Imagine a family sitting at its kitchen table with bills piled high. They have no budget, only a general sense of where money comes from and where it goes. The lenders to whom they owe a considerable sum are not calling yet, but they might be soon. They owe nearly 5 times as much as they spend each year and almost 7 times as much as they earn. What’s more, the amount of debt goes up every single month because 40 cents out of every dollar they spend is borrowed.
If a financial planner sat down with this family, their situation would accurately be declared a man-made disaster. A full-on crisis management plan to restore financial responsibility would be developed and implemented. They would cut up their credit cards, stop buying nonessentials and create a plan to manage how much comes in and how much goes out.
When this is Uncle Sam’s kitchen table, however, the “answer” to dealing with financial mismanagement is usually to stave off crisis month by month or year by year, rather than actually avert or prevent it. For decades, but particularly in the last four years, politicians on both sides of the aisle have punted on paying for their immediate decisions.
In just a few short weeks, Congress and the president will once again be back at the nation’s kitchen table, faced with another decision about how to deal with the mounting stack of bills. At this point, they will continue to take in enough money to cover the essentials — interest on the debt (to preserve the nation’s full faith and credit), Social Security, Medicare and defense. Yet there will not be enough to cover everything else.
Will Washington learn its lesson that it is simply spending beyond its means and figure out a responsible way forward? Rather than look back and point fingers like a family facing financial disaster might do, the 536 negotiators at the table need a to-do list and a clear delegation of responsibilities.
Read more: http://p.washingtontimes.com/news/2013/jan/16/a-budget-plan-that-actually-works/#ixzz2I9Yw3HJh
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