Tuesday, May 22, 2012

More business-like habits in Washington might rescue the country

Commentary by James H. Shott 

Some Americans fully understand the potentially cataclysmic economic situation facing the country. They are not the ones we have to worry about.

Who we have to worry about are the ones – the millions – that either do not fully comprehend the problem, or have some level of understanding and either are unconcerned about the problem, are using it to their advantage, or have no idea what to do about it. Many of the people in this group hold positions in the federal government, and are responsible for creating the crisis and/or perpetuating it and making it worse.

While government and business are distinctly different creatures, there are aspects of sound business operation that belong in the Federal Government Operators Manual, and Chapter I is “Fiscal Responsibility.”

The Prime Directive, derived from the U.S. Constitution, is a simple one: Government must remain small with limited scope and interfere minimally in the lives of the citizens it exists to serve. It must be a good steward of the people’s finances, taxing minimally and spending frugally.

If such a manual existed and if it had the force of law, many politicians and bureaucrats would have been jailed or fired for their part in creating a crisis that more and more resembles to a frightening degree what now threatens socialist Europe.

The situation is this: The U.S. has borrowed debt amounting to $50,000 for every citizen in the country totaling nearly $16 trillion. Despite this enormous and growing debt, in most years the federal government willfully spends more than it takes in, averaging deficits of $1.3 trillion annually since 2009, which is approximately 40 percent more than revenue, and has increased the national debt by about a third.

To say it is foolish and risky to have done this for years on end produces one of those “well, duh!” moments.
Yet, that is what we have done, and continue to do.

Those Americans more concerned with the fate of the nation than with their own political well-being know that we cannot continue on this course.

There are three options to correct this crisis: Reduce spending; increase revenue; or a combination of both. The latter is the best option.

Some people advocate deeply cutting the out-of-control and frequently wasteful and fraudulent spending. These people are responsible citizens and conscientious public servants. They are accused of wanting to throw people out on the street, take food from babies, and other equally cartoonish slurs by those who want to maintain the status quo, people who a) benefit from wasting your tax dollars or b) benefit from government misspending.

Government taxation and spending is where common business practice should be applied: what would a business with costs 40 percent higher than its income do? Unlike government, which can – but shouldn’t – print money at will, if it wants to survive, a business must have more income than spending. Government should have a balance of the two.

One of the first things a business would do is cut non-essential expense. Here, the federal government has a vast array of opportunities: combine the dozens of wasteful duplicated services, reduce employee expense through attrition; fire unproductive and self-serving federal workers, and take the virtually unprecedented step of shutting down programs that do not work. Like Head Start, a true tribute to government inefficiency that a Department of Health and Human Services study found has wasted $150 billion since 1965, but produces no lasting benefits for participants.

 It could scale back the frenzied regulatory efforts of the EPA and other agencies that spend our money killing jobs, raising costs for businesses and consumers, but produce negligible improvements, or do more harm than good. It could stop agencies like the GSA from robbing taxpayers to fund lavish get-togethers posing as training activities, and stop giving away the public’s money on dumb ideas like the half-billion President Barack Obama “loaned” to the failed solar company Solyndra, and other self-defeating assaults on the private sector. It could sell the 14,000 federally owned real estate properties that now sit empty and unproductive.

The government could give up its predatory attitude toward businesses and the wealthy in its futile effort to increase government revenue, and the politicians could replace their efforts to gin up class envy with practical steps that would foster job creation, thereby broadening the tax base and actually increasing tax revenue.

The idea of raising taxes on rich folks might cause some people to get all tingly, but it won’t make a significant difference in balancing out the treacherous over-spending in which the federal government continues to indulge.

Federal government fiscal negligence predates Mr. Obama’s presidency by many years, but the sign that proclaims “The Buck Stops Here” is on the desk he campaigned so aggressively to earn in 2008, and before he asks a single American to pay a penny more in taxes to support a bloated bureaucracy or higher costs resulting from excessive regulation, he needs to get his administration under control. Some or perhaps most of the ideologues now running the administration are not up to the task, but the country has lots of capable people outside government that can do the job.

Cross-posted from Observations

1 comment:

  1. You've offered a very sane solution to an insane government. No trust exists on either side. Obama is the most divisive president this country has ever had.

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