The Free Lunch Revisited

free lunch photoIt probably won’t come as news to anyone that members of Congress are currently embroiled in an effort to approve a bill to raise the U.S. debt. This unfolding event has all the outward drama and intrigue of a TV soap opera. (CNN news story link) To add to the drama the U.S. Treasury has given Congress until August 2, 2011 to agree on the debt we as Americans will assume and share with countless future generations. Our debt now consumes roughly 70 percent of the annual U.S. gross domestic product (GDP). A few short years ago the U.S. debt accounted for “only” 40 percent of annual GDP. As a comparison, Greece’s current debt hovers at 125 percent of GDP.

Okay, why do we accept government overspending in the first place? Why are the members of Congress and the Executive Branch somehow exempt and not held accountable? Every U.S. citizen knows the consequences of irresponsible money management: deteriorating credit scores, bankruptcy, home foreclosure, loss of job, fines and penalties – even jail time.

Conversely, the average American citizen is held to the standard of total financial accountability and responsibility. Americans are expected to work, pay our bills on time and be responsible with our credit and spending. If we fail, then any of the aforementioned consequences are a dead certainty. Few surprises await us if we do not abide by these rules.

So then what are the consequences for Congress and the Executive Branch who abuse the system and drive us ever deeper into debt? None. Zero. Zip. Nada. Yes, our elected representatives have meticulously constructed a system of laws that empower them to effectively mortgage our future and to overspend with money we’ve yet to earn. That’s truly a ‘double standard’ in my book.

Add to this the fact that the typical member of Congress receives a lot of job perks too. These perks include things like special health care plans, exclusive investment and retirement plans, real estate and trip write offs and much more. You and I fund all this of course. Since many of those in Congress are also attorneys it seems pretty clear the intent of these individuals was to feather their bed by creating laws that give them unlimited terms and benefits that go beyond what is typically found in the private sector.

So what’s the bottom line here? I think we are prime for a complete overhaul of the tax system in the U.S. We also need to change how Legislators and government officials are compensated and how many terms they can serve. Entitlement programs and foreign aid should be given equal scrutiny and overhauled as well. I’m convinced that if the U.S. government was run in many ways like a corporation we’d see far less waste and we’d not find ourselves swimming in debt. We would also see innovation and greater prosperity return.

There will be those who will say this goal is not reasonable or obtainable. But I think it is, and a new course of action is preferable, sustainable and necessary. We can certainly live without the ‘Double Standard’. Neither do we need the staggering debt that is being piled on the U.S. taxpayer and future generations of Americans. Those in political office love to sell us on the idea there is a ‘free lunch’ for everyone – including themselves. You simply need to ask for it. But the ‘free lunch’ has never been real – we all ultimately pay the bill. Time is running out and we’re just fooling ourselves if we believe someone else is willing to pick up the tab.

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8 Responses to The Free Lunch Revisited

  1. How ironic that we went so quickly from spending trillions bailing out the auto and financial industries to a call for severe austerity in the middle of a depression! Oh! Excuse me. Recession. As an economics student and former bond broker/energy trader, we are still in the middle of the worse depression since the 1930s! Despite recent government claims otherwise, the unemployment, RE and GDP numbers prove that we may have moved to a mere recession, but things are not over yet.

    Sure, debt is high right now relative to GDP. It was during other major catastrophes also, like the two World Wars. But the Republicans are raising a hue and cry over an old law. They are using it to push their own agenda, which is cutting their hated social programs. Now is not the time to raise taxes or cut spending. Now is the tough and difficult time to do what the Chinese did; pump massive amounts of money into the economy to fuel growth. Fight this war first. Then save money in the fat years.

  2. Kevin Bryce says:

    Colin,

    Thank you for your interesting comments.

    I agree with you on some points but the reality is that our economy is in a free-fall and the best indicator of this is that job creation is sorely lagging. In my humble opinion “staying the course” as you suggest will have but one outcome – guaranteed economic disaster. That is what we are facing. We must make hard and intelligent choices and cease the overspending by our government that precipitated this crisis.

  3. Bob Thomas says:

    Money for nothin’ and your chicks for free. That’s the way they do it on the MTV.

    There are serious issues with the revenue and the expense sides of the ledger. Both require significant overhaul. Unfortunately, the people in a position to affect change are heavily invested in the status quo. This is a direct consequence of apathy or sloth on the part of the American voters. The only way this will change is if large numbers of disgruntled voters become active in their parties and do the hard work that is necessary to put better candidates up for office. Allowing parties to function the way they have in the past will do nothing but insure we get the same sorts of douche-bag candidates that we have had in the past. In fairness, sometimes we get candidates who are not douche-bags, but they are few and far between.

    On the revenue side, we have a Byzantine tax code that has spawned an industry based upon gaming the system. Taxes will always be necessary, but it doesn’t have to be complicated. I would like to replace income tax with a national sales tax. Then, even people making undeclared income (criminals) end up being tax payers. If the American public insists on making the wealthiest 10 percent contribute more than what the would through such a sales tax, then a modest flat-rate tax on income above the 90th percentile makes sense. The important thing is to quit using the tax code for anything other than collecting revenue. Allowing the tax code to become an instrument to encourage or discourage behaviors–such as exempting money spent on home financing–leads to complexity. The IRS could probably function with less than 20 percent of their current staff in a simplified environment.

    On the expense side the fix will be far more complicated. One thing that needs to happen immediately is to put in place a non sequitur rule that prohibits unrelated items from appearing in legislative bill. For example, members of Congress would not be able to attach funding for a 50-million dollar bridge to nowhere to a bill furnishing supplemental funding to FEMA for disaster cleanup. I am a centrist, so I want lots of programs cut that are near and dear to each party. Term limits would also be healthy. The fact that a member of Congress became known as the Prince of Pork epitomizes what is wrong with the current system.

    • Kevin Bryce says:

      Bob,

      You’ve obviously put a lot of thought into how to solve the budget problem. I’d definitely vote for you if you ran for office. But I know you probably wouldn’t want the job. Or would you?

      Thanks for your great comments!

  4. Jean Bryce says:

    Great writing about this very disturbing problem! I particularly liked cutting the IRS workforce. One thing I couldn’t go along with was “douche bags”….actually they are criminals living outside the penal system. We should be much more careful of who we vote for. Keep these messages coming!

    • Kevin Bryce says:

      Jean,

      Thank you for your comments. I agree with you that irresponsible government spending is a criminal act. U.S. voters need to educate themselves and restore accountability to public office. Gone are the days of the “free lunch”!

  5. Ryan Dean says:

    It’s truly sad the shape of our government. I have lost my trust in big governments ability to solve problems and competency. Especially when every time you turn around another politician is being busted or exposed for shady or unethical scams. :-(

    • Kevin Bryce says:

      Ryan,

      You bring out an excellent point. The lack of credibility with our politicians underscores how little the public trusts big government. As you know Ronald Reagan was a huge proponent of reducing the size and involvement of the federal government. He believed in returning control and decision making to the states and to the individual.

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