Brad Causey
Brad Causey,
Editor and Publisher
R. Shannon Pollard
Kevin Sommers
David R. Wehry
James E. Foy
The Freedom Letter
Balancing the Budget
As this is written the rhetoric on both sides of the "raise the debt ceiling" debate has reached the point of demagoguery and comedy. The President is threatening senior citizens by saying there will not be enough money to send checks out next month. Others (apparently similar members of the uninformed) have said "the economic recovery may be threatened if we reduce spending." The President is insisting the "rich" (so far undefined) need to pay more. The House leadership is properly saying taxes are already too high.
Fact: the federal government in the last 3 years, mostly under the Obama administration, has borrowed more money than anytime in history. The quantity of dollars borrowed in the last 2.5 years is greater than the combined amount over the last 50. The federal deficit this year is more than the entire federal budget was in 1994. The federal government is borrowing 40 cents of every dollar it is spending. Although the federal budget has been out of control for some time, the quantity of reckless and irresponsible spending is at an all time high. This is fact regardless of how it is measured. Quantity of current dollars, quantity of inflation adjusted dollars, or % of GDP. All three measurements show federal spending is at an all time high. Knowing this, it is somewhat logical to think the government's line of credit (commonly known as the debt ceiling) is about to run out. National governments are the only entity able to simply borrow money on a whim and decide when, and at what rate to pay it back. Since 1789, our federal government has never missed an interest payment. However, with the exception of World War II, never in the past have we borrowed so much in such a short period of time. Contrary to popular belief, most of the federal budget is NOT national security or national defense. Currently, 62% of the budget is re-distribution of wealth. Within this broad category are social security in its various guises, medicare, medicaid, food stamps, WIC, and unemployment compensation. As this is written, 40% of the country's population is receiving some form of income or service from the government. All of this is unprecedented in our history. On a side note, we are headed down the exact same path as Greece. Once a proud nation with a impressive history. Now, they cannot service their debt and are at the mercy of other countries in the European Union. One hopes we are smart enough to avoid their fate.
How do we solve this problem? Without getting into personalities or political issues, the federal government needs to return to its constitutional roots. If we stop spending money on unconstitutional things, and return to the proper role of government envisioned by our founders, all the issues above will solve themselves. For a guide, please refer to the Constitution of the United States, article I, section 8.
I have obtained a copy of the federal budget as proposed for the fiscal year 2012. The current fiscal year ends on September 30th. The document contains line by line expenditures of the previous two years, and projects for the next five. Based upon the actual 2012 proposed budget, I propose the following solution.
I am quite certain that waste, fraud and abuse are apparent in every government program. Defense procurement (for example) is a process riddled with greed, bribery and unnecessary/costly delays. However, "provide for the common defense" is one of the primary duties of the federal government. So, for now we will leave the defense and related budgets alone. Related programs are the department of Energy and Veterans affairs.
The politicians divide the budget into two major categories: "discretionary" and "mandatory". Neither term is constitutional. The constitution simply says the following: "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law." Article I, section 9. What they actually mean is that "discretionary" programs must be debated and voted on yearly. The "mandatory" ones are on auto pilot. The money is spent automatically, without a yearly vote. This is the crux of the problem. Automatic appropriations are not only unconstitutional, but a recipe for fiscal disaster. How would you or I possibly manage our finances without knowing what the majority of them are?
Here is a list of easy cuts:
First column is the Department or program. Second column is the proposed expenditure for Fiscal 2012. Third column is my proposed expenditure. Fourth column is a simple explanation. I will total the "cuts" at the bottom of the section.
Department or Program for Fiscal 2012 Proposed Expenditure Explanation
Agriculture $22 Billion $5 Billion Get rid of price supports and ethanol subsidies
Commerce $9 Billion $3 Billion Should probably eliminate it entirely
Education $77 Billion zero Education is a state and local function according to the 10th amendment
Health & Human Services $82 Billion zero None of this is constitutional, at the federal level
Housing & Urban Development $42 Billion zero see above
Interior $12 Billion $10 Billion could probably survive fine on only $5 Billion
Justice $21 Billion $15 Billion About what they had 5 years ago
Labor $13 Billion $3 Billion Most of what they do, they should not be doing at all
Dept. of State $53 Billion $20 Billion Get rid of aid to foreign dictators, and save a lot of money
Transportation $13 Billion $15 Billion Roads and highways are good!
Treasury $14 Billion $10 Billion Please get rid of Geithner
Corps of Engineers $5 Billion $6 Billion Floods are hardly under control
EPA $9 Billion $3 Billion Less money equals less mischief
NASA $19 Billion $10 Billion Should be plenty without shuttles
Nat'l Science Foundation $8 Billion zero Will anyone notice?
Small Business Admin. $1 Billion zero adios!
Social Security Admin. $10 Billion $2 Billion None of this is "benefits", only bureaucracy
Corp. for Nat'l & Comm. Service $1 Billion zero What the hell is this anyway?
"Other" agencies $20 Billion $5 Billion Please tell me what "other" is
Totals (so far) $431 Billion $107 Billion We have already saved $324 Billion!!!

Now on to "mandatory" (automatic) programs.... It goes without saying we should actually vote on these yearly.
Department or Program for Fiscal 2012 Proposed Expenditure Explanation
Social Security $761 Billion $650 Billion This is about what the payroll tax actually generates
Medicare $485 Billion $200 Billion see above
Medicaid $269 Billion $100 Billlion Stop paying for drugs and ER visits
Net Interest $242 Billion $242 Billion Sins of the past...
"other" mandatory programs $612 Billion $100 Billion Again, please tell me what "other" is!!!
Total "mandatory" $2.369 Trillion $1.292 Trillion $1.077 Trillion in additional savings!
So far our savings for one year are $1.401 Trillion. The projected deficit for fiscal 2012 is $1.1 Trillion. The deficit is eliminated now. Using this model, we would be running a surplus of $300 Billion. Not really that hard, was it? I realize that a substantial portion of our population is used to be being supported by those of us who work. However, going down this road is obviously not working. (sorry for the pun) Call me cold hearted or cruel if you wish. But, while doing that, please give me an alternative. We cannot continue down our current path. Something has to change. If you have a better idea, please let me know.
In a perfect world, the federal government would have nothing to do with retirement or health care. This is properly the responsibility of you and I as individuals, or state and local government, if they choose. The only reason I am proposing any expense for Social Security or Medicare is the separate tax associated with each. One can make a rational argument that the tax should be increased/decreased, applied to different amount of income etc. Let us have the discussion. If we keep the program, the revenue stream must match it. Social Security is actually quite simple to solve. Get rid of disability and SSI. There is plenty of money for the "retirement" portion of it for the foreseeable future. We should also stop taxing savings and make it easier to opt out of the program entirely. Social Security retirement is now, and always has been, an inter-generational ponzi scheme. Not even FDR would agree with the current configuration.
As to medicare/medicaid: The entire idea of a "third party payer" is flawed. Whether the third party is the government or a private insurance company, the rational decision making has been removed from the person actually receiving the benefit. It is any wonder the system is completely out of control? At most, the government should provide a subsidy for catastrophic coverage. Such as a high deductible major medical policy. No more free ER visits, band-aids and drugs. If we expect people to be healthy, the incentives need to be in the correct place.
It should be obvious that if we make the very simple cuts proposed here, there is no reason to raise the debt limit at all. The government can, and should live within its means. To give a single example of how out of control the government has become: I recently read a newpaper article from January of 1961. President Eisenhower proposed the fiscal 1962 budget just before his second term ended. The total? $81 Billion. About $50 Billion was defense related. This was only 50 years ago. Allow me to put this is perspective:
Budget year Total expense Surplus/Deficit National defense % of total Federal tax per person
1962 $82,000,000,000.00 Surplus of $1.5 Billion 60% $439.00
2012 $3,729,000,000,000.00 Deficit of $1.1 Trillion 18% $8500.00
Contrary to media hype, people were not dying in the streets in the year 1962, for lack of medical care or food stamps. How easy would it be to choose your health care provider, if you were not paying for others? How easy would it be to plan your own retirement if you were able keep most of your paycheck? There is no rational argument for the entitlement state. Only emotional ones. I close with quotes from former Presidents:
"To take from one because it is thought that his own industry and that of his father's has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association--the guarantee to every one of a free exercise of his industry and the fruits acquired by it." Thomas Jefferson
"You cannot strengthen the weak by weakening the strong. You cannot help small men by tearing down big men. You cannot help the poor by destroying the rich. You cannot lift the wage earner by pulling down the wage payer. You cannot keep out of trouble by spending more than your income. You cannot help men permanently by doing for them what they can and should do for themselves." Abraham Lincoln
"I think myself that we have more machinery of government than is necessary, too many parasites living on the labor of the industrious." Thomas Jefferson
Thank you for reading the Freedom Letter.
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