Welcome To Callentinomics 101
Milton Friedman and John Maynard Keynes have got nothing on me. You can take your Supply-Side Economics and your Laffer Curve and toss them right out the window with every other principle you learned in college Economics. I don’t need a Ph.D. or an M.B.A. to know exactly what to do to solve the financial woes of this country. And I certainly don’t need an entire staff of tweed-wearing, pipe-smoking, Ivy League intellectuals to help me explain it to the American People.
With April 15th in the rear-view mirror and another tax year behind us, it’s quite simple. All we need to do is pass a law that says, quite simply: If you didn’t collect it, you don’t get to spend it. Period. Forget about bills that proclaim to be budget-neutral and the promises to balance everything out. Government spending is out of control, and they’ve demonstrated neither the ability nor the desire to do anything about it. Not only have we lost the Gold Standard, but we’ve blown right through any possible debt standard and now, it seems we don’t even have a “Reality Standard”.
But the problem as I see it is that Congress isn’t even looking at things from the right side of the accounting ledger. I keep hearing politicians pitching programs “we need” and services that “everyone deserves,” but rarely do I hear anyone talking about what we can afford. Well, it’s time to kick off a new era of responsibility and it begins with looking at everything first from the perspective of what we have to spend.
Ever walk into a store or restaurant that only takes cash? Why do you think that is? Usually it’s because they don’t believe in credit cards and they don’t trust checks. And some might argue that they risk losing business because they limit the payment options, but I can see where they more than make up for that potential loss in profit with a definite gain in peace of mind, since they don’t spend nearly as much time worrying about account transfers, bounced checks, and identity theft. When you only take cash, short of being paid in counterfeit bills, once the sale is done, it’s final. And at the end of the day, profit or loss is readily identifiable by how much cash is in the drawer.
When you only work with cash, you don’t have to worry about transfer fees and services charges and you’ll never lose money in interest payments. It’s the reason that every single personal financial coach will start by telling you to cut up your credit cards. It’s time to force the government to play by those same rules.
So here’s the plan. We need a constitutional amendment that states: The United States Government shall not spend money it has not physically collected through taxation. No more deficit spending; no more spending first and figuring out how to pay for it later; no more empty promises of “pay as you go”. As the saying goes… “In GOD we trust, all others pay cash.”
Congress and the President will be forced to see what they have in their checkbook first, before starting a discussion on how to spend it. Trust me, once they’re restricted to spending only actual funds, you won’t have to worry about bridges to nowhere or million dollar tunnels for endangered turtles. You’ll see a quicker end to war and a tighter reign on fraud and abuse. You also won’t hear long-winded speeches about theoretical policies or legislative loopholes. With the purse strings tightened, I guarantee you that the same politicians who spend hours debating Trickle-Down Economics will quickly come to a consensus on how to get the most out of the tax system.
But, let’s also be realistic. I understand that this will represent a considerable problem in the short run, as almost every government program is already currently under-funded. Social Security, Medicare, Medicaid, the list goes on and on. They’re all writing checks that aren’t worth the paper they’re printed on. And that represents a real-life problem to the American people who depend on that check to get from day to day. I’m sorry to tell you that I don’t have a magic pill that alleviates the devastating effect on that demographic. But, continuing down the path we’re going doesn’t really provide another option anyway. The current system of spending is unsustainable, so the choice is really to live within our means now, or wait until the system collapses and then live with nothing while the country rebuilds itself financially.
The choice we are left with is to move out of our current house that we can’t afford and into an apartment or wait until foreclosure hits and just get tossed into the street. Neither option seems palatable, and both require enormous sacrifice, and yes, immediate suffering. But at least the first option leaves us in control.