Edward Richardson - March 30, 2000

     President Obama has proposed his new budget for America, along with his new vision of larger government and higher taxes.  This caused me to think about what a budget really is and how it is supposed to work.

     A budget generally contains two categories of expenses.  Those things which must be funded and those items which you would like to fund.  In the federal budget these are divided up with the terms “mandatory” and “discretionary”.  While I have big problems with what the government considers mandatory and what it considers discretionary, I won’t go into that aspect of the budget in this article as it would require a much closer examination of the budget.

     So, with the aforementioned in mind, how would one put together a budget in these tough economic times?  What does the government need to do to not only balance the federal budget, but, make an allowance within the budget to repay the principle of the national debt?

     There are basically two ways to effect the balance of a budget, increase income or decrease expenses.  How the government goes about increasing income and decreasing expenses is where President Obama and the Congress need to go back to school.

     Assuming that the governments “mandatory” spending is really mandatory, that leaves us with only one part of the budget where we can reduce expenses, “discretionary spending”.   One thing that must always be kept in mind when considering discretionary funding is that you do not want to create new mandatory spending by creating a program that requires future spending.

     What are some of the things that the government considers to be discretionary spending?  How about the entire Department of Defense budget and Veterans Administration spending.  While you might argue that these should be included as mandatory, there are things included in discretionary funding that everyone would agree are not required for the United States to survive such as foreign aid, federal education funding and funding for our national parks.  You may argue that these are areas of funding that should not be cut, but, we are in tough times and tough decisions need to be made.  If your household budget were tight, would you give your neighbor $5000.00 to help him pave his driveway, send his children to private school or buy playground equipment for his back yard?  I think not.

     President Obama and Congress need to make these hard decisions.  The United States should not be borrowing money from China to help Africa fight AIDS.  While I agree it is a noble cause, we cannot afford to help right now.  We should also not be giving away money to other countries to help them build infrastructure when we can’t afford to repair our own.  Perhaps we should be lending them the money instead or just hold-off until we have a budget surplus.   While I agree that setting aside land as national parks is a good thing, we should not be spending money to add new facilities at this time.  Again, we can’t afford it.  As far as education spending, how long do we keep throwing money at the problem before we realize that the only way we are going to improve education is to hold teachers accountable through results based merit pay and returning discipline to the classrooms.  Schools need to be able to hire and fire teachers based on performance without the union getting in the way and we need to give the teachers a classroom environment where they can succeed.  

     One area where we could actually see a net decrease in federal spending is through immigration enforcement.  If we can enforce current laws and drive out a majority of the ILLEGAL immigrants, the federal government as well as state governments would see a decrease in spending for social programs that were originally designed to help Americans but have since been expanded either on purpose or by accident to include supporting illegal immigrants such as Food Stamps and Medicaid.  It could also help education funding by requiring proof of citizenship or legal immigration status to attend public schools.

     Taking a brief look at the possibility of increasing income to the federal government, I have some ideas.  If we reduce the corporate tax rate for companies with less than $5 million in gross receipts from the current 35% to 25%, while we would see a temporary reduction of income, it would allow these businesses to improve operations and employ more workers.  The increased production would increase the company’s profitability giving it a higher income to tax as well as giving the government more employee paychecks to deduct taxes from and would result in a net increase to federal revenues as well as providing a needed boost to the nation’s economy all without giving those large, evil corporations a tax cut.

     A budget is a tool used to manage finances.  One of the biggest rules surrounding a budget is, that in order to remain financially viable, you must not budget more expenses than you have income.  If you have to borrow money to meet your budget needs, then you need to cut costs.  When income is limited, you don’t start ambitious and expensive policy changes such as President Obama’s Health Care Reform or his Alternative Energy plan.  While the plans may or may not be good plans, we cannot afford them at this time.

     The bottom line is that our country needs to learn to live within its means.  We need to prioritize our expenses to ensure that we are helping Americans first and then, if we have money left over, we can talk about helping citizens of other countries.  I am not being naive.  I realize that some foreign aid must continue due to our commitments around the world such as Iraq and Afghanistan, but that doesn’t mean that there are not other areas where we could eliminate or at least drastically reduce programs.  Perhaps we could just put those programs on hold until we get our financial house in order.