Treating the feds like family
I want to disavow Newt Gingrich of this insane notion that our national budget works like a family budget. It does not. And should not.
Let me explain the difference.
Families should run a budget that incurs no debt. That is true. That is because the family budget is the nucleus of our economic system. Things get out of whack at this level when we live beyond our means.
But, even though we all agree that families should live within their means where possible, the truth is we don’t. Sometimes extended payments are necessary and can be even positive. For example, if the prospect of income looks good over the next several years, you may feel that you can extend payments to, let’s say, build a pool in the backyard. Nothing wrong with that. And, there are unexpected expenses, such as surgery that requires a family to borrow beyond their income. This is true.
But since the family is autonomous and independent, it should be lived “in the black.”
Cities and states should live within their means, too. But the needs of citizens are always changing. Roads need to be built, city centers financed, mass transit installed. Often, these governments borrow money (bonds) or get federal funds to pay for long-term improvements. But in theory, and as a matter of practice, cities and states should live their means. Sometimes they are mandated by law to do so.
Now we come to the federal budget. The US government cannot live within its means. And shouldn’t. There are several reasons.
The most obvious is that the government’s two most basic missions, according to the Constitution, is to protect its citizens from foreign invasion and promote the general welfare.
Promoting the general welfare means tweaking the tools of the economy to encourage trade, keep inflation low, issue currency, and be the national bank for enterprises.
Since the Great Depression, we have adhered to the theory that when business is too timid to invest in new opportunities that create jobs, the government sets up and fills the void. This has worked for 50 years. It saved the country from a depression in the last decade. Recently, it saved GM. It provides unemployment benefits to millions of citizens who would otherwise have been put onto the street. It has funded millions in relief and rebuilding loans for victims of natural disasters.
Unlike a business, it doesn’t seek a profit for it’s investment. But this is just what we expect from the federal government to keep the country going. To expect the government to act like a family budget would mean the demise of entire towns because there would be no money for temporary loans and grants.
But the main reason preventing us from having a more balanced budget is defense spending.
Almost all military costs are spent costs. Ammunition, transportation, even personnel are funded in the hope that they will never be used — and, therefore, like insurance, the cost over time is a spent cost, not an investment. And maintenance is expensive. After all, war heads do not maintain themselves. Readiness is not something that can be made to appear from scratch as needed.
If you factor in the real cost of military expenses, you find that the cost accounts for more than 50% of the federal budget. Let me be clear. More than half the national budget is devoted to non-recoverable expenditures that cannot be considered an investment in any real sense. Threats to our country and natural disasters do not fit any kind of schedule. They often seem to happen at the worst possible times.
So, if Newt and conservatives are really serious about protecting the future of our country and want to slash the budget where we could get the “most bang for the buck”, the place to begin would be defense spending. Remember, the US spends more on defense than the next 15 nations combined. Could we assume that there is some waste and redundancy here that could be curtailed before we have to fire any more teachers and police officers? #newt #economy #ntd #newtestamentdemocrat
