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This sequestration conundrum is a problem of its own creation, mainly due to the fed trying to manage life within the states.
Let's look at those funds which go from the federal government directly to the states, the question that arises is "why?" The purpose of the federal government is not to be a "super-state" to direct/administer what occurs within the state(s) and definitely not to collect from the richer (states) and give to the poorer.
Think about it from an overhead standpoint. The fed acquires the money by taxation or borrowing, then has to internally administer it through the Treasury to whatever department/agency controls particular projects/programs. The federal department/agency has to establish funding criteria, manage it, process applications for the money, assure no fraud (if only!), account for its disbursal and verify it was spent on the required service. That's just at the fed level.
The State/local department/agency receiving the money goes through basically an identical process with the addition step of responding to federal reporting requirements. If the money must first go to a State agency for subsequent disbursal to a local agency, there's a third overhead level involved.
I have a hard time accepting that funding for local school teacher's aides or first-responder gear and other such stuff is a federal matter, let alone must go through three levels of bureaucratic overhead spanning the continent before that teacher's aide is paid or the first-responder gear is purchased. The cost for such "administration" is staggering and explains the exceptional number of federal employees administering what can and should be done only at the state/local level.
There is no reason for citizens of New York or Illinois to have to pay for state/local activities within Montana or Arkansas - or vice versa. Yet, that's exactly what is happening with this Robin Hood type of federal involvement in state/local matters. If there truly is a need for the funded service, then that money needs to come from taxing within the impacted state by the state and disbursing internally. Federal overhead level is expensive, unnecessary and a significant portion of the federal debt.
The cost of government is a negative factor in determining gross national productivity. Government produces nothing and by its very nature is "overhead." The idiocy of taxing the citizenry at the national level and setting up "trickle down" federal programs to provide money which could just as easily been directly acquired by the state/local authorities without the fiscal burden of paying for federal folk to receive/administer/distribute the money is obvious.
So, all of this "the sky is falling" sequestration stuff should make us wonder why most of these "trickle down" programs exist at all. if there is a local need, then locally tax and pay for it, thus reducing the current overhead by at least a third, probably half. The problem is not that there are too many services/entitlements increasing the national debt, it's that the fed should not be involved with these programs to start with, as the fed does not provide any bang-for-the-buck and by its very involvement eats up more money than necessary to provide many services/entitlements.
Every business person knows that the key to running a cost-efficient, productive business is to reduce the overhead to a minimum. The higher the overhead, the higher the price for the service/product. Until we hold the federal government (Congress and the Executive) to the same money-management standards that stockholders demand of company boards of directors, this stupidity will continue.
Steve, not exactly disagreeing with you.
But you start from a false premise; there is nothing about it but control.
You control the money, you make people rely on the money you have, you control the people.
First step is something radical, or maybe not so radical.
Repeal the 17th Amendment, and return control of the Senate back to the State Legislatures.
This would address many of the issues.
The main argument for the 17th Amendment was that the Senators were corrupt. Can anyone argue that they are not just as corrupt now?
And at least then, the State Legislatures acted as a leash.
And as a result of the direct election of Senators, they can simply buy their seats with other people’s money, and work with the House to put the Bill back on the states (unfunded Mandates). The states would not tolerate that.
Now of course there is only one way to fix the problem, the State legislatures have to call for a Constitutional Convention, with the Goal of repealing the 17th Amendment.
The other legal rout includes through the Senate…and that is not going to happen.
I agree with everything you stated, except stockholders holding corperations accountable for money-management. Most shareholders have shares that are tied up in funds to make money or in a retirement portfolio. Share holders buy and sell shares to make a quick buck at the expence of our economy. Pragmatically, we cannot allow this to continue as business as usual. We have to bring manufacturing and jobs back to the USA, so we can have a tax base for a sustainable economy. Please read and comment on my post about consitutional bills to bring jobs back to America. We can work on comprehensive fiscal reform after we start the process of bringing jobs back. Outsourcing failed all of us, let's try Insourcing.
Well, it happened and the world did not collapse. However, the broadcast and print media have gone Postal over the fact that $85 Billion in cuts go into effect this year. They make it sound like it's November 1929 again.
Well, the number sounds big to us po'folk who don't qualify for open door treatment at the casino in Monaco, but the cuts only total 3.5% of the federal annual expenditure/budget. Three point Five Percent!
Let's put that into perspective. Borrowed money currently constitutes 35% of the budget (planned or osmosis). For 2012, that's $1.327 Trillion. If you deduct the sequestration amount from that, you still have borrowing at $1.242 Trillion.
Now comes the smoke-and-mirrors. According to the White House, for some unexplained reason, over the next couple years, revenue (taxes and fees) are going to increase from $2.468T in 2012 to $3.919T in 2017. That's a 59% increase in revenue in five years. We aren't going to see that increase simply by raising taxes on millionaires, so that means the rest of us are going to be slammed with new federal taxes. Simply put, that means whatever you paid this year in federal taxes, you will pay somewhere around 50% more for 2017. By the way, the federal plan sill anticipates borrowing $612B for 2017, since the overall budget will be $4.531T, roughly 21% larger than the 2012 budget. (See http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/h...)
The bottom line is that the federal empire will continue to grow, debt will still grow, taxes will skyrocket, and no one can forecast an end to this debacle. This is what neither one of the major parties want to explain to the citizenry, and neither party seems in any hurry to fix this.