Posted on 07/01/2008 5:21:25 PM PDT by vmorgs
“Every crisis presents an opportunity.”
Sure, it’s one of the oldest clichés in the book. But clichés don’t find their way into “the book” without invoking some elemental, common sense wisdom.
Of course, since such wisdom is generally anathema to our elected officials’ way of thinking, expecting them to behave any differently during the current economic malaise than they have in previous downturns is probably wishful thinking.
In a nutshell, here’s the predicament government budget writers are facing – the property taxes that provide their main source of revenue are plummeting alongside national home prices, which suffered a record dip in April of this year. On the other hand, record-high prices at the gas pump are sending their budgets soaring skyward.
Caught in a pincers – and already struggling to balance unsustainable health care and employee pension increases – their budget prognoses grow grimmer by the day.
Yet despite the gloomy forecasts, government’s impending revenue crisis does present our leaders with yet another opportunity to get their act together.
First and foremost, it gives them a chance to reform the way they spend money at all levels of government – an opportunity our leaders utterly failed to avail themselves of during the post-Sept. 11 downturn and the recession of the early Nineties.
In both cases, government could not control its special interest appetite and instead passed the pain onto those who could least afford it.
Rather than cutting pork projects, trimming bureaucratic fat and adopting a zero-based approach to spending that prioritized activities and results, most governments resorted instead to across-the-board cuts that shortchanged vital frontline services.
These services disproportionately impacted middle income earners and poorer citizens – a cruel way of bullying the public into accepting the need for “revenue enhancements.”
So what should our leaders be doing this time around?
Let’s start with the basic premise that the private sector utilizes when confronted with declining revenues – the principle of maximum utility.
In any organization, public or private, there are essential and non-essential services as well as essential and non-essential employees. Unique to government, though, is the philosophy that when tough times come the solution is always to spread the cuts “equally” across government.
“We’ve all got to share in the pain,” elected officials will say, usually right before they introduce a bill raising yet another fee or further increasing your tax bill.
This politically-expedient approach fails to acknowledge that there are hundreds of functions that government has no business performing, and hundreds more than may be worthwhile but clearly do not fall under the definition of “core” responsibilities.
“Maximum utility” is never achieved by simply lopping an equal amount off the top of every agency or program during economic downturns. Nor is it achieved by spending every last dime that comes in when times are good.
Each and every year, regardless of the revenue stream coming in, budget writers should start from zero – identifying top priority public needs and then allocating funding based on which government “activities” meet those needs.
Of course there’s one small problem with this incredibly common sense approach to spending the people’s money – politicians don’t like it.
They don’t want the public to see how their special interest goodies and pet projects stack up compared to genuine obligations. Plus, they don’t want to lose the one pressure point they have for adding new revenue streams that will fuel even more unnecessary spending in the future.
The result is a vicious cycle which – along with unsustainable entitlement spending and taxpayer-funded lobbying – continues to perpetuate the growth of government far beyond our ability to pay for it.
During America’s last two economic downturns, hard choices were averted because our leaders simply failed to make them. We should expect – and demand better this time around.
In my wildest dreams... one million government workers in the unemployment line and none being employed because business owners know they only know how to obstruct their business!
Eliminate half the government employees by random draw or first letter of their name. Nothing essential will go undone.
Yes! Crisitunity!
The caboose of the gravy train is when nobody is willing to lend the US government any more money to profligately spend.
And though only State governments have done it, not the federal government, defaulting on their debt is not unheard of, and would be considered. It is possible that the problems this would create might be less than the problem it would solve.
That is, America’s ace in the hole is agribusiness. We feed much of the world. This would mean that we would possibly not completely default, but demand that all international debt repayment be with food. If you have our debt, it is canceled, but after that, the exported food would be free, to fend off enormous famines. Fair trade.
In the first year alone, our food might be worth $50-100 billion. Assuming the crisis continued, the US might get a $500B-$3T write down. While restoring much of our credit in the long run, in the short term, the US would have to pay for any imports with cash on the barrel head.
Importantly, we would not be savaged for doing this, because at the same time, most of the world’s economies would be in ruins. By insulating ourselves from that with our financial hanky-panky, we would be able to work from outside the problem to fix it.
So we would not be screwing the rest of the world, though it might look that way.
Domestically, the most noticeable thing would be a massive reduction in federal responsibility and entitlements. Our economy would have to be reoriented to filling our needs, in that imports would have dried up. Most export trade would be dead as well. If it wasn’t made in America, you couldn’t get it.
Credit at any level would stop in the new economy. Unless you had cash, you couldn’t afford it. Going back to the old way of doing things. This would also mean that the government would both have to print a lot more money, and issue debit cards for a lot of things.
It is not that nothing essential will go undone, it is that the productive class will be unleashed. No fears of being jailed or fined for violating some obscure regulation or sued into bankrupt status for nothing the business has control over. And in a perfect world the beggars on the corners would only receive food or clothing, not cash they can use to further their drug dependencies.
Another positive thing is America has more stuff than any other nation. In a worse case scenario like you describe we have what other nations envy. A vast stock of-—>>
power plants
power transmission lines
buildings
houses
natural gas
oil
coal
roads
automobiles
train
railway stock
railroads
farms
farm equipment
tools
appliances
refrigerators
washing machines
All the above are repairable if we are cut off from imports
Different angles on the same phenomenon, I think. To me, “essential” means U.S. Marines, stoplights and flush toilets. If we eliminate town, county, state, and federal employees A-M, we’ll still have stoplights, toilets, and Marines, because those are important to everyone. The crap will dissipate along with its staff.
I agree. The biggest issue I have is with public schools. An educated public is good, but a school system that has the indoctrination into socialism as its goal is a really bad thing. I just don’t know how to recover short of firing all school members and starting over again.
Society has changed since somebody thought government-run education was a good idea. My proposal is private pay or private charity ... which might have worked all along.
What?...we should expect more and better this time around ?...never happen sir...not in a zillion dimRAT lifetimes...
When times are tough, the RATS close the parks and swimming pools, no open water fire hydrants with sprinklers in summer; raise tuitions, raise taxes even as peoplee are abandoning their homes..empty out the remaining little towns hanging on by a thread...they don’t ever think of changing their political philosophy to help the people because in order to help all you have to make some pay more, that’s their motto...and they have enough greedy pigRATS behind them to keep their spirits up...
We will see you in November...
It is possible that you’re correct, although it’s not going to be tested experimentally, so we’ll never know for sure :-). To be fair, I would exclude active-duty or reserve military, although not DoD civil servants. My husband is ex-military, and he and I are both former DoD civilians.
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