By Tom Wilbur
Our nation has a budgetary crisis, and a debt crisis. You may have seen or read about it in the news lately. You didn’t see it? Please disregard the rest of this article, and make no plans to vote in 2012.
For those of you still with me, I’d like to go over the fundamentals of budgeting, and debt. The fundamentals of any budget should be to establish a path—a series of benchmarks and targets, for any entity to work towards. If you are smart financially, you have established a budget for yourself, and you review it on a regular basis. A yearly budget is made up of shorter set points… monthly, or by paycheck (for individuals).
For the past couple of years, our nation hasn’t had a budget. Hard to imagine, isn’t it? We’re not very smart. The President and Congress have been unable to get one passed. Not having a budget is a real key as to why we find ourselves in peril. We haven’t had a plan. Without a plan, our nation has no direction financially, and it’s impossible to measure how we’re doing in comparison to any income and expense targets previously established—without one.
Budgets are generally put in place to achieve some balance, and to define a plan for improvement. Most budgets for businesses are geared towards providing that at the end of a period of time (generally annually) there will be a bottom line with net income. A positive number. Businesses that don’t have a profit in the foreseeable future, will soon find themselves out of business.
Non-profit organizations often budget to meet the present and future needs of their organizations, and their targets rotate less around profit, but are put in place to fund reserves—to ensure that the organization will have the funds it needs in the days and years ahead. It’s a key ingredient of sound financial management to have reserves to stave off emergencies, or meet the financial obligations of unanticipated expenses, or simply to save for future growth.
Our nation has lost its way, because we have no plan, and no leadership. Oh, sure there are a handful of folks in Washington that understand the implications of not having a budget and being fiscally responsible, but all of them have contributed in some way or another to carving out their slice of a pie that we don’t have, to gain their share for the demands of their constituents. But I digress.
A budget typically asks the preparers to work towards some level of improved position, although that’s not always the case. We all want a plan that drives us towards a better place. And a business may establish a budget that is working towards a minimization of their losses, instead of an actual profit. We have all faced these kinds of challenges personally. A budget can be a guideline for success.
(I have a few ideas on how to balance our nation’s budget, and you will read incorporated within my plan the ideas of others . . .I’m not in position to keep track of who has said what, so base it upon this—I rarely have an original thought, and we’ll go from there. If I stole your idea, sorry—you can have it back, in a little while.)
Here’s the Primary Premise to fix our nation’s troubles: It is time to stop blaming somebody else. That just doesn’t work at all in more. Our nation obviously has trillions of dollars of debt at the federal level created by years of overspending, and we can put the blame game to bed. Let’s blame it on everybody that has ever worked in Washington, held office in Washington, has visited Washington, or knows someone who has visited Washington. It’s all your fault. You are to blame. I am to blame. We the People run this country, not 536 politicians in Washington, D.C. If our representatives don’t know their head from their rear, it’s your job and my job to vote them out. And to make our voices heard until we all get it right, in this great democracy in which we live. The buck stops with you and me, baby—we’re in charge.
So here you go—a number of fundamentals to get us off dead-center, from 20,000 feet:
Fundamental #1: Income should exceed expenses.
We’re all going to have to work on this one together. Spending is spiraling out of control. We have so much waste, that just the time we’ve taken fighting about the debt crisis for the past year has cost us as taxpayers billions of dollars. I don’t think raising taxes is the right move. But should GE pay less in taxes than you do at the end of the year? I don’t think so. I doubt you do, either. So some level of tax reform is probably necessary—a simple tax plan that should be fairer to all, and less complex. Warren Buffett thinks so, and he’s a pretty smart guy. If there are any incentives, they should be in place for businesses that are out taking the risks to create the jobs we so desperately need.
On the expense side of the ledger, I’m tired of paying billions of dollars to other nations, who don’t give a flying flip about America. We think that they’ll like us more if we give them money, and that’s baloney.
I believe in other basics—that if an individual has a net worth that supports their life in a very positive manner, as they get older, they shouldn’t just automatically get social security payments. I know millionaires all paid in, too, but social security should be in place to provide for those who can’t fend for themselves on their own. And there is no question, Obamacare should be scrapped in favor of allowing insurance companies to compete for all of our business nationwide. I have studied it, and over the next few years, a lot of businesses will fail, or just stop providing insurance coverage for their employees’ altogether, if it’s fully implemented. I believe it’s an example of a federal program that has over-stepped its boundaries… requiring that every America pay to have health care feels Orwell’ion to me.
Fundamental #2: Our federal government should do what the Constitution instructed it to do.
Our federal government has certain responsibilities: These responsibilities include defending citizens from foreign invasion as well as pursuing interests abroad, creating and enforcing laws and regulations and implementing federal programs and organizations to benefit its citizens.
These include protecting our borders, overseeing our nation’s highways and transportation, and the nation’s financial system. The federal government should ensure that our rights to life, and liberty and the pursuit of happiness are protected. We must be a responsible partner to the nations of the world—with integrity and fairness in all that we do, but that in my opinion, we must end the practice of using force or cash, to impose our ideals upon other countries. I fully support our military, but we should not and cannot afford to be watchdog for every fight in the world.
In this area, and in many others, it’s time to narrow our approach to what our founding fathers designed for our federal government and its powers, and stop trying to oversee everything.
Fundamental #3: We are all in the boat together. We need to paddle together.
We have so many of our priorities screwed up right now, it’s hard to get them all identified. So, we’re going to have to work together to get it all fixed. We need a strategy to put people to work productively. Our nation was built upon self-sufficiency, and gumption, not handouts. It’s all resolvable—I believe in our individual and collective ability to get it all turned around.
If you are unemployed and get a check from our government, there should be accountability for the money you receive from other taxpayers. Here’s a concept—if we provide a check, then you should either be in class studying to improve your skill sets, or at the very least actively involved in some type of volunteer work to improve the quality of life in our community. We shouldn’t pay people to sit at home and watch TV all day. We need to return America to a nation of people who are self-reliant, and who value hard work. A good friend of mine went from being on welfare, to becoming an attorney. Government programs should provide the tools to help someone get back on their feet, not ongoing sustenance.
There are hundreds of other corrections we can make— eliminating redundancies and waste at every level, holding Congress responsible for any funds they spend outside the budget—and on and on. I honestly believe that everyone in Washington should be paid based upon the performance of the nation’s balance sheet. If they bring spending in under budget, reward them. If they spend too much, take it out of their pay. That would reel all the pork barrel spending in pretty quick. Every other business in America operates that way—Congress should have to, as well.
Fundamental #4: We need to continue to support the creation of jobs. If we want jobs to begin to grow again, our number one ally is stability.
We’ve been scattered in so many directions– trying to implement so many laws, rules and changes over the course of the past few years, we’ve created instability in the market place. Businesses don’t know how to plan for the future, because they get unbelievable mixed and confusing messages from Congress, and no one knows which end is up. Stability creates opportunity for preparation to plan, and grow, and achieve. Instability creates uncertainty, and undermines the chance for businesses to expand, and hire more folks along the way.
An example of how change impacts us all: Banks have been given 7,000 pages of new imposing regulations from the Dodd-Frank Act alone. I’m guessing there’s no one in Congress who has actually read what they passed, but to date, only 10% of the Act has been implemented, and every change creates more instability for banks, more costs, and more stifling of growth, as financial institutions work to comply. It increases the costs for providing services to consumers.
Congress has put in place stringent requirements and strategies for financing that only the most qualified of borrowers and most profitable of companies are able to secure, and frankly, that’s not who needs to borrow money right now. We need to help empower community and regional banks across the nation to be in position to lend to companies on the grow. Our little bank is not Goldman Sachs—we’re just a community bank looking to serve this area. And we can help people better than out of state finance companies, if we aren’t rolled over with the same giant ball of onerous regulations Congress has gifted investment companies. We smaller banks didn’t create the huge problems on Wall Street.
Fundamental #5: We have an obligation to ourselves, and our children to shoulder the debt we have created, and not saddle our children with the burden of fixing our financial wrongs.
When did we decide that printing money and pushing our debts to our children was a correct and appropriate activity? It must have been a good number of years ago. Anything we do that perpetuates increased debt must be curtailed. Debt gives the power of compounding to the losing side of the ledger, and debt unharnessed, can lead to failure. Most businesses that fail do so because of the lack of ongoing cash flow, or incurring such large debt levels, that the debt can no longer be adequately serviced.
We need to stop the hemorrhaging, and live within our means. Here’s an idea—never enter a war, unless we have provided the way and means to pay for it. We need to bring our kids back from war, in one piece, and not in body bags—and while I support our military at every level and believe in strongly defending our nation’s people, I don’t understand why we feel that our young men and women need to be placed in harm’s way for every skirmish around the world. It’s our job to hold Congress accountable for all of their actions. And I am 100% behind term limits.
One last thing—respect for another’s position, and kindness can prevail quicker in any negotiation than vilifying someone for their point of view. I have disagreements with people on occasion. But often times, we can come to terms with our differences by settling in, and just being decent. Everyone comes from different backgrounds and walks of life—and we all have different pressures and stresses in our lives. Plato once said, “Be kind. For everyone you meet is fighting a great battle.” Walk a mile in someone’s shoes, and then start the discussion. You might find that you agree on more things than you realize, and that allows for positive changes to be made ongoing.
Now is the time for Congress to set a reasonable budget for the years ahead—creating a framework for improvement, and recognizing that everything done to reduce spending, creates less need for revenue—and the chance for balance and prosperity to return.
Of course, they’ll have to ramp up all these budget ideas when they get back from their extended vacations (another adjustment that needs to be made) but in the meantime, stay vigilant and hold their feet to the fire—as we march on, together.
Tom Wilbur is President/CEO of BANK VI in Salina. He is a lifelong resident of Salina, a graduate of the University of Kansas, and has been a regular editorial contributor to newspapers and magazines, and a speaker and trainer in the banking industry. He can be contacted at tomw@banksix.com.