As you can see, the federal government always spends more than it takes in, its expenses are always more than its income. Over-spending is constant and fairly consistent. What is enough money to service the nation one year is never enough to do the same next year. Even in years when they raise taxes, they simply spend more. The disease has taken hold and may not be curable. Stop me, I can't help myself. Pass a law (constitutional amendment) to force me to do what's right, to live within my income.
What else do you expect from lawyers? Confronted with a problem they cannot solve, they turn to the law. If they were doctors, they would be trying to invent a serum or pill to make themselves stop spending.
Interest on the amount of money the federal government has borrowed averages roughly 15 percent of the budget it was working with. In other words, if the government could cut its expenditures by 10 to 15 percent we would be well on our way to a treatment for the disease. At least, we might stop borrowing more and thus hold the National Debt where it is.
Government does not work the way private enterprise works and therein lie some small steps towards solution.
Unlike private enterprise, governmental entities operate within a defined territory and without any competition whatsoever. The government owns the market for the services it provides. It has 100 percent share of market. There is no competition. No other company can outbid them or prove that they can do the job better. Governmental functions are monopolies, pure and simple.
We pay the government with taxes, and it operates however it wants. We can only hope that they're honest, out to do the job right, and so forth. About the only thing government workers fear is who oversees them, which political party or elected officials manage their operation. With political parties becoming less and less distinguishable, more and more alike, this problem diminishes and the monopoly thrives. Besides, the governmental departments have learned that they can place so many mid-management people between the politicians and the workers that it becomes almost impossible to determine who is and who is not doing the job right. We even end up with duplicate functions, cities with both a mayor and a city manager, fire departments with more chiefs than indians, twenty-seven different investigative departments with the authority of the FBI and national security responsibility, and so forth. More people work for the federal government than manufacturing in the United States. Governement is a megalopolis.
Al Gore's "Report on Reinventing Government" and many other books on the subject are all correct in pointing out how we could trim the fat from and privatize many aspects of current government. However, the point-by-point task they undertake is almost impossible to accomplish. And the problem lies in the fact that corrections entail pitting an Adam Smith type free enterprise system against a structure much more similar to, God help us for mentioning the phrase, a Marx-Engels system of economics with its "general fund," penchant for hiring but not firing personnel, unions, pensions, benefits, and autonomy.
Whatever gains are accomplished they will be small and fought tooth and nail every step of the way.
With all that behind us, there is one unique fact of government that might allow a savings. It lies in how budgets are determined.
The federal government can do either of two things. It can raise taxes, or it can cut spending. It could also do a combination of each.
The federal government decides what percentage of personal and corporate income will go towards tax. From good estimates of the anticipated GDP (Gross Domestic Product) they can pretty much tell what their budget is going to be for the next fiscal year. It's always less than they decide to spend, and they know this ahead of time, but no federal politician wants the reputation of raising taxes. They know they're going to have a deficit.
Some state and local governmental entities decide beforehand how much money they need to carry out their plans and then tax the people accordingly. They decide their budget allocations six months ahead of the fiscal year and if it turns out that tax income was greater than they anticipated (due to new business in the area, people moving in, annexations, mild weather, or whatever) then, theoretically, the public pays less tax. This system guarantees a balanced budget.
The federal government could adopt this latter method and we would immediately have a 15 percent tax increase as you can tell from the above chart. That's one way the budget could be balanced immediately.
The other way the federal government could balance its budget would be to cut expenses by at least 15 percent. We'll cover this subject shortly.
However,
For one thing, departments that do turn a profit are not allowed to use it as a means of increasing the service they provide. For instance, the police or building departments of a city may actually take in more money than it costs for them to operate. The police may do this with tickets issued, confiscated monies and properties of dopers, and so forth, while the building department might do it with the fees they charge for permits. But whatever they take in is thrown into the "general fund" as a means of helping to support other services that do not make money because that isn't the name of the game anyway.
More importantly, every department of government knows that if they do not spend every cent of their budget allocation they probably will not get as much next year. And if they want to build a case for additional funds, then the fact that they are always over budget, in the red, will help get more next time. Anyone who has ever submitted a budget in government knows this.
As a result, every department head in every aspect of government knows exactly where the fat is. They added it in themselves.
All that's needed is a very strong hand at the top. Mayors, administrators, governors and even presidents who simply call all their department heads in, then tell them emphatically---they are each going to cut their budgets 10 or 15 percent from the last year. Come back in two weeks with the plan on how you intend to do this.
We do not have that sort of leadership in government.
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