The majority of Americans believe that our federal, state, and local governments should balance their budgets. That is, the spending should not exceed the tax revenues collected. However, at the polls last November, big spenders were re-elected. That includes liberal democrats in the US Senate and, of course, President Obama. Somehow the electorate doesn't believe that these radical, big spending, liberals are the problem. Do the people really believe in taking a balanced approach where revenues are increased AND spending is cut? (By the way, we've had the tax increases for a small number of Americans, but no real spending cuts.) Do the people really agree that even the extremely small cuts (that aren't really cuts at all) will be devastating to the economic recovery? Will spending cuts kill the economic recovery? Does government spending create jobs or even save them? I don't believe so.
Politicians have been talking about taking steps to balance the budget sometime out in the future. That would be 3-10 years away. They are waiting on the economy to outgrow the pace of spending growth, but what if the deficits and government regulations and high cost of energy they have created just won't let our economy get off the ground? What if the great depression wasn't eased and ended by government spending programs (i.e. Keynesian economics)? Could it be possible that the great depression would have just been a tough recession if FDR hadn't intervened? Did all of those trillion dollar pork barrel programs that were promoted by Obama really avert a depression, or did they make this thing much worse than it needed to be?
I personally believe that all of this deficit spending is a huge MessAPolitico. I also believe that this recession would have been difficult, but it would be over if the government hadn't intervened to protect us from reality. I would love to have a balanced budget amendment at all levels of our government. I think that bills passed by lawmakers should be analyzed for cost, and each taxpayer (and potential voter) should be told how much that it will cost them in extra taxes. If we had to pay for all of that pork, would we be so keen on having politicians spend the money? I'll bet not. At least the politicians might try to cut an existing program before starting a new one so that new revenue wouldn't be needed.
If a balanced budget amendment was passed that simply makes an unbalanced budget illegal, would that fix everything? No. You see, our lawmakers just can't agree to cut anything. If an unbalanced budget is illegal and no one will cut spending, then taxes must go up. That's right, the law would require collecting enough tax revenue to cover the costs. I know that we tend to think that a balanced budget amendment would force the politicians to reduce spending, but we just might get the unintended consequence of a massive tax increase if a simple amendment passed.
Right now, we borrow about 40 cents of every dollar the federal government spends. Do you realize that we would need to raise 2/3 more tax revenue to balance the budget without any spending cuts? Wow! Let's do the math. If we collected 100% rather than 60% of the money spent, we would need to collect 100/60 = 1 2/3 times as much. Can this much tax be collected? If you believe in the Laffer curve, the answer is definitively no. If you raise the tax rates by 2/3, will 2/3 more taxes be collected. No. The excessive taxes will take too much money out of the economy. A major recession, commonly called a great, great, great depression, will bring all economic activity to a halt. There will be no profits to tax, no dividends or capital gains to tax, and a lot less income to tax.
The Cut, Cap, and Balance amendment that was proposed by Congress a couple of years ago would have been a good one. It limited spending to the revenue collected last year. That would force spending to be kept in check.
The Congress is proposing to balance the budget over a number of years and by betting on the come, and that strategy is not destined to succeed. I personally believe that they need to drastically cut with an axe. Any department that isn't absolutely necessary should be eliminated. Everything that can be privatized should be privatized. I think that there are a very few things that must be done by the federal government. Everything else should be left to the more efficient and responsive private sector economy. All they need to do is dump 40% of the federal government agencies that are trying to do something that shouldn't be done by government (or maybe shouldn't be done at all).
Finally, we regular people borrow money sometimes. We get mortgages and car loans and use credit cards. We eventually pay these loans off. That's right, we don't just spend more than we earn year in and year out, and continue getting new loans to cover the shortage. We actually make payments on our loans, and the payments don't come from getting a new credit card and transferring the balance. Why can't the government ever pay off the national debt? Why do we not develop budgets and a plan for systematically getting the national debt paid off? I believe this is another major MessAPolitico.
Maybe we should be talking about a Pay Off the National Debt Amendment. Could that be the solution? Yes. No one believes that it can be done. I do. It might take 20 or 30 years, but it can be done. It all must start with a balanced budget immediately. It also starts by cutting out everything but the things that absolutely must be done by the federal government. I believe we could then run budget surpluses of $500M-$700M annually, and that surplus could be used to retire some national debt. You might fear the effect of huge government spending cuts, but I fear what will happen if we don't do it and do it now!
No comments:
Post a Comment