Deficit Reduction...

The Real Solution.

Okay.  Not that anyone asked - But, here's my 2 cents on the topic... 

(Which, BTW, is probably about what its worth)  ;-)

The solution’s pretty simple.  

The solution is not taxes. And, its not budget cutting.

For a minute, let's think of government as business...

Taxes are to government as gross income is to business – In both cases, it supplies the revenue necessary for that business (or government) to flourish.   A government that increases taxes on its citizens in order to raise revenue ends up doing the same thing as a business (deep in debt) would do by increasing its prices.  Yes – It may supply a bit of temporary relief.  However, that  temporarily help, quickly turns into a long-term  business-killer.  (Its simple - When the cost is too high, folks take their business elsewhere.)

Okay – So raising taxes (or prices) is not a viable long term solution for either business or government.  Then what is?  How ‘bout trimming expenses?

Well, actually, significantly cutting the (government’s) budget does the same as a business (also deep in debt) cutting its budget – Again, this apparent solution only leads to a worsening of the problem.  (Cutting services to citizens or customers will only produce an immediate, and counterproductive, backlash.)

So, if neither raising taxes (or prices) nor significantly cutting expenses will help get a government (or business) out of a hole (at least in the long-term), then what will?

Its time for government to learn from business.  Namely...

If a business is in trouble, the best way out is simple.  

Get more customers.  Period.  

That’s all there is to it.  (Increased top-line sales revenue will always yield profitability.)   Increasing prices and cutting budgets only leads to fewer customers (at the very time the business needs them most).   And, for government, its the same – Increasing taxes and cutting budgets only leads to still fewer taxpayers (and still lower revenue).

Just like in business (where the more happy / paying customers you have, the more successful you are) - Every successful government needs happy / taxpaying citizens.  So, just like business, the best way for our (or any) government to get out of (budget) trouble is simple – Get more taxpayers.  (Not higher taxes or reduced budgets.)   More taxpayers means more revenue.  

The math is simple – When our unemployment rate is low,  our government runs at a surplus.  At full employment, we could pay down our entire debt in our lifetime.  (This, of course, is also the best argument for a country to liberalize its citizenship rules. After all, the more working citizens a country has, the more tax revenue that country collects.  Counter intuitively, tight immigration restrictions are very likely to contribute to a greatly worsened deficit.)

That’s it.  All we need to do is increase employment, and our budget deficit disappears.  And, yes – there will be short-term negative impacts to our budget if the government intervenes to decrease unemployment.  But, those short-term costs are actually the quickest – most effective way to decrease our long-term debt.  (After all, just like in business, you have to spend money to make money.)

None of this is rocket science.  More folks paying taxes, means more money for our Treasury.  (Heck, it must be simple if even I can understand it.) 

Of course, to our leaders down in DC none of this is news.  The truth is, the majority of them already know this is the only real solution – But, instead of working together to institute some real solutions, they are shortsightedly choosing the fate of their (political) parties over the fate of their nation (leaving us all to suffer).  This, unfortunately, remains the core of the problem.  They're only concern seems to be their own gains and "victory at all costs"  (regardless what that cost is for: truth, decency, our citizens, our democracy, and even our very existence). 

Knowing you could save a life (in this case, the life of your country) and choosing NOT to for your own short term gain should be criminal.  (It is, at the very least, despicable.)  Unfortunately, under the current polarized system, this is not likely to change.

Maybe.  Just maybe.  We’d be a lot better off with no political parties.  With no political parties, the vast majority of the acrimony would immediately disappear.  Our public servants would be free to serve us, and not their political parties - to do the right thing by us, and not the politically expedient thing (for their party’s gain).

Okay.  Okay.  I know – That’s crazy talk.  ;-)  Hmm...  Oh well – We can dream, can’t we?

xxx

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Our Final Hour?

Sir Martin Rees

He is the Royal Society Professor at Cambridge University, a Fellow of Kings College, and the England’s Astronomer Royal. He is the most awarded scientist in Britain, a Knight, and the President of the British Royal. He is not simply considered Britain's most respected Scientist – He is, quite simply, one of the World’s most respected Scientists.

In 2005, in his book: “Our Final Hour”, Professor Rees categorically states:

“The odds are no better than fifty-fifty that our present civilization on Earth will survive to the end of the present century.”

Remember, this is not the idle rant of an uninformed mind. No - far from it - this is the sober scholarly scientific prediction of one the World’s most informed (and trusted) minds.

That prediction was made over five years ago. And, since then, as each day has passed, our odds have steadily decreased.

Isn't it time that we plan accordingly?

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