Welcome to the April Money, Investing and Insurance issue of NorthBay biz magazine. This issue provides some local insights into these financial areas that have great bearing on the health of our local economy. So please enjoy all the stories, special features and columns this month in the area’s only locally owned glossy business publication—NorthBay biz.
The further a society drifts from the truth, the more it will hate those that speak it.” — George Orwell
I have a question: Why is it that whenever the government needs more money (read, all the time) taxpayers are threatened with the loss of vital services if the latest tax increase isn’t approved? Apparently none of our money is being spent on anything other than police, firefighters and teachers. There’s no other recourse, no duplicative programs, no waste in government spending anywhere except there. We’re very familiar with this repetitive scam on the state, county and local levels here in California. In fact, chanting, “we’re number one” is very appropriate when it comes to leading the nation in taxes, regulations and fees. (It takes a lot of money to support one-third of the country’s welfare recipients when the state represents only 12 percent of the total population.)
But the latest and best example of the government “crying wolf” is the recent sequestration debacle in Washington. We were told—and I’m not making any of this up—that, literally, the sky would fall as air traffic controllers and TSA agents would be furloughed, prompting long delays at the nation’s airports. Strategic movement of our military would be in jeopardy, teachers furloughed, criminals released from jails. The food industry and your safety would be in jeopardy as meat inspectors would face layoffs. Parks would be shut down, as would facets of health care, leaving the elderly to die unattended.
These claims are outrageous taken at face value, but especially so since federal spending has doubled since Bill Clinton’s last year in office. You see, no amount of hyperbole can be too great when the slightest degree of decreased spending is at stake. And, as usual, what’s being labeled as a cut really isn’t. All these so called “cuts” are, in actuality, only a reduction of the budgeted spending “increases.” Beyond these plain facts, has anyone in Washington ever suggested to, for example, perhaps cut back on consultants or political junkets to conferences in far away lands? Not that I’m aware of—instead the default position is always cutbacks in fire and/or police protection.
Thanks to a recent column by Charles Krauthammer, I learned the following: According to the 2011 Government Accountability Office, here are just a few examples of Washington’s wasteful ways. “There are 44 federal overlapping job training programs, 18 for nutrition assistance, 82 on teacher quality, 56 on financial literacy and more than 20 on homelessness, etc.” The total cost of these programs exceeds $100 billion and could approach as much as $200 billion by some estimates. And, according to John Stossel, here are a few more less expensive items that, so far, haven’t been threatened to be cut by the sequester: $140,000 to study pig feces in China, $100,000 for a video game about aliens saving the planet from climate change, $88,000 for a comedy tour of India called, “Make Chai, Not War,” and finally $55,000 to study immaturity and drinking. Again, not making this up, but these dollars are safe from cuts. Instead, let’s sack some air traffic controllers. If you don’t inject fear into the populace and threaten vital services, you’re not doing your job as a politician.
Halfway through this column and I just realized I haven’t yet really quantified these “onerous” sequestration spending cuts. Here’s what we’re talking about that has the federal politicians and their complicit media wailing about the pain they will inflict. According to the CBO, spending will be cut by $85 billion over a number of years. Actual discretionary spending will be cut by $44 billion in 2013. To put that number in perspective, total federal spending in 2013 is estimated to be $3.5 trillion. Here’s another comparison: The feds authorized more than $50 billion for Hurricane Sandy relief and the last extension of unemployment benefits added another $30 billion to our debt. And now we’re told, and expected to believe, that our world, as we know it, will come to an end as a result of these truly insignificant spending cuts.
Last comparison: Let’s pretend the federal government is a family household just like yours or mine. To do this, I’m going to drop 8 zeroes from the fed family budget so the numbers are understandable. Annual Income—$24,449, Annual Spending—$35,389, New Credit Card Debt—$10,890, Total Credit Card Debt—$166,000, Spending Cut—$540. This example shows that this nice little federal family is spending almost 45 percent more than it earns annually. Already burdened with $166,000 of debt, it plans to balance its budget by reducing spending by $540 per year.
At a time when we’re all asked to make accommodations to cope with the anemic economy of the past several years and tighten our belts and absorb the 2 percent payroll tax that hit every working person in January, the government believes it’s above any austerity measures. It’s past time to go far beyond sequester and impose real budget cuts and return the country to fiscal solvency while we still can.
That’s it for now. Enjoy this month’s magazine.
