The Problem with the One Cent Solution

There are so many issues with the tea party group “Citizens for Restoring America’s Financial Future Inc’s (CRAFF) ‘One Cent Solution,’ It’s hard to even know where to begin.  I listened to a radio show with a regional director of the organization speak about the plan, and the tea party in general.  I had intended to write about what I heard her speak about, but as I delved into their website and the legislation modeled after the idea, it became clear the issue was even larger.  She was blatantly lying about the plan’s core strategy.  So, there are problems with her radio ideas, and additionally the website ideas.

Essentially, The One Cent Solution is supposed to take one cent from every dollar spent.

“Government should balance their budget like household’s do.  Cut 1% across the board from all programs.”  (Radio woman said across all programs, no exceptions.  Website says only discretionary and entitlement, and that some programs may be deemed too essential to cut, and more cuts would have to come from other programs to make up for it) In principle, I agree with the second tactic (when cost cutting in any scenario must occur), but issues with that proposal to be addressed further below.

Part One: Balanced budget falsehood:
As she kept repeating that mantra.. government must balance their budget like households do.. my first thought was – does she have any idea how much debt Americans are actually in?  As of 2014, Americans have nearly 11.7 trillion in debt, the big three being credit card debt, house mortgages, and student loans.  This also doesn’t mean that all debt is bad.  In fact, one of the markers for a well functioning financial market is access to loans  / capital. Nearly every single small business owner in America took out a loan to get started.  Students take out loans for education because even though higher eduction in America is inflated and ridiculously expensive, it is an investment and a hope that you will make more  than without that degree, and statistics show that there is a strong correlation with a college degree and a higher income, although for a variety of different reasons.  Debt is not inherently bad.   What makes debt bad is an inability to pay it off, a high percentage of debt as related to how much capital you have, or a low return on investment.  Like having the economy crash after you invest tens of thousands of dollars in your education.  There are other reasons people don’t operate a balanced budget, like an inability to afford to feed your kids, high cost of medical care, high interest loans, which are the only kind you can get if you don’t have a high income, which then ensures keeping people in debt because it’s so hard to pay off, and it continues to spiral out of control.  Tea party: Can we just operate on facts and reality for a minute?  I know it makes for good PR to make it sound like Americans have a balanced budget and the government just needs to be more like them.  But in reality, the government is exactly like the average household.  High in debt, and lots of problems to deal with.

Part Two: Balancing a household budget doesn’t mean cutting equally.   Listening to the tea party people makes me wonder – have they ever had to balance a budget on a low income? If I can’t pay my bills, I don’t just cut a little off the top from everything.  That is just stupid.  Just eat a little less? Just pay my bills a little less?  I don’t live in poverty, but I do live paycheck to paycheck.   What this means is that I can function fairly normally, pay my bills on time, and only begin to have issues when something unexpected comes up, like car repairs, and parking tickets.  I confess, I rarely pay my parking tickets.  I have a list of budget priorities, and some fall lower in the list and it also shifts constantly.  How needed is this car repair?  Can it wait?   Congress also has a list of budget priorities, and it has nothing to do with how well the program works, how much it is needed, or even how much waste it has.  In practicality, and how politics works, this means that defense spending will not be touched, and the programs with the most effective interest groups and congressional pet projects will be the criteria for which programs are cut and which ones stay, and no meaningful changes to the budget will occur, because programs that have no interest groups have a minuscule budget in comparison.  You could cut the entire department of education, and it would hardly move the needle on the deficit.   when defense spending is not on the table (which is 20% of the budget).  This doesn’t even include homeland security and things like ramping up the border fence.

Being able to have an outcome that actually reflects the initial goal, requires a solution that is based on facts and reality, not political posturing and intentional misleading.

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About Musings over Coffee

Fitness enthusiast. Love to travel, mess up recipes, ponder random things, get riled up about the news, all of which nearly always coinciding with one of my favorite things in the world: Coffee.
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