Budgeting 101

For anyone who wonders why Swamp politicians, be they Democrat or Republican, can’t seem to get a grip on America’s finances and put us on a fiscally sustainable path, this Blog post is a must-read. Let’s start with some fundamental facts:

    1. No entity — an individual person, a family, a corporation, or a government — can continuously expend more funds than it takes in for an indefinite number of years. The result of such a scenario is a continuously-increasing debt — and inevitably, at some point in time, the creditor(s) who have granted the bulk of that credit will lose confidence in the debtor’s ability to repay what is owed, or even the interest on it. That, in turn, will result in the creditor(s) taking such actions as refusal to extend additional credit, requiring pay-down of some existing debt before any new loans of smaller amounts will be made [i.e., creating a scenario in which the debtor’s overall debt level is reducing each year], and/or increasing interest rates on new debt.
    2. No government can make all of the people over whom it has authority happy all of the time [it can, however, keep some of the people happy all of the time, and all [or at least most] of the people happy some of the time].
    3. In recent decades and currently, attributes in a person running for office that are most likely to result in his/her being elected to that office have very little if anything to do with his/her knowledge of fiscal or other domestic [or foreign policy] issues. Factors determining electability are more in the realm of name recognition [vis-a-vis that of his/her opponent], speech-making ability, and “charisma”.

The “drain the Swamp” mantra these days, at its core, is a recognition on the part of many that these fundamental facts, which I might add form the basis of the ground rules of the Current Paradigm, must change if anything other than the status quo will prevail until a financial meltdown forces acceleration to a New Paradigm.

For anyone doubting the accuracy of the preceding paragraph, one of the original pages of this site [Unsustainable Fiscal Path] gets into the weeds of why #1 above is a fact and not just a collection of assumptions on my part. The purpose of this blog post is not to attempt to debate #1 [or any of the items] in my fundamental facts list above, but to clarify why Swamp politicians, absent a “wake up call,” will never move the needle on this issue — ergo, “draining the Swamp” may be the only way to get us off the fence voluntarily before we fall off of it.

Demonstrations And Protests Won’t Do It

Demonstrations and protests seem to me to be more prevalent nowadays than they’ve ever been in my lifetime. I realize that it’s possible they just appear to be more prevalent because of our climate of 24-hour, 365-day instantaneous “news” coverage — and in recent years, Social Media posts that can “go viral” within hours if not minutes. I do think it’s accurate to say, though, that they are organized and promulgated much more quickly, and that their usefulness has been outlived. While distant-past versions have played a major role in producing very meaningful and lasting change [e.g., the Civil Rights era], today we have such a plethora of issues simultaneously in the media that they tend to drown each other out and just become general evidence that there are segments of our society who are not happy — and therefore nothing more than evidence of the truth of assumption #2.

Current Swamp Occupants Won’t Change

In retrospect, President John Adams was certainly speaking prophetically over 200 years ago when he said this: “There is nothing which I dread so much as a division of the republic into two great parties, each arranged under its leader, and concerting measures in opposition to each other. This, in my humble apprehension, is to be dreaded as the greatest political evil under our Constitution.” That’s a pretty accurate description of our current situation, which has no doubt evolved [or devolved might be more descriptive] to a much worse state than he must have been imagining when he said that. If Swamp occupants haven’t changed in over 200 years, we would be foolish to think they will change now.

So What Are We Left With?

I think Pogo [Walt Kelly], in summing up his attitude towards the foibles of mankind and the nature of the human condition, had the answer in 1970 — “We have met the enemy, and he is us” [a parody of a message sent in 1813 from U. S. Navy Commodore Oliver Hazard Perry to Army General William Henry Harrison after his War-Of-1812 victory in the Battle of Lake Erie, stating, “We have met the enemy, and they are ours.”].

Interestingly, this 1970 edition of that famous comic strip was a timely confirmation of something President James Garfield had said almost 100 years earlier — “The people are responsible for the character of their Congress. If that body be ignorant, reckless, and corrupt, it is because the people tolerate ignorance, recklessness, and corruption.  If it be intelligent, brave, and pure, it is because the people demand these high qualities to represent them in the national legislature. … If the next centennial does not find us a great nation . . . it will be because those who represent the enterprise, the culture, and the morality of the nation do not aid in controlling the political force.” [Garfield focused these remarks on legislators, but I would broaden them to apply to all elected officials — national, state, and local.]

So what we are left with is us!  And the question before us is “What can we do?”

Our Challenge

Albert Einstein is often quoted as defining insanity as “doing the same thing over and over again and expecting different results.” [he later disputed having said that]. Nonetheless, a quote accurately attributed to him is “We cannot solve our problems with the same thinking we used when we created them.”

Almost 129 million votes were cast in the 2017 presidential election. However, because of our Electoral College system [which I believe is a good thing], only a few hundred thousand votes could have changed the 306-227 outcome. I believe that at least a third, maybe closer to half, of the 129 million people who voted fall into a category one popular radio talk show host calls “low information voters” — basically, people who are easily swayed by the most petty of factors [how the candidate looks, how good a speaker he/she is, liking or disliking one thing he/she said or did in the final weeks or even days of the campaign, etc.]

I’d like to think that the 2016 election was the last one that will have been dominated by the Current Paradigm, and that the Major Paradigm Shift Well Underway in this country is, at least for our elections, complete. If that is the case, those of us who have the will to do so can surely find ways to swing a few hundred thousand low-information voters in our direction. Then, the remaining issue will be to ensure that there is a steady stream of candidates for elected offices who have something in their qualification profiles other than “looks nice on camera”, “speaks eloquently”, and “has charisma”: for starters, maybe one such item could be “has a rudimentary understanding of economics and finance”. Sorry, no capacity to deal with that issue in this post — I’ve already run a little over my self-imposed length for individual posts. I’ll save that for another day.

Thanks for reading this post, and if you regularly follow my Blog, for that, too. Please consider sharing this or other posts with your friends, colleagues and associates.

img_7026 img_3358

Charles M. Jones

Author: Charles M. Jones, PE, CPA

[retired — neither license active]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: