What is the real cause of the United States Budget Crisis? What are the solutions? The Red States are calling for tax cuts. The Blue States are calling for increased unemployment. Both are ignoring the elephant in the room. Imagine a 2,000 pound elephant in your living room, and two people enter the room, ignore the mammoth, and instead argue over the placement of a new lamp. Common sense would tell you that the lamp’s location is irrelevant since it’s going to be crushed by the elephant either way.
The Elephant in America’s living room is simple: We spend more than we make. We are addicted to overspending. Until we settle and deal with that reality, we are in terrible trouble. Where should we cut? How do we cut? Will it be easy? No, budgeting never is, but you have to do it. How do you eat an elephant? One bite at a time.
Proverbs 27:23 Be diligent to know the state of your flocks, And attend to your herds; 24 For riches are not forever, Nor does a crown endure to all generations.
Solomon notes that you must “know the state of your flocks.” You must know how many assets you have. You need to realize and account for your herds, then consume less than you make. Why? When you spend more than you make, your riches don’t last forever. You will run out of money. And when you do, don’t be arrogant to think a kingdom will last forever. Solomon tells us that a country or king or is irrational and irresponsible with money will not endure to all generations. Why? They go bankrupt.
So where is America today? Imagine two beavers who’ve built a dam to hold back the river. They spent their whole life building this dam. When you look at the dam today, it still holds back the water, but there are lots of little sprinkles and sprays coming forth from the little wooden blockage they’ve built. Over the years, momma beaver got hungry and didn’t want to wander into the woods to find a tree to gnaw on, so she took a stick out of their dam. Papa beaver followed suit removing another branch carefully as if playing pick up sticks. Over the years, the beavers have slowly weakened their own dam, their own home, and their own future. One day a friendly bird flies overhead and tells the beavers that a flood is coming. A tidal wave is headed toward them. This bird flew as quickly as it good to warn them before it’s too late. The beavers laugh at the bird. The beavers respond not by repairing the dam, strengthening the wall of wood, but by pulling out more sticks to gnaw on.
There is a tidal wave of spending coming toward America as baby boomers retire. It is a tidal wave of financial commitments that will obliterate the US budget. Instead of putting money aside to prepare for these promises and payments, politicians from both sides have been pulling out branches from our future by spending our grandparents’ future money on yesterday’s “gnawing” projects.
What are the proposed solutions? 1) Spend more. 2) Save Less. Democrats are gnawing at the dam through another year of unemployment benefits which increase the spending. Republicans want to decrease taxes which will increase deficits. The elephant in the room is the massive spending problem that is being ignored. The tidal wave around the corner is the reality that we not only can’t afford our current spending, but are in no way prepared for the spending to come. Increasing spending on anything is as irrational as pulling more sticks out of the dam. Decreasing taxation prior to a tidal wave is the beaver equivalent of “shaving” the top layer off your dam, making it “lower” and weaker, rather than bigger and taller.
I’m always a fan of lower taxes and more liberty. I am always a fan of starving the wasteful government of their inefficient programs, but we can’t ignore the elephant surfing the tidal wave. We must dramatically cut spending. It’s that simple. Not easy, but simple. We must live on less. We must cut our government by 20-40% to prepare for the tsunami to come. Solomon said it clearly, “Count your herds or bankrupt your nation.”
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