What are the major problems with the American budget?
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Takerial
Lovable Teddy Bear
What are the major problems with the American budget, and how would you go about fixing them?
For me, one of the major problems is that there is no incentive to save. What happens a lot is that organizations will force themselves to waste the rest of the budget they have remaining at the end of the year, just to retain their limit.
Because often, whatever you don't spend, they cut off from your budget the next year. So it makes sense to spend the rest of it, so you can have that same amount in case you need it next year.
What I see as the best solution, would to create an incentive to save. My idea?
Alright, say you have a 100k budget.
Of that, you spend only 90k. So that means 10k was not spent. Under the current budget. You'd just get dropped down to 90k for the next year.
My idea. Take 50% of what they save, so 5k of 10k, and put it aside for them. So they'd have an account with 5k in it. And don't take away from their budget.
The other 5k, just goes back into the pool so to speak. So if this is a budget for a school. It'd go back up to the school district. There it could be reused on schools that need an increased funding. And then you apply the same thing to the school district. Say you have 10 schools, all with 100k budget. Say, all of them saved 10k, and 5k went back up to the school district. Well that adds up to 50k saved in the district budget. So 25k of that is put aside for the district budget, and raised to the next level again, something like state.
So this creates an incentive to save. "I get to put aside 5k for when I really need it." is a great reason to not needlessly spend 10k then.
Cause say you do this for 5 years. You now have 25k set aside for when you need. Well say one of the buildings ended up with fire damage. Instead of having to stretch the already stretched budget. You have that wonderful 25k set aside that could easily be used to cover that.
Of course it won't be THAT simple. Regulations will need to be put in place so it isn't abused. And a new agency will need to be created. But that's not necessarily bad. If it saves as much money as it should, then the agency should have enough money to start without additional costs. And a new agency means new jobs that are definitely needed. It also means that if done right, money will be better distributed amongst government with new programs being able to be put in place without the need of a rise in taxes.
And as it continues on, it will require a smaller budget, meaning it will require fewer taxes.
For me, one of the major problems is that there is no incentive to save. What happens a lot is that organizations will force themselves to waste the rest of the budget they have remaining at the end of the year, just to retain their limit.
Because often, whatever you don't spend, they cut off from your budget the next year. So it makes sense to spend the rest of it, so you can have that same amount in case you need it next year.
What I see as the best solution, would to create an incentive to save. My idea?
Alright, say you have a 100k budget.
Of that, you spend only 90k. So that means 10k was not spent. Under the current budget. You'd just get dropped down to 90k for the next year.
My idea. Take 50% of what they save, so 5k of 10k, and put it aside for them. So they'd have an account with 5k in it. And don't take away from their budget.
The other 5k, just goes back into the pool so to speak. So if this is a budget for a school. It'd go back up to the school district. There it could be reused on schools that need an increased funding. And then you apply the same thing to the school district. Say you have 10 schools, all with 100k budget. Say, all of them saved 10k, and 5k went back up to the school district. Well that adds up to 50k saved in the district budget. So 25k of that is put aside for the district budget, and raised to the next level again, something like state.
So this creates an incentive to save. "I get to put aside 5k for when I really need it." is a great reason to not needlessly spend 10k then.
Cause say you do this for 5 years. You now have 25k set aside for when you need. Well say one of the buildings ended up with fire damage. Instead of having to stretch the already stretched budget. You have that wonderful 25k set aside that could easily be used to cover that.
Of course it won't be THAT simple. Regulations will need to be put in place so it isn't abused. And a new agency will need to be created. But that's not necessarily bad. If it saves as much money as it should, then the agency should have enough money to start without additional costs. And a new agency means new jobs that are definitely needed. It also means that if done right, money will be better distributed amongst government with new programs being able to be put in place without the need of a rise in taxes.
And as it continues on, it will require a smaller budget, meaning it will require fewer taxes.
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The problems are the politicians who are running the country would rather line their own pockets than do what's best for the people, and the people who would rather have everything handed to them with out having to think for themselves.
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Mr.Shaggnificent wrote...
The problems are the politicians who are running the country would rather line their own pockets than do what's best for the people, and the people who would rather have everything handed to them with out having to think for themselves. Ever read "The Republic" - the problem with politicians being more concerned with themselves rather than those they were elected to serve is nothing new.
To see what's wrong with the budget we need to look at the economy in general. IMHO, American business has been on the downslide for quite a while, I attribute it to the change from Business men running businesses to CPAs running businesses. It is no longer about serving your customer or even being profitable, it suddenly became all about unrealistic and unsustainable growth. They began offering CEOs unrealistically huge salaries - but demanded equally unrealistic and unsustainable results, attempts to continue getting huge rewards lead us to Enron, the banking crisis, etc.
When I was first entering the work place (many years ago) a good investment doubled your money in 10 years, now people are trying to do it in 6 months - no wonder everything got screwed up.
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The recession occurred because a bunch of people bought crappy property on loan, and then failed to pay it back. I believe people need to spend more, in the end, if everyone is spending money, it all comes back to us.
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Takerial
Lovable Teddy Bear
...
That's not really something dealing with the actual budget.
And it's nice to go "People need to spend more money." But there is no money for them to spend.
That's not really something dealing with the actual budget.
And it's nice to go "People need to spend more money." But there is no money for them to spend.
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I know I could probably google this, but I feel you have a better grasp of this. o_o By American budget, what are you referring to? >_>
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When your "outgo" exceeds your Income
Then your upkeep will be your downfall
Simple as that
Don't spend what you don't have
Be you an individual or a country
Then your upkeep will be your downfall
Simple as that
Don't spend what you don't have
Be you an individual or a country
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If politicians aren't spending money, then people will ask why they are paying taxes and getting nothing. People vote for politicians who promise to fund a variety of programs and cut taxes while balancing the budget by eliminating corruption and waste. This is of course fantasy.
The main single categories that use up a large portion of the budget are military spending and entitlement spending. Entitlement spending refers to programs like Social Security and Medicare/Medicaid, which together accounted for 39% of the budget in 2009. Other entitlement programs accounted for 17% of the budget. Military spending accounted for 23% of the budget. (sourced from Wikipedia)
While politicians can complain about the bailout (TARP is listed as 4% of the budget), bridges to nowhere, or whatever else, the real money is in military spending and entitlement programs. If the US wants to balance the budget, these are the things that must be cut, or else taxes have to be raised. However, cutting these expenditures is extremely unpopular. Social security is called the "third rail" of politics. Tax hikes are about equally popular, as Walter Mondale and H.W. Bush discovered.
Perhaps because voters are not informed enough or don't see an immediate consequence of deficits and debt, we elect politicians who use debt spending to try to deliver on their campaign promises of tax cuts and funded programs. People who promise to balance the budget by raising the retirement age of social security and re-indexing the payouts don't make it to congress.
The main single categories that use up a large portion of the budget are military spending and entitlement spending. Entitlement spending refers to programs like Social Security and Medicare/Medicaid, which together accounted for 39% of the budget in 2009. Other entitlement programs accounted for 17% of the budget. Military spending accounted for 23% of the budget. (sourced from Wikipedia)
While politicians can complain about the bailout (TARP is listed as 4% of the budget), bridges to nowhere, or whatever else, the real money is in military spending and entitlement programs. If the US wants to balance the budget, these are the things that must be cut, or else taxes have to be raised. However, cutting these expenditures is extremely unpopular. Social security is called the "third rail" of politics. Tax hikes are about equally popular, as Walter Mondale and H.W. Bush discovered.
Perhaps because voters are not informed enough or don't see an immediate consequence of deficits and debt, we elect politicians who use debt spending to try to deliver on their campaign promises of tax cuts and funded programs. People who promise to balance the budget by raising the retirement age of social security and re-indexing the payouts don't make it to congress.
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Not to dismiss any of the arguments posted above me - they all can be equally valid in their own right, but each of these in itself is not the problem.
Lets take the initial argument for example: saving.
A great example of this is Japan in the Cold War era of globalization and world wide development. Their entire society was focused around the concept to save, and it ended up paying off when the world became fully globalized after the crash of the cold war system between 1988 and 1992. The initial shock of the massive democratization of information and finance would have crippled them like the other Asian markets (Korea and Thailand for example).
How does this relate to the American economy? If we shift towards the notion of saving abruptly, it will become more of a hindrance than a help. Yes people would have more money in the bank, but that would be less money out there in circulation. The system that we've created around ourselves is dependent on capitalism in it's finest. However, this doesn't mean all barriers should be taken down to maintain it.
Now, in response to the accusations against the politicians. We all know that to an extent this is true, but due to the need for a government to be very transparent about it's finances in order to thrive, their effect on the finances of the entire country are infinitesimal. There are countries in the world that are nicknamed 'cleptocracies' due to the corruption in their governments, and the result of such a broken system is financial exile. Does the United States look like a financially exiled nation to you? The American budget can be tracked more so than ever thanks to the availability - and necessity of availability - of information - especially as it pertains to national finance.
Addressing the comment about the housing market collapse by NeoStriker, you are correct. The economic collapse in the U.S. was triggered by many factors, but one of the key catalysts would be the housing market. In the early 90's, under president Clinton's administration, there was a bill introduced that mandated loaning agencies to approve unreliable loans. Naturally, this triggered a rise in home purchases and the market flourished because of it. Real estate, like Oil, is a massive market mover, particularly because it requires so much capital to invest in and exploit.
As stated above, in agreement with your (NeoStriker's) statement, spending is the key to reconciling the damage.
Now to address the issue as a whole. Although the problem is complicated and there are many factors that going into determining an outcome, I'm only going to identify one, since many have already been addressed. War.
Historically, War has been an economy booster for a nation. Production goes up, the government buys more, people work more, and nationalistic pride rises.
In modern times, however, war has proven to be the opposite. When the powerful nation of China threatened to declare war on the much smaller Taiwan, people watched expectantly as Taiwan's stocks fell 20 percent. However, Chinese economists were shocked when China's stocks plummeted 40 percent! The economy, and more importantly, the masses of investors all tapped into the internet 24/7, do not like the concept of war. In a globalized world war means loss, not gain.
This brings me back the the current situation in the United States. As global enforcers, they are constantly at war in both a small and large way. However, when they declared war on Iraq in a very large way with so little provocation, the response in the NYMEX was swift and fierce. Peaceful resolution and patient understanding from all levels is what is needed for the U.S. and it's residents to thrive in the new decade and following century.
Lets take the initial argument for example: saving.
A great example of this is Japan in the Cold War era of globalization and world wide development. Their entire society was focused around the concept to save, and it ended up paying off when the world became fully globalized after the crash of the cold war system between 1988 and 1992. The initial shock of the massive democratization of information and finance would have crippled them like the other Asian markets (Korea and Thailand for example).
How does this relate to the American economy? If we shift towards the notion of saving abruptly, it will become more of a hindrance than a help. Yes people would have more money in the bank, but that would be less money out there in circulation. The system that we've created around ourselves is dependent on capitalism in it's finest. However, this doesn't mean all barriers should be taken down to maintain it.
Now, in response to the accusations against the politicians. We all know that to an extent this is true, but due to the need for a government to be very transparent about it's finances in order to thrive, their effect on the finances of the entire country are infinitesimal. There are countries in the world that are nicknamed 'cleptocracies' due to the corruption in their governments, and the result of such a broken system is financial exile. Does the United States look like a financially exiled nation to you? The American budget can be tracked more so than ever thanks to the availability - and necessity of availability - of information - especially as it pertains to national finance.
Addressing the comment about the housing market collapse by NeoStriker, you are correct. The economic collapse in the U.S. was triggered by many factors, but one of the key catalysts would be the housing market. In the early 90's, under president Clinton's administration, there was a bill introduced that mandated loaning agencies to approve unreliable loans. Naturally, this triggered a rise in home purchases and the market flourished because of it. Real estate, like Oil, is a massive market mover, particularly because it requires so much capital to invest in and exploit.
As stated above, in agreement with your (NeoStriker's) statement, spending is the key to reconciling the damage.
Now to address the issue as a whole. Although the problem is complicated and there are many factors that going into determining an outcome, I'm only going to identify one, since many have already been addressed. War.
Historically, War has been an economy booster for a nation. Production goes up, the government buys more, people work more, and nationalistic pride rises.
In modern times, however, war has proven to be the opposite. When the powerful nation of China threatened to declare war on the much smaller Taiwan, people watched expectantly as Taiwan's stocks fell 20 percent. However, Chinese economists were shocked when China's stocks plummeted 40 percent! The economy, and more importantly, the masses of investors all tapped into the internet 24/7, do not like the concept of war. In a globalized world war means loss, not gain.
This brings me back the the current situation in the United States. As global enforcers, they are constantly at war in both a small and large way. However, when they declared war on Iraq in a very large way with so little provocation, the response in the NYMEX was swift and fierce. Peaceful resolution and patient understanding from all levels is what is needed for the U.S. and it's residents to thrive in the new decade and following century.
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Economic recession and health care costs. Get those two fixed, no easy task mind you, along with some tweaks to Social Security, and we'll be alright. You don't, and we're in a gigantic mess.
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The part where there is none. Also the part where it is paid for by other countries, who then with hold services from us that we pay for.
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Space Cowboy wrote...
The part where there is none. Also the part where it is paid for by other countries, who then with hold services from us that we pay for.Please substantiate these claims. I'd like to know more about your point of view.
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We're in debt, and it's being bought by other countries, foremost among them is China and Japan. China is silently withholding services, products and materials from America and other countries that are vital as imported goods.
We're paying for everything with I.O.U.s. What a fantastic budget, it's like a credit card: we can buy what ever the hell we want and pay for it later. (My whole first comment was kind of off topic |: )
Fuck the police.
We're paying for everything with I.O.U.s. What a fantastic budget, it's like a credit card: we can buy what ever the hell we want and pay for it later. (My whole first comment was kind of off topic |: )
Fuck the police.
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The problem with the "American Budget" is that us Americans don't have the will to save our money instead spend it and think "Yay! I have a credit card I'll be able to pay off everything in time" but we never factor interest into the charge. Also people don't know how to buy on credit. If you are gonna buy a car you have to have a credit card because they check your credit. Well when you go out to buy a car make sure you can buy it on the spot but don't pay with cash. Use your card so you can raise your credit score and when they go to collect you will have the money and they won't be able to charge you interest. Never buy anything on credit you can't pay for on the spot.
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My biggest problem with the budget is superfluous defense budget and pork-barrel spending, as outlined in The Complex: How the Military Invades our Everyday Lives.
Simply put, there's a LOT of useless and extraneous shit that our government is throwing down taxpayer dollars for, and we wouldn't have problems in our budget if they'd stop spending the cash on useless shit and actually do what they promise to with it.
Simply put, there's a LOT of useless and extraneous shit that our government is throwing down taxpayer dollars for, and we wouldn't have problems in our budget if they'd stop spending the cash on useless shit and actually do what they promise to with it.