This was interesting to me during the debate for a couple of reasons. First off, a scalpel is something used for fine, precision cutting. Well, lets examine the situation. While no budget has been passed for FY 2009, the 2008 budget provides an adequate picture of some of the problems we face. The FY 2008 weighs in at 2.9 trillion dollars. That is of course more than the government actually raised by 240 billion. Thus we have to borrow more so the 240 billion gets added in and thus we end up owing approximately 9 trillion dollars. Those are indeed some very large numbers.
Now bear in mind this is for 2008 and that the budget does not include funding the wars in Iraq and Afghanistan. Those campaigns are funded separately. Also let us not forget the 700 billion dollars that now looks certain to pass to help stabilize the Wall Street mess. More big numbers, staggering in fact.
Both candidates state that they understand the plight of the middle class, however given the fact that both are Senators and thus both endorsed this sort of management of our government's finances, I am not so sure. Sure, there are many, many Americans who run a deficit when it comes to their own finances. I unfortunately have been among them many times. And I don't just mean the guys who have to have that 63 inch plasma television and whip out the plastic to get it. Yes, I've been there too but I really am referring to those who when faced with rising costs of such necessities as food and fuel began to charge those things in order to make ends meet. Debt adds up quickly in that respect. Much like the government. The difference is of course that Joe Sixpack can't slide his credit card debt off to his children and grandchildren. He either pays it or finds his credit limit cut off, especially now. The government simply raises its credit limit, or debt ceiling when it runs out of credit. This is a luxury that most don't have, at least not more than once or twice. It is difficult to imagine that anyone who takes this approach when faced with being out of money actually has any clue as to what "Main Street Americans" are going through right now.
So what happens when you or I run out of money? Well, first off the credit dries up. Then more than likely you began to default on unsecured debt like that American Express card. Now Joe Sixpack can't borrow anything for at least 7 years. He determines he has to make real cutbacks so he decides to sell the SUV. Only he can't because he owes more than its worth and no one wants the gas guzzler anyway so it gets repossessed. If he is lucky it ends here, if not he probably looses his house as the finances continue to spiral downward. So would scalpel sized cutbacks have saved our Joe Sixpack from financial ruin? Probably not.
So what if the government is actually not just out of money, but running out of credit. We keep hearing of how this crisis is the worst since the 1930s. Lets not forget that the great depression was not limited to the US but was a global crisis. Certainly the finances of the worlds nations are even more intertwined than they were in 1930. So if the doomsday scenarios are in fact correct would the governments of other nations feeling the financial pinch continue to loan the US money or could they for that matter? At that point the people of the United States would be forced to the serious look at the role of government in our lives that we should have done long ago.
I am not speaking simply of individual programs here. It has been my observation that if the government ever kills a program (which is rare) that 10 more spring up. No, what we need to survive is a change in philosophy. For example, why is the government in the retirement business. We all know that one day our bodies will no longer be able support our full time employment. So why must the government provide for us something that we all should be providing for ourselves as a matter of common sense. Maybe instead of providing the retirement the government could encourage savings. Even squirrels are smart enough to store away nuts for the winter. A populist may even apply some sort of matching funds approach for those below certain income levels as a compromise to finally get this long overdue reform passed. It would still certainly be cheaper than the current system. The important thing would be to get the system to where people were funding their own retirement rather than the previous generations. That approach just isn't sustainable no matter how popular it is.
And what about energy? Lets be honest, the current plan, if there is one is basically that the U.S. Military will ensure the flow of energy. People really don't look at it in that manner, but if there was a supply interruption tomorrow does anyone think the american people would simply wring their collective hands and accept blackouts and no gasoline? They would demand action and that action would be a forceful restoral of the flow of energy. Energy is vital to this nation and the lack of production domestically means that by default we must be willing to go get it. And make no mistake, push come to shove, we will. And its sad because we probably don't need to. The cost of having to depend on others for energy is killing us, both figuratively and for some in my profession, literally.
So in light of the growing debt and clouds of uncertainty what sweeping changes to cut government operating costs are our fearless leaders proposing? Well, there is the new multi billion dollar health care plan for one. Huh? The government is broke and we now want it to provide healthcare? This is just the type of change in philosophy that I am talking about. Our healthcare system once worked. It in fact worked so well that even to this day many still look at it as the best in the world. Perhaps government should take a look at repairing the problems crippling the health care system and correcting them rather than taking the system over. Tort and insurance reform would be a good start. Target the things driving the costs up and correct them. And maybe we should look at separating health insurance from employment. Group Health Insurance can certainly consist of groups other than ones fellow employees. My point is that a government takeover of anything generally fixes nothing.
Speaking of government takeovers, what about the 700 billion dollars to takeover bad mortgages. This is a tough call but it is important. Do we want the government in the mortgage business? If you want to make the argument that in the big picture this saves us money by keeping the economy out of a depression I might be swayed. But to put taxpayers on the hook for this, specifically those who didn't exacerbate this mess by purchasing more house than they could afford is not right. In many cases, even renegotiating the adjustable rate mortgages is not going to fix anything. Many purchased more than they could afford. And honestly, those that lose their homes aren't going out on the street. They will spend the next 7 years in an apartment or rental just as the millions of Americans, including myself for a long while with crummy credit do. It's a hard lesson to learn, but it is an important one. And does anyone think that a cash infusion to these poorly run companies is going to be a magic fix? Well, how well has throwing money at problems worked in the past?
So will scalpel or even axe sized cutbacks work for an organization that owes 9 trillion bucks mostly to people who don't like us anyway? Give me a break. I think the freeze on spending is a good starting point but even this axe approach as Senator Obama referred to it as is a drop in the bucket. Government spending needs to shrink, and do so substantially to have any real impact, not just stop growing. That means people will be forced to make sacrifices and change how they think of the role of government. Perhaps taxes will go up. People might be on board if they saw real efforts on the part of our leaders to, well, lead and fix this mess. The point is we don't need a scalpel, or an axe to fix this mess, we need a chainsaw...a really big chainsaw.
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