True up income to spending at EOY

Elected officials divert American’s attention using sound bites that sound good. There is often much more to the tail than a few words can portray. Politicians fear saying too much as they can be attacked on their words. And, Americans are portrayed as not having the attention span and education to understand the message.

When it comes to spending, this perpetual lie has resulted in out of control spending for a theoretically noble cause, while simultaneously fulfilling the dream of lower taxes. This irresponsible behavior would put normal families into bankruptcy. But, for our Federal Government to do it, we’re paralyzed with a bickering government and a dollar on the verge of complete collapse. The dollars purchasing power is weaker than any tax hike would have been to cover our costs; we’ve effectively ended up with the worst of all worlds (i.e. high debt, rising unemployment, under employment of the employed, decreasing federal revenue, increasing federal spending, and inflation).

Politicians pretend that spending is not a tax increase. Eventually, one party finally takes some responsibility for the spending and either increase’s taxes or cuts spending. That party then takes the blame associated with the pinch Americans finally feel. But, it takes years to recover from these spending sprees. By the time we do recover, people tend to forget how we got ourselves in the mess in the first place.

We need to balance the income and expenses at the end of every year. If the government didn’t collect enough revenue for the spending, then they didn’t collect sufficient taxes or they overspent. Either way, they should not be borrowing money on Americans behalf and then making our children pay for these burdens. Rather, they should bill us at the end of the year. Let it be each American that decides if they need to carry the debt using interest rates similar to those the government currently pays on bonds, or if they want to pay the debt in the same year.

In order to accomplish this paradigm shift in thinking, the government must assign the debt incurred for the year just ended back to the tax payers based on their respective AGI and associated tax rates. Americans can then decide to either pay their AGI adjusted portion of the National Debt in a single payment, or annually using the interest rate the government is paying for the average bonds and treasury bills. Those people that die and whose estates cannot payoff the debt will be assigned as bad debt, and those that hold the bonds and treasury bills would incur those loses (i.e. just like any other investor risks).

There would be a few immediate impacts to this proposal that would be realized:

1. Income taxes would be reduced by the portion that is currently allocated to the national debt. As this debt would be individually assigned and thus no longer paid for out of the general funds. This should be about a 33% tax cut.
2. Annual invoices representing an individual share of the National Debt would list each year debt is being carried and minimum amounts due. It would be undeniable which year, and who was in power, that incurred the largest debts. Invoice would include the year debt was incurred, the name of the congressional session and the President that presided in that year, a link to a website with detailed revenue and spending for that year, your personal allocation of the balance, the balance you’ve paid off so far, the payoff amount, and the minimum payment amount inclusive of interest charges for the upcoming year.
3. The debt is now assigned to the people that voted for (or had the chance to vote for) the Elected Officials responsible for making the debt and not to their children.
4. Because debt is paid for within the given year, or assigned out to the people that incurred the debt, each congressional session is given a chance to budget their year without the burden of debts and associated political blame games that their predecessors (possibly of opposing parties) got them into. And, taxpayers are forever reminded which administrations got them into the debts in the first place; whilst having the opportunity to pay it off quickly or to finance the debt over terms similar to what the government was going to do without our permissions.
5. Debt would be paid off quicker than having the current system because a percentage of Americans prefer to not carry debt and have the means to cover it.
6. The US Government would no longer be in debt to foreign regimes.
   
   

This method assigns accountability where it must be; with the taxpayers that put people in power. It serves as an annual reminder of the consequences of spending, therefore assigning accountability of collecting the revenue to the administrations that incurred such spending. In families, kids do not inherit their parents’ debts. In government, there is no reason our kids should inherit their parents debt.

In this manner, we as voters are reminded annually….

• In the Carter years, congress failed to collect $648 per person to pay for the programs.
• In the Reagan years, congress failed to collect $5930 per person.
• In the Bush Sr. years, congress failed to collect $4983 per person
• In the Bill Clinton years, congress failed to collect $4280 per person
• And, prior to the bailout reports, during the Bush Jr. years, congress has failed to collect well over $11,000 per person…. Though, we can tell you how much each congress has left us to date. For example, the 109th Congress failed to collect $1663 per person for 2007.

If Government is truly we the people, then we the people are responsible for the oversight of our representatives. Oversight includes the money they spend. The debt should not be carried forward. It should be assigned to the citizens with oversight authority (thru their media and votes) that supported the policies and actions that incurred said debt.