Thursday, April 14, 2011

The Federal Budget: Beyond the rhetoric...

Let's scrape away all the hyperbole and rhetoric.

Our government was set up, at least initially, that Congress would only be in session for a few months each year.  Our elected officials would return home to private sector jobs working in their communities and rubbing elbows with their constituents.  This gave the American people much greater access to those they elected it also made our elected officials a bit more human to their constituents. 

As the roles and responsibilities of government have grown and changed our elected officials have had to spend increasingly more time away from their communities and more time in Washington to the point where we are today with many of our elected officials becoming career politicians with limited exposure to the results and effects of the policies they draft into law.

For several generations the powers that be, those we elect-- the one's that are supposed to be (by JFK's definition at least) our "best and brightest" have been spending more than they've been taking in and passing the financial burden of their financial excesses on to the following generation(s).  This isn't a Democrat or Republican thing as there have been elected officials from both parties who have been egregious in this offense.  In the words of the late great singer/songwriter Kevin Gilbert "We're the clean-up crew for parties we were too young to attend."

I'm not going to quibble over whether the government had any right to increase its role in our lives or whether that increased role in our lives has been for better or for worse... that's another discussion for another time.

However, the more responsibilities the government takes on, the more expensive it becomes to run and if the government is spending more money than it's taking in something has to give.  The budget debate, at its core, isn't about whether certain government programs are good or bad.  That is corollary to the discussion.  The debate, a rather rancorous one at that, is about the financial sustainability of the programs the government is currently running and is responsible for.

Our government has been operating at a loss for decades now, spending far more money than they take in.  In order to balance our budget we have to decrease spending, increase revenue (via taxation), or some combination of both.  Considering we're still in a recession (although some would argue we're coming out of that recession) raising taxes is rather unpalatable to most Americans right now.  When you take into consideration Congress's financial history-- when taxes have gone up so has spending.  So the net increase in revenues disappeared and our government continues to chase its tail on the budget balance sheet...  at least until they throw the budget stick and tell the next generation to "go fetch."

History shows that the concept of "fiscal restraint" is completely foreign to the US Congress.  And I'd argue that most moderate Americans aren't so much against taxes because they're against many of the government programs in existence today (although, I believe that is the case for many of them).  They want the government to prove they can be responsible with the money we give them in taxes before we will agree to give them more of our money.  In other words-- "Show us you can cut spending before asking us for any more of our money."

Another proposition for increasing revenue is a simplification of the tax code and an elimination of loopholes and deductions that many wealthy American individuals and corporations use to either reduce the amount of taxes they have to pay or to avoid having to pay any taxes at all.  This would essentially be a massive tax hike limited to those who have been skirting and taking advantage of the complexities of the existing tax code for their benefit.  In lessesning their exposure to taxes these people have increased the tax burden for the rest of us.  Those of us who have been paying our taxes all along would see no difference in our taxes. 

Either way, spending has to be cut and many of those cuts will be difficult. 

Admittedly I'm no wizard of finance but here are some ideas for getting our financial house in order:

a) Re-establish the Social Security account and move all money that's supposed to go into Social Security into that account and all money that should be going into Social Security going forward should also go into that account.  This should be an account that Congress should have absolutely no access to.  Currently, when you look at your paycheck and see separate deductions for federal income tax and Social Security-- all of that money is going into the "general fund" which Congress uses to fund its programs.  Congress has been borrowing much more from Social Security than they've been paying back into it.  We can FIX Social Security by eliminating Congress's ability to access that money.

b) Any changes to Medicare should be grandfathered in.  Anyone who currently benefits from Medicare as it exists today should continue to benefit from it.  Medicare was set up to take care of these people that are currently benefitting from it and they paid into it with the expectation of receiving care upon reaching the age of eligibility.  Those who don't yet/don't currently benefit from Medicare-- changes need to be made.  The way it is currently set up is unsustainable not to mention it increases health care and insurance costs for the rest of us.  Medicare currently pays pennies on the dollar that money has to be made up somewhere and the health care industry makes it up with the rest of us who have private health insurance coverage.  This results in doctors ordering tests/procedures that might not actually be necessary in order to collect more insurance revenue.  Private health insurance has to pay more to off-set what Medicare doesn't pay and thus increases the premiums for those of us who pay into private health insurance policies.  Given our government's inability to pay doctors in full, a privatization of Medicare might be our only legitimate course of action.  By increasing competition in the private sector prices could be driven down and with doctors getting paid in full by a combination of insurnace and patient co-pays/deductibles/etc. the rate at which the cost or private health insurance premiums increase would be slowed substantially.

c) Term limits.  Washington exists in a vaccuum of sorts and the longer a person serves in Congress the more our elected representatives lose touch with the economic realities of our country.  Over time our elected officials become increasingly more out of touch with those who elected them.  If the 2006, 2008, and 2010 Congressional elections are any indication, we might not need actual term limits as the American people have come to realize the value of "fresh blood" and "new ideas" in Congress and many career politicians saw their political careers come to rather abrupt ends in each of those election cycles.  Those who serve us who are most recently from non-political fields are generally more in touch with the realities of their constituencies as they were most recently part of the very constituencies that elected them.

d) We need to wake up and realize that there are those in positions of power-- whether they be elected officials, pundits, newsmakers, pundits who are out to serve their own interests and agendas.  The easiest means to that end is to "divide and conquer."  Much of the division and rancor in this country is the result of the villification of the opposition.  I'd argue that most of us despite our political leanings in opposite directions from one another have more political common ground than those pundits, elected officials, and newsmakers would like us to believe.  Getting us to fight amongst oursevles gives them power and keeps them in positions of power.  If we stopped long enough to realize what these people-- on both sides of the political spectrum re doing to us as a country... those people would be in for a good old fashioned tar and feathering.  In the end we all want what is best for this country-- we just have different ideas of what actually IS best for the country and by what means to accomplish that end. 

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