The North Carolina Budget: Controlling the Growth of Government

The North Carolina Legislature recently passed this year’s budget.  They had to override the threatened veto of Governor   Beverly Perdue, and they did it by convincing four Democratic Senators  to vote with the Republicans. It was a victory for taxpayers, and a victory for our American system of government.

Not all will agree with my musings on this issue, but self reflection is useful, so scrutinizing these legislative actions will have value for all of us—agree or not.

Our country has been in a serious economic decline for over two years, and we currently find about 2 million of our citizens unemployed and unable to find work. Any action by our government must be focused on alleviating this catastrophe. The North Carolina legislature has moved to decrease this pain by its actions.

Governments have a tendency to increase in size and scope as time passes. Beginning as a country of 13 million persons in the early nineteenth century, we have reached a population of over 300 million. This increase in our population does not explain, by a long shot, the increase in influence, scope and control of our Government.

As a small example of this

continued “fattening” of government, who has not watched a street repair in their local community, and noted the abundance of workers (cousins, special friends, and relatives) “needed” to patch a divot in our well-used streets. Do we need all those people to fix a one-foot hole in the asphalt? Spending “other people’s money” is easy, especially when there is little public scrutiny. Our Governments—Federal, State, and local—have become bloated at multiple levels, as we citizens have tried to financially support them. I have worried that our Government has become a government of itself, by itself, and for itself because we have not watched closely enough.

This recently became evident in Bell, California when the citizens discovered the enormous salaries and benefits of their elected officials. Subsequently, these officials were removed from office and some face serious criminal charges. If one would take the time to closely investigate the details of hiring, salaries, and benefits of their local government officials, I believe the tendency to incrementally increase all these factors would become evident.

It is too easy to spend our money, and governments must have controls over this weakness. That control, unfortunately, is supposed to come from the people, but frequently, the people are too busy trying to earn enough money to pay their taxes to scrutinize the spending of their government.

It is clear, that Government has become the distributor of resources (money) between different factions. Giving to one group insures their support at the poles, so the “giving” itself has a fundamental conflict of interest. Witness the current federal administration and the favorable treatment of organized labor. This kind of behavior does not benefit the national interest. South Carolina is fighting for over 8,000 jobs while the National Labor Relations Board tries to force Boeing to hire union workers there before they can open their new aircraft plant. It’s clear, in this example,  whose hand is in whose pocket.

The “change” in our recent elected State government in North Carolina is an example of an effective and appropriate public response to the profligate spending of our elected officials. How many new bureaus, with multiple employees, have been created over the years? Does government ever, EVER get smaller? No, it will not, and it will not unless the people force this change.

I have hoped that this economic downturn would be an “opportunity” to decrease the size of government, and our North Carolina Legislature has accomplished that. Thank God.

The most welcomed relief was rolling back the “temporary” increase in the sales tax from 7 3/4%.  Our Governor, threatened   veto of this and other changes, but was fortunately overruled even by members of her own party.

If citizens can change their spending habits during times of financial stress governments must also. Now is the time to accomplish this goal. These changes will make North Carolina a better place for all of us to live, not just the Government. Checking Government growth is healthy for North Carolina’s financial growth. We should all remember this at the next election.

The Budget Battle, Can America Survive?

The dismal science (economics) is not my strong suit. Listening to the news recently, and reading newspapers has left me with a gigantic headache. Debt, deficit, 46 billion now, 75 billion later, interest on the debt, costs, and debt limit, are terms being thrown around in the current Congressional debate about how to get us out of this impending catastrophe. I did find something this morning, however,  which helped to clarify this mess we are in, and it needs to be shared with all of us.

It was written by David Malpass--a much smarter person than I--who presents some of these incomprehensible facts in a way that even I  became frightened because of where we are headed. His insight is in an editorial in today's Wall Street Journal, and is entitled, "After Obama's Budget, Republicans Need a New Strategy." After reading the article, the title is correct, because it is obvious that someone needs a strategy--new or otherwise even if we are forced to hear the truth.

Mr. Malpass (a deputy assistant Treasury assistant secretary in the Regan administration) reports that the federal government is "spending $300 billion every month...and of that $120 billion is borrowed." How's that for responsible management? He goes on to reveal ever more frightening figures:

Our debt limit is currently $14.3 trillion and will have to grow to over $26 trillion over 10 years as the government spends $46 billion and takes in $39 billion in taxes.  I can't believe it. He goes on to talk about the unrealistic assumptions that Obama's numbers are based upon.

His budget assumes that "real growth will climb from an already wishful 4% in 2012 to 4.5% in 2013, and 4.2% in 2014--despite plans for sweeping  tax increases." His wish-list also assumes that the Federal Reserve will keep interest rates low; wages and salaries will grow 6.6% per year in 2013 and 2014, and inflation will be only around 2%. Obama projects unemployment to remain about 6%-8% during this period. Mr. Malpass astutely points out that all these fanciful dreams will occur in an environment with "no recessions, no inflation, big tax increases, and no wars."

He reveals our violation of generational responsibility by relating that "there is talk that Washington wants to begin issuing 100 year bonds--the government gets the money now by promising that our great-great-grandchildren will pay it back." How's that for inter-generational Justice. Is anyone listening?

If we don't face up to this challenge, it seems certain that we will be in for an economic tragedy, and I'm not certain that we have the national will to avert this disaster. Let's face it, we are a 220 year old experiment. Can a government continue to thrive if encourages citizens to elect leaders based on how much treasure they promise to spend on them?  No one is even touching the biggest chunks of this budget crisis--Medicare, Medicaid and Social Security--at this point because maybe we won't vote for them next time around if they do. Do I see a fundamental flaw here?

On top of all this, it seems to me that no one believes that this is a real problem with real money. On an individual level each of us tries to manage our money carefully-- it is clearly ours, and we know it. If we're irresponsible, we feel the pain. On a national level, it's  no one's money because it belongs to everyone else. There seems to be a mind-set here of detachment from the consequences. Could anything be more potentially dangerous?

When the President's Debt Commission released it's report in December 2010, the public's reaction was appalling: Don't touch my benefits! It's apparent that we need leadership, and so far I haven't seen any. Republican's now have the opportunity to be leaders. Will they take the "chance" of telling the truth and risking their position of power in the next Congress. Let's hope so.