I'm reading through the works of Gene Sperling, and he keeps talking about providing incentives for lower income workers to save, either through a Universal 401K, or tax code changes, or whatever. It all sounds great, but it's missing an important element.
We can't, through changes in law, require individual savings. It's not that we couldn't pass a law requiring people to save some money, it's just that a law like that would cause a lot of ugly political consequences. Who wants to be the candidate for reelection who says "I voted for the bill that took 10% of your money away from you."
That doesn't work, and there's a better way.
While we can't have direct effect on the behavior of individuals, we can pass laws that affect how our government works. There has been a Balanced Budget Amendment introduced in Congress for years, if not decades. It's an idea that makes sense, and the last several years of the Clinton Administration shows what a budget written in balance can do. We were on track not just to pay down the National Debt, currently 8.9 Trillion Dollars, but to pay it off. This is a debt that exploded under Reagan and Bush I, and Bush II has reversed the positive direction that we had started to move.
So, why is a balanced budget so important? Because we owe money to other countries, and we have to pay interest on that money every year, regardless of anything else. Add that interest to the fixed expenses of Social Security, Medicare, and all the other promises that the Government has made, and we're heading towards a downward spiral that we won't be able to get out of.
Here's my spin. I don't think Balanced Budgets are the answer. They're not enough. We didn't pay down the Debt under Clinton by having Balanced Budgets, we paid it down by having a Budget Surplus. That's the key.
If we could require a 1-10% budget surplus at the Federal level every year, we would be able to start to pay down the debt that we have, and after a few years (or decades since we're so far in the hole), we would start having extra money. Before people start crying for tax cuts, I have a different idea. Wouldn't it be better to put that money to use in our overall economy?
Here's an even larger picture. If every level of government, from Federal down through States, Counties and Cities, were required to have a 1-10% budget surplus, all of them could start to pay down their debts and start putting money aside. For my own city of Seattle, the extra revenue could be put into local banks, and made available to businesses and home buyers as low interest and fixed rate loans. The interest earned from those loans would be made available to the city in the next budget cycle as part of the general fund, and that extra money would justify a reduction in taxes.
There are 50 states. Washington has 39 counties. Each county has several dozen cities. We're talking big bucks, and it's time we started using that money to help ourselves and rebuild our infrastructure. Building our civilization on a foundation of Debt is destroying us a little at a time. Building on a foundation of wealth has long term positive consequences for us and our children's future. I think it's a better course.
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3 comments:
I have been waiting for 38 years for the legislature to get off their posteriors and deal with person and public debt in America. To by honest I am still hoping but I quit waiting. In December 2004 after a period of pray and grumbling to God, Specifically asking why our leaders had not taken action to deal with debt. In that quiet voice that means stop and listen I heard Him ask me; “Why haven’t I done something?” Understand please that I have taught Sunday School to Young Adults and Youth. I have spoken often of issue of biblical stewardship. God was calling me to do something more specific. I just did not know what and was not ready to hear it so we had a short discussion. It was me trying to deny that I was the individual He wanted to take on the problem. No Response. Except for the various scripture of others in the Bible who tried to tell God no. I repented quickly.
You See I know that I did not have the ability in myself so God had to have a plan. I started doing my home work which is first prayer and then research. What I found revealed that the problem was in several orders of magnitude worse than I thought. I then looked for the cause of the problem. The cause of debt varies from one person and situation to another. I needed to find a common factor that could be worked. Counseling and Compound Interest are the only two factors that can be used to deal with debt. Counseling is not immediately feasible because personal debt has a stigmatism with it and most individual hide the problem until it is out of control. That leaves Compound interest and the only factor that might be able to change. The question is how. How do we change the compound interest factor?
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Easy we offer a long term zero compound interest loan to cover the individuals personal debt.
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Ok, Where do we get the money.
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There in lays the problem. Where do we get the funds?
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People Donate
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Uh, 24 Trillion USD
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Ok, I was lost at this point. Then I read Mathew 14 the feeding of the Multitude and the Old Testament assignment of the Land to the Tribes of Israel.
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We offer a $1,000 Loans by Raffle. When the Individual repay their loans at $5.00 per month for 240 months these funds are deposited in an American Fixed Trust. This pays down individual debt. It provides a long term National Savings Program for America.
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I hope that the simplicity of the concept excites you. It sure did me. I was dancing in Praise for several days. I went to close brothers and sisters in the Lord and we organized a Not-for-Profit in the PI to start working toward seeing God program made real.
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This is where we are today. Looking for Local Not-For-Profit Organization in every community in the United States to organize, operate and administer the program. Notice that the program is to be completely controlled at the local community level.
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What is Wrong with this Plan?
In the 1980 US Presidential election, Ronald Reagan asked the American people a question. "Are you better off now than you were four years ago?" It instantly became part of our lexicon, and part of our culture. America is the most selfish nation on Earth. The current generation of leaders were brought up in a conservative movement that taught them "If there is no immediate benefit to you personally, it's not in your best interest." Even charity became part of it, with advertisements showing pictures of children in Africa and the caption telling us that if we gave this or that organization $100, it would solve the problem. If we had sat down to think about it, we would have realized that we were being fed a lie. That $100 didn't solve anything, and in a few instances it actually made the problem worse. But it sure made us feel good. And that's what we were after, that feeling of gratification after doing minimal work.
The United States has not been able to deal with sacrifice since World War II. The Greatest Generation grew up in the Depression, where most people had to struggle day to day with their survival needs. Then we launched ourselves into a war against tyranny, and we sacrificed whatever we had to in a quest to defeat the forces of Fascism. The Boomer generation grew up in a world where on the one hand we believed we had already defeated our enemies, and on the other hand world devastation was just a few minutes away thanks to the Cold War.
Your plan is wonderful, but I think it is missing a critical piece of our current culture. If someone donates to the raffle, and they don't win, unless they have a personal connection to the winner they're likely not going to donate again. It doesn't make your idea wrong, just impractical. We need to change it so people see a benefit to themselves, while helping everyone else at the same time. It's not going to be an easy fix.
You are absolutely correct. The need for personal connection is why we are asking the local communities to take control of the Shared Debt Relief Loan Raffles. Local Organizations such as the: Local Boy Scout Troops; Local Fellowships, Local Political Party Chapters. Any local organization that will operate a fully transparent program is welcome. Folks need to see that the program is working for their community. They need to know that as they repay their loans to the American Fix Trust it will serve other needs in their community. They need to have faith that they and other participants will have a say in what the dividends are used for. Bring problem solving back to the community. Remind the community that we do not need state of federal actions to solve many of our problems. WE NEED EACH OTHER!
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