Wise Money

I got an idea. I'm going to borrow forty six cents of every dollar I spend this year.

Hey, that's a great idea. That is strong thinking. Forty six cents of every dollar? Every dollar? All year long? Wow. Where are you going to get that money and how long until you have to pay it back?

Well, it's your money. And I'm going to make your kids pay it back.

This is not some crack head on the street trying to lift your wallet with the persuasion of a gun. It's not a distant relative or a cash strapped collegian who just got a piece of plastic credit in the mail. This is government. American government and it's not just the same old politics of more of the same. This is big leap forward into a bank busting thugging which will leave this country looking at a whole new wave of change as we plummet towards a new economic style.

I don't write this for political ammunition. This is not intended to split the people and force us to different sides of the fence. I have my views, I believe in my opinions and I do take sides. But we have enough finger pointing and and name calling going on to allow me me to stand aside and separate myself from the slinging of mud balls and high end rhetoric. I'm not in that game.

But I am in the game of calling it like it is. Put some facts out to chew on and regardless of where you stand politically or spiritually or culturally I am taking the published facts and attempting to sift them into a comprehensible platform from which you can make your own educated stance.

It does not come as news to you that we are experiencing an economic, 'challenge' if you will. This economic challenge started with the collapse of the American housing industry and rippled its way across the globe until it was felt in just about every market. Without getting too involved on the causes and politics of this I feel it is safe to say the balloon burst due to too many people living beyond their means. Forget about who got what kind of loan and why congress wanted those loans approved and then what the banks did with those loans and how they got packaged with other loans and resold across the world until the very existence of a global economy was threatened. That is not the issue today. But for argument's sake let's agree the economy is in trouble and the root of that trouble is too much money owed and not enough being paid back. Agreed?

So that's what we want to dive into today. What's it mean when too much money is borrowed? How does it impact the economy? Why is it important?

46% of every dollar spent by the United States Government for fiscal year 2010 will be borrowed. That is a big number. Would you care if your spouse proposed this as a household economic plan? Would you classify this as responsible spending? Sustainable? Do you think that you alone would be able to convince anyone to support an idea like this? Well this is what we are doing in America today. We have decided to borrow 46 cents of every dollar that we, as a government, are going to spend to operate that government. That's a lot of money. And that's money we don't have.

Again, staying away from the politics I want to focus just on the math. This is government spending. That means this is government money. Government money is misnomer. Some say there is no such thing as government money, only taxpayer money. Taxpayer money is the people's money. Your money. Government gets it from you in creative ways. It's taken from your paycheck before you even see it. You are taxed on what you buy, what you eat, what you use, where you live and how you get there. A common formula states that for every forty legal hours that you work, eight of those hours go directly to the government. That equation doesn't work for every pay scale or every work week but it gives us a place to start. We can all agree that the government is getting at least some of the money you earn and once they do they spend it. That's what's on the plate today. The spending.

American government is not afraid to spend money. We spend like nobody else. Astronomical amounts at a dangerous pace. Now I will give our trusted friends in Washington D.C. a small slice of credit. They are required to write down just what it is they'd like to buy and how much they think it will cost and then put it to a vote before the check is cashed and the shopping spree commenced. They call this The Budget. Without diving too deeply into our system of government the president comes up with a budget and submits it to congress for approval. Some things get eliminated while others get added. Sometimes (all the time) to garner the required number of votes a congressman may want to add a little 'sumpthin' sumpthin' ' for the folks back home. This is called 'pork spending' or 'earmarks' and it can be fairly interesting to as to what our loyal friends in the US Congress find appropriate.

You may remember that economic stimulus bill that was signed into law not too long ago? The one that was solely for the purpose of kick starting a dying economy? There are 9,287 earmarks attached to that single bill. Now within those 9,287 individual congressional earmarks there are a few projects which may indeed pay a dividend somewhere down the line. There's sidewalks to be built, interstates to be improved and $41,500,000 to be spent on improvements to three presidential libraries...Wait a minute. We are going to spend $41,500,000 to improve the FDR, JFK and LBJ libraries? That's part of a stimulus we consider vital to restoring the national economy? What else is in there? A fruit fly facility in Hawaii? A Swine Odor Research Grant in Ames, Iowa? And so on and so on until we have 9,287 different little projects that congress feels justified in buying. Totally outside the regular budget, totally removed from an 'Economic Stimulus' and totally financed with your money. That's how they play the game in DC.

And that bill was only $410,000,000,000. Only 410 billion dollars. They pushed that one through in about four days. Now the annual budget is up for discussion. And this one, in the form submitted by the president is loaded in at 3.5 trillion dollars. That's trillion. A whole lot of zeros. So many in fact that we really don't comprehend it. It gets distorted and loses impact. Let me just say a Trillion Dollars should not lose its impact. Let me paint a quick picture for you of a trillion dollars (and you can google the trillion dollar graphic if you want to see it for yourself). Imagine stacks of $100 bills. A million dollars in hundreds can fit in a duffel bag. That's big money. A hundred million can be stacked on a pallet and top out about waist high. A billion dollars is ten of those pallets. Ten pallets in hundred dollar bills is a pretty good chunk. A trillion dollars? Take that single pallet and put another one on top of it. Now take that double stack and put 49 more double stacked pallets next to it. Behind each stack place 99 identical double stacked pallets and soon you need a much bigger warehouse to store this trillion dollars. And we are very nonchalantly suggesting that it is a great idea to spend three and a half warehouses worth of hundred dollar bills in the fiscal year 2010.

Oh, and we are going to borrow 46% of that. We even have a name for this practice. It's called 'Deficit Spending' and we've been doing it every single year for forty years. This deficit spending gets added to what we call the National Debt and as of May 7 of this year that debt stood at 11.2 trillion dollars. This is what we already owe. And we are paying it back. It's the number three item on our spending list. In 2008 we spent 700 billion dollars on the Department of Health and Human Services. Next came National Defense at 650 billion dollars. Our country spent 61 billion dollars on the Department of Education in 2008 and we spent 412 billion dollars on the interest alone on the National Debt. 412 billion dollars to pay the interest on our debt in a single year. And now we are submitting the largest budget in the history of humankind and we are going to borrow 46% of it. And taxes won't be raised?

So the question is does this concern you? Is it wise financial thinking? If where we are today requires us to spend $412 billion dollars on an annual interest payment is it wise to add 1.7 trillion dollars to that debt in just one year? Well, maybe we're buying better things. Maybe we're buying machines that will do ten times the work at a fraction of the energy or maybe we're building better schools and things like that? The White House publishes the budget on its web site. It's broken down by departments and they even highlight certain sections. Under the Budget Highlights for the Department of Health and Human Services one can see that we are going to spend 3.2 billion dollars (32 pallets of hundreds) on a project we call the Low Income Home Energy Assistance Program. The White House says this 3.2 billion dollars will go to pay the heating and cooling costs for low income households. We're going to borrow money to pay the air conditioning costs for poor people? We really do live in a great country. I've always had an interest in the costs of incarceration in this country and the United States Federal Bureau of Prisons gets over 6 billion dollars for fiscal 2010. That's six billion dollars to manage 204,000 inmates in 44 facilities. Did you know the United States of America houses 54,036 non US citizens in our federal prison system? That's over 25% of the federal inmate population and we get to pay for three meals a day, medical and dental (and medication), television, heating, cooling, laundry services, shoes, clothes, etc...for people who aren't even citizens? No wonder that Somali pirate was smiling when he landed in New York City.

Politics aside are we wise to want to spend this kind of money? What's it all mean to you? Well, what it means is that instead of your eight hour donation to the federal government you are probably going to need to make a stiffer contribution. And the question is are you in favor of taking an extra day from your work week to finance a government which is literally spending money faster than we can print it?

It may be audacious of me but I would hope that we could maybe change our ways before it's too late.