Saturday, November 27, 2010

Federal Debt Balderadash

Here's a truism - The Federal Debt is out of control. If this debt belonged to an individual or a family they would be filing bankruptcy and starting all over again. Our government doesn't have that option but it can print more money which reduces the value of the money in our pockets.

The current big economic debate appears to be about keeping the Bush tax cuts. There also needs to be a debate about spending cuts. Even drunken sailors quite spending when they run out of money but not our ladies and gentlemen in congress. The bulk of their spending is to keep getting reelected (bridges to nowhere, turtle crossings, etc) not the good of the nation. There is even two kinds of spending processes! A mandatory and a discretionary.

The mandatory process is created when Congress and the President create a law (and a bureaucracy to administer it) that says if there are this many people that meet the qualification than they are allotted this much money. Zippo ! Presto! It's off and running and since it's a law no matter how long ago it was voted on, it will continue to live on and on and on and on. Think Social Security, Medicare, etc.

The discretionary process requires Congress and the President to each year establish the budget for those items that aren't covered by the mandatory process. Think Congressional and Executive operational budgets, etc.

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