We often hear from this same side that we need to either run government as a household or as a business. So let's examine what the tea party and the right is suggesting in that light:
HOUSEHOLD MODEL
Say you're running a household with both parents working and you're feeling a budget pinch. The first thing you'll do is to start cutting expenses. You'll forgo that night out at the fine dining restaurant, you won't buy that new car, you might put off a vacation. OK, cutting spending seems to be working, but then things get a little worse, you have to start cutting more. Now you cut out the trips to McDonalds, you put off some of the car maintenance hoping to get a few more miles out of it before something breaks, you deny the kids their high school yearbook. But it's not enough. So the father gets a second job to increase the family income. You DON'T, while cutting expenses, decide that the wife should quit her job and become a stay-at-home mom. That would be insanity.BUSINESS MODEL
You have a small business, making widgets. You have a workforce which is costing you about 20% in wages and benefits and you're making good money. Because the markets expect you to not only make good money, but to have year-over-year increases (otherwise you become a takeover target), you need to increase revenues, but the business is slow and your market share is fixed. So you cut expenses. You begin by looking at your biggest expense which is labor. So you don't give increases and reduce staff, you then look at benefits and negotiate lower health care costs or reduce the retirement benefits. In a business environment you never consider deferring equipment maintenance. But as things get a little worse you need to cut even more. However, you see an opportunity to expand and need to purchase more equipment. Is this the time to cut prices? Your staffing is at minimum, your equipment is older, and you need to modernize. NO business ever reduces income during an expansion phase.So why do we think that we can both cut costs AND taxes (revenue) at the same time we're in financial trouble AND we're fighting two wars? At no other time in history has any government ever cut taxes while trying to fight a war. If we learn nothing else from history, we should at least learn that the downfall of the great societies, Rome, Greece, etc. has been because they could not sustain economically while fighting expensive wars.
More on this subject in my next posting which will cover where we've come from and where we're actually at regarding revenues and spending.
