department oversight.

To start the department in 2021, the county used $4.8 million in federal American Rescue Plan Act (ARPA) money and took another $3.9 million from its capital improvement plan.

Republican candidate for county Council, Jeff Jones, is concerned about the county’s use of ARPA funds for various functions and programs, a practice that he believes is unsustainable because those funds are not permanent.

He said the Democratically-controlled council has used ARPA funds to start programs that will soon need increased tax dollars to continue. And council members have admitted they plan to raise taxes, he noted.

“They’re not spending money in a sustainable way,” said Jones. “If I told you what we foresee in just 2024 in the budget for the county, it will shock you because there is a looming tax increase. And that’s my evaluation…That is their words. That is the current council’s words. They can’t sustain the spending that they’ve done because they’ve got a blank check known as ARPA funds, and it’s plugged a lot of holes, but it’s created one big gaping hole.”

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