What if we had household elections? Every two years, someone could run for CFO. The CFO would decide how we spend and make our money. People would, in running for office, make speeches, perhaps after dinner, about trips to Maui, a new Mercedes, a new house in Fantasyland and higher allowances for the kids. Another candidate might run suggesting we get a house in Realityland and live more modestly. The Fantasyland candidate would criticize this candidate as being pessimistic, cheap and probably lacking in human kindness. The most optimistic candidate would win a lot because people love to hope for great things.
Politicians, especially Democrats but really almost all mainstream politicians today, are Fantasyland candidates. They love to hope for great things and they love to make big promises. And they love to get elected!
Unfortunately, great things don’t always happen, or sometimes the future turns out not to be as crazy awesome as we had hoped. Many of our past expectations about the present were based on a vision of a crazy awesome economy. Oh well. Our heart was in the right place.
The trouble with the Fantasyland candidate is that the family that elects him or her winds up poor. After a few fun years they spend themselves into debts they can’t pay. They wind up worse off than the Realityland candidate family.
Politicians, when they create a government program, do not really know if it will be affordable. They don’t know what it will cost in the long run and they don’t know what the economy will be like then either. It is up to voters to be vigilant and work to terminate or reduce the scope of programs that force us to spend more than we can afford, even on appealing items. That can be unfun (we would like to be the type of family that goes to Maui every year), but it is necessary.
We Americans need to move to Realityland. To do this, we need to be more skeptical of the promises of political candidates, and we need to reverse the Washington budgeting mindset. Today, in Washington we determine what we need to spend and then figure out what taxes should be. That way taxes always go up because there are always cost over-runs. This doesn’t work because there is no end of awesome sounding programs politicians can think of, just as there is no end to the ideas we could come up with to spend our own personal money.
The way it should work is that we figure out what tax rate is reasonable for the product called Government. Then we figure out how we are going to spend the money we actually expect to get. By definition under such a system there would be no such thing as “mandatory” spending. All spending commitments would be made on an “assuming we can” basis.
We should agree on a reasonable tax rate and structure that allows for economic freedom, incentives to work and a private economy. We should agree that the federal government budget must be balanced every year. And then we should spend only the money we receive. The tax code should rarely change.
If you and I agreed to take that trip to Hawaii every year, we might find we can’t really afford it. In that case, we would change plans. Would we be disappointed? Of course. But that’s reality. We would adjust.
Today, the federal government spends $33,000 for every household. The average household makes $50,000. Does $33,000 seem like a lot to you in that context? Does that seem reasonable? Not to me. It seems pretty out of control to me.
What seems reasonable? Hmmm…$18,000 per household? Almost 40% of household income? That seems reasonable, and sustainable, to me.
This would require us to cut current federal government expenditures approximately in half. There would be, necessarily, no sacred cows here and we would have to reduce the size of Social Security, Medicare and the Military.
I loved Top Gun and I am glad we won WWII. But we would have to stop being policeman to the world. Goodbye bases protecting Japan, Korea and Europe. Protect yourselves, guys, and thanks for all the gratitude.
Social Security and Medicare would become safety net programs for the poor, like welfare.
Why would we have to do this? Is it because we hate people? Is it because we’re pessimistic?
It is because it is too expensive to do otherwise. That’s what we have learned in recent years. Sorry. That’s the reality of it all.
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