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Wall Street Growth: Blind Spot or Opportunity?
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Four days into 2018, news outlets across America were reporting the achievement of a new, breathtaking height in the U.S. financial market: the Dow Jones Industrial Average had eclipsed the 25,000-point mark. The milestone was startling not only in its height, but because of how quickly it was achieved. According to Matt Egan, writing in
CNN Money
, "
The 121-year-old index has spiked nearly 7,000 points, or 36%, since President Trump's election, an incredible move in such a short period." Seven trading days later, the Dow broke the 26,000 barrier, setting a record for the fastest 1,000-point rise.
Reliable
economic indicators
like the current growth in manufacturing and a significant rise in housing starts have provided grounds for Wall Street's optimism. The
lowest unemployment
figures since December of 2000 and anticipated corporate savings from Trump's Tax Plan have also
reinforced the positive energy driving this market.
For those concerned about America's long-range fiscal outlook, this growth couldn't have come at a better time. Facing the economic challenge of the nation's debt problem from a position of strength is far preferable to crisis management. However, seizing this opportunity will require political leadership to see past the immediate Wall Street gains and institute fiscal restraints now to prevent what the Co-Chair of Obama's National Commission on Fiscal Responsibility and Reform,
Erskine Bowles
, called "the most predictable economic crisis in history."
The coming crisis Bowles referred to has been generated by a Congress that is currently maintaining a
sixty-year habit
of national debt increases, which have cumulatively burdened the United States with more than twenty trillion dollars in obligations. Even were the strong market growth we are now experiencing to continue, this trajectory of spending would be unsustainable and will only be
exacerbated
as Social Security, Medicare and Medicaid expand to meet the needs of an ageing population. Even a relatively moderate economic downturn, under these circumstances, could cause economic stability to give way under the pressures of declining revenues, expanding obligations and increasingly expensive debt.
Further, while optimism still abounds on Wall Street, vulnerabilities are beginning to show in America's financial outlook.
Bloomberg Markets
recently reported on nearly a dozen
concerns that
might usher in
a
stock market decline,
like flagging interest in investment in U.S. assets from clients in Asia. This prediction became a painful reality within weeks of its publication on January 10th 2018, when the
Chinese government recommended slowing
, if not stopping investment in U.S. Treasuries, causing yields on 10-year treasuries to rise to their highest rate in ten months.
The financial over-extension of the American household is also a disturbing trend.
According to Tad Rivelle, one of the pros opining in the
Bloomberg piece
, "there is a widening gap between the value of U.S. household assets and GDP growth-a sign the economy is heading for a fall. Prices for stocks, bonds, homes, and even art that make up total household net worth have outrun W.S. GDP growth for years. This is an unsustainable deviation...[and] is wider than before the bubbles that preceded two other notable recessions: the dot-com crash of 2001 and the housing crash of 2008. 'Financial instability tends to follow periods when asset growth has been disproportionate to underlying measures of income,' Rivelle says. 'People usually say a recession happens because consumers stopped spending. What really happens is the economy becomes malformed.'"
To re-form this malformed economy, both at the household and federal level, growth is essential. As
Steven Moore
said in his 2016 testimony to the Senate Judiciary Committee, "...Without growth, we will never cut spending enough and raise enough revenue to get anywhere near balance [in the federal budget]." This period of market expansion is exactly the time when America could most effectively pursue fiscal responsibility, passing a balanced budget amendment with counter-cyclical spending limits, to gradually restore balance to an economic system over-weighted with debt.
Five trillion dollars in debt ago, Erskine Bowles said,
"This debt and these deficits that we are incurring on an annual basis are like a cancer and they are truly going to destroy this country from within unless we have the common sense to do something about it." But it remains to be seen whether the country will be lulled by relatively short term positive economic outlooks into ignoring the financially terminal prospect of uncontrolled deficits, or whether state legislative leadership can respond with the constitutional restraint of an Article V BBA in time to restore long-term economic healt
h.
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Two More Groups Formally
Endorse the BBA Task Force Effort
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| Joseph Bast, CEO of The Heartland Institute |
During December Joseph Bast, CEO of the influential and respected
Heartland Institute issued a letter making it clear that his organization heartily endorses the state-led BBA-focused Article V movement being coordinated by the BBA Task Force.
Bast wrote, "The system created by the Founders to rein in the national government is now broken. Until the damage is fixed, conservatives and libertarians will continue to win battles and lose the bigger war for freedom. For this reason The Heartland Institute supports all efforts to use Article V of the Constitution to convene a convention of the states to propose amendments to the constitution, and none is more urgent than a balanced budget amendment."
John M. Cogswell, Chairman of the Colorado-based
Campaign Constitution has also submitted a letter endorsing the BBA Task Force effort. It said they "enthusiastically commit both ourselves and Campaign Constitution in support of your effort to obtain more state applications".
More and more respected conservative and libertarian leaders and the organizations they head are lining up to assist the BBA Task Force in its efforts to obtain the final needed six state Article V applications. 2018 looks to be a good year!
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Partner with us to Make the BBA a Reality
The time has come for an Article V BBA. Common sense dictates this solution, the Constitution provides the means, and responsible leadership from the states support it. However, the opposition is determined to fight our efforts by playing on the fears of those unfamiliar with the legitimacy, precedent and protections inherent in the Article V convention process. We need your partnership in fighting the misinformation and in demonstrating support for an Article V balanced budget amendment. Thank you for considering taking part in this important work to restore America's economic future.
Donate
The BBA Task Force, a 501(c)(4) non-profit, non-  partisan organization, was founded to help facilitate the proposal and ratification of a balanced budget amendment to the U.S. Constitution. We have 28 of the 34 state resolutions necessary to call an Article V Convention for the limited purpose of proposing a Balanced Budget Amendment. We also have legislative sponsors in 8 additional states, which puts us within striking range of the needed 34!
To help us with a financial gift, please click on the donate button to contribute online, or mail your donation to: Balanced Budget Amendment Task Force, 2740 SW Martin Downs Blvd. #235, Palm City, FL 34990. (Donations are not tax-deductible.)
Volunteer
To help us by donating your time and effort, please click on the volunteer button. We need grassroots activists in our target states to call, email, and visit their state legislators. If you live in one of the 8 blue states below, or would be willing to lobby in a target state, we would love to have your help.
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