Long-form

Long-form blog posts and editorials. Topics cover both personal and the world at large. 

Proposal: how to fix the U.S. budget

Right... like that is going to happen. You know I don't even know why the US government refers to it's budget as a "budget" - everybody knows the spending will be much more than the income! As a business major I have been taught throughout the five years in the program that budgets are suppose to be balanced (not too hard right California?), meaning the outflows have to equal the inflows. No such luck with the US government, where not since the Clinton era have we even seen a positive balance between spending and income.

But what I am saying? Deficit spending is THE american tradition. Hell I have amassed a few credit cards to attest to that fact (all paid off every month in a very Chinese manner mind you). Well clearly the problem is that the US don't pay off the money it spends on credit (except for that interest payment to the "Federal" reserve, which is mighty fat), not because it does not want to, because they can't! The current government as a business don't make a profit! Never mind the fact that the body of governance in this sovereign nation leaves all its monetary matters to a PRIVATE entity (yes, THAT "Federal" reserve). Guess who is making all the profits then? Bankers and Lawyers.

No I am not going to talk about a private entity having more power than an elected government (it is thesis worthy), that is the not the point of today's post. As anybody that watch some glimmer of news knows, the US government is once again deadlock into passing a budget. The rhetoric is plastered all over the place - Liberals wants to do more spending and taxing, while the GOP wants to cut social programs and taxes for the rich and corporations (spending without taxing!). The following is my opinion on what congress should do regarding the budget.

So what happens when you are spending more than you earn (you declare bankruptcy!)? A sane person or business will naturally cut back on the spending and increase in the income to I don't know, BALANCE things out. Inevitably, congress will need to start looking at the US spending and start making some cuts, especially those that takes up a big chunk of the pie (yes California you have set a wonderful example). And the obvious first choice is...

Defense! Defense spending MUST be cut. Why are we still in the Middle East? Are we even winning? Bin Laden is most likely in Pakistan, and man I am telling you the US is going to go there and hunt... oh wait Pakistan has nukes okay never mind. I mean do you actually think US would actually invade Iraq if Sadam actually HAD nuclear weapons? All the WMD talk by the Bush administration was just smoke screen (probably the abili for W to finish the job his father started). As long as your country have nuclear weapons, the US will not dare to invade you! US is not really going to tolerate Mahmoud Ahmadinejad and all his farce if IRAN is not enriching their own uranium. The reason we and the rest of the world is turning a blind side to the human tragedy that is North Korea is because - you guess it, they have nukes. Ghadafi over at Libya (which is in the AFRICA and NOT the Middle East people, google maps is the best) is doing it wrong - should have gotten nukes then UN won't dare to impose a no fly zone. 

But come to think of it, what the heck have we been doing since World War II? What the heck is the US fighting for? Sure WWII had two nations threatening to imperialize the world, but what comes after that? Korea is still a divided country (thank you China), with the South being held hostage (next time ROK, you should think about building your capital city a little bit farther than 20 miles from the border you share with your worse enemy). Vietnam was a disaster. First gulf war did nothing. And now we have been stuck in Afghanistan and Iraq for close to a decade with no results. What the heck is the end game? Spreading democracy? What, is the UN chopped liver? the US have better things to worry about at home. Besides, the resent uprisings in the Middle East have proved that democracy is alive and well without the intervention of the US. STOP acting like you are the last bastion of democracy. 

So yes, pull out of Iraq and Afghanistan, and let the locals decide for themselves. The surrounding nations (and the Arab League) will see to it that whatever goes on inside will not affect anybody outside the borders. Besides, those two countries don't have nukes, so breath easy US. Don't give me the fighting terrorism rhetoric, as clearly the CIA and your local TSA agent is doing a fine job. As a matter of fact, pull our troops out of their stations in foreign countries. Get the fuck out of the likes of Japan (Okinawans hate you!), South Korea (right, because having troops there will prevent the North from provoking the South.. oh wait), and Germany (nobody received the memo that Hitler is dead and the wall already fell?). Cut back on manpower, while still invest in technological R&D to stay ahead of the game. Let most of the current troops retired, educate themselves (G.I. Bill!), and contribute to society in a more productive manner (because that my friends will raise the GDP).

Next on the list of cuts is everybody's favorite dead horse to beat on - Social Security and Medicare. First and foremost, it must be made clear that these are NOT entitlements (sorry GOP). These are setup to be insurance trusts - meaning they are self sustaining, and theoretically SHOULD NOT be part of any government's spending budget. In fact up until now Social Security inflows from taxation is actually HIGHER than the amount of premiums it pays out. You know that sizable amount we lose to those two programs in our paychecks every month? Well Social Security and Medicare is suppose to then invest that money into a portfolio of many different things to essentially "grow" the money. That is how these entities sustain themselves. They should not require any government money AT ALL. 

Well turns out bonds put out by the Treasury are also considered investment opportunities in the eyes of Social Security and Medicare. Guess what happens when the government is spending more than it takes in, and are looking for avenues to cover that deficit. That's right, being federal entities they are essentially impelled to invest the majority of their portfolio in government bonds. Because it is just too easy - like borrowing money from your parents. But hey this means that not only is the US borrowing heavily from China, but it is also heavily borrowing from you the working man! The only reason Social Security and Medicare is part of the spending budget is because both are government entities, nothing more. If separated out they are both self sustainable (for the time being anyways) with actual SURPLUSES,

Not honestly going to pare down Social Security and Medicare are you GOP? Again, they ARE NOT entitlements. Cutting down these programs while still borrowing from it is essentially robbing the general public! Now do those programs need reform in order to have long term sustainability? Of course (isn't the joke that my generation won't have any Social Security?)! Stop forcing them to buy treasury stock, let them invest in a diverse portfolio (like banks!) with much higher growth potential, and the problem will fix itself. But you say wait, people are living longer and longer! Social Security in the future cannot possible cover the ever enlarging retirement population (sorry Florida). The problem is not the amount of people, the problem is the COST to sustain them. And the number one cost would be - MEDICAL! Health care cost has sky rocketed in a rate much faster than increase in income. I am willing to bet a lot of it is artificial (hello big corporate drug and insurance companies!). Congress should do something about that, and I believe everything will take care of itself.

I don't think I need to mention at length about fixing the American epidemic of being FAT and its link to medical cost. 

Last thing I want to talk about in terms of cutting spending, is idiotic government subsidies and corporate tax loopholes. Why are we subsidizing things like corn? In fact, while do we have farming subsidies at all? I understand its history, but there is no reason we should still have them in this day and age. Listen, we have enough food in the US. In fact we have a SURPLUS of food (probably the only thing we have a surplus of). That on top of the fact we are a nation of eating too much! So lets make this clear - we make enough food to feed ourselves, and yet we still have subsidies to encourage food production? I understand the reason for keeping the prices low for the general public, but honestly how bad is it going to get if subsidies are done with? People will still buy gas at $4 dollars a gallon! The need for food is inelastic.

Cut subsidies to foreign countries as well. I am pretty sure it is kind of sort of not kosher under WTO regulations. But nonetheless, worry about the home first before helping other people. You don't see corporations making donations when they are not making profits (shareholders won't like that). 

So corporate tax loopholes. This one is easy to figure out. Just go look up the profits for companies like Exxon and General Electric and compare that to the amount of taxes they actually paid. It is an outrage when the US is home to many corporations with revenue that rivals some nation's GDP, yet the US is still crying poor? These corporations should be properly taxed! If a person made $250,000 a year and 33% percent of that went to taxes, there should be no reason that a corporation will have to pay the same rate, if not MORE. Come on congress, the US GDP is still plenty robust. FIx our tax codes, tax our production correctly, and just maybe we will have enough income to support our extravagant spending.

Speaking of taxes, get rid of the Bush tax cuts. How can a nation possibly justify a tax cut when we are in such debt with a negative difference between spending and income? I understand when Bush did it, because the Clinton year brought budget surplus - Bush could not have possibly predicted that after the tax cuts the nation will be fighting two war simultaneously and go through one of the worst economic meltdowns since the great depression. But to extend the Bush tax cuts while we don't have enough money? I don't like paying taxes as much as the person next to me, but since we are a nation of entitlements (but we are not socialist nor communist, no, NEVER), that money have to come from somewhere. I don't see how raising taxes back to pre Bush levels will somehow stop people from functioning as usual. 

So yes, cut spending and raise taxes. Because you the government have no choice when a private entity controls your entire money supply, and whom you owe A LOT of money to.