Excessive Spending - Tax Cuts, Spending, or Spending Cuts

A few days ago I wrote about the growing propensity of our government to throw money at every problem. Sure, money is an important aspect of making sure the nation runs well and providing aid to the needy during disasters. But it seems that the federal government is seen as an open bank vault... withdrawals welcome... repayment not necessary.

Well, even though it's not supposed to work like that, both political parties are pretty good at operating in that fashion. While large corporations are forced to be as efficient as possible to continue operating (except for the process of default called bankruptcy), the federal government simply issues more notes payable. At some point, the lenders will get their due or we will all be in trouble. More and more, the lenders are not fellow Americans buying savings bonds or treasury notes, but our overseas competitors. The same people who are benefitting from our job losses and dismantling of our manufacturing capabilities are the ones who can decide when our country goes into an economic tailspin. Now is not the time. First they have to build their own and other markets. Then we are fair game.

So what to do? My son an I have slight differing opinions. We both acknowledge spending is out of control by whomever is in power at the federal level. He believes the only solution is to raise taxes. I told him I thought we should cut half of the federal programs through either consolidation or outright elimination.

Tax more. Okay, since we are not investing in manufacturing and our research is increasingly being "outsourced", why have tax breaks for stock investments? Sounds too much like the wealthy getting a free pass. Certainly there are no middle class people investing in the stock market anymore. While we are at it, eliminate all of those tax deferred saving plans. They may not be all that great in the long run. Throw on a national consumption tax, too. Wasn't there a disease call "consumption"? Well then, lets tax health services. Then we can build more nice parks for the homeless in case we can't build federal housing fast enough..

Spend more. Hey, we are doing that already.

Spend less. That's just not fair. Someone else got theirs and I want mine! Should somebody evaluate all of the federal programs and determine which of the 1,000 or so should continue? Is someone challenging what is happening:

Demanding that programs prove results in order to earn financial support, however obvious and sensible, marks a dramatic departure from past practice. No one has asked about the extent to which Elderly Housing Grants help the one million very low-income elderly households with severe housing needs. Is $4.8 billion in federal foster care funding preventing the maltreatment and abuse of children by providing stable temporary homes? Have federal efforts to reduce air pollution been successful? These programs seek to accomplish important goals but fail to provide evidence that they are successful in serving the citizens for whom they are intended.

Even programs known to be failing continue to get support. For example, the Safe and Drug Free Schools Program, which a 2001 RAND study determined to be fundamentally flawed, has only grown larger and more expensive. The current system discourages accountability, with no participant incentives to take responsibility, much less risks, to produce improvements in results.

Just maybe the government watchdog. Let's see what happens once they identify those pet projects of the influential senators that control the purse strings.

By the way, do read the report at the link above. You'll find an interesting coincidence between my off-the-cuff response of cutting half of the programs and what the OMB has to say.