Publius-Huldah's Blog

Understanding the Constitution

Balancing the Budget? Or Adding A National Sales Tax To The Income Tax?

By Publius Huldah

The stated purpose of Compact for America, Inc. is to get a balanced budget amendment (BBA) ratified.  Here is their proposed BBA.  State Legislators recently introduced it in Arizona. 1

The gap between what this BBA pretends to do – and what it actually does – is enormous. It has nothing to do with “balancing the budget” – it is about slipping in a new national sales tax or value-added tax in addition to the existing federal income tax.

We have become so shallow that we look no further than a name – if it sounds good, we are all for it.  We hear, “balanced budget amendment”, and think, “I have to balance my budget; they should have to balance theirs.”  So we don’t read the amendment, we just assume they will have to balance theirs the same way we balance ours – by cutting spending.

But that is not what the BBA does.  In effect, it redefines “balancing the budget” to mean spending no more than your income plus the additional debt you incur to finance your spending.  To illustrate:  If your income is $100,000 a year; but you spend $175,000 a year, you “balance” your budget by borrowing the additional $75,000.  See?

Under the BBA, Congress may continue to spend whatever it likes and incur as much new debt as it pleases – as long as 26 States agree.  And since the States have become major consumers of federal funding, who doubts that they can’t continue to be bought?  Federal grants make up almost 35% of the States’ annual budgets!  The States are addicted to federal funds – who thinks they won’t agree to get more money?

The BBA enshrines Debt as a permanent feature of our Country; gives it constitutional approval; does nothing to reduce spending or “balance the budget”; authorizes a new national tax; and wipes out the “enumerated powers” limitation on the federal government.

Let’s look at the BBA, section by section, using plain and honest English.  And then let’s look at how our Framers wrote our Constitution to strictly control federal spending.

Compact for America’s BBA

Section 1 says the federal government may not spend more than they take from you in taxes or add to the national debt. [Yes, you read that right.]

Section 2 accepts debt as a permanent feature of our Country – the “Authorized Debt”. This is the maximum amount of debt the federal government may incur at any given point in time.

  • Initially, when the Amendment is ratified, the “authorized debt” may not be more than 105% of the then existing national debt.  So!  If the national debt is $20 trillion when the Amendment is ratified, the federal government may not initially add more than 105% of    $20 trillion [or $1 trillion] to the national debt.
  • After that initial addition to the national debt, the “authorized debt” may not be increased unless it is approved by State Legislatures as provided in Section 3.

Section 3 says whenever Congress wants, it may increase the national debt if 26 of the State Legislatures agree.  [Yes, you read that right.]

Section 4 says whenever the national debt exceeds 98% of “the debt limit set by Section 2”, the President shall “impound” sufficient expenditures so that the national debt won’t exceed the “authorized debt”.  And if the President doesn’t do this, Congress may impeach him!

This is a hoot, Folks!  I’ll show you:

  •  No debt limit is set by Section 2!  The national debt can be increased at any time if Congress gets 26 State Legislatures to agree.  Can 26 States be bought?
  •  Section 6 defines “impoundment” as “a proposal not to spend all or part of a sum of money appropriated by Congress”.  Who believes Congress will impeach the President 2 for failing to “impound” an appropriation made by Congress?

Section 5 says any new or increased federal “general revenue tax” must be approved by 2/3 of the members of both houses of Congress.

Now pay attention, because this is a monstrous trick to be played on you:  Section 6 defines “general revenue tax” as “any income tax, sales tax, or value-added tax” levied by the federal government.

And when you read the first sentence of Section 5 with the definition of “general revenue taxin place of “general revenue tax”, you see that it says:

“No bill that provides for a new or increased income tax, sales tax, or value-added tax shall become law unless approved by a two-thirds roll call vote…” 

 Do you see?  This permits Congress to impose a national sales tax or value added tax in addition to the income tax, 3 if 2/3 of both houses agree.  [Yes, you read that right.]

But the trickery of the drafters of this evil piece of work is even worse.  Section 5 also says that any bill for a new sales tax which would replace the federal income tax need only be approved by a simple majority of the members of both houses.

This makes most readers believe that the income tax would be replaced by a sales tax.

But the Amendment does not require Congress to introduce a sales tax to replace the income tax. [Remember, that sales tax requires only a simple majority to get passed.]

Whereas it authorizes Congress to impose a sales tax or value-added tax in addition to the income tax[This sales tax requires a 2/3 majority to get passed.]

Do you see? Are they tricky or what!

And which option will Congress choose?

Section 6 sets forth the definitions for the amendment.  As you see, you must always read the definitions and apply them to the text.

Section 7 says the Amendment is “self-enforcing”.  Rubbish!  No Constitution or amendment is “self-enforcing”.  There is only one way to enforce our Constitution:  WE THE PEOPLE, who are “the natural guardians of the Constitution” (Federalist No. 16, next to last para), enforce it by learning it and by throwing out politicians who ignore it. And we must always be on guard against the wolves who seek to destroy it.

Nick Dranias, on the Board of Directors for the Compact for America , is a constitutional lawyer.  History professor, Kevin R. C. Gutzman, on the Advisory Council, is a lawyer. Other prominent lawyers and a 5th Circuit Court Judge, are on the Council. They all know what their BBA really does.  For a chilling disclosure of who some of these people are on the Council, see investigative journalist Kelleigh Nelson’s paper on News With Views.

How Does Our Constitution Control Federal Spending?

Our Constitution lists – itemizes – every power WE THE PEOPLE delegated to the federal government when we ratified the Constitution.  These are the “enumerated powers”.  Article I, §8 lists most of the powers delegated to Congress for the Country at large: 4

  • immigration office (Art. I, §8, cl.4)
  • mint (Art. I, §8, cl. 5)
  • a few criminal laws (e.g., Art. I, §8, cl. 6)
  • post offices & post roads (Art. I, §8, cl. 7)
  • patent & copyright office (Art. I, §8, cl. 8)
  • federal courts (Art. I, §8, cl. 9)
  • military and citizen militia (Art. I, §8, cls. 11-16)

Various other Articles, sections, and clauses list additional objects of Congress’ spending, such as payment of the salaries of persons on the civil list (Art. I, §6, cl.1; Art. II, §1, next to last clause; and Art. III, §1).

Do you get the idea?  The Constitution lists what Congress is permitted to spend money on. Its spending is limited to the enumerated powers, and the salaries of those on the civil list.  If you will go thru our Constitution and highlight every power delegated to Congress and the President, you will see ALL the objects on which Congress has constitutional authority to appropriate funds.  THAT is ALL – ALL – they may lawfully spend money on.

We have a debt of $17+ trillion (plus unfunded liabilities) because WE ignored our Constitution for 100 years; and Congress spent money on objects outside the scope of the enumerated powers.

This one page chart depicts the Constitution We established, and most of what Congress may lawfully spend money on.  Is it not a thing of beauty?  Do you want it back?  Then Restore it!

Understand this:  All versions of a BBA eliminate the enumerated powers limitations on the federal government.  Under all versions, the Constitution is “fundamentally changed” to permit the federal government to do anything they want and to spend money on anything they please.

Amendments are a tricky business.  And tricksters abound in our Land.

Endnotes:

 1 Compact for America is also trying to use the “compact of the states” provision & is calling for an Art. V convention.  Red Flag, Folks!  But for now, let’s look just at their dishonest BBA.

2 Congress always had authority to impeach and remove a President for usurpations of power – see this short Primer.

3 Section 5 also says Congress may reduce or eliminate existing income tax exemptions, deductions, or credits by a simple majority vote.

4 This paper lists all the powers delegated to Congress by our Constitution.  You can learn them!

Postscript added Feb. 13, 2014:

Nick Dranias and others at Compact for America are posting here & there insisting that their BBA does not  impose a new tax, because Congress already has authority to impose a sales tax or VAT tax.  They say Art. I, Sec. 8, cl. 1,  authorizes Congress to impose “imposts”, and that an “impost” is any kind of tax.

Rubbish!

We must go by the original intent of “impost”. Ten or so of The Federalist Papers discuss “imposts”, and they are a tax on imports. That is quite clear. It is easy to find these Papers. The edition of The Federalist I use has a search function: just type in imposts and the list of Papers will come right up and you can read them all.

 

Webster’s 1828 dictionary also defines “imposts” as a tax on imports: http://1828.mshaffer.com/d/word/impost

 

“1. Any tax or tribute imposed by authority; particularly, a duty or tax laid by government on goods imported, and paid or secured by the importer at the time of importation. Imposts are also called customs.”

So a national sales tax is most manifestly NOT an “impost”!  And yes, Dranias’ BBA imposes a new national sales or VAT tax.

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February 10, 2014 - Posted by | Balanced Budget Amendment, Compact for America, Kevin Gutzman, Nick Dranias | , , ,

37 Comments »

  1. […] vote every few months to raise the debt limit). In the version of the Balanced Budget Amendment by Nick Dranias and Compact for America, Congress and at least 26 States can vote at any time to raise the spending […]

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  7. […] Esq., of the Compact for America, Inc., whose “balanced budget” amendment imposes a new national sales or VAT tax on the American People. • Former law professor, Rob Natelson. • Nullification denier and law […]

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  9. […] limit (just as they vote every few months to raise the debt limit). In the version of the BBA by Nick Dranias and Compact for America, Congress and at least 26 States can vote at any time to raise the spending […]

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  10. […] Dranias, Esq., of the Compact for America, Inc., whose “balanced budget” amendment imposes a new national sales or VAT tax on the American […]

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  11. […] Dranias, Esq., of the Compact for America, Inc., whose “balanced budget” amendment imposes a new national sales or VAT tax on the American […]

    Pingback by Article V Convention: How “Individuals of Insidious Views” Are Stealing Our Constitution | Grumpy Opinions | February 19, 2014 | Reply

  12. […] limit (just as they vote every few months to raise the debt limit).  In the version of the BBA by Nick Dranias and Compact for America, Congress and at least 26 States can vote at any time to raise the spending […]

    Pingback by Balanced Budget Amendments (BBA) Gut Our Constitution And Don’t Reduce Spending « Publius-Huldah's Blog | February 19, 2014 | Reply

  13. […] limit (just as they vote every few months to raise the debt limit).  In the version of the BBA by Nick Dranias and Compact for America, Congress and at least 26 States can vote at any time to raise the spending […]

    Pingback by Balanced Budget Amendments (BBA) Gut Our Constitution And Don’t Reduce Spending | American Clarion | February 17, 2014 | Reply

  14. […] limit (just as they vote every few months to raise the debt limit). In the version of the BBA by Nick Dranias and Compact for America, Congress and at least 26 States can vote at any time to raise the spending […]

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  15. […] limit (just as they vote every few months to raise the debt limit). In the version of the BBA by Nick Dranias and Compact for America, Congress and at least 26 States can vote at any time to raise the spending […]

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  16. […] limit (just as they vote every few months to raise the debt limit). In the version of the BBA by Nick Dranias and Compact for America, Congress and at least 26 States can vote at any time to raise the spending […]

    Pingback by Balanced Budget Amendments (BBA) Gut Our Constitution And Don’t Reduce Spending | NoisyRoom.net | February 16, 2014 | Reply

  17. There is a solution, though: the FairTax, a national sales tax which would REPLACE all federal income taxes and kickstart the process of repealing the 16th Amdt. It would sunset automatically if the 16th Amdt is not repealed within seven years of its enactment.

    Comment by ZM | February 15, 2014 | Reply

    • Yes, there is a solution – but a national sales tax is not it.
      The solution is:
      1. For Congress to reduce spending to the enumerated objects of its powers; and
      2. For Congress to dust off Article I, Sec. 2, clause 3, and re-institute the “direct Taxes” where Congress assesses THE STATES their pro rata share of the costs of operating the federal government as it exercises its enumerated powers ONLY.

      Our Framers never wanted the federal government to have such direct control over individuals as to have everyone who sells stuff be their tax collector!!!

      Comment by Publius Huldah | February 15, 2014 | Reply

      • Now I don’t feel so much like the lone ranger. Until this moment I thought I was the only who could read the document without bias. It’s very clear to me that States are responsible to pay for the operations of the federal government based on census data. That doesn’t mean the States won’t pass that cost on to the citizens, for there is no other means, but there is no direct tax to individuals authorized in the original document. The XVIth Amendment was a hug mistake.
        I’ve read all your work, Publius Huldah, but I can’t recall having come across this particular statement until now.
        Quoting you here.
        “The solution is:
        1. For Congress to reduce spending to the enumerated objects of its powers; and
        2. For Congress to dust off Article I, Sec. 2, clause 3, and re-institute the “direct Taxes” where Congress assesses THE STATES their pro rata share of the costs of operating the federal government as it exercises its enumerated powers ONLY. ”
        Thank you.

        Comment by styersbd | February 15, 2014 | Reply

        • Yes! You are 100% right.
          Our Framers did not want the feds to have the power to directly tax citizens! Art. I, Sec. 9, clause 4.
          The powers delegated to the federal government are so few & defined that, except for war, the federal government could run on “imposts” (import tariffs), “excises” (non ad valorem taxes levied on units of merchandize such as a tax on a gallon of whiskey), and the pro-rata contributions from the States (who could collect the tax as they deemed proper & right).

          But the progressives played on the ENVY & RESENTMENT of the American People to get them to support the income tax: “SOAK THE RICH!” Yeah, soak ‘em – serves them right. Q: Where were our Pastors to smack down this sinful envy? A: They had already been corrupted in their seminaries.

          And the gullible stupid Americans who supported the income tax had NO UNDERSTANDING WHATSOEVER of the ramifications of what they were supporting. They just wanted to “get even” with the rich.

          Comment by Publius Huldah | February 15, 2014 | Reply

  18. PH:
    Hi. good to read your new piece. My first thought, since I used your link to pull up the BBA, is it looks to me like congress can raise the debt limit 60 days after the proposed measure is offered to State legislatures regardless of whether or not the simple majority approves the measure. Once it first offers the measure to the States, and the measure is disapproved, that condition has been met, and since that condition has been met, congress can simply raise the authorized debt as it always has in the past. It looks like a matter of convenience to put the weight on State legislatures by simple majority, but if that doesn’t work, congress still has the power to raise the debt limit. I don’t see much change other than that States may be involved in ‘measures’, and that we are accepting that debt is inevitable as you’ve skillfully presented in your piece.
    I also find it interesting they shift the wording from ‘authorized debt’ to ‘debt limit’. It may be unimportant, but it’s remarkable. Why wouldn’t they use the same terms for consistency?
    Quoting you here:
    “This makes most readers believe that the income tax would be replaced by a sales tax.”
    I don’t get that impression at all. I think congress can already adopt a sales tax. Unless we repeal the XVIth Amendment, income taxes will never go away.

    Comment by styersbd | February 10, 2014 | Reply

    • Actually, Congress has no constitutional authority to impose an inland sales tax or a VAT.

      A sales tax is a percentage of the retail price of the purchased item. So a sales tax is an ad valorem tax – it’s based on the value of the items sold as measured by the selling price.

      Whereas excise taxes (which are authorized in the original Constitution) were a flat tax on a unit of goods – such as the excise tax on whiskey. The excise tax wasn’t based on the retail value of the whiskey but on – for example – for every gallon of whiskey, an excise of such & such amount will be assessed.

      Nick Dranias is foaming at the mouth at my words that his tricky & dishonest amendment authorizes a new tax (a national sales or VAT) – but the truth is, it does.

      Comment by Publius Huldah | February 11, 2014 | Reply

      • I get that about excise. If I’m not mistaken, part of the concern of the producers was precisely for that reason, that they were charged for production without consideration of the cost incurred to get the product to the eastern markets.
        My thought is that a national sales tax will be considered a Duty, or more commonly a consumption tax. Section 8 isn’t that specific in that it opens with the statement ‘The Congress shall have Power To lay and collect Taxes,…’ as long as those taxes are uniform.
        In the Whiskey Rebellion, the tax was uniform on the product but not on the person who would deliver the product to market in view of the cost of transporting the product across mountains. The tax added a more significant burden to producers west of those mountains. They didn’t consider it fully before enacting the tax, or they did so in favor of the eastern producers of alcohol.
        Also to borrow money on the credit of the US is not that specific, basically by the way it’s worded, if credit is available, the Congress has the power to use it.

        Comment by styersbd | February 11, 2014 | Reply

        • One of my points is that the BBA proposed by Nick Dranias authorizes Congress to impose a new national sales or VAT tax. A Power which Congress does not presently have.

          Comment by Publius Huldah | February 11, 2014 | Reply

          • Oyes, and very clearly stated in your piece. I would support a user fee in the form of retail tax on the condition that they agree not to tax our labor in the form of income tax. The hazard is, of course, that they will both tax our labor and our consumption through income and sales taxes.

            Comment by styersbd | February 11, 2014

    • Clarification – a national sales tax would be an “impost” (defined as a tax or similar compulsory payment) that is authorized under Article I, Section 8, Clause 1, provided that it was uniform throughout the United States. So Nick’s point is that a national sales or VAT tax is already authorized by the Constitution and can be imposed at any time by simple majorities in both Houses of Congress. The BBA would make it a much higher hurdle for Congress to impose a new national sales tax, requiring 2/3 vote of the full membership of each House. The principled compromise – allow a national sales tax by simple majorities of both Houses only if it would completely replace the current income tax system, resulting in a flatter and fairer tax system in which all Americans would participate.

      Comment by Chip DeMOss | February 12, 2014 | Reply

      • Chip,

        We must go by the original intent of “impost”. Ten or so of The Federalist Papers discuss “imposts”, and they are a tax on imports. That is quite clear. It is easy to find these Papers. The edition of The Federalist I use has a search function: just type in imposts and the list of Papers will come right up and you can read them all.

        So a national sales tax is most manifestly NOT an “impost”!

        I also use Webster’s 1828 dictionary to provide definitions closer to the time of our Framing: Webster’s also defines “imposts” as a tax on imports: http://1828.mshaffer.com/d/word/impost

        “1. Any tax or tribute imposed by authority; particularly, a duty or tax laid by government on goods imported, and paid or secured by the importer at the time of importation. Imposts are also called customs.”

        Comment by Publius Huldah | February 12, 2014 | Reply

  19. Reblogged this on PUMABydesign001's Blog.

    Comment by bydesign001 | February 10, 2014 | Reply

    • Clarification – Section 2 of the BBA states that “outstanding debt shall not exceed authorized debt” and that means at any time. The initial debt limit, or “authorized debt” is set at 105% of the outstanding debt at the time of ratification. So the numbers you are using in your example are correct – if outstanding debt at the time of ratification is $20 trillion, then the resulting debt limit, or authorized debt, is $21 trillion. So outstanding debt can never exceed $21 trillion. That means there is only a $1 trillion “cushion” at the time of ratification, which represents approximately 2 years of current deficits. So if Congress expects to have to borrow more than $21 trillion, they will have two years to make their case to the states. This breaks up the concentration of power in Washington DC by bringing the issue to the state legislators, who are much closer to the people, much more accessible by their constituents. and it is much more difficult for special interest lobbyists to influence, simply because there are over 7,500 state legislators across the county.

      Comment by Chip DeMOss | February 12, 2014 | Reply

      • Now, Chip
        I don’t do math. But I can read. The BBA Compact For America supports permits Congress to increase the debt at any time and in any amount as long as they get 26 States to agree to the increase.

        The limitations you mention aren’t in the BBA.

        Comment by Publius Huldah | February 12, 2014 | Reply

  20. Dear Madam PH, I always enjoy reading your posts, and this was no exception. I would like to point out though, that there seems to be a typo in the first bullet point you listed under section 2 of the BBA: Initially, when the Amendment is ratified, the “authorized debt” may not be more than 105% of the then existing national debt. So! If the national debt is $20 trillion when the Amendment is ratified, the federal government may not initially add more than 105% of $20 trillion [or $1 trillion] to the national debt. I’m sure it was just a typo in your post, but my calculator says 105% of $20 trillion is $21 trillion, not $1 trillion (which would more than double the national debt, no matter what size it is at the time). I frequently pass your posts on to my family and friends. Keep up the good work. All is grace, Mrs. Bob Oberlin [Kay]

    Comment by family008@juno.com | February 10, 2014 | Reply

    • I do not do math – numbers always got me confused. Words are my only tools. So I actually asked a math teacher and she said the answer was $1 trillion. Of course, I may have asked the question incorrectly. Sigh, I’ll ask again and make sure I ask it correctly.

      I have done some work on my genealogy and all but two of my male ancestors were clergy or lawyers or farmers. Just one engineer and one physician. WE don’t do numbers here! I think it is a genetic defect.

      Comment by Publius Huldah | February 10, 2014 | Reply

      • For suggested clarity:
        If we allow for a 105% total increase, the increase of $21 trillion could be added to the total authorized debt which was $20 trillion resulting in a total authorized debt of $41 trillion. Hypothetically, no matter what size the debt at the time of the adoption of the amendment, even adding 100% would double it.
        If instead we interpret the meaning as an allowance for 100% of the current debt plus an additional 5%, then the hypothetical figure of $20 trillion would limit the additional debt to $1 trillion for a total of $21 trillion.

        Comment by styersbd | February 11, 2014 | Reply

  21. Reblogged this on SiriusCoffee and commented:
    You will find Publius Holdah’s logic very difficult to refute! Don’t be pulled in by flashy titles – you have to take the time to dig into legislation to find the evil (and it’s safe to assume that it’s there!).

    Comment by Brad S. | February 10, 2014 | Reply

    • Thanks, Brad!
      And oh yes, the evil abounds. Lies, lies everywhere.

      Comment by Publius Huldah | February 10, 2014 | Reply

  22. “WE” are being taxed into submission by tyranny. The unGODly deception of carbon to tax, The rain water tax called “Storm Water”(storm means ‘wind’ a fitting word). “WE” must resist, “Defy. Do NOT Comply. Resist by “Interposition with Nullification” That is The Solution. “WE” Have Grace of GOD Given Unalienable Rights. PH has the best of clarification here at her site. “Stand Up-Show Up” That’s ALL it takes.

    Comment by Noah | February 10, 2014 | Reply

  23. P.H. The Marketplace Fairness Act (always be suspect of any legislation that has the word “fair” or “true/truth” in the title as it will be anything but…) is legislation of the same sort.

    Both the Republican Senate and House Reps from SD, and the Democrat Senator, bought in to the Red Herring idea (read LIES) that somehow the MFA is just “leveling the playing field” between the brick and mortar stores and internet sellers. BS! It is a new tax and even says so, if they took the time to read it,

    So you are very right about reading the carefully worded “title” and moving to the vote stage without any further effort, after all they are busy (or so they say).

    By the way the MFA the would be sure to require a new FEDERAL bureaucracy just to referee all the payments. But that will be “discovered” AFTER they pass the law.

    Comment by Steve in SD (out in the great alone) | February 10, 2014 | Reply


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