As we come to the end of this series, the question
remains: What’s the way out of this government red
ink mess?
Better ways of counting debt, using accrual
accounting instead of cash basis accounting, are
important to reversing the runaway debt that has
plagued the nation for generations. That’s because
you can’t solve a problem unless you understand it.
And many in government have inadvertently or
deliberately misstated the extent of government red
ink as DOGE officials have demonstrated.
Even federal government agencies, unlike
mainstream media, don’t debate the problem. “The
Federal budget is on an unsustainable path,” says the
Congressional Budget Office (CBO).
But there’s other things that must be done if the
United States is to avoid becoming the next Weimar
Republic or Hapsburgh Empire or repeating the
mistakes of the Continental Congress. The latter
tried to finance the American Revolution through the
overissue of paper money. That’s a mistake that’s
been repeated again and again by the leaders of our
own central bank.
Productive change begins with educating Americans.
Many problems come from generations of big
spenders. I speak of Americans who run up big
credit card debts, become dependent on Big Daddy
government spending and its career pols. They are
often economic illiterates who only care about big
donors, the next election. They dismiss generations
of unborn taxpayers. The problem begins early. Not
only are our pols often bad at budgeting, but kids
learn little about economics and personal finance at
state schools.
Only about half the states require students to take a
stand-alone personal finance course in order to
graduate. Some don’t require even one course. Some
just implement personal finance into another course.
“The current state of financial education mandates in
every U.S. state fails to meet the minimum
educational standards required for other subject
areas. To bridge this gap, it is crucial for educators,
assessments, and instructional materials to meet or
exceed the standards set for other subjects taught in
schools. By prioritizing comprehensive financial
education, we can equip our children with the
necessary tools to help them reach a financially
secure future,” according Ramsey Solutions, a
personal finance website.
What else should be done?
The National Financial Educators Council is a good
place to begin. It has a Policy & Framework for
High School Financial Literacy Education. It offers
guidance to policymakers and schools aiming to
implement effective financial literacy programming.
By adopting such policies, it could help ensure that
children receive financial education. But every
potential solution of the problem of financial
ignorance offered at state schools must be hedged.
Adding personal finance courses at state schools is
unlikely to change the nature of government schools.
Over a century and a half ago, John Stuart Mill,
writing in a classic work “On Liberty,” detailed the
problem.
“A general state education is a mere contrivance for
molding people to be exactly one another,” Mill
wrote, He warned that, if it is efficient, and
successful, “it established a despotism over the
mind, leading by natural tendency to one over the
body.” State education dominates minds just as
faulty budgeting practices have at the state and
federal levels for generations. This is what
economist Milton Friedman called “a tyranny of the
status quo.” It ensures that we have perpetual
government red ink. (Friedman, who argued for
education vouchers that would average people to use
private schools, late in his highly productive life
believed that the most important sector of the
economy that needed privatization was education).
This tyranny of the status quo is exercised through
the annual budgeting process. It is usually primed
for more and more red ink no matter whether the left
or the right is in power or no matter what most
voters want. This battle to reduce or eliminate debt is
essential to our liberty. Our liberty, the great
historian of freedom Lord Acton warned, is based on
de-centralized government. That was the idea of the
original U.S. constitution. But “public debt,” wrote
the Austrian economist Murray Rothbard, “and
centralized government are mutually reinforcing.”
To break this alliance of tyranny, change budget
practices at both the local and federal level. Require
zero based budgeting (ZBB). Today, in most levels
of government, the budget begins with an
assumption of the previous year’s spending levels.
Debate centers on how much more the government
should spend in the next fiscal year. Less is rarely if
ever considered since careers pols believe more
spending is the path to re-election. This is a notion
that should make every responsible voter “mad as
hell,” to quote long forgotten California tax rebel
Howard Jarvis. The problem of government red ink
is a system of built in debt year after year no matter
which party is in power at the national and local
levels.
“A few states have implemented or experimented
with zero-based budgeting (ZBB), and I believe it’s
a concept worth exploring on a broader scale. ZBB
requires each department to justify its entire budget
from scratch every year, rather than simply rolling
over the previous year’s numbers and debating
incremental increases. This approach can lead to a
more thoughtful and thorough examination of
government spending, helping to uncover
inefficiencies and prioritize essential programs, says
Sheila Weinberg, founder and CEO of Truth in
Accounting. She says Georgia, Texas, Idaho, and
South Dakota have adopted or experimented with
ZBB at various times. Some in Oregon appear to be
actively pursuing ZBB as part of their budget reform
efforts.
Weinberg is interested in a constitutional amendment
that, with a few exceptions, requires the federal
government to balance the budget.
“I think the idea of a constitutional amendment
requiring the federal government to run a balanced
budget is an interesting one and could potentially be
a step in the right direction. However, I believe it’s
crucial that the amendment be worded carefully to
avoid loopholes or unintended consequences. It’s
worth noting that all U.S. states, with the exception
of Vermont, and 75 of the most populous cities,
already have balanced budget requirements,”
Weinberg adds. “Yet, despite these requirements,
many states and cities still face significant debt. This
is often due to budget gimmicks that technically
allow them to claim they have a balanced budget
while skirting the intent of the law. The federal
amendment would need to address this issue,
ensuring that only actual earned revenue could be
included in the budget, and all expenses, including
those associated with increases in long-term
liabilities like pensions, Social Security and
Medicare, would need to be accounted for.”
Again, the stricter accounting standards mentioned
at the beginning of this article are critical.
These ideas can make sense but only if we also
accept a prior suggestion made in this series: Take
an independent group of outside auditors, a group
that has nothing to do with any group in the
government and using the same accrual accounting
standards required of publicly held corporations,
affirm that the government’s numbers are legitimate
in every annual budget process.
But despite all these suggestions on how to restore
reasonable spending and budgeting, the fault, as the
Bard of Avon writes in his play “Julis Caesar,” lies
“not in our stars, but in ourselves.” We, the voters,
consistently elect Democrats and Republicans to
Congress, most of whom are chronic over spenders.
We have been doing so for generations, notes Bob
Bixby, executive director of the Concord Coalition.
“Indeed, “it is an abject failure of leadership that a
nation with all the advantages, ingenuity, and
resources we enjoy has not acted to remedy, or even
barely acknowledge, the perilous fiscal path we are
on.” Bixby’s insists that our lawmakers “do your
job.”
The CBO concedes the overspending woes were
“created through legislative action and it will take
legislative action to set a more sustainable course.
The sooner that actions are taken,” the CBO, “the
better the chances of success. Kicking the can down
the road means that solutions will be even more
difficult and leaves more of a burden to be borne by
future generations.”
To which I would repeat because the message is
always relevant: Voters do your job. Insist that both
Republican and Democrat lawmakers stop
overspending and back it up by voting out of office
those who don’t listen. There are lots of districts in
which there is effectively one-party government. For
instance, in my old hometown, in the last city
council elections, about 60 percent of the races there
was no race. The GOP put up nobody to run against
the ruling Democrat council member. Is it any
wonder that New York City is a big tax, high debt,
city, constantly looking for more “revenue” (sic)?
It’s up to us, average citizens, to make responsible
spending a key issue, a reason for why we vote for
someone. Are we up to insisting on a sane spending
standard?
Shakespeare, in writing how Rome lost its liberty,
said though one of his characters that the fault was
not in our stars, but in ourselves, that we “are
underlings.”
We must free ourselves by insisting that our
Potomac Poloniuses meet a higher standard: Every
voter should ask at least two questions to someone
who wants his or her votes. How did we get to close
$200 trillion of federal government debt, a point
where just interest on the federal debt is the third
biggest item in the federal budget? And what will
you do to clean up this mess?
Gregory Bresiger, a former editor of Traders
Magazine and a reporter with the New York Post
Sunday business section, is the author of the
Defiance Press book “The Frugal Libertarian.”
