Recession – Freeread

This entry is part 7 of 50 in the series 2011A

My friends. I have not yet gotten around to publishing my book – Molecular Politics because it needed one more chapter dealing with our monetary system. After a lot of reflection and study of the subject I am finally ready to write it. Here is the first installment.

An Out of Control Economy

We have to do something about our out-of-control borrowing and spending or this time period will mark the real beginning to our troubles instead of the end of a financial downturn.
There are several things on which the vast majority agrees. The problem is there is major disagreement on how to proceed with these agreed upon problems.

(1) The weakened dollar needs strengthened.

(2) The government spends too much and the federal budget needs some common sense control just as a family budget does.

(3) We do not want to borrow so much that our children and grandchildren will become poor debtors.

(4) It is dangerous to borrow so much money from countries that are potential enemies, let alone from friends.

(5) We pay way too much interest on borrowed money, currently around $450,000,000,000 a year and if interest rates or the debt ceiling changes this could go way up. This is an insane situation.

(6) There is far too much waste and fraud with taxpayer’s money.

(7) There is too much frivolous spending and political paybacks that add to the wasted spending.

Almost every politician gives lip service to these causes of financial problems but few will support any kind of action to solve them

Why?

Because any time there is a cutback in spending some individuals and groups will feel threatened with loss. – then, after that threat occurs, these people will lash out in every conceivable way at the politicians who tried to be fiscally responsible.

We do not see many attempts at fiscal restraint in the federal government because representatives are not limited by a balanced budget amendment. The case is different with many of the states, however, where a balanced budget is required.

Therefore when we had the financial disaster that started in 2008, even though all governments were short of funds, the federal government borrowed and spent more than ever. A shortage of funds provided no incentive to conserve spending for politicians were terrified of voters complaining of cutbacks.

On the other hand, some states were forced to make cuts in spending whether the politicians wanted to or not.

In my home state of Idaho we have a balanced budget amendment. Since we were hit hard by the Great Recession like everyone else action had to be taken. Governor Butch Otter had to look at ways to increase revenue and cut spending.

To increase revenue he proposed a one-penny increase in the gasoline tax. When he did this you’d think he was ordering a pound of flesh from each of us. Both conservatives and liberals cried foul and the proposal was dead in the water.

Then to offset cuts made to parks and recreation Otter increased various fees for camping, registration and services. Again there was a outcry, especially from senior citizens who had to pay more to enjoy Idaho’s beautiful campgrounds.

He then talked of turning some underfunded campgrounds over to private enterprise who would keep them open for a profit.

This time there was great suspicion from the Left who does not trust that business has the public interest as a priority.

Because of the budget shortfall Otter found he had to look at every possible avenue of spending when considering cuts. Finally he had to look at the sacred cow of education. He cut education by about 7.5%. He explained that this was not as bad as it sounded because the percentage of the budget dedicated to education actually increased. The problem was that the budget itself was much less because of shortfalls.

Again, there was a major outcry, especially from those involved in education. Letter after letter appeared in local papers making known their displeasure and painting a very undesirable picture of our governor. Here are a few things they said.

(1) We should have used our reserve account for emergencies to keep education fully funded.

The trouble with this idea is hard times are continuing and the reserve account may soon be gone no matter what we do.

(2) The governor was accused of supporting funding for his pet projects while leaving education out to hang.

The trouble with this argument is that no governor is squeaky clean enough to escape this accusation. Since values are a matter of opinion then those hit by cuts will always think money is not fairly spent or distributed.

(3) The governor was accused of being anti education or hating education.

I don’t think this is true of any governor in the union and is a cheap shot.

(4) Many liberals voiced this cut and dried, yet simple criticism. The governor and legislators lacked guts enough to just raise taxes enough so cuts in education will not be necessary.

Even if the conservative governor was willing to do this he would have been crucified by his own party and may have lost his bid for reelection.

What do we learn from this reflection on state and federal spending?

We see that one of the reasons the federal government overspends so much is they see what happens to State leaders who do support legitimate spending measures and then get attacked for it. It just seems so much easier for them to borrow more money, supply the needed funding and be done with it.

Except this time round we are reaching a critical mass in borrowing. Even the general public, which usually does not pay much attention to financial matters, is waking up to this and demanding action.

The problem is that many will complain no matter what cuts are made.

So far we have presented some ideas of what can be done to restore financial security, but this will not be enough. Sooner or later we will have to apply one more all-important measure – a reform of the monetary system.

Some think that this is wishful thinking, but I submit that it can be done and will present a plan that can turn this country around and head it in the direction of its true destiny – the economic light of the world.
Copyright 2011 By J J Dewey

Read This entire series. Here are the links.