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What If Series:  USA Budget Games and an Option

Dan Morris - 07/11/2011

What if the USA Congressional and Executive Leadership acted like adults and not toddlers?

One of the most prolific annual rites of gamesmanship is the USA Budget.  Thousands of pages of special interest cutouts, allocations, gifts, grants, bribes, and hyperbole.  Of course the government requires funding for its core and Constitutionally required functions.  All spending above the legally required levels relates to promoting one person’s vision of a better world (generally at the expense of some other person’s money).  The pseudo-scientific-voodoo that the both the Executive and Congressional leaders use to forecast revenue to justify their spending is a complete fraud.  If IBM used such hokus-pokus, its CEO and CFO would be spending a decade or more at Club Fed. 

There are too many challenges to the USA Budget issue for this or any other single blog posting.  Yet, I have a proposed simple solution.  Move to an Actual Cash Received (ACR) spending plan.  The plan is simple, elegant, and unalterable (I admit my plan still lacks the benefits of an accrual accounting structure, but we are dealing with Congress, and politicians for the most part are simply White Collar Hookers incapable protecting anything more then their next re-election cycle). 

Here is my plan:

  • For the next two (2) fiscal years, we agree on a budget and borrow 100% of our needs.  Lets call that additional borrowing at say $8 Trillion (the actual amount is not relevant to the plan).  Since there is something like $12 Trillion sitting idle in USA banks, it isn’t like the money isn’t available at a reasonable interest rate.

  • All tax receipts received each fiscal year shall be separated into a holding account (and I mean an actual accounting - not like the Social Security Trust Fund which is simply a Ponzi scheme style of record keeping).  Each fiscal year’s receipts shall be maintained in a separate account.

  • Beginning with the third (3rd) year in this process, (and continuing each successive year utilizing the reach back 2 years budget plan) the actual spending plan for year 3 will be solely based upon the actual cash received and held from year 1.  Hence, Congress can only spend that which they have in the bank.  Excesses (ok, stop laughing) would be 1/2 spend on accelerating debt repayments and 1/2 for discretionary spending as directed by the President.  Oh, and the total debt (call that now rounded to $30 trillion, will be amortized over 30 years (just like a mortgage). 

    Under this plan, the gov’t stops all deficit spending (even though most illuminated economists all agree that deficits don’t matter except for ego) and the debt is erased in a systematic method.  No more hocus pokus with the budget.

    And since there are times of true emergencies (e.g. War - and not something like Libya or Vietnam where the President forgets that only Congress can declare war), Congress would be allowed a limited cushion to tap a credit line with a reindexing of the amortization - but only by a Congressional War Declaration. 

    We are a wealthy country and the other emergencies (e.g. Katrina, floods, fires, 9-11 type events, etc. that will continue to occur) will be funded by private and public sources with the understanding gov’t spending is still limited.

    The continual games of mental three year olds that currently lead both the Executive and Legislative Branches of our Nation - must stop.  The amount of pork is embarrassing and since we are unable to utilize the Singapore Approach to bad behavior, we have to simply remove the temptation of proverbial cookie jar provided by the taxpayers.

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