I first wrote this on June 21, 2011. Still the same solution on Jan 15th, 2013.
I hate complex issues. Complexity breeds confusion. Confusion hides errors and misuse, the two things we have in great abundance when it comes to federal spending. My solution to balancing the budget and stabilizing the economy is rather simple. Which is probably the reason why it has never been thought of.
However – thinking out of the box, the solution is evident and centers around the age-old economic premise that A) the government must spend its entire budget, and B) the government cannot save money. Two simple premises that when acknowledged, help you understand why we are so screwed up.
The fact of the matter is that when the government spends, the money eventually flows back into the economy. At least that’s what it is supposed to do. Take for example – government subsides. The government subsidizes companies in the form of grants and other funding, who in turn, buy goods and services from other vendors. These funds are spent the form of wages to its workers, who in turn spend those wages on food, clothing and shelter within their local communities. Given all the right conditions, our economy works. Therefore, why do we find ourselves in such odds over this mathematically correct formula? Why isn’t the system working when it works so well mathematically? Is it because we have funder two wars? How about giving money to countries who hate us, in the form of foreign aid/bribes? No, not fully. The answer is in the rules for spending. If we pay attention and close up the loose rules, we would have no problem.
Here are a few new rules that should (must be) put into place and followed.
Rule 1) If you receive government money in any form, (grant, loan, subsidy, tax breaks or bribe, etc) you must spend the money here in the US. You must buy US-based products and those products must be produced here in the U.S. Your vendors must also be US-based vendors, who in turn buy within the US. All other companies who do not receive government subsidies are free to buy wherever they want. All taxpayers however should buy from only those companies who are receiving government funding under the new rules. You would if you want your money back.
Rule 2) If you receive funds from the government, Federal, state or local, you or your company may not have an offshore account anywhere in the world.
Rule 3) You must be a full citizen of the US and not a dummy corporation set up in the Bahamas or other offshore area. You may not have any foreign investors or stockholders.
Rule 4) If you do not like these rules, or want to file an appeal, then stop taking funds from the government, or funds will be withheld pending the outcome of a court hearing.
Violate any of these rules, and you must pay back all funds received from the day of the first draft you took, plus an interest penalty of 50 cents on every dollar you received.
There are no conditions to these rules. There is neither appeal nor special circumstances. If you receive money in ANY form from the government, these are the rules in addition to the tax and other rules that regulate government funding.
With an installation of these rules, the American public is assured that the money spent here in the US stays here and in turn, flows back into our economy.
Oh, and Rule 5 – the bottom line of all these rules is simply this. If you don’t like the rules, don’t accept government funding. That alone will cut the budget down to almost nothing. Then we get to work on the real problem; such as term limits, government pensions and why a disgraced government official, who having been forced to resign, gets a government pension of close to a million dollars a year for the rest of his miserable life.