The Problem with the United States Budget!

'The Problem with the United States Budget' is an article by Jason Moser and his thoughts on the way the government is handling its responsibilities. He has taken several personal finance classes in college as well as creates budgeting materials for his own budget.

----------------------------------------------

Instead of figuring out how to trim the deficit with pointless cuts here and there that barely even scrape the dirt at the bottom of the deficit, how about figuring out how to bring in more revenue to pay off more debt each year!

In a Fox Business News article called 'Only in America: More Debt to Avoid Fiscal Meltdown', the government is contemplating a very critical decision on a catch 22 situation that could go bad either way. In one direction, the government will pretty much default on all of their debt and all of the world's powers will lose all confidence in our ability to pay them back. In the other direction, by increasing the debt limit, the government will be able to simply increase the deficit even more.

Congress is going about it all wrong. The financial think tank is thinking like a multimillion dollar business instead of like a family with a huge buget. Thought the United States is a huge government, it is still one budget. How difficult could it be to:

A. Stop borrowing money.
B. Stop spending more.
C. Raise more income.
D. Lower the debt.

Think about the budget from your prospective. What would you do with your personal budget if you were in a situation where:

A. Your income is $100,000.00
B. Your spending is $150,000.00
C. Your liabilities total $750,000.00
D. Your net worth is $250,000.00 not including this year's income

In this example, most of your earnings doesn't go to bills. You pay the minimum on all of your credit cards and loans and practically everything you purchase is on credit, not cash.

What would you do to solve the problem?

Well, the first thing you should do is shred every single credit card you have. Closing all of the accounts is not smart, but requesting lower limits doesn't hurt. Your credit score will go down if you close all of your credit card accounts at the same time. But, you must get rid of the source of credit, the cards and the numbers you use to make your purchases.

The second thing you should do is assess your budget and see where you are going wrong. The first problem is that you are spending more than you make. The second thing is that you owe more than you are worth. Those are the obvious problems. Now you have to dig deeper and find where you are spending that keeps widening your debt (eventually you will run out of credit). You are going out to eat way too much, you pay top dollar for the best services (doctors, dentists, lawyers, hair dressers, therapists...), you have to have the newest cars, largest boats, and biggest house. And the five i-phones for your household are a must. You have people cut your grass, prune the bushes, and even wash your car. You are rarely home, but all of the lights, televisions, computers, and appliances stay on constantly. And everyone must own a car in the house, sometimes two of them. Wow, there are a lot of things that can be trimmed down to control your spending.

Third, figure out exactly where all of your money is going. You must know all of your bill outflows as well as all of your miscellaneous living expenses. Bill outflows are your utilities, mortgage, auto loans, cell phone bill, store charge cards, credit cards, and personal loans. These bills generally have a minimum payment or a set monthly payment. You must know how much you must pay on all of these to not get behind. If you are paying minimum payments, you are owing more and more every year on interest alone. If you make interest only payments, your balance will never go up or down so the debt will never be paid off. For your miscellaneous expenses, you must know how much you pay for gas, food, entertainment, medical, health, and everything else that consumes your money each month.

Now that you know where all of your money is going, you need to make a budget plan to actually trim down your unnecessary expenses and bills at the same time.

Before I go on, you can see where this is going to get cumbersome with the United States Government. Can you imagine how many pages of income, expenses, liabilities, and assets the government has? How can anyone simply review the budget and come up with any kind of solution?

The forth thing you need to do is to get the entire family on board with the plan. If any one part doesn't do their part, the plan will quickly fall apart and the old habits will be reenacted. Discuss the plan with all parties and reach an agreeable decision. Getting a family of four or even ten is easy. Getting an entire congress full of democrats and republicans to all agree on the same budget is near, if not, impossible.

Once everyone is on the same page and agrees to the budget plan, you must take action on the budget plan. Your goals are to increase income, lower miscellaneous living expenses, creatively raise bill payments to pay the higher interest liabilities off faster while still paying down the other liabilities, and not incure any new debt until the original debt is paid off.

Now how easy is this? Very, very painful. But necessary to avoid financial collapse. Some people will simply bail out and take the bankruptcy road, trying to erase all of their debt that way. This may work to an extent, but it is backfiring on you in the long run when companies raise their interest rates or prices to make up for the lost money from your bankruptcy, of course costing you more every month.

Unfortunately, our government can't just bail out and file bankruptcy. But they can do something about the debt in question. But unfortunately it will take some time to go through the thousands of financial statements and pages of budget proposals to even think about a solution. Here's some quick fixes the government could do to help in some of the budget areas:

A. RAISE MORE INCOME! Create a FLAT TAX! Here's some statistics from a CBO Study: "Middle-class households that earned between $34,300 and $141,900 paid 50.5 percent of all federal tax revenues in 2007 (the most recent year analyzed), according to the CBO study released Thursday, and households that earned between $34,300 and $352,900 paid 66.7 percent of all federal taxes.

"Households in the top 1 percent for annual income (those earning more than $352,900) paid a healthy 28.1 percent of all federal taxes, but households in the lower income brackets paid relatively little. Those earning less than $34,300 paid only 5.2 percent of all federal taxes, and those earning less than $20,500 carried almost none of the federal tax burden (just 0.8 percent of the total) in 2007." That's a pretty large spread of tax burden among the income levels.

From low income to super wealthy, everyone pays the SAME tax rate every year for every dollar they earn. This is easy. Go to the IRS, erase every computer hard drive they have, get rid of every tax program out there, and start over. The 14EZ form will be super easy for everyone; 4 lines total. One for total income, one for the amount you were actually taxed throughout the year (which should be 15% lets say for all earned income from a job), a line for how much tax you should owe based on all income sources, and how much you still owe. Nothing more. Sign it, send it in and you are done. Simple as that. If someone doesn't pay their taxes, put them in jail or make them pay double to stay out of jail.

Another thing they can do is stop importing oil and other commodities that we have readily available right here in this country. Exporting is highly encouraged, but no more importing until spending is under control. This may hurt the world economy right now, but they aren't really watching our backs right now.

B. STOP BORROWING MONEY. If you look at the rate at which the United States borrows money, you would fall over dead. They need to stop. If they have to borrow money, just like with normal every day citizens, then they don't need it. If they don't have enough to attack a country, they shouldn't attack the country.

C. STOP BAILING OUT BANKS AND OTHER COMPANIES. Worrying about the economy and trying to be the do all save all is what is killing this country's economy. Stop giving away billions to failed companies. They failed because they didn't run their business correctly. This is what really added to the deficit in the past three years, especially when none of the companies are really paying it back.

D. STOP WASTEFUL SPENDING. This is a big one that the government put themselves in trying to help businesses who provide items via a stock system. When the government shops around for the lowest price, it's not necessarily the lowest. If you buy a toilet seat a Lowe's, you may pay $22.00. The government, because the item is tracked with a special stock number, will have to pay around $200.00 for the same toilet seat. Get rid of the stock system all together and purchase everything on the open market. Stop paying hundreds for dollars.

E. FIRE SOME OF THEIR EMPLOYEES. I know this will hurt the job market at first, but there are way too many people working in the government that are really considered unnecessary. By unnecessary, I mean sit on their butts all day everyday not really doing anything. With all of the pay increases for all of these government employees (including military), the amount of people (too many people) that get paid isn't supporting these increases in the overall outlook of the budget.

This is a great start that will definitely help the United States in their quest for a lower deficit. What is trimming four trillion dollars off of the country's fourteen trillion dollar deficit, especially over a twelve year period. Our country has to do something right now as the debt continues to grow through interest payments alone before all of the other nations in the world who we owe debt to bail out of the dollar and leave us high and dry to lick our wounds.