How Not to Budget
Tags: Second American Revolution.
Click here to get Caucus of Corruption: The Truth About The New Democratic Majority by Matt Margolis and Mark Noonan.
California Governor Arnold Schwarzenegger will know within a month whether a $1.1 billion drop in revenue collections is part of a growing budget shortfall or an isolated event, his budget spokesman said.
Revenue in the three months ended Sept. 30 was 5.3 percent less than assumed in the $85 billion annual budget, state controller John Chiang reported yesterday. Income tax receipts led the gap, as unemployment reached 12.2 percent in August.
“The culprit here appears to be estimated quarterly personal income tax statements,” H.D. Palmer, the governor’s budget spokesman, said yesterday. “The numbers are cause for concern, but the issue now for us is to determine if this is a one-time event or whether it has more long-term implications.”
To translate from the governmentese: “oh, shoot: this is falling apart faster than we expected!”.
The way a government should budget is this:
1. What were the actual revenues from two years ago?
2. Next year’s budget should spend 10% less than that.
3. If there’s a surplus – whoopee! You can spend it or rebate it.
4. If there’s a deficit – too bad, but at least you won’t have to borrow as much to cover it as you would have with a budget which presumes increased revenues.
Repeat each year.
Government is a lot simpler than we make it out to be – of course, those who run government make it as complex as possible? Why? Well…
1. A large portion of the people manning government simply don’t know enough to realize when they’re being rolled by professional bureaucrats and lobbyists.
2. Another large portion of such people know that the screwier they make it, the less likely they are to get caught in their grafting.
Meanwhile, the few who know what they are doing and are honest are left to issue repeated warnings, which are then calmly ignored. Think of it like this – in response to the various rip-offs by banks via credit cards and payday loans, Obama has proposed to add another layer of government bureaucrats to the mix. Much simpler to merely pass a law saying that no APR may be higher than 20% and that no APR may be increased by more than 1 percentage point per year – banks will stop loaning to the people they charge 29% to because people who have that sort of lousy credit won’t qualify for an APR less than 20% and, meanwhile, people who get in a bind won’t find their APRs jumping from 9.99% to 18.99% for being late, once. And we don’t need a single new bureaucrat to enforce such a thing – the current law enforcement agencies are sufficient to easily monitor this, and banks are highly unlikely to attempt to break such a law. The demerit in this, for government, is that it would be easy for everyone to understand – it’d also be fair to both banks and consumers and that right there would kill the deal.
New people are needed – new people with new ideas.
Thank you for visiting Blogs For Victory. If you enjoy our content, please consider making a donation to help us cover the costs of our servers.Mark Noonan is co-author (with Matt Margolis) of Caucus of Corruption: The Truth About The New Democratic Majority. He also blogs at Nevada News and Views. Follow Mark on Twitter.
13 Responses to “How Not to Budget”
Caucus of Corruption
Government overspending is pretty much what you can expect to happen when you have people spending other peoples’ money.
I picked up a book a couple of weeks ago and have found it fascinating. It is called “National Suicide” by Martin Gross. I’ve had internet connectivity problems and haven’t had a chance to double-check his info, but what he says is alarming, and if he is right, he is pointing out a situation that absolutely MUST be addressed now. While I may not always agree with Gross’s conclusions, his statements are attention-getters.
An example:
“In one recent year, the federal government could not acount for $24.5 billion it spent. Buried in the Treasury Deparment’s “Unreconciled Transactions Affecting the Change in Net Position” is the fact that the enormous sum is unreconciled—that is, missing. It was spent by some people, somewhere in Washington, but that information is unknown. The Treasury finds it a “priority” if only because the missing amount is large enought to fund the entire Department of Justice for a year.”
Another:
“According to the GAO, the IRS could not verify $3 billion of its own expenses, adding that the agency “had not kept its own books and records with the same degree of accuracy it experts of taxpayers”.
But it gets better—-”Refunds of $233 billion “could not be verified or reconciled”. (I read that to mean that while the IRS says it refunded $233 billion, no one really knows where that money went.)
Quick math: if Gross’ figures are correct, that is $260.5 BILLION in funds that are simply missing.
No oversight and a carefree attitude toward the funds of other people will always result in conclusions like these.
Throw in some bleeding-heart determination to fix all the ills of humanity and society with other peoples’ money, and you have a budgetary disaster looming.
Or, as we are seeing now, a budgetary disaster which has arrived.
Amazona,
That is another reason I want to “re-valuate” our currency – by switching back to the gold standard and converting our fiat money for hard money at a 100-1 ratio (ie, 100 fiat dollars for 1 gold dollar) we’ll turn a $3,000,000,000,000.00 budget in to a $30,000,000,000.00 budget..much easier to lose billions when managing trillions…much harder when the numbers are smaller.
Amazona
If this were a business and the IRS did an audit, the asset’s would be seized and someone would be going to jail for a long time.
This is a great example of why we need to elect small business owners. Currently we have two many congress critters who know nothing of a P&L, or how to even balance a check book, and even the POTUS is currently in the first real job he’s ever had.
Actually, looking at the IRS problems there is an easy solution. Go to a flat tax, very few if any deductions. We will be able to file with a postcard, and the employer withholding should be very accurate, no interest free loans! I work to keep my tax refund as small as possible, by keeping my deductions as high as I dare. That way I get more money back on each paycheck, and do not give away the interest I can earn on my money to the government.
Maybe we should demand that the federal government cannot raise taxes, or increase spending until they can account for all moneys spent? And penalize them by the amount not accounted for each year. Bet if the missing money came out of House/Senate pays, it would be found really quick.
kjs
a national sales tax, no deductions, no withholding, no govt in your business.
very simple just like a state sales tax.
Well, if you ask the Omaha city council, they will tell you that a sales tax is not a very reliable way to collect funds. Also, a sales tax will hurt those who are working poor. Or would the sales tax cover everything but food?
A flat tax could start at a level that would allow those who are working poor to not have to pay tax, at least until they started to earn decent money. This way those stuck on the DNC handouts would not find the idea hard to deal with.
Remember, any major tax change has to get a lot of people who are used to being at the public trough to agree to it. Telling them they will have to pay a national sales tax probably won’t work.
Yes, Tracy Burns said that a national sales tax would smash the working class.
It seems that everything the Democrats have created is designed to hurt the working class…of course, that is understandable, they want communism.
I have to wonder why some one like Steve Forbes, who supports a flat tax, is ignored. But those who want to tax the working poor are given such importance. It seems that a rich man like Forbes, who would probably pay less with a sales tax than a flat tax, would advocate for the tax that would help the working poor rather than himself.
Maybe we need to teach some of the working poor the reality of trusting the Dems.
kjs
Well, if you ask the Omaha city council, they will tell you that a sales tax is not a very reliable way to collect funds. Also, a sales tax will hurt those who are working poor. Or would the sales tax cover everything but food?
The state of Florida has NO income tax, only a sales tax.
It works just fine, and the “working poor” seem to get along ok.
I mean most still have plenty of money left for cigarettes and beer.
funny how mark’s “new ideas” mean going back to the wild wild west currency system. talk about modern.
I have no problem with going back to the gold standard. At least then our currency would have real value, and unfettered borrowing by the federal govt would be stopped.
As for the sales tax, well I guess some areas it works better than others. Here in Omaha, because Iowa has lower sales tax, we often have people going over there to avoid the cost. And Neo, not all working poor buy cigs or drink beer. Some actually are working to try and get out of the hole. Lets not hold the actions of a few against everyone.
kjs
I know I have three kids and two grand kids.(still cost me a bundle)
but through my profession I get in many peoples homes and the vast majority of the low income people and their neighbors smoke and there usually are beer cans in the waste basket…just saying.