The last few years have seen a giant push to balance the Federal Budget. Fiscal responsibility is something that generally makes good sense, and the role of Republicans prior to the last ten or so years has been to interject that sensibility into politics. But recently its gone off of the rails.
There is a insidious idea that the government should run like a household budget, and some budget provisions want to the government to match their expenditures with their revenue dollar for dollar. In other words, if you spend a dollar, you should make a dollar, right?
Wrong. The government budget works nothing like your household budget. They resemble each other much like a baby resembles a Lovecraftian horror. It can’t run like a business, either, for one very good reason.
The government has a responsibility to care for the public that supersedes its other functions. It is Capitalism 101: the government takes on the non-profitable, but necessary, functions so private industry can go make money. Imagine doing a household budget, but everyone on your block has to live off of your paycheck. Could you still budget the same way?
And balancing the budget during a weak economy is like putting a starving man on a diet.
As you know, the government’s main form of revenue is taxes, and mostly income taxes. Conservatives want to lower taxes and cut services to match them, because they tell you you’ll have more money in your pocket to pay your bills with. And wouldn’t you rather have more money in your pocket, than to pay taxes?
There are two problems with this.
The biggest cost of any product or service is labor. To cut major costs, you cut people and then overwork the ones that are left. It’s probably happening at your job right now. The government would cut its biggest expense, people, and businesses would follow suit as the market crashed. You think you have a hard time finding a job now? Wait until all the recently laid off start looking for jobs.
The other problem is that we’re not paying a lot of taxes. I know what you’re thinking. Times are hard, and taxes are killing you. But people have trouble separating Federal taxes from State taxes when they think of what they have to pay. I would suspect that the property and school taxes are killing you if you have a home. Those are State and local taxes.
Federal taxes are the lowest they’ve been in 30 years. They are lower under Obama then they were under Reagan.
Remember, taxes are revenue. So think of government as a business that is making less money than they used to. But remember conservatives want everything cut but Social Security and Defense Spending.
The problem is defense spending is the biggest item in the budget.
And Social Security was originally a hustle, a benefit that you were eligible for roughly three years after statistics indicated you’d have died. Social Security doesn’t work if you actually live long. And no matter what you paid in, you earned more than you put in by far and the true cost is not accurately reflected in the budget. It’s Socialism at its purest.
To compound the money problem, in 2000 we launched two very expensive wars and did a tax cut. For a business, that’s like cutting the price of your product in half, but your expenses go up. In fact, there wouldn’t be a deficit if not for the tax cuts.
And the “people” who have the biggest tax burden? Don’t pay much in taxes.
So if the government is a business, revenue is down, but the biggest expenses remain. Imagine owning a butcher shop, for instance. One day, someone comes in and tells you that you can only sell horse meat, and it has to be labeled as such. But all your bills stay the same: rent, employees, utilities, everything. Not many people want horse meat, and the few that will eat it won’t pay much for it, but you can’t get rid of any of your expenses. What do you do?
We’ll get into that in a later article. The point of this article is simple, though. The reason balanced budgets can’t work, is because the government’s job is to take care of people, and they have to do it with taxes. If they can’t raise taxes, they cannot balance the budget.