Jerry Hogan: You Can’t Balance This Budget

Jerry Hogan - Rockwall County Judge-Elect
Rockwall County Judge Jerry Hogan

I recently saw an explanation, in the most simplistic form, of why our country continues to spiral deeper and deeper into debt.

In this Fiscal year, October 1, 2011-September 30, 2012, the budget proposed by President Obama totals $3.8 Trillion dollars. Our total forecasted revenue for this same period is $2.469 Trillion; a deficit between expenses and revenue of a little over $1.3 Trillion. This is bad enough, but unfortunately it gets much worse.

The budget is composed of three main components: Interest Payments for money we continue to borrow ($225 Billion yearly), Mandated Programs, called non-discretionary spending, (Social Security $773 Billion, Medicare $478 Billion, Medicaid $255 Billion, TARP $35 Billion, and other mandated programs of $711 Billion, for a total of $2.252 Trillion) and Federal Government, or discretionary spending, (Security $868 Billion and non security spending such as education, energy etc., $450 Billion, which totals to $1.319 Trillion).

Looking at these numbers, it is clear our budget cannot be balanced. Even if we eliminated ALL Security and ALL other government at the national level our revenue would still be exceeded by our expenses!

Our total national debt is now approaching $16 Trillion. Four years ago it was $10 Trillion. By the year 2021, it is projected to be $26 Trillion. Our debt today of $16 Trillion equates to 25% of the world’s Gross Domestic Product. Our debt totals more than 32 times the debt of Greece, and the world has already seen what happens when a country’s debt rating is reduced to the lowest level, social programs are dramatically cut, and bail out programs are required. Riots in the streets result and the world’s financial markets go into a spin.

Unfortunately our Congress, rather than addressing and fixing the problem, continue to push the issue down the road by raising the debt ceiling and refusing to address the cause and solutions.

There are no easy solutions. We have allowed our country to get into this financial deficit position by continuing to add program after program to our national list of “things that will help our citizens”, take action after action that will “better position us in the world to show what democracy is all about”, and continue in our endeavors of insuring “political correctness” in every action we take. Now, unfortunately, we are arriving at that position where actions must be taken or we face financial disaster.

Our credit rating, for the first time ever, was recently downgraded. Our budget projections continue to show significant deficit spending. No plans are forthcoming from the Congress or the current Administration. Rather than talking about Student Loan rates or why tax rates should be raised for the wealthy, where are the bold programs and plans to address this financial crisis? Where are the leaders who are willing to go to Washington to fix the problem rather than to talk about what they are going to do once they arrive? Where are the leaders who are willing to lead? Where are the representatives who are willing to put aside their plans for continued terms in the Congress or the Administration in return for telling the American people what the problem is and what we are going to have to do to fix the problem?

Frankly, the track record of someone doing this is not very good; in fact it is almost non-existent. What a shame.

How do you fix this problem? You have two choices; increase revenue or cut costs. To increase revenue you must 1. get a viable tax policy in place that makes business want to invest and 2. get the uncertainty out of what “Washington” is going to do. This will drive the economy which will result in market growth which will drive down unemployment which will drive revenue up by more taxes being paid, etc. If this does not happen, estimates of an increase in taxes of 50% will be needed to drive the revenue to where it will allow balancing of the budget.

Cutting costs will be very difficult as programs that have continued to be added to our roll of funded programs have a life of their own and refuse to go away. They usually do have a purpose and they usually do help some group of citizens, so getting rid of them or cutting back could introduce the same type resistance that we saw in Greece when some of their programs were cut. Bold and aggressive actions will be needed here. Fear of not getting reelected should not be the determining factor on programs proposed or voted upon.

We do not yet have this problem of spiraling debt and unbalanced budgets at the County level. Our debt rating continues to be AA; our debt service, primarily for new road construction, is not excessive, and our debt forecasts result in well programmed issuance of debt for programs voted upon by the citizens.

Our operating budget is a balanced budget. Personal costs are closely watched and controlled. New proposed programs are examined to insure both need and affordability before being introduced into the budget. And this is where extra vigilance is always needed. No proposal ever presented to the Commissioners Court is described based upon its non-need or non-applicability; according to the presenters, all programs have worth and merit and should be immediately adopted because of the good it creates.

My comment on these proposals is simple. If you can’t justify the program with off-setting cost savings, then the program is probably not really that good. Witness the mess our country is in with the introduction of all those “good” programs now locked into the non-discretionary spending side of our budget!

Jerry Hogan is the County Judge of Rockwall County Texas.

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