CEOs are overpaid, profit-hungry, shareholder-beholden, monsters of society….Right? Right? Right?
But, have you ever thought about how a CEO might tackle America’s budget issues?
Certainly, a company with America’s track record would have gone bankrupt years ago. Shareholders would have expected that the company would have brought in a brilliant CEO mind to engineer a turnaround by now…But, what would that CEO do if they had to turn this ship around?
Here is the answer, brought to you straight from CEO 101:
1) Cut fixed costs
2) Increase prices
3) Institute a poison pill
4) Sell off unprofitable assets
5) Pay down debt, increase cash flow
1) Cut Fixed Costs
This is a must-have in any business turnaround. You must first cut down our fixed costs, so that when you manage to increase revenue, the effect is exponential. In order to cut costs, America would need to reduce its federal salaries, and entitlement programs immediately. Programs like Social Security, Medicare, Welfare, along with federal government salaries, account for around 60% of the annual budget. By cutting these programs/salaries by 15%, the United States would save around $315 billion/year.
2) Increase Prices
The Federal Government collects approximately $2.77 Trillion in tax revenue each year. If the Federal Government were to increase tax collections by 15%, they would net an additional $415 Billion/year. One could spend years arguing the best way to administer this tax increase, but let’s assume that since over 50% of people don’t pay federal income tax, and 10% of people can afford to pay more, that we find some solution that makes it so everyone can survive while letting the government keep its head above water.
3) Institute a “Poison Pill”
Many Corporations institute poison pill initiatives, to ward off competitors with evil agendas. The United States should do the same. Instead of Obama’s plan, which decimates the military, we should look to strengthen the military while cutting in all other areas. By cutting the Nuclear Arsenal, while cutting some new weapons systems, and reforming command, support, and infrastructure, the armed forces could save approximately $500 Billion over the next ten years, or $50 Billion/year. Today, we spend about $150 Billion/year on salaries for around 1.4 million soldiers. If we reinvested the $50 Billion/year into more soldiers, we would be sitting at over 2 million soldiers, which would put us on par with China as the world’s largest military. In one budgetary move, we could provide employment to 800,000 Americans, and put ourselves back on the map as the world’s largest military in a revenue-neutral move.
4) Sell off unprofitable assets & defund unprofitable business units
The Federal Government owns approximately 650 million acres of land, appraised at around $2000/acre, equals a sum of $1.3 Trillion. If the government were to unload the worst 33% of the land, it would net around $400 Billion, along with lowering expenses significantly.
We spend over $70 Billion/year in foreign aid, $17 Billion/year on NASA, $30 Billion/year in agriculture subsidies, $48 Billion/year on the department of education, and $13 Billion/year for the IRS. That would total about $175 Billion/year.
5) Pay Down Debt
We spend about $415 Billion/year in interest on your national debt. By making the aforementioned cuts, we would save approximately $900 Billion/year. This would allow us to pay off around $350 Billion of National Debt each year, which would account for an additional $10 Billion/year in interest expense.
Where would we be if the Government took these steps?
Today, we stand at $17.75 Trillion in debt. If the Federal Government took these steps, we would reduce the debt by $360 Billion/year. Even with this dramatic effort, we would still likely not be debt-free for approximately 50 years.
Clearly, it is time that we bring in a “fixer” who can set this country on the right path. While 50 years is a long time to recover, it is better than the trajectory that we are on. There are many things that can speed up the recovery, such as entitlement reform/dismissal, or temporary tax spikes, but the overall goal needs to be having a smaller central Government with less taxes and less fixed costs going forward.
I think that we can all agree that if we had a friend who only made $50,000 each year, but had $315,000 in credit card debt, we would be worried about that person’s mental health…
If they asked you for help, would you recommend that they work 6 jobs so that they can continue spending the same amount of money and never get out of debt? Or would you recommend that they take on one extra job while drastically reducing their spending while trying to pay off their credit cards?
Of course, you would likely do the latter. When you have a spending problem, it is okay to want more income, but controlling your spending is an absolute must in order to get your house back in order.
If the United States Government was a person, they would be this person!
Unfortunately, our government has chosen neither of the options outlined above. They have basically taken on a few extra hours at work (in the form of more taxes) while deciding to spend even more than ever before (in the form of ObamaCare).
The Democrats have decided that they do not want to cut spending, because they think they can raise enough taxes to get out of this mess. Here is the truth, they could raise everyone’s taxes by 25% right this second, and use that money solely to pay off the debt, and it would still take 15 years to get back to even. That doesn’t even count the Trillions of dollars they are adding to the debt each year.
Conclusion: The debt is too big to tackle by raising revenue without cutting spending.
The Republicans believe that we can stop cut spending, without raising taxes, and get this mess under control. Here is the truth, in order to make this work, the government would have to cut 90% of its spending for the next 20 years in order to achieve this goal.
Conclusion: The debt is too big to tackle by cutting spending without raising revenue.
The sooner we can all agree to these simple facts, the sooner we can help our dysfunctional friend get back on their feet.
We do not need conservatives, we do not need liberals, we just need people who know how to do math. Anyone out there fit that description?
If so…Please, Please, Please run for congress!
This is not about political parties, this is about a person who is riddled in debt looking themselves in the mirror and deciding that today is the day to stop living a lie. Today is the day when they cut back on what they can live without. Today is the day when they decide to spend more of their time working hard to make some more money so they can pay off some of their debt. Today is the day to make a plan, execute a plan, and endure some tough years on their way to achieving the American Dream.
If they don’t, the American dream as we know it will not be available to any one of us in the future…
- Obama’s victory on debt ceiling comes at a terrible price (cornhusker4palin.newsvine.com)
- Robin Koerner: The USA Defaults — on Its Constitution (huffingtonpost.com)
- Government Reopens, Spends $328 Billion In A Single Day (personalliberty.com)
In order to understand the National Debt, we need to first look back at the last 30 years or so to try to understand what lead to the National Debt issue getting out of control. It is extremely important to understand the difference between who controls congress, and who controls the presidency. While the President is very powerful, and he has Veto power, the congress is who actually passes the laws. It is very telling to watch what happens when a particular party has control of both the Congress and the Senate, which allows them to pass just about anything that they want, with minimal minority party support.
Since 1980, Democrats have had control of both the Congress and the Senate for 12 years, the Republicans have had control of both houses for 10 years, and there have been 10 years where we have had a split congress.
So, who does better at controlling the National Debt? Let’s take a look…
12 Years of Democratic Control = $8 Trillion added to the National Debt – $800 Billion per year
10 Years of Republican Control = $3 Trillion added to the National Debt – $300 Billion per year
10 Years of Shared Control = $4 Trillion added to the National Debt – $400 Billion per year
Wait…are the numbers skewed by wars and terrorism and stuff?
Well, the Democrats were in charge during the 1st Gulf War, there was Shared Control during 9/11, and the Republicans were in charge during the 2nd Iraq War and the War in Afghanistan,…So let’s call it even, or at least not a large issue in this debate.
Conclusion: Despite what the Liberal Media says, you get the most fiscally responsible governments when the Republicans control both the Congress and the Senate. The numbers don’t lie.
Neither party has done a good job, but the Tea Party is committed to changing that in the future…
Help us take back control of the Senate this year so that we can return to an era of fiscal responsibility!
- Debt ceiling debate headed towards nasty fight between Obama, Republicans (capitolhillblue.com)