BUDGETS, BUDGETS EVERYWHERE…
(…and always printed in red ink)
The President recently sent a budget proposal for the coming fiscal year to Congress for some four trillion dollars…and that’s just for one year’s spending. Talk about being the world’s Daddy Warbucks! Not even the Russians and the Chinese combined can match it. If that doesn’t prove that the US of A isn’t the richest and most powerful country the world… nothing else can.
All of which may explain why so much of the rest of the world keeps coming to it…asking for a hand out. Of course, what those folks don’t understand is that this annual numbers game of ours is just an illusion. It’s all accounting smoke and mirrors. We really don’t have four trillion dollars to piss away for this and that…and whatever.
However, we do have something much akin to having a genie in a bottle at our disposal. It’s our…Treasury. You see, it is, indeed, almost genie-like because it has the best damned printing presses in the world…so it can produce any number of dollars that may be needed for any given fiscal year. Of course if you’re a fiscal buzz-kill kind of tax-payer, like a lot of us are, you can’t help but grumble about how all that printing is making those dollars worth less than old Monopoly Money…and piling up a debt load having so many zeros no one will be able to really figure what it actually is.
The sad thing is that neither the Congress, nor the President, seem able or willing to focus on how to come up with a real cure for our condition, preferring instead to waste their time (and tax-payers’ money) squabbling over who has the better – band aid – measures to cover up whatever economic dings and bruises we suffer because of that.
Well, we make no claim to expertise when it comes to matters of economics and fiscal policy, but, even though we may have to take our boots off to count up to twenty, we do have some understanding of the fundamentals that lead to a reasonable facsimile of a stable and prosperous society. For what it’s worth, here are a few ideas that might restore our national economic health, and do it, without a lot of political heartburn for anyone:
- Congress should mandate that a 5% set-aside will be the first item of expense from whatever gross revenues there are in any given fiscal year.
- The remainder of those revenues will be the cap on spending for that year.
- If proposed spending for that year exceeds that cap, creating a deficit, that deficit will be shared proportionately between the three branches of our government which, in turn, will then distribute its deficit slice proportionately among all its budgetary units. Thus, no single branch, no single budgetary unit, no single program, will be hit harder than anyone else. Spending limits will be spread throughout the entire government.
- Based upon function alone, such a proportionate distribution might be…75% for the Executive branch… 15% for the Legislative branch…and 10% for the Judiciary branch.
- As to that 5% set-aside first mentioned above…80% will be applied against the national debt…and 20% will be used to increase our bullion reserves as collateral for that debt. The important thing here is not the specific dollar amount, but that there is a steady, year to year, progressive reduction being applied to that debt. A process to remain in place until the ratio of debt to GDP is back to a healthier level. For an economy like ours we can probably do well if it ranges between 40-50% of GDP.
- 20% of that set aside will be used to buy gold and silver bullion from our domestic producers. These will be required to sell half of their annual production to the Treasury at a 50% discount from the going market rate. Income from such sales to the Treasury will be tax-exempt. They can sell the other half at whatever market rates apply. Note here: Such bullion assets acquired by the Treasury, however, will be valued at the going market rate, making it a win-win deal for both.
Since all of this would be directly tied to our annual GDP growth rate, as it increased year to year (even if at an anemic rate of only half percent per year) such an approach would provide slightly higher revenues available for spending each year, our national debt would progressively diminish, while our collateral reserves would also progressively increase…all at the same time.
Of course, there’s just one problem with this idea…it makes too much sense, and worse than that…neither party could make any political hay from it…so both are not likely to consider it. Nevertheless, just for the hell of it, we did a crude number crunching exercise a few years ago just to see what would happen if it was applied. The results were very encouraging…our national debt was reduced by 40% in about eight years…our bullion reserves grew about the same…and our annual available funds for budget needs were increased almost to four trillion…all without the need for any kind of political heartburn… by anyone.
Imagine how much better the numbers might be if we had actually taken our boots off…
CENTURION