Monday, February 27, 2017
We seem to have become a "math challenged" society. I saw it many times during my 40+ years as a custom homebuilder. A client would come to me and say they had a hard budget of $ X . After learning what they wanted in terms of their amenities, I would advise them they should expect approx Y square feet in order to stay within budget.
Then we would all sit down with the architect and they would tell him to cap the footage at Y feet, and that they were willing to accept smaller secondary bedrooms, say 100 square feet each...."so make them 12 feet x 12 feet."
That's pretty much how our government has worked for decades. A succession of congresses and presidents have wanted more than they could pay for. That's how we got our $19,000,000,000,000 deficit. We got away with it because no matter how badly we f__ked things up here in America, we were still less f__ked up than the rest of the world. Smart money "over there" would invest their money here (read: finance our deficit) because we were still considered a safe, stable country. It was all relative.
Tomorrow Prez Trump is going to give Congress his new budget outline. He's said he was going to dramatically boost defense spending and infrastructure improvement, while not touching Social Security or Medicare. Oh, and he wants a BIG tax cut, too. I'm sure the Tea Party is sweating bullets right now! Their whole reason for being is to cut spending and the deficit, and here a fellow Republican is proposing an increase in both.
"Not to worry" they'll say. "We're going to increase income by growing the economy by 4% (thereby increasing tax revenues) and by cutting 'waste, fraud, and inefficiency'".
Have you ever heard a competent financial adviser say, "Sure, go ahead and buy that big new vacation house. You're bound to get a substantial raise any day now. I hope." And hasn't every president since Calvin Coolidge promised to save money by cutting waste, fraud, and inefficiency? *still waiting*
The truth is, there are too many powerful constituencies (read: voters, special interests, and campaign contributors) who would scream bloody murder if Congress cut anything that affected them, and if there's anything every congressman loves it's happy voters and campaign contributors, so....
What will eventually happen is there will be, out of absolute dire necessity, a substantial tax increase on the wealthy. "But how is that fair", the rich will ask? My answer: It isn't, but it's sorta like the answer John Dillinger gave when asked why he robbed banks: "Because that's where the money is."