Friday, October 28, 2011

Buffett: Balance the Budget in 5 Minutes

Harrisburg PA (Reuters:  Daniel Shanken).

     I was pleased to learn that billionaire Warren Buffet is an advocate of establishing term limits for Congress if they fail to end irresponsible budgetary decisions.  Readers of the Village Elliot’s column may be aware that he proposed virutally the same idea a few weeks ago.

      "I could end the deficit in 5 minutes," Buffett told CNBC. "You just pass a law that says that anytime there is a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election. The 26th amendment (granting the right to vote for 18 year-olds) took only 3 months & 8 days to be ratified! Why? Simple! The people demanded it. That was in 1971...before computers, e-mail, cell phones, etc. Of the 27 amendments to the Constitution, seven (7) took 1 year or less to become the law of the land...all because of public pressure.

            Although I like what Buffett had to say,  3% of GDP is a whopping 450 billion dollars.   Although under some conditions a deficit may be necessary, I think some sort of special permission should be required to have a budget that far out of balance.  On the average, the budget should be balanced.   But certainly if the Congresspeople feel that strongly about the need for a deficit they should be willing to give up their office to prove how important it is.  Getting new people to serve is not a bad thing.  In fact, it’s probably downright healthy.

            This whole thing is underscored by a local crisis in Pennsylvania.  Somehow, the little city of Harrisburg has managed to spend itself 300 million dollars in debt.  Now they are trying to declare bankruptcy, although the mayor doesn’t want to face that humiliation. 

          Harrisburg is a city of some 50,000 people, meaning that their debt is an amazing $6000 per person, or $24,000 for a family of four.  That’s real money that has to be repaid.  Harrisburg is just not going to be given magical loans or issue its own currency, and nobody is going to buy their piece of **** bonds.

          What’s sickening to me is that the mayor is going to run for re-electiion and will be opposed by their top financial official.  Just as at the national level, they are loving the national attention as they seek to blame each other and point fingers at one another.  Excuse me, but these people should be too embarrassed to run for dog catcher, never mind mayor.  New people need to be brought in, not the same old faces.   And Harrisburg should never ever be allowed to run a deficit budget again.  Period.

          Harrisburg typifies the same problem which exists at the national level.  Too many white collar crooks.  Too much crooked math, and not enough supervision from the people.
        If it is this clear at the level of Harrisburg, perhaps it will also become clear that the national economy  is susceptible to greedy politicians and excessive borrowing.  At the national level too, we need some additional checks and balances.  When our politicians spend too much money, they should be made to depart.  Let's let some new people have a try, and not re-elect these comedians. 

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