Apolitical Budget Process

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There is a simple formula for our politicians to follow to end deficits and pay down debt. If followed, this 5 rule budget process will reap political advantage for the Party that subscribes to it. It is common sense. Most middle class families in control of their monthly bills and income will recognize it right away. Let's take a look at these short and simple, common sense budget rules.
 

Budgeting Rules:

Rule 1.
Take no action which would jeopardize or diminish revenue. Quitting one's job or taking another job with lower pay, everyone knows, will make budgeting more difficult, and cause one to give up more of what one needs, and or, wants in order to balance one's budget. In government terms, this means taking no actions which cause job or wage losses for tax payers, or reduces other government revenues.

Rule 2.
If opportunities exist to increase income without sacrificing quality of life, take advantage of them. If a better paying job comes along that allows a person to do what they already do, and increase their income, it is dumb not to take that better paying job or pay increase. In government terms, this rule means increasing revenues, taxes, wherever doing so will not harm the economy or quality of living standard for Americans in any significant way.

Rule 3.
Accurately assess what your income is, and subtract 20% for unanticipated expenses that are certainly to arise. Going forward, put that 20% subtracted, into an emergency account to be accessed only in emergencies that would otherwise bankrupt you. In government terms, this means putting politics aside, and realistically projecting what revenues will be. It means getting rid of ideological theories that make no sense, like cutting taxes will increase revenues. That only happens when economic growth is being strangled by a lack of profits by business, or ability to borrow to expand their business. That is clearly not the case in these times.

Rule 4.
Once you realistically know what your income will be, make a list of expenses and obligations that are absolutely essential to keep your family from leaving you, keep your health and income intact, and keep you out of bankruptcy. This is the core of your budget. Make a rule that no one in the family may do anything that would jeopardize the family's ability to afford these obligations. In government terms, this means making a list of expenses that will prevent revolution, keep workers employed and employers employing, defending the nation from hostile acts toward it, and meeting the nation's debt obligations and maintaining its good credit risk rating. (Demonstrating that our government is following these rules, will insure our good credit risk rating.)

Rule 5.
Make two lists. A high priority list and a low priority list. In the high priority list include everything that would either improve your financial position in the future, or, make your family feel healthier, happier, or more fulfilled over the years to come. In the lower priority list, include all your wants that would provide you and your family a short term fulfillment with no residual benefits later on. In government terms, the high priority list would include measures that would improve the quality of life for Americans either continuously or increasingly over the decades to come, like investments in cleaner environmental conditions and space exploration which will eventually preserve the species in the event of an extinction event on Earth that will inevitably occur. The low priority list would include items with a short term or one time benefit, like a new National Park, monument, or, one year subsidy to farmers, whose profits dropped precipitously due to a non-recurring anomaly in weather patterns for that year. 

Allocate your remaining income to the high priority list, first, and then any remaining income to items on your low priority list, without borrowing. Stick to your budget, and you go no further in debt. If you have debt, paying it down as fast at an accelerated rate, becomes an item in your high priority list. If interest expense is eating your income up, then paying down debt must become the first item in your high priority list. This will free up your income for other high and low priority items as soon as that debt is paid off. 

Summary:
That's it. Five simple rules to guide the budgeting process to insure America's solvency and one day increase prosperity for generations to come. To be sure, there is ample room for debate and arguing over what should go on these lists and how to prioritize them. However, these are simple common sense rules which, it is safe to say, the majority of Americans who manage their own budgets, would agree are rules their representatives should adopt and follow in managing the big budget for us all.

One thing every American voter should remember is that a budget's primary purposes are to guide you in keeping what you have, and with that taken care of, improving your financial condition going forward. If our politician's are talking budgets that fail this test, they aren't representing you or your interests.

I personally intend to use this 5 Rule Budget to measure the actions of my representatives, and the President as well. If they demonstrate that they lack the common sense contained in these rules, they don't deserve my vote and shouldn't deserve yours. After all, what future do any of us in the Middle Class have if our politicians destroy our nation's economic future? Short of leaving America, it will be a most difficult and unhappy future, indeed.
 

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This page contains a single entry by David R. Remer published on April 14, 2011 4:06 PM.

Government: System Worked: Barely. was the previous entry in this blog.

Debt Ceiling Will Be Raised. is the next entry in this blog.

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