It’s sheer happenstance that I write this chapter of the 50 year plan at a time when budget battles are looming at all levels of government – locally fighting over a property tax increase, the state looking at a special session of the General Assembly this fall to combat a structural deficit, and the federal government perpetually makes a show of trying to whittle down its deficit spending.
Over the last few decades, a number of ideas have been bandied about as possible solutions to the problem of government overspending. I’m going to talk about three in particular for this chapter.
To begin, many have attempted to jumpstart the process by introducing a balanced budget amendment to the Constitution. The argument goes that most states have a balanced budget amendment so the federal government should as well.
There are times I would agree with that; however, in this era of an open-ended war with the forces of radical Islam, a balanced budget may not be readily attainable. Generally a balanced budget amendment leaves an exemption for times of war, and, whereas states cannot declare war, the federal government retains that right to do so. Also, since 2001 the government has a stated position of dealing with the national security threat brought about by al-Qaeda and its allies globally in any and all ways possible.
So a balanced budget amendment is probably not in the cards, at least for the foreseeable future. Something much more attainable but probably just as realistic as enacting a balanced budget amendment is reforming the system of “earmarks”.
A couple months ago we had our state Senator, Lowell Stoltzfus, as a guest speaker at the WCRC meeting and the subject of state spending naturally came up. Like all other states, Maryland has a capital improvements budget and what we call “bond bills.” What occurs during the portion of the General Assembly session devoted to the budget is a lot of serious horsetrading and competition as legislators scramble to secure pork for their districts.
The point Stoltzfus brought up was that you have two choices: you can take the high road and not seek any money for the district as a means of cutting spending. Unfortunately, there’s always another legislator without those scruples who would be happy to fund something in his or her district with that money since it’s going to be available anyway. Or, you can sort of hold your nose and grab for as much cash as you can get, which is distasteful but is also a sad reality that the money is going to be made available because almost all legislators like being in Annapolis and want to be reelected. Yes, in my way of thinking it’s called buying votes.
Now multiply that by 50 states’ worth of elected officials on the federal level and you see why our financial house is so far out of order – particularly when there’s a theoretically unlimited money supply out there. After all, the deficit is just a number to them.
So you come to a third theory, which isn’t always thought of as a fiscal responsibility aspect but I believe would contribute to the effort of reining in spending.
At one time, I subscribed to a fairly libertarian theory that term limits were bad policy because you deny voters all of the possible choices. But over the last few years, as I’ve seen hundreds of career politicians spend decades in office, I’ve changed my thinking. Our Founding Fathers intended political duty as something done for just a few years, which is why the House of Representatives was set up to be elected by the people every two years. Many don’t realize that the Senate was set up with six year terms in part because Senators were not directly elected by the people, they were chosen by state legislatures. The longer terms were in order to bring continuity to the office when there was turnover in state legislatures on a semi-annual basis. These terms were not changed when the Seventeenth Amendment was ratified in 1913, only the method of Senate election.
While term limits may seen an unnatural limit on the will of the people, the principle is already in the Constitution as the 22nd Amendment. Ratified in 1951, it codified what had been a tradition started by George Washington and carrying through until Franklin Roosevelt defied the norm by running for a third consecutive term in 1940. Prior to FDR, no President had served more than two terms. Teddy Roosevelt ran for what would’ve been almost a third full term in 1912 (taking office upon the assassination of President McKinley in 1901), but he had been out of office since 1909.
Further, since the Amendment was ratified, regular change has occurred at the executive branch. A party holding the office of President for 8 years has been the norm, except for the years of Jimmy Carter through George H.W. Bush. Democrats only held the presidency for one term under Carter (1977-81) before the GOP held sway for 12 years (1981-1993, Reagan and G.H.W. Bush.) We returned to an eight year cycle with Bill Clinton and the trend would continue if a Democrat wins back the Oval Office in 2008.
But this change does not occur in lesser levels of government. A number of Congressmen and Senators, generally Democrats who favor an all-encompassing government, have held their offices 30 years or more. Once entrenched, they become obstacles to reform. And, above all, reform is what’s needed at the federal level if the taxpayers are ever to get true relief as I’ve outlined in earlier parts of my 50 year plan.
I also wanted to write about fiscal responsibility on a personal level. Sure, it would be nice to have all levels of government tighten their belts in order to keep more money in our collective pockets where it belongs. But we have a part to play in this too.
I tell people the story of one of the downstairs neighbors I had when my first ex-wife and my daughter (step in name only) lived in the upstairs half of a duplex. He bragged about his $800 TV and $800 stereo (which had bass enough to thump my apartment at 2 a.m.) but it turned out he could never keep his wife’s car in repair and they were eventually evicted for not paying the rent – after they had the gas turned off. Hopefully they learned a lesson from that but something tells me they just skipped to the next rental and did the same thing.
And I know that I talk about things I do that are frivolous, but it’s a question of moderation. I don’t see bands every weekend, my Shorebirds tickets are a company benefit, and I didn’t buy an overly expensive house or car even though I could have. The Sun yesterday had an article about car sales slowing because of longer finance periods for their present cars.
I suppose the best advice I can give to young people is to take the first 10% off your check and stick it in a 401.k or someplace else you can’t easily touch it. Then pay your bills and groceries and such. Also cut up the credit cards, and if you own a house ignore the siren call of home equity loans for the most part, unless it’s something that would improve your property value or a needed repair like fixing the roof. If there’s one thing that’s become a pet peeve of mine, it’s seeing and hearing dozens of advertisements a week that tell the unsuspecting that they can have (and deserve) it all, just refinance your home. Never mind the deeper hole that you’ve dug for yourself just to take a cruise to Aruba or buy the big-screen TV you’ll likely have to replace (with a bigger one, of course) in three years. Sure, you can deduct the interest off your taxes – for now.
Am I frugal? To an extent, yes. I can be a little tight with my money but my life has taught me the hard way that it’s a good policy to have. I paid a lot of interest to the folks at MasterCard, Visa, and Discover for a bunch of years before I finally got wise. So I make every attempt to stay within a budget and plan for the future.
So maybe the “buy now, pay later” basis of our economy takes a hit. Smart people are always able to land on their feet when adversity strikes. I’m trying to avoid two generations’ worth of train wrecks with some simple advice. It’s up to my readers of that age to take it.
