The President has released his 2013 budget. Despite the rhetoric, this budget increases our deficit by at least $1.3 trillion and raises the overall deficit to $17 trillion.
This budget does not save any money; it reduces the planned increase in spending by a trivial amount. It will actually increase taxes on small business owners and stifle job growth. We will still be spending more than we take in through the myriad of excessive taxes and fees.
It does not take a genius to figure out that we cannot spend more than we earn forever. At some point, the deficit will cause our economy to collapse as it has in Greece and as it soon will in other European nations.
Our government needs to learn how to balance the budget from those who do it every day, the small business owner. When times are tough, small business owners cut staff and expenses. As this is an election year, it will be difficult for our elected representatives to cut expenses, especially entitlements.
Taking able-bodied people off the dole and putting them to work is just not done in an election year. Reducing the Unemployment Insurance benefit to 26 weeks would force some of the professionally unemployed to get a job. As it now stands, a person can remain on Unemployment Insurance benefits for up to 99 weeks thanks to legislation passed in 2009.
Congress will not pass any legislation to decrease these benefits in an election year. Since they increased the debt limit, we will continue to beg China for more loans to fund our ever-growing deficit.
So what can be done? My first suggestion is to cut the salaries of federal employees to the levels of the private sector. Currently, a federal employee earns approximately 10 percent more than their private sector counterpart.
One way to cut the size of government would be to reduce the salaries of federal employees by 10 to 20 percent. Those who are productive would be encouraged to move to the private sector. As long as federal employees are paid more than their counterparts in the private sector, we can expect continued growth in the size of government and in the size of our deficit.
Cut civil service salaries and public sector growth will slow down or stop. As the number of federal public servants decrease, we may even achieve a balanced budget.
We in the private sector had to make hard decisions in difficult times. I remember the sad day I had to tell my employees that we either had to cut salaries or let someone go. I was relieved when they accepted the salary cut as it enabled us to be more competitive and save their jobs.
We were able to survive the downturn because everyone pitched in. It is time to apply the rules of the marketplace to the federal government. In difficult times, we must let staff go. Encouraging retirements is one way to reduce staff. Layoffs may also be necessary to balance the budget.
Federal employees have had it good for decades. An inflated salary, a benefit package better than most of the taxpayers, and a retirement plan that is unrivaled in this nation. It is time to cut costs and some of their jobs.
I believe that we must downsize the government by at least ten percent in the 2013 budget year and in any future year where the budget cannot be balanced without tax increases ("revenue enhancements" in President Obama's words).
When faced with the threat of layoffs, some staff may identify areas for cost reduction as an alternative to losing their jobs. They are best able to identify programs that are not cost justified or that were a waste of taxpayer money. In my past dealings with federal employees, I found they knew where money could be saved. Unfortunately, they did not have the power to cut waste embedded in programs supported by legislators.
Once a program is established in law, it can only be eliminated if it is cut in subsequent legislation. What we need to do is close the loop. Federal employees should be able to identify ineffective programs and submit them to the legislators for action. Herein lies the crux of the problem.
In order to be elected our congressmen and women promised the taxpayers pork if they are elected. They're the ones who padded legislation with earmarks. Unless there is a rebellion at the polls in November, our elected officials will continue to "bring home the bacon" to their voters even if it increases the deficit.
I spent yesterday reviewing the budget details on a department-by-department basis (http://www.Whitehouse.gov/omb/budget/overview). The budget for a department is divided into two spending sections, discretionary spending and mandatory spending. Let's look at the Department of Agriculture budget.
In the discretionary spending section, I would cut out the commodities component completely and make significant cuts to the marketing and research budgets. This would result in a 20 percent cut in discretionary spending and likely some layoffs. Let the private sector handle research and commodities. The private sector is best equipped to do this and can do it at a lower cost.
In the mandatory section of the budget I would take a knife to the Commodity Credit Corporation. The primary function of this corporation is to stabilize commodity prices to protect farm income. I say let the free market prevail.
Farmers are very industrious and know how to make a profit. Artificial stabilization of farm products may reduce the impact of the decline in the commodity price, but it also may prevent profit increases through the stabilization process. Cutting the Commodity Credit Corporation would save $12 billion each and every year!
Another area I would cut would be crop insurance. The budget for 2012 was approximately $3.7 billion. In the proposed 2013 budget this increased to $9.162 billion, a 247 percent increase. In my opinion, the increase cannot be justified!
If there is a market for crop insurance, private companies will compete to get a piece of it.
I am not familiar with the workings of the Department of Agriculture or any other federal department. But as an accountant and a retired small-business owner, I know that I could slash costs and trim the fat from any government department. Anyone with common sense and independent thought can do this.
Yes, some constituencies would be offended by the cuts. So be it! We cannot subsidize inefficiencies nor can we continue to confiscate taxpayer assets through excessive taxation. Instead of buying votes to ensure reelection, politicians should do their job and stand for reelection on their record.
We are taxed enough already. The existing tax burden is crippling American families and businesses. Adding additional taxes will impede the economic recovery we so desperately need.
As a member of our local tea party group, I marched on Washington in 2009 and in 2010. Hundreds of thousands of people joined me in protesting the excessive taxation and reckless spending of our government. Looking back on it, I can see that a single march or two was not enough to affect the change we need.
It is also clear to me that writing letters to our politicians has not worked. We need to continue marching on Washington several times a year to ensure that the politicians get the message.
The working people, those who contribute to the treasury, are angry. We are not going to stand by and let our elected representatives dole out our money to their cronies, sloths and laggards. It is time to force able-bodied people on government assistance into jobs and off the government teat. It is time to decrease the burden on the 51 percent of the working population who pay income taxes. All workers should be taxed at a fair rate.
The burden of government must be placed on the shoulders of every American. Only then will they realize how crippling the weight of government is and press their politicians to downsize the federal government.
© 2012 Gordon Smith All Rights Reserved