Spending money you do not have- it is as simple as that. Politicians have made careers out of spending money that wasn’t there, that was not their own- now or ever, and benefitting personally by doing it. I do not have enough time on the planet to explain how much that bothers me- so I will save that rant. Suffice to say that this particular habit is the single biggest blight on our society as it pulls our resources blindly away from other things, impacts the value of our dollar, undermines our confidence, and puts of future in jeopardy. This irresponsible drawdown must stop, and the rate of spending must be radically reduced from current levels. I know- how do you reduce now without hurting our currently frail economy.
The current arrangement cannot continue- agreed? So we need to temper spending, find add’l money where we can, and all get over our little piece of the pie that we will need to pay. But why should I pay more? Save it- since we have all benefitted directly or indirectly by the over-spending, we really can’t argue when someone drops a small check on the table at the end of our dinner.
Eventually my answer is even simpler- IF in one of your pockets you had 20 dollars
And instead of handing that to the government you could do anything you wanted with it- What would you do? Save it or spend it- right? Either one is a good thing for the economy so what did we would be better off- right? Giving the Government less is the eventual goal, as is choosing individually where our money goes.
Until then, the Revenue side must be temporarily increased as a bridge to our future, but the Spending side being reduced now slightly, and increasingly as time and demands play out is the crucial piece of the puzzle. Hear this- IF that doesn’t happen, nothing else matters for the financial end will simply be written. That is not a possibility; it is a mathematical statement of fact. Where we cut is not as crucial as THAT we cut.
Flat tax? Fair tax? Progressive tax? National Sales Tax? Simplify the Tax code? Eliminate deductions? Broaden the base? HOW do we get the necessary money to continue until we can reduce spending safely? HOW do we reduce spending enough to not raise taxes at the worst possible economic time? Tough questions, to be sure, that need immediate and decisive action. Fix It Now, and let the new journey begin.
The Congress recently put together a “Super Committee” to come together and find a “smart” solution, to avoid the harsh mandated cuts which would be triggered by a lack of joint solution. Result- couldn’t get it done. Think THAT through- they couldn’t agree on finding 1.2 Trillion OVER 10 YEARS (simple math of 120 Billion a year), at a time when we need them to find 1.645 Trillion a YEAR to break even and several Trillion to get us out of this fiscal mess. THAT is the best they could do. This result takes me back to a simple belief- that the only people who will actually DO THIS will be moderates who do not WANT the job. Basically, a career extremist has 2 forces at work against them (either political end of the spectrum). First, they need to satisfy their base to get re-elected, which means don’t compromise. Second, they want to be re-elected, which is a more powerful force to these selfish individuals than fixing the countries ills by thinking, deciding, and acting on our behalf. Doing what is “right and necessary” is never the same thing as what is “easiest and painless”.
Idea- The only guarantee that our future politicians will not put us back in the same mess is a Balanced Budget Amendment. It should have some latitude from year to year, given we will have years we run a surplus and years we run a deficit based strictly on market fluctuations. That “give and take” needs strict parameters, predetermined priorities, and the overall package is one to be voted on by the American people. When it comes to a 15 Trillion dollar pile of debt, a run rate of 1.7 Trillion per year, and an economy of 14.3 Trillion overall in the balance- how could you not at least put it in front of the American people and let us decide?
Side note- Remember an important piece of the economic riddle, the economic pace will pick back up, and with that comes an increase in the revenue stream. We can decrease the revenue rate to accelerate the economic rate, which in turn will increase the overall revenue stream. Also, when was the last time you heard the phrase or use of PAYGO (pay as you go)?