Budget Crisis

Ideas to Solve the Budget Crisis

Solution sets for solving the budget crisis now include generalities like cutting programs, layoffs, and tax increases, which are aimed at preventing money being spent or at gaining more money.

I like the approach of spending less money but not the idea of layoffs. The only solution set for this dilemma is that of cutting the amounts of all these salaries and wages and benefits that are paid by the taxpayers. Given the economic slowdown, demanding more taxes from the people creates a hardship in meeting these new demands for the same or less services. Boomtime pay cannot continue during economic slowdowns. The need for what these people do continues but are they up to do the job for less money? Must the government entities go bankrupt in order to dodge union intransigence?

This is a moral issue. Do these people want us to scrape up more for them so they can continue as they are now? What about the idea that if everyone takes a pay cut, maybe not so many will be fired? These people are paid from taxes. It is not right to take money from one to give to another for no increase in productivity. They are actually promising less productivity instead of more.

There simply is not the money there was during the boom. Sin dinero ahora. Bloated salaries and benefits crowd the budget. We’re being taxed to pay consultants, directors and other bureaucrats. We’re being taxed to build more and more roads when public transportation is the need and would also provide cleaner air and local long term jobs instead of boom construction. We are taxed to provide benefits for government workers when privatizing benefits would relieve the state of insurance responsibilities and would probably result in lower costs for consumers because of competition among insurers or clinics.

People do not want to pay more taxes. Cut the pay of the workers paid by the government, ease off on layoffs whenever possible and use attrition instead for cutbacks in personnel. Keeping money in the hands of more people will result in a more predictable, broad based spending pattern and less unrest among the unemployed and also provides beneficial cuts in unemployment payments and welfare demands. Recent statistics on CNBC might begin a trend to lower prices for consumer goods. Maintaining the standard of living would then be possible after pay cuts if a devaluation trend in USA prices is established. * Debt renegotiation continues in the form of foreclosures, defaults and other failures.

Cutbacks can be made in agencies and programs using a checklist that is doubtless incomplete. Every agency and program and every employee should be subject to cost scrutiny according to this checklist.




Agency and Program cost analysis

Administration: cost amount and as percent of total expenditure
Consultant costs
Employee costs in amount and as compared to program costs as a %
Pay grade analysis as to distribution
Program and agency goals and objectives
Progress achieving those goals and objectives
Union contract demands and renegotiation Etc.

Individual employee charges
Pay grade
Travel
Relocation
Mileage
Cars
Insurance: amount and percent of total costs
Phones
Memberships
Per Diem Ect.
Duties

This same analysis would apply to all the schools, including higher education.
The public schools could be given the responsibility for paying for busing out of the existing budget. This is a positive thing in that this would force the school districts to reconsider busing in an attempt to cut costs. Busing could be mostly eliminated in favor of small schools in neighborhoods, which would cut exorbitant transportation costs now subsidized by the state. Analyze the budgets to obtain amounts spent on busing: insurance, fuel, replacement units, maintenance, and personnel. Give this cost back to the districts. How much would that save?

Several questions must be answered in order to determine the level of cuts in pay that could best assist the budgeting process. These are generalities which would generate base data. What % of the budget is pay and what % is benefits? How much could be saved at ascending percentages of pay cuts?

Another problem is the existence of various budgetary entitlements, some of which are scheduled to infinitely increase. The legislature must work together to devise some way to handle non critical entitlements during times of a budget deficit. The schools budgets needs a complete overhaul and a refocus on the learner instead of the bureaucrats raking in top salaries and benefits at taxpayer expense while test scores remain mediocre at best.

Tax money is precious and should not be wasted. Tax money is also finite.

*Prices as a % of income, whatever the unit of measure is used. Stabilized petro prices are to our benefit, it appears.

MANDATORY INSURANCE

Ripoffs and Civil Unrest

I see on the news today that insurance executives have received hairy threats as a result of the publicity surrounding bonuses to them while people invested in their company have lost money.

It appears that civil disobedience stems from lost expectations, cash, opportunities, or from excessive debt and penalties. Pretending that debt is a product will not make it so, but Bernanke and Geithner cannot see another option other than propping up debt derivatives. Just who is benefitting by the continuation of the sale of debt derivatives? Are they or their families in a position of power that influences policy decision making, rather like the Madoff family and the SEC? Debt derivatives produce nothing but brokers fees and insurance obligations. What were the terms of the insurance obligations? 100% of expected profit from the derivative investment? The principal invested in the derivative? What?

Credit card schemes with excessive penalties, automatic interest rate hikes based on other accounts, the punitive attitude taken by these lenders and their predisposition to extend credit to undocumented borrowers has created a mountain of debt. Much of that kind of debt is an obligation plus penalties that are unearned income for lenders and unplanned debt for borrowers on the credit card scene. Bailing out the credit card firms is ridiculous but can turn fraudulent if the bailout funds include unearned lender income projections based on extending credit to anyone. Payday lenders and credit card companies are in the same category, preying on the foolish and desperate in many instances.

Attacks by the ripped off on the wealthy who benefitted by the scam will easily gather steam. Announcement of hearing and indictments would take the edge off, but I can’t help but wonder if returning the principal to the investors might be cheaper than bailing out all these unregulated funds and insurance obligations, particularly foreign entities.

Globalization has turned into a massive fraud perpetuated on the USA taxpayers by domestic and foreign banks and insurance firms who invested in derivative garbage based on fraudulent contracts all the way from the inflated appraisals and undocumented borrowers, the creation of derivatives with unresearched ratings and lax regulation when present at all. Why are USA taxpayers stuck with this tab? Insurance schemes overseas bankrupted a company holding assets obtained through mandatory insurance and retirement accounts in the USA, drained these assets and then demanded more from the US government. Their demands were met at our expense.

I think that insurance is a racket. Legislators have foisted mandatory insurance off on the people and now these insurance firms are using the pool money to gamble and pay themselves huge salaries. They have gambled away retirement funds, IRA accounts and any other money they could get their hands on, even to the point of bankrupting the company and funneling our tax money overseas.

Were members of AIG really brokering these derivatives to banks and then insuring these same derivatives through AIG, receiving a handsome brokers fee in the process? Are the retirement accounts of House and Senate members held by AIG?

Whatever it is, this financial scam and the incredible debt load has created unemployment and anger on the streets of this nation. Were the boomtime profits and the high compensation of irresponsible developers and executives worth the social cost? Are the members of the boards who approved the excessive contract amounts for executives receiving sweetheart loans from the very same companies they represented? How many political figures received cheap loans from these companies? Who sat on the boards of Fannie and Freddie and others when ‘bonus’ schemes were approved? How much were these people paid to rubberstamp any wild scheme the executives deemed a good investment?

And above all, why not review the figures and see if returning the principal might be cheaper than bailing out all these wild schemes? People are angry because their money has been stolen and gambled away, not just the boomlet money but also the principal in many cases.

Civil unrest is not good for the nation.

Pirates of the Economic World