Every day there are news headlines about government over-spending, and otherwise acting financially foolish. Just glancing at this morning’s headlines I see a story the Greece is close to financial ruin. Portugal is in a political crisis over its government deficit. Harrisburg, Pennsylvania may have to declare bankruptcy. The states don’t have enough money to clear the snow from the streets.
Moody’s warns it may have to lower the credit rating of the US and other countries, states and cities. The stock market took a tumble yesterday because of fears of financial fallout from irresponsible government spending in Europe.
And there are on-going stories about California, Michigan, New York and other states facing financial collapse. Iceland, Scotland, and other countries are unable to dig themselves out of the messes they have gotten themselves into.
Yesterday the Obama administration unveiled a huge new budget with almost 1.3 trillion deficit.
I see editorials written about this problem. Today there is one entitled “The Ticking Fiscal Bomb In the United States” and another entitled “A Federal Budget That Insults All Budgets.”
And of course everyone is aware of the trillions in unfunded liabilities assumed by Washington. The Social Security Ponzi scheme, Medicare and Medicade and other programs continue to grow, continue to consume resources.
All of these problems have been created by one thing: governments not acting responsibly.
Most people spend what they earn and no more. They even try to put away a little money for emergencies or retirement. Not governments. Governments spend every cent they can extract from their citizens, and then borrow as much as they can and spend it too.
Then if something unexpected happens, like a drop in revenues or a snow storm, there is no money to handle the situation.
Unlike regular people, governments have the luxury of being able to demand a raise from their employers when they spend themselves into trouble. In other words, they impose a tax increase of some kind, usually disguised. There is little incentive for responsible spending.
Clearly, the people of the world are reaching their tipping points. Most of us in the USA are paying 40% or more of our incomes in various taxes. Yet, governments continue their profligate ways. When it will governments get their financial houses in order? What will it take to force them to do so?