Why Americans can’t deal with debt and elect people with incentives to create more

Historical government spending in the United S...
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National Public Radio, Planned Parenthood, subsidizing underwater mortgages or Nevada’s Cowboy Poetry Festival, Medicaid, take your pick, somebody thinks each should be exempt from budget cutters in Washington.

 

Do we see a trend here that transcends political party?

Every penny of federal spending will have its defenders and supporters with perfectly rational arguments why projects are important. After all, if the spending was not important how did the money get allocated in the first place?

When you stop laughing keep in mind what federal spending is important to you. I am partial to national parks and historical sites myself and of course my Social Security check. I could do without studies on the behavior of people in bars in South America (no, I didn’t make that up) or regulation of light bulbs. 

Our view of government spending is no different from personal spending except we mostly get to do it with someone else’s money.  Every penny we spend has a “good” purpose and after all, we all know the wealthy are not paying their fair share.

Remember the old financial planning rule that you should have at least three months expenses and perhaps six months expenses saved in the case of an emergency? Hardly anyone does that, but since 2007 I bet there are millions of people who wished they had. On top of that many people have a penchant for living on the edge. that is, leveraged to the hilt so that one slip in the fiscal world puts them over the edge.

So it is with our governments, nothing in the bank for a raining day and leveraged beyond the hilt, why is that?   Well, in large part there is no one accountable for long-term planning or concerned about that rainy day. We are so focused on solving today’s problems, we lose site of the new problems we may create. Politicians are more worried about keeping their supporter base happy than they are fiscal responsibility. Think of it as taking the kids to Disney when the mortgage payment  is late this month.

I always held that a financial windfall should be used for a non-recurring expense because the windfall is not going to recur. Say you get an unexpected bonus or a few weeks of good OT. What should you do with it? You could buy a new car and use it for a down payment, but then you have to deal with the monthly payments. You could do home repairs and pay cash which makes more sense. States do the same thing. Money from the federal government is used to hire additional police or school teachers and then when the cash runs out, well you know the story. Wouldn’t it be better to use such one time payments for one time repairs to school buildings or the purchase of needed equipment that has some longevity?  Why doesn’t that happen, because it would be less visible to the public and besides politicians have to deal with the unions representing these workers.

For the most part Americans are financial dunces and we elect bigger dunces who have the added incentive to keep us happy in the present and poorer in the future.

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