The 2011 Federal Budget is about $3.8 Trillion, of which, spending exceeds income by about $1.56 Trillion.  So we are in deficit spending mode to the extent of 41% of the budget.

 

 

 

Some questions….

If your small business was running 41% in the red, would you:

a.  Cut your spending by 3%;

b.  Argue with your wife about whether to cut the budget or just raise prices to your customers;

c.  Counterfeit money to pay your debt?

d.  All of the above;  or

e.  Hire an expert to write a dispassionate plan to work your way out of debt; or

f.  try something else?

If you answered “d. All of the Above,” you probably work in Washington, D. C. or, more specifically, are in Congress or the White House.  Who else could get away with such stupid (and illegal) “solutions”???

If you answered “e. Hire an expert to write a dispassionate plan to work your way out of debt,” you are probably the Republicans in the House of Representatives who have asked Representative Paul Ryan to prepare such a plan.  I like Congressman Ryan’s Plan better than anything else I have seen come out of Washington in quite a while.  Or maybe you would call on Thomas Sowell and use his plan.

Here is my plan “f.”

Cut the budget of every single operation of the U.S. Government 10% in 2012.  Then cut 10% more in 2013.  Then do it again in 2014, 2015, and 2016.  Cutting 10% from each previous budget for 5 years will take 41% off of the original budget.  Problem solved.  We are now in the black or so close that the budget deficit is effectively gone.

I can hear the screams now, “Meat Ax,” “Hatchet Man,” etc.  In fact, those wielding the real “Meat Ax” are those who spend huge amounts more than they take in each year.  Those are the people piling up the debt that will eventually bankrupt the nation.  When that happens, little things like 10% cuts will seem like kid’s play.

Before you start to say that 10% a year is unrealistic or that it will cut some programs that shouldn’t be cut while leaving others that should, let me give you a few reasons why I think this will work.

1.  Everyone is treated equally. This isn’t playing favorites like only increasing taxes on the “rich” or only cutting programs that support “women’s health.”  If you can cut 10% from your budget at home, why can’t Congress and the President do the same?

2.  Everyone knows what is coming.  If the 5 year plan starts today, everyone knows what their budgets will be in each new year for five years.  That gives time to plan.

3.  More importantly, it requires you to prioritize what is to be funded and what isn’t.  Is Federal support of ethanol really as important as maintenance of the nations bridges?  How does a new National Park at Mount St. Helens stack up against funding the Centers for Disease Control?  These are questions worthy of debate.

4.  The questions are not so important, however, that they should stop all cuts until they are decided.  This is the current state of political gridlock.  All we get now is more delay, more debt, and more assurance that we will bankrupt the nation.  By making the 10% cuts it will force decisions.  Politicians need a push.

5.  I almost hate to add this, but, we are so conditioned to our government’s economic illiteracy, I need to.  We need to motivate our elected officials to balance the budget.  I’m not sure I like legislating a “balanced budget.”  That is a bit too short term a solution for me.  I do think we might try limiting the term of any Congressman, Senator, or President to “x” years after failing to balance a budget.

The idea is to steadily get back on sound financial footing.  We can do this if we set a plan in motion that gets us to our goal incrementally.  However, it needs to be uncomfortable.  No gardener ever created a beautiful landscape without pulling more weeds than she wanted to.  No budget will be balanced without discipline and some pain.

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