I keep reading how the recent “fiscal cliff” debates will seem like child’s play compared to the upcoming negotiations regarding the fast-approaching federal debt ceiling deadline, discussions that will also include the topic of spending cuts.
I fully understand the debt-ceiling issue; it simply involves two distinct philosophies.
The first viewpoint, as the President so curiously states, is being able to live within your means, but of course we certainly have the means to print our way to unchecked spending.
The second belief is being able to live within your money, which requires making decisions on what to buy or not buy, spend or not spend, all based upon your real income.
Indeed, both philosophies have their roots deeply entrenched in both true liberal and conservative doctrine.
Thus, political war is inevitable since neither side should acquiesce to the other’s demands on the debt-ceiling. There should be no room for negotiations, regardless of the outcome. Clearly, you either believe in your philosophy or you don’t.
However, when it comes to budget cuts, it becomes a totally different situation.
I’ve previously discussed that both the House and Senate are having difficulty finding ways to cut $110 billion out of a $3.8 trillion budget.
I reiterate that the cuts of $1.1 trillion are over a 10-year time period, which amounts to about 3% per year.
Maybe as a U.S. citizen, Senator John McCain’s next door neighbor, and a patriot, I can suggest a few ideas to the feckless folk in Washington, D.C. that would not bring down our worldwide defenses against terror, should prevent grandma from having to eat dog food, and will still allow for the continuing study of our ever-changing worldwide global climate.
For example, U.S. Secretary of the Navy Raymond Mabus is worried about worldwide naval base improvements and repairs.
The solution: do the repairs and complete the improvements, just reduce it by 25% of what is projected.
Therefore, we save money and Mabus will still get updated naval bases.
Of course, we could get really wild and crazy and shut down a navy base or two, but we don’t want to go to extremes.
Mabus is also concerned about a reduction of travel for top Navy brass. We could just let them all stay put for a while and not foot the bills for their vacations.
Thus, we save cash.
In addition, Mabus is apprehensive about administrative spending.
I guess he has yet to learn that technology reduces personnel, an opportunity to save money once again.
Multiply these savings by the other branches of the military and you make some very significant dents in that $110 billion.
Throw in a reduction (not elimination) of the Puerto Rican rum credit (many enjoy their rum and Coke), cutback on both the NASCAR and Hollywood credits, and you make real headway in achieving that so-called unachievable 3% cut.
I have even more outlandish ideas, but I truly don’t want to overload you all at once, but there’s always next time.
Along with his 40-years of dedication in the financial services industry, Bill is the President and CEO of GPSforLife, has recently authored a highly successful book entitled 44th: A Presidential Conspiracy, publishes his dynamic monthly financial newsletter MacroProfit, and faithfully continues his third decade on the radio with It’s All About Money, which can be heard weekdays on Money Radio in Phoenix and in podcast form on his website (and on smartphone apps) published at billtatro.com weekdays at 5pm Eastern. Bill can be reached via email at email@example.com and on Twitter @tatroshow.