Many times, the problems in life that seem most complex are quite the opposite: They are simple issues that have been complicated and muddled by factors such as emotion, obstinacy, greed, and dishonesty. Such is often the case with budgets. Whether you are managing a household, a state, or a country, the basics of budgeting are the same. First, you need to know how much money is coming in. Then, you need to prioritize spending, distinguishing between needs and wants. And finally, you shouldn't spend more money than you take in.
Ask anyone who has ever struggled to dig themselves out of debt and they will tell you that these fundamentals are absolutely essential for achieving and maintaining freedom from debt. Fail to attend to any of the three, and you're going to have problems.
Houston, we have a problem – a $14 trillion-and-counting problem. It is estimated that, by the end of 2011, the US national debt will exceed our gross domestic product for the first time in history. Not only is this an unsustainable course with dire implications for economic and homeland security, it is grossly irresponsible behavior for a nation that purports to be a political and economic role model for the rest of the world. Year after year, our elected representatives refuse to do the hard work required to distinguish between budgetary wants and needs, and year after year the government takes on debt to finance programs it can't afford.
Last November, the American people sent a clear message to Washington that they've had enough. Whether fueled by Tea Party patriotism or simple frustration over the stagnating economy and job market, the prevailing sentiment is that our country is on the wrong economic course. Common sense dictates that a move back towards fiscal solvency must be part of the solution to revitalizing America's economy. Without this vital step, we will continue limping along, bogged down by crushing debt and unable to muster any true economic momentum. Businesses will continue to struggle and Main Street will continue to feel the pinch.
There are basically only two ways for the American government to escape the bondage of debt: Cut spending or increase taxes – or resort to a combination of both.
Well, the American people have made it clear that they don't want – nor can they afford – Uncle Sam raising their taxes any time soon. Consequently, Congress has made it clear that it has no intention of raising taxes in the next two years. The only option left, then, is to cut spending, and given the projected budget deficit, they'll have to cut lots of spending in order to make any meaningful impact on the nation's balance sheet. It's time to bring out the hatchets.
If only it were as simple as it sounds. Here's where politics come into play and things get tricky. First, there is the problem that many Americans fail to appreciate the connection between a good idea and the costs of implementing that idea. Even the staunchest proponents of budgetary reform tend to balk when confronted with the real-world implications of that reform. Few Americans realize how much they've actually come to rely on government programs in the last 75 years or so. This is why you'll see Tea Party patriots wielding "Government Hands Off Medicare" signs with absolutely no sense of irony, and why any mention of entitlement reform tends to raise hackles on both sides of the aisle.
On the spending side of things, it is indisputable that the national budget is shaped, in no small part, by a phalanx of special interests. The cast of characters is familiar enough: Big Business, Big Labor, Big Medicine, the NEA... the list goes on and on. At the end of the day, then, government expenditures are often shaped by politicians who cater to special interests in an effort to preserve their political careers by exchanging taxpayer money for votes. To those politicians, the prospect of making substantive and meaningful budget cuts is terrifying; it is tantamount to committing political suicide. We can see this dynamic playing out today in places like Wisconsin, where Governor Scott Walker is feeling the backlash of standing up to Big Labor. We've seen it in New Jersey, where Governor Chris Christy has roused the ire
Do our leaders have what it takes to endure the repercussions of decisive action? Are they willing to risk their careers in order to effect true reform? And, do the American people have the integrity and character to support authentic attempts to balance the budget? Or will we take to the streets in protest when the rubber hits the road and actual cuts are proposed?
The fate of our economy literally hangs on the answers to these questions. The remedies needed to right the Ship of State are not easy or comfortable, but they are simple. The only alternative to decisive action today is to continue kicking the can of responsibility down the road, mortgaging the future of our grandchildren. We can, and should, do better. Such a shameful course is not worthy of a nation that has for centuries stood as a model of liberty, justice, and financial responsibility for the rest of the world.