A financial budget is supposed to be a limit on spending. When an individual or organization spends beyond the limit of their budget they have defaulted on their original obligation of adhering to a strict financial plan. However, there are differences between a financial budget of an individual or private organization and that of a government. If an individual goes into debt and cannot repay their bills, they can liquidate that debt through bankruptcy, but if a government cannot finance its debts it can either borrow more, raises taxes, or simply create more money through the Federal Reserve System. All three government “solutions” are detrimental to each and every taxpayer because they are now forced to pay the extra cost by taxation or inflation. It’s easy to see the dangers of a government that spends beyond its means.
The Federal government has consistently raised the debt ceiling when faced with defaulting on debt obligations. This is a strategy that both, Republicans and Democrats, have supported for decades. The Republicans aren’t willing to cut any spending on programs related to the Military-Industrial Complex and the Democrats aren’t willing to cut any spending on Domestic Welfare Programs. They “compromise”, raise the debt ceiling, and put the American taxpayer on the hook for the bill, kicking the can of financial catastrophe down the road a little further.
An out of control financial budget is a symptom of government mismanagement. The only way a financial budget does any good is if it is actually followed. This simple idea has proven impossible for both parties in Washington. Both parties have supported deficit spending financed by the Federal Reserve System. Radical budget cuts are necessary but they are meaningless without Federal Reserve transparency (See Robert Marquette on Monetary & Economic Policy). A balanced budget is the bedrock of responsible financial policy.
Does Government Have a Revenue or Spending Problem?