I’ve written about this in my books (see the side bar); here are some of my thoughts.  Of course, to achieve this, we’ll need significant majorities of conservatives in the House and Senate, and we’ll need a conservative President.

Enact legislation requiring Federal spending averaged over a five year period to not exceed Federal revenues, except in time of national emergency.  Further, that five year period must be a sliding five years: the oldest year is dropped from the computation, and the latest year added to that computation.  This will allow spending to exceed revenues for short periods to allow for the vagaries in the timing of revenue vs. obligations that are inevitable, while requiring spending to be reined in so as to keep this short term borrowing from growing.

If the President declares a national emergency, and the Speaker of the House and the Senate Majority Leader concur, debt can be accumulated for the purpose of dealing with the emergency.  If the emergency is a declared war, then that emergency will automatically expire one year after the end of that war.  If the emergency is from another cause, then the emergency will automatically expire after one year, unless the President renews his declaration and a majority of each house of Congress concurs.  Once the emergency has expired, then each year’s spending must be held below each year’s revenues until the emergency-driven debt has been repaid entirely.

There will be a huge hue and cry over this, of course.  It’s impractical.  It ignores big ticket items.  It overly constrains spending by the government.  It’s too hard to do politically.  And so on; there will always be excuses not to make the change.  The truth is, it’s only impractical because politicians make it so.  Instead of taking action, most of our current politicians push party politics, want to trade favors, need to pay back the interest groups who made their elections fiscally possible.

Congressman Emanuel Cleaver (D, MO), chairman of the Congressional Black Caucus, tweeted after the conclusion of the summer of 2011 debt limit rise negotiations, “Democrats got nothing in this deal, and if we did, someone please show it to me.”  However, this isn’t about the Democratic or Republican Party.  It isn’t about which party gets more or less than the other.  It’s about whether the nation wins or loses, and what’s good for the United States isn’t a mindless zero-sum game.

The big-ticket items—defense and other—can, and should, be budgeted for in advance.  Absent an outright emergency, these large expenditures are not surprises.  Although military spending is constitutionally constrained to two-year periods, the President submits a budget every year, and the Congress handles budget creation and passage every year (or is required to by law; the Senate has failed that obligation for the past three years).  When budgeting is taken seriously, as every family and business takes it, the long-term, expensive items can be planned in advance, and an expenditure schema that covers those big ticket expenses can be worked out in advance to keep overall spending within the limits just described.  Notice that this can include specific long-term borrowing for specific big-ticket items.  Most families are capable of budgeting for the acquisition of a 30-year home mortgage.  Our government can budget, also, for a defense system and the repair and upgrade of the nation’s electricity grid (as one example of an expensive, infrastructure investment).

As to the constraints on government spending, that’s the point.  Congressman Mike Doyle (D, PA) is reported as saying in a meeting with Vice President Joe Biden just prior to the August 2011 House vote on the bill that codified the negotiations that Congressman Cleaver so plaintively decried, “We have negotiated with terrorists.  This small group of terrorists have made it impossible to spend any money.”  But it isn’t about the government’s “right” to spend our money.  Leaving aside the dishonest slur on a group of Americans whose only “crime” is daring to disagree with this Progressive mentality, this attitude of a government entitlement to spend is exactly why government spending needs to be tightly constrained; the only terrorism involved here consists of the exploding deficits and national debt.

Related to this, the following legislation regarding Federal borrowing is necessary.  Total US Federal debt must be limited to 20% of GDP, absent a declared national emergency.  Current Federal debt already pushes 100% of GDP; we have a long way to go.  The legislation must also include a requirement that revenue surpluses go toward paying down the debt and then toward reducing tax rates in subsequent years.  Why 20%?  That was the upper bound of the range of Federal debt in the 1920s, before Progressive policies exploded that debt from the 1930s on.  Some will decry having a debt limit, though.  It’s too constraining, they’ll complain.  Consider this: we’ve had no debt limit for the last 80 years, except in name: the debt “limit” has been routinely raised for the asking until 2011.  As a lady once asked not so long ago, “How’s that working out?”

Finally, the tax rates must be frozen at the “Bush tax cut” level, until the debt is paid down to the required level.

Watch the economy burgeon, and GDP rise to meet the falling debt.