Some 101 for Congress and the President

It’s not really rocket science.

  1. If you have loans outstanding and the payment is due, you owe the creditors a payment. Payables for Idiots 101.
  2. If you have received goods and services, then you owe your vendors a payment. Payables for Idiots 102.
  3. You pay your bills. End of story. That’s what grown ups do. If you have to float some debt for a few months, you do it. And you staple a note to your head to stop spending like a slot machine junkie. Payables for Idiots 103.

The debts we have are for goods and services we’ve already received. So increase the debt limit and pay your damn bills. What about spending?

  1. You do not spend more than you take in year after year. If you do, that’s called running your business into the ground. In the case of the Congress (primarily Harry Reid’s Senate at this point, although many, but not all, of the Republicans were happy to go along with dumb spending earlier) and the President, it’s the country they’re running into the ground. Spending for Idiots 101.
  2. If you’ve got all sorts of cool things planned like Acorn subsidies for pimps and Antarctica Jell-O wrestling grants for scientists, but you can’t afford them—i.e. you have to go into debt to get them–you cancel those plans. Spending for Idiots 102.
  3. The problem is that Congress and the President buy all sorts of crap and expect to put it on a credit card when it comes due. And there’s nothing to prevent them from doing it.
  4. They’re like irresponsible teenagers. They need controls that won’t allow them to overspend. Kind of like putting limits on a teenager’s cell phone minutes. Or forcing them to use a debit card. When they’re out of cash, they get a card denied response from their vendors.
  5. So you set spending limits, debt limits, and force them to balance the budget each year, except in extreme emergencies like when space aliens try to wipe out humanity. Spending for Idiots 103.

This means you pass Cut, Cap, and Balance and quit spending money you don’t have. Really difficult stuff. What about getting out of debt?

  1. You eat rice and beans until you’re debt is gone or down to a manageable level. That means you cancel crap you can’t pay for. Sorry earmarks, you’re gone. Sorry grants for nude artists in trees, you’re gone. Sorry subsidies for PBS, you’re gone.  Finances 200: How to Not Be A Money Moron.
  2. You figure out how to reduce your current cost structure. This means you figure out a way to reduce the costs of Medicare, Medicaid, Social Security, and every other service or product you provide, cutting those that aren’t essential. You hire someone like Mitt Romney who knows how to go through every line in a budget and turn a bloated ship around.  Finances 300: No, You Can’t Pay For Your Sister’s Hair Implants with My Money.
  3. You remind people this is the freaking U S of A. A place where a man or woman can make themselves. Not where the government changes your diapers and feeds you mush three times a day. Communism and socialism have failed. They were badly conceived utopias, much like multi-level soap and vitamin marketing schemes that are supposed to usher in the Second Coming.  Finances 400: The USA Buried the USSR for a Reason.
  4. You increase your revenues.
  5. However, if you raise taxes, you’re actually going to depress your revenues. Think about this. Which car company has bigger revenues–Lamborgini or Honda? Who is going to put out, if they’ve got Louie the Fingers and his buddy Jockstrap taking increasing amounts of their money in a protection racket? Don’t be a thug. Be an enabler.  Do what Wal-Mart does and go for volume.  Do what Ebay does–create the environment that entices tons of commerce, entices people to dramatically increase their transactions. Transactions go through the roof; you take only a tiny cut, and, shazam, you increase your revenues.  Finances 500: Um, Do You Want People to Work to Become Rich or Do You Want Them To Pick Up Torches and Burn the Houses of the Rich Down?

Cut spending, reduce cost structure, and increase your revenues. That’s getting out of debt.

Is this really that hard?

EDIT: 8/1 Seems that “wacky” Ron Paul actually has a simple commonsense approach that doesn’t sound crazy. Why couldn’t we do this?

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9 Responses to Some 101 for Congress and the President

  1. Isaac says:

    Well said, John. I couldn’t agree with you more.

  2. James C says:

    And you establish a pro-growth, pro-jobs tax policy (which may or may not include actual tax cuts) to increase revenues. The tax surplus of the late 90’s was not the result of government frugality, it was the result of economic growth – people makine more money than expected.

    Now, stop with the politics and get back to your revisions…

  3. John Brown says:

    Yes, boss, back to work.

  4. Heath Cowled says:

    I agree wholeheartedly. If my parents could explain saving and debt to me in primary school, then how can the concept escape whole governments? And I mean that plural. My state government is cutting *everything*… excluding rates, of course. Anyway, I thought I’d weigh in with James C and add an idea I’m partial to.

    We could simplify our tax system, so the average person could figure out how much money he or she owed without having to buy a computer program or pay someone to figure it out.

    Of course, this would get rid of a whole lot of loopholes, making everything much fairer. Some people wouldn’t like that. They might leave. They’d have probably been using loopholes, though, so their loss would be a smaller blow than you might think. To counterbalance that, there’d be a blossoming of small business. By not having to pay as many accountants, entry and running costs for virtually every industry would be lowered (Economics: 101). It’s a way to apply James C’s idea of promoting entrepreneurship while not cutting the actual tax rate.

    Speaking of which, the government wouldn’t have to pay so many accountants to look for tax cheats – or perhaps rake more money in by keeping all of its accountants, while making it vastly easier to *catch* cheats.

    Of course by ‘we’ I mean Australians. Not being a resident of the USA, I’m not going to claim privileged knowledge about your nation. But a few years ago, Australia’s treasurer explained our business tax law could be reduced from bulky tomes to flimsy handbooks. I reckon that would have solved a lot of problems, but there are those with power who didn’t like the idea (see my comment about people exploiting loopholes).

    It might not work to the same extent in the USA, but a similar idea appeared in a rather prominent USA-based magazine. It was being detailed as a possible strategy to help deal with the bind you’re in over there. I’d give its name, but I’m scared of breaching copyright. Is it okay if I say the title rhymes with lime? And rhyme, actually.

    But hey, why listen to an Aussie? We don’t complain when our government gives money to schools. We *do* complain when our pollies want to give less money to schools. We *even* complain when the government gives more to private schools than public ones. It’s as though we don’t think the market will regulate itself so everyone gets a fair go. Course, I’d like to totally change the way we do education, but this isn’t the time for that little rant.

    Maybe it’s because we used to get exploited by rich people. Or maybe it’s because of all of the beer we drink. But, if you think about it, the commies have practically taken over, down under.

    P.S. Sorry, John. I don’t mean to write a little essay with every post.

  5. John Brown says:

    I think it’s the beer, Heath (grin).

    Having gotten a Masters degree in accounting and worked for a big accounting firm for a few years, I agree the tax code should be simplified. AND it should include more people. When almost half the people aren’t paying any sort of income tax, there’s something screwy. BTW, link out to the Time article.

  6. AndrewV says:

    I could have sworn you worked for Arthur Andersen, John. Doesn’t that mean we have to take your financial advice with a shovel of salt? 😉

    All kidding aside I think you’ve got it nailed here, particularly the part about increasing revenues long term with tax incentives. The Cut, Cap and Balance Act actually gives a blueprint for that if you read between the lines (quote from Wikipedia):

    “Cap on future spending
    The bill proposed that federal spending would be scaled back based on the glide path for the fiscal years below as a percentage of the Gross Domestic Product (GDP):
    2012, 22.5% of GDP.
    2013, 21.7% of GDP.
    2014, 20.8% of GDP.
    2015, 20.2% of GDP.
    2016, 20.2% of GDP.
    2017, 20.0% of GDP.
    2018, 19.7% of GDP.
    2019, 19.9% of GDP.
    2020, 19.9% of GDP.
    2021, 19.9% of GDP.”

    The liberals are screaming that this means we are going to spend less and less money on entitlement programs, push poverty through the roof, kill off the elderly, etc. What this really does, however, is give a firm incentive to the government to grow the economy.

    If Barney Frank wants to spend all sorts of extra money in 2014, he needs to start working *today* on revving up the economy so that in 2014 he will have more money to spend. Same thing with everyone else in Congress who wants to put their name on bills to buy votes from special interests but has no desire to pay for what they are buying. Grow the economy every year and we will have more money to spend without needing to kill off the value system and work ethic that got us here in the first place.

  7. John Brown says:

    I like that idea a lot. Get the money now so you can spend it on whatever great project you want later. Not vice versa.

  8. Heath Cowled says:

    Sorry, I read that article in dead-tree format, in a magazine that has since been shredded. You can search the archives if you like, but I’m not quite that dedicated.

    There is this, however, which mentions a few of the same issues:,9171,975330-1,00.html

    Still agree with you, by the way, on regulating income and expenses. That’s the most basic tenet of good financial practice there is. I mean, it got us out of the Great Depression, but that’s because money needed to be injected into the system. We have plenty of money now; it just isn’t circulating the way it needs to be.