July 10, 2010
Edward R. Smith
ed@gaffneyhill.com

Solve the Government's Money Trouble

This is not a hard problem to solve.  It's really a matter of 2 things:  One, wanting to solve the problem; and Second, remembering that we live in the 21st century.  Since I believe I have these two things under my belt, below is a list of task our Government needs to do, to solve the problems of balancing the budget; funding the war(s); fund the research and development needed to solve the energy problem; and to make sure there is enough money left for me to get a Social Security check at retirement time.

1. Eliminate paper money

Yup, it's that simple.

I guess I should explain myself.  The first concept that our government needs to understand is the very same for all of us fiscally responsible individuals that have to understand when balancing our individual budgets.  Input needs to be at least as much as the Output, otherwise you end up behind the eight ball, just like our country is now.  Now I have nothing against borrowing money, if we didn't, not too many of us would own homes or have new cars to drive.  But you just can't keep doing that without having a plan of how you are going to pay your debtors.

Now for lesson two.  I'm really tied of hearing about how we need to cut the budget.  Its just a bunch of lies.  Cutting a librarian's job isn't cutting the budget.  Pay attention now.  A librarian has been paying their share of Unemployment Tax as well as other taxes just like a whole bunch of us.  So as we have all these "librarian" now not paying their taxes they are now collecting from the Pot of funds which were put in there.  And because there are so many "librarians" out there collecting and since everyone is cutting, leaving no jobs for the "librarian" to take, we as a government do the right thing and extend the unemployment benefits.  So who do you think is going to fill the Unemployment Benefit Pot?  -- Good you were paying attention. --  Us poor slobs that are still working, just less of us.  The Federal Government is kicking in too, but who is filling the Federal Government pot?  Yup, the same poor slobs.  Oh, don't forget, Ms. Librarian is now just squeaking by on the money she is getting, so there is no tax revenue on all the extras that she would have purchased when she was working.  In other words, its a double whammy. The "librarian" is no longer there serving the function.  Her function is two parts: doing what ever librarian's do, and for the purpose of this article paying taxes into the pot.  And us poor working slobs still have to pay, hence the LIE.

This leads to the next lesson.  Revenue.  This is the money our government takes in as input to the pot. Most of the revenue our government receives comes from taxes.  Taxes are fees charged to individuals and businesses which fills the Pot.

Let's review:

• Pot - the money the government has to work with.
• Input - Also know as Revenue generated by taxes
• Output - These are the expenses.  Expenses could be a payment for a loan such as a mortgage or in the Government's case a bailout.
• Good fiscal responsibility - Inputs at least as much as Outputs.  Otherwise know as a balanced budget

So by now you must be asking how does eliminating paper money solve any of this. Again, pretty simple concepts.  If cutting isn't the answer then the only other option is to increase the input or revenue.  And, no, that doesn't mean we all need to pay more taxes, it means we all need to pay our fair share.  Yes, I'm suggesting that not everyone is paying their fair share, to the tune of an amount that would fund most of the programs our Government keeps promising us year after year, election after election. 

Lets all be honest for a moment.  Who has ever cheated on their taxes?  Maybe exaggerated on the charitable contributions line? For all those of you that said "never", I'd like to nominate you for sainthood.  For the rest of the more honest individuals out there (very ironic), at least once in their life cheated on their taxes.  Remember Ms. Liberian.  She got a job paying under the table cleaning houses.  As a matter of fact lots of people get paid under the table and don't pay any taxes. 

Now I have to say, I really and truly feel bad for all the people in Louisiana and Mississippi  that took a major blow to their lives with the horrific events following the hurricane disasters followed by the worst oil spill in history.  My heart goes out to you.  But I'm afraid I'm going to have to use you as an example.  Rightfully so, many want some reimbursement from BP.  I think you deserve it.  Far too many times big corporation make cuts that sacrifice safety, the well being of the people, or just bad judgment.  Time will tell but BP sounds like they plan to make good on it, at least financially.  But here is the part that makes me crazy.  They are having trouble figuring out how much business was lost, thereby how much money does BP owe the people of the area.  And the reason they are having trouble figuring this out is because much of the business is a Cash business.  OK, so what does that really mean.  There is nothing wrong with a cash business, it was the bases of our economy long before checks and plastic came in play.  But people are still required to pay taxes on their cash receivables.  And if they were paying their taxes like they should have been, it would be easy to prove how much your business lost to the disasters by simply pulling out your tax returns. 

Small businesses also cheat, and I think they still make up the majority of the businesses out there.  Its very easy for small businesses to declare things that are not really business expenses as business expenses.  Record keeping is so bad that often at tax time it is just a guess of income and expenses that will be believable enough that the Government won't audit. 

My theory is that if everyone paid their fair share, and stop cheating the Government there would actually be enough money to balance our budget. I should mention that we the people are the Government, so we are just cheating ourselves.  Of course there is more to it that just that, but I'm not going to cover it all here.  Back to eliminating paper money.  It's not necessarily the easiest thing to do is to get everyone to do the right thing, especially when it comes to parting with your hard earned cash.  Its time take advantage of the technologies we have at our disposal to enforce everyone doing their bit.  The first step is to get the records of financial transaction documented.  You do that by taking paper money out of the equation and moving it to an electronic form.  Oh, by the way, this also makes it a bit more difficult to traffic illegal drugs.  The immigration problem would also be solved.  Illegal immigrants would now have a records of their earnings, and taxes would come right out off the top just like it does for us W2 type employees. 

My idea is not to eliminate coin money, in fact I don't think coin money transactions should be taxable.  Again it would be the same problem as we have today where people would cheat, so lets even up the playing field and there would be no taxes on any coin money transactions.  So, yes all you critics out there have just discovered a hole in my plan.  You could buy an ounce of crack with a suitcase of Thomas Jefferson gold dollars, and the Government wouldn't be able to trace it or collect any tax revenue from it.  You would also be able to by coffee for a single coin, and not have to pull out change to pay the state.

Anyway, this is my idea and I think it would work. 

Comments to the author are welcome.