Government

Budget, what’s a budget?

2014

If you have ever worked in a large company and had to make and stick with a budget, you know what happens if you don’t. If you have ever tried to set and live on a personal budget and didn’t, you know the consequences.

The federal government is a different animal of course, it can spend what it wants, print money and raise taxes and make a lot of people feel good in the process. Heck there was near panic when federal departments were asked to cut spending by 5% … 5% mind you. Many economists on the left see nothing wrong with all this. Their argument is that as the economy grows government revenue will increase and the debt decline. Okay, I guess that makes sense.

imageBut how does that work if we keep adding more to the debt, not to address an emergency, but just to spend more on things we think we need and that make us feel good?

The current total debt stands at $17,549,497,313,923.60 as of March 19. Of that seventeen trillion dollars, $4,966,992,678,888.08 is the debt the treasury owes to government trust funds such as Social Security, a debt we all want to be sure is paid when due. That means $12,582,504,635,035.52 is owed to the public and other countries. Russia holds $132 billion of U.S. Treasury securities for example. The economy must do a lot of growing to reduce this debt.

But wait, the President’s new budget calls for spending that adds $564 billion to the debt so before the economy can start dealing with the accumulated debt, it must grow to offset this new addition to the debt.

I think we can all agree that deficits are necessary in times of national emergency like war or even an economic crisis, but when that crisis passes shouldn’t budgets work to lower the debt, not continue to add to it? There will always be new things, desirable things to spend money on, but that doesn’t give us (current generation) a blank check to do so.

Perhaps we should keep in mind it’s only a few years before the Social Security Trust will start redeeming its bonds and less time before interest rates and debt service rise. What happens when additional revenue is needed for these things regardless of future budgets? Politicians need to think longer term.

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Categories: Government

1 reply »

  1. your last sentence Dick…therein lies the problem….politicians really don’t care about the long haul….its all about getting elected in the” here and now”.So its about making political alliances and promises which usually result in more spending and greater taxation. By the way this is not just a democratic thing ,republicans do likewise when they have control of the “purse strings”.It becomes more an issue of what the money and taxation is being appropriated for. This often points to the fundamental ideological/policy differences between republicans and democrats. Let’s face it politicians /government officials love spending money (especially when its someone else who is on the hook). Spending such large sums of money is just so ego enhancing, self gratifying and power producing while elevating one’s self esteem and importance.

    So why behave or act as a” frightened squirrel” trying to gather up every last acorn for fear of a harsh winter? There will always be plenty of acorns right? With our gnp…barely chugging along at 2.5 %, if that, it would seem delay of gratification and self discipline( on budgetary matters) by our politicians is in order.

    I am reminded of the “marshmallow” study conducted at( I believe) at Columbia in the 70s. Some 20 children (4 and 5 year olds) were placed in a room one at a time and seated at a desk. Across the room but in plain site on a table was a big marshmallow. The rule was that you can take the marshmallow now but if you wait 10 minutes(or until i come back) you can have 2 marshmallows. While this research on “delay of gratification” has been conducted numerous times the general findings on the research that followed up on original participants (20 years later) found those exercising self discipline had significantly higher sat scores, virtually little or no involvement with the criminal justice system, had higher likelihood of completing college and graduate school …along with other positive pro-social behaviors.

    Given this was cor relational research with small sample sizes, we can’t make to much of it or over generalize. But maybe we would do better to elect more frightened squirrels and “marshmallow doublers” to solve our budgetary woes.lol.

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