How To Seriously Balance the Budget

balance Our legislators all claim they want to spend less.  But every time they attempt a plan for fiscal responsibility, they get sidetracked on who-wants-to-cut-what.

If they are serious about our finances, they have to stop debating which programs to cut (Planned Parenthood, Medicare, the Military, etc), and instead focus on the budget itself.   This means unilateral cuts, blind to the programs, and  simply trim everything equally.

Here is my simple proposal to balance the budget over 8 years (2013 to 2020):

  1. Federal Spending in 2010 was ~$3.5T with revenues of ~$2.1T.  To make these changes in 2013-2020,  we need to cut $1.4T per year.  We will accomplish this by reducing spending by $175B annually, additively.
  2. An annual spending cap is defined as:
                           ($3.5T – $175B * (Year – 2012))
    1. 2013 = $3.325T
    2. 2014 = $3.150T
    3. 2015 = $2.975T
    4. 2016 = $2.800T
    5. 2017 = $2.625T
    6. 2018 = $2.450T
    7. 2019 = $2.275T
    8. 2020 = $2.100T
    9. > 2020 : The cap is set to the prior year’s revenue.
  3. Each year, the budget dictates the proportion of money spent for each line item.  If the total budget exceeds the values from (2), spending per line item will be reduced proportionally such that total spending equals the value of line (2).
  4. These spending cuts are mandatory, and override any previously guaranteed benefits to any programs.  All federal programs will need to adjust to the new spending caps.
  5. If, in any year, there is a surplus in revenues, the spending caps outlined in (2) will remain, and the surplus will be used to reduce the overall debt.
  6. After the year 2020, annual spending will be capped at the total revenue of the previous year, and the budget balancing process of line (3) will be applied with the new spending cap.

This solution removes the politically charged plans where our legislators always get tripped up.  This is liberating for all legislators, as they can now focus on getting the job done and balancing the budget in 8 years.  No problem, right?

Buying Into The Carpool Lane

Scott Adams nailed me today:

RV-AB441_ADAMS__G_20110128010821 

Living in the Bay Area, I’m anything except “rich”.  But I guess according to most standards, I’m in the top few percent.  But I can’t remember how often I have said this to my friends:  “The only reason I got a hybrid was to buy my way into the carpool lane.”

And yeah, it is totally worth it!!!   But how much did our government make off my desire to drive faster than all the commoners?  $8.  Honda got the rest.  What a bunch of suckers.

No Political Efficiency since 1913?

We currently have 435 legislators in the House of Representatives.  This number has been fixed since 1913.  Question:  Do we need the same number of representatives that we had back then?

On one hand, you could argue that we need more seats in Congress.  After all, there were only 97M Americans in 1913.  Today we have 307M Americans.  Surely more constituents requires a larger congress?

But think about the technology advancements since that time.  In 1913, if you wanted to communicate with your representative, what choices did you have?  He certainly didn’t visit his local district very often – the first commercial flight didn’t even take place until 1914.  Calling your representative was unlikely – there was no long distance from California to Washington at back then, and long distance calls from closer geographies were manual and time consuming.  And of course there was no internet, so real-time communication was impossible.   We did have the one-way megaphones of newspapers and magazines.  And of course, you could write a letter. 

So, in 1913, maybe we needed 435 legislators.  Each had a significant job to do with just communicating, corresponding, traveling, and coordinating between Washington and his local region. 

But today, do we need so many?  With a single email, legislators can reach far more than 225,000 people right from the comfort of his mistress’ bed.  Websites, telephones, television, and email combined certainly make the communication burden almost non-existent compared to 1913.

Obviously, there is more to legislation than just communication with constituents.  But, given the gridlock in Washington, the skyrocketing costs of Washington, and the increased dissatisfaction with the never-ending burden of an increasingly complex set of laws, maybe we should cut that 435 in half.  Any reason why not?  Or is that just the way we roll around here?

Time To Bust The Public Labor Unions

It’s no secret that I’m not a fan of unions.  But I’m even less of a fan of public-sector unions for two reasons:

  1. As a taxpayer, I’m on the hook for the bill.
  2. Politicians simply can’t resist giving unions money in exchange for votes.

I apologize to the firefighters, police officers, and teachers.  Your jobs are extremely important.  But we can’t afford your unions, and we need your help to bust them apart.  Unions are the same cancer which bankrupted America’s once-largest-company, General Motors.  Why do we let this cancer invade our state?  (Oh yeah, Jerry Brown did it – so don’t vote for him now)

Shedlock puts it well:

In the case of public unions, if politicians strike a bad deal, taxpayers foot the bill. In the case of private corporations, if management strikes a bad deal, the company goes bankrupt, shareholders take a hit, or the jobs move elsewhere, as soon as the contract is up.

If you aren’t convinced, here are some articles to read:

Here’s The Real Problem With Labor Unions

The Beholden State

Plundering California

Public-sector unions bankrupting America

Intel CEO Agrees that Obama Policies Stink

If you haven’t believed me, take it from Intel CEO Paul Otelini.  Or Carly Fiorina.  Or Of course, Otelini’s credibility is a little low right now after he blew $7.7B on the purchase of McAfee at a huge premium.  But we’ll ignore that for now.

He’s right about America’s business-unfriendly policies and that Obama is making them worse.  This is important stuff – once the jobs are gone, it’s really hard to get them back. 

Regarding current economic policy, Otellini said, “I think this group does not understand what it takes to create jobs.  And I think they’re flummoxed by their experiment in Keynesian economics not working.”

Local Unions, National Ambitions

nounions This week, shopping addicts Obama and Pelosi, spent another $26B on stimulus.  They’d have you believe this is about saving jobs for teachers and firefighters.  But that is such a mischaracterization.

To understand the problem, you first need to fully understand how local unions have bankrupted the states.  This has hit California particularly hard over the past 30 years, but the same drama is playing out in states across the country.  For the full details, go read this article to understand how Jerry Brown enabled public service workers in California to unionize, and how ever since then, California has fallen from grace.

At this point, the Unions have tapped out the states.  In the past, they’ve always been able to squeeze a little more money out of California.  But California has been bled dry.

Recognizing that they’ve exhausted local money, the massive, cash-rich unions are turning to their only available savior:  the federal government.  Unfortunately, Obama and Pelosi are too clueless to know what is happening.

It’s sad to hear this – but it is true.  We pay our public workers too much.  The only solution is to cut pay or to cut workers.  Federal bailouts will not cure the disease.  We need to eliminate unions from our public jobs and start anew.

Obama’s Wars

obamaswar I voted for Obama for one reason:  I thought he was more likely to get us out of Iraq.  I was wrong.  Obama’s stance was clear: he just needed 18 months to do the job.  That deadline is Tuesday.

There are currently still 85,000-100,000 US troops in Iraq.  All other countries have already pulled out.  Just as under the Bush administration, the objective of our presence in the region is unclear.

And although his campaign promises were to reduce the US war efforts, Obama has also more than doubled US troop levels in Afghanistan in the past year.  If you think this is Bush’s war, you’re wrong.  Obama did this.

Obama’s failure to hold to his campaign promise is just one more reason why he will never again get a vote from me.