Wednesday, January 27, 2010

EC: Cutting Taxes and Spending IS Possible – Here’s How

Tim Wilson

President Obama is, according to the White House, about to propose a freeze on some Government spending. Hooray! Sadly his scalpel is making no cuts, merely a suspension of increases for 3 years in some areas. His White House is trumpeting the possibility this will save $250Bn over 10 years. They have missed the point that saving $25Bn per year while increasing debt by over $1Trillion per year is not progress. Those of us who live in reality know that when our level of debt reaches critical point, we are in deep trouble. Bankruptcy is not a good thing, so we try and avoid it. One of the first things almost every responsible householder or family will do is to sit down and look at income versus expenditure, then make cuts in spending to avoid going further into debt. Not Congress! They carry on spending like gambling addicts on a thrash.
To be fair, President Obama is not responsible for the looming disaster which is the American national debt. The blame for that lies fair and square with Congress, present and for many years past. However he is supposed to show leadership and he did make big promises to the American people over fiscal responsibility. He promised to go through government spending items “line by line”, to wield a scalpel (Note to President: a scalpel cuts, it doesn’t freeze) and to reduce the deficit. It is time he lived up to his word. He is not in a popularity contest, despite his illusions. He is in the big chair, the one where the buck stops. It is time to show he can lead, not posture.
Here is a radical suggestion to the President and all members of Congress, based on the best financial advice given to all those who find themselves in financial trouble: Spend only what you can afford! Indeed the debt counseling industry recommends that people in financial trouble make their budget according to the following principles:
1. Reduce spending below income.
2. Prioritize paying off debt to avoid interest payments.
3. Work harder to earn more (note to all of them: taxes are not earned income).
Note that no-one ever suggests increasing spending when in financial trouble – except politicians. Perhaps there is something about joining the elected elites that cancels common sense and contact with reality – I can think of no other reason that all of our politicians seem unable to recognize the need to follow the above principles.
While discussing the above with various acquaintances, I kept being told that I am politically naive and don’t understand how government works. That may be true, but I do know how life works and, having run my own business and family finances, have a pretty good idea how basic economics work. So here are some serious suggestions to start our politicians off:
1. Put a moratorium on all new government hires in every department except Defense, CIA, Justice and Treasury. Include the White House Staff.
2. Cut the budgets of the White House and all government departments except Defense, CIA, Justice and Treasury by 10% now, effective immediately. (Note to the President: turn the thermostat down!)
3. Set up a Congressional Commission to recommend the best ways to make personnel cuts of up to 50% in White House staff and every government department except Defense, CIA, Justice and Treasury, reporting by August 1st, 2010 for implementation before the end of the year. Keep the recruiting moratorium in effect until targets are met.
4. Cut the number of non-military posts in the Defense Department to a maximum of 10% of total personnel.
5. Make every Departmental Secretary produce a plan to maintain services, and to prioritize where services have to be cut, as a result of personnel reductions.
6. Freeze pay in all government jobs until, at least, average pay is reduced to the national average wage. Include the financial benefits of pensions and other perks in the equation.
7. Put a moratorium on the issuance of any new consultancy contracts. Make government Departments use their own internal expertise for all projects. Allow the employment of consultants only on projects of critical national importance, as authorized only by Cabinet members and subject to Congressional scrutiny and review.
8. Cut Congressional costs by 10% immediately. Set an example! You decide how – pay cuts, pension reductions, staff reductions, reduced expenses, closing your canteens and restaurants, paying for your own drinks? You said you were worthy of election to serve us – not to profit – so show us you mean it!
9. Stop looking for ways to increase revenues – they are tax increases no matter how you dress it up. Cutting government spending will allow you to cut taxes, which will boost the economy so that your successors can consider future increases in “services”. The only basic service you are constitutionally obliged to provide is defense – increase that by all means, but cut everything not related to defense and justice.
10. While you are laboring, simplify the tax code so a normal human being can understand it. One other penalty you have imposed on us all is the requirement to spend considerable time and effort filling out forms to maximize your revenue (note: it is not your money, it is ours and we work hard to earn it).
11. Stop thinking we don’t realize that a rebate or refund is only giving us a small portion of our money back. If you want to stimulate the economy and give everyone a financial boost, cut taxes!
From the above it will be obvious that the security of the country remains a high priority and should be able to continue through a serious review and cut in government spending.
People Calling Congress – CUT Spending NOW!
Family Security Matters Contributing Editor Tim Wilson is a retired British Army officer who now works as an independent consultant. Feedback:

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