Two Kinds of Budgets

budgetingYears ago, right after getting married to my wonderful wife, I enrolled and graduated from Dave Ramsey’s Financial Peace University course.  This is where I learned the true importance of budgeting.  I also learned that there are two kinds of budgets.  The first is a “Zero-Based Budget”, where every dollar has a place to go and you end the month with zero dollars left over.  Of course, this budget includes everything from the utility bills to charity to savings and retirement.  Every thing is accounted for in the budget and you live within your budget.  When you run out of money in a certain category (such as “Eating Out”), you either pull money from another category or you stop spending money on that particular category.  This is not rocket science.  But it is pure genius.  And it works every time. Additionally, if you need extra funds for bills, Christmas outings, or gifts and are unsure who can assist or what options are available, try Quick Loans, which provides a no-obligation estimate and the opportunity to speak with a professional member of staff who will not only address all of your concerns or questions but also assist you in applying for the amount you require.

The second kind of budget is the “Needs-Only Budget”, where you look at your “Needs” versus your “Wants”.  When you separate everything as either a Need or a Want, you add up the Needs and see how much you COULD live on if you absolutely had to.  How low can you cut your “Eating Out” budget if you needed to?  No fancy restaurants and packing a lunch from home if possible.  Do you really need Cable TV?  How about Netflix?  Unlimited Text Plan?  Do you really need that new pair of glasses?  It’s amazing what you can really get by with when you look at it this way.

So when do you use one kind of budget over another?  The Zero-Based Budget is your normal everyday budget.  If you have trouble meeting your budget, you cut from your already identified list of Wants.  However, when you enter an emergency situation where your income is severely reduced (loss of a job, perhaps) or your expenses dramatically increase (such as serious medical expenses), you then switch to your Needs-Only Budget.  This allows you to increase cash flow to pay for increased expenses, or live within a reduced income.  Living under a Needs-Only Budget is not a comfortable thing to do.  Quite the contrary.  But that is the real beauty of it – you are very motivated to CHANGE your present situation if you can.

Curious.  When we look at the Federal Government we see neither of these budgets being used.  In fact, it seems that the Federal Government hascongress1 come up with a third kind of budget: the “Don’t-Even-Try Budget”.  For the life of me, I cannot understand how Congress can consistently pass a budget that exceeds its income.  Following Dave Ramsey’s plan, I am debt free except for a mortgage that I will pay off in less than 15 years.  I have savings in the bank for a rainy day and for retirement.  I give generously to charities that are important to me.  Following Congress’s plan, the Federal Government now has more debt than it has income.  SIX TIMES more debt than income.  The Federal Government is overspending its income by over 60% this year.  The Federal Government actually owes more in retirement (Social Security) than it owes in debt!

Furthermore, incredulously, Congress has invented yet another kind of budget for times of crisis: the “All-Needs-All-Wants-Plus-Kitchen-Sink Budget”.  In a time of crisis, in this case a reduction in projected income (Debt Ceiling) AND a dramatic increase in expenses (President Obama’s massive increase in spending in the current “budget”), the Congress actually RAISED spending.  By a LOT!

I would like to see Congress come up with a “Zero-based Budget” – also known as a “Balanced Budget”.  I would LOVE to see the Congress develop its “Needs-Only Budget”.  That is the only way we will see dramatic change in Washington.  That is the only way we will ever get rid of $15,000,000,000,000 of debt.

Tea Party Caused the Credit Downgrade?

A “cult fringe”.  Tom Harkin, Democrat Senator from Iowa on July 20, 2011. A “fringe element”. Michigan Governor Jennifer Granholm, Democrat, to CNN in April 2010. “Tea partiers-the fringe element of the Republican Party”. DailyKos, July 27, 2011. Harry Reid has called the Tea Party irrelevant, and claimed it will be short-lived.

Yet, once the S&P downgraded the U.S. credit rating, somehow it’s the Tea Party’s fault? Both David Axelrod, of Obama’s team, and John Kerry have called this the “Tea Party Downgrade”. Interesting how it doesn’t take long for the Democrat talking points to use the exact same language.

My question is, how in the world is a fringe, irrelevant group capable of bringing down the credit rating of the largest economy in the world for the first time ever?

This is a problem for both major parties. The blame game immediately started after the downgrade. I thought the debt deal, which was supported by members of both parties, was supposed to save the economy. Isn’t that what we were told? Now, we’re told it’s Obama’s fault. We’re told it’s the Tea Party’s fault.

It’s clear to me that it’s the federal government’s fault. This is what happens when year after year, the federal government does not concern itself with living within its means. This is what happens when the government continues to waste money on matters that don’t actually benefit the country, continues to fund entitlement programs without giving the people in those programs the proper incentives to find employment, and continues to raise the debt ceiling without regard for its ability to pay the debt back.

Isn’t it time for the American citizen to stand up against the federal government’s irresponsibility?

Free Credit Report for the Government?

So Congress has now passed its Debt Deal.  If you watched any of the voting on C-Span or anywhere else, you likely saw many of your elected officials congratulating themselves on such a good job.  They celebrated the vote, happy that they averted a “default”, and avoided the largest economic disaster since the Great Depression.

What?  Increasing the amount of debt the country could owe somehow SAVES the country from economic ruin?  Our elected officials must live on a different planet than you and me.

In all of the debates regarding the debt ceiling, did you hear ANY of the representatives or senators ask if doing so was constitutional?  Hardly.  If any of them did so, it was only in passing.  Instead, the bulk of the debate centered around the completely fictitious notion that the U.S. might default on its debt.  This was never going to happen!  But that’s all the media reported on, and that’s all the elected officials talked about.

So is it constitutional?  According to Article I, Section 8, of the Constitution:

Section. 8.

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

To borrow Money on the credit of the United States;”

At first glance, it would certainly appear that Congress is well within its rights to increase the debt limit, as it has the power to “borrow money on the credit of the United States”.  But notice something else in the first clause:  Congress also has the power “to pay the Debts”.  Why is it that we never hear about that?

Can it seriously be argued that the founding fathers intended to give Congress the power to continually raise the debt limit without any regard for the ability to actually pay back those debts?  Of course not.  If the founding fathers were truly giving Congress such a power, they would necessarily have been allowing Congress to bankrupt the country.  That was never what they intended.

What Congress is doing, and has done for way too long, is focus only on its “power” to borrow money, without considering the equal responsibility to actually pay it back.  Consequently, our country continues to fall deeper into debt.

What about the commerce clause?  Is it constitutional under that?  I would say the same principle applies.  At some point, you lose the ability to regulate commerce when you’re nothing more than a debtor to more creditors than you can count.  Ask yourself this question:  when your monthly debts are more than your income, who’s in control of your life?  You, or your creditors?  The answer is simple.

What about the general welfare clause?  Surely it passes muster under that, right?  Again, the same questions yield the same results.  Who is benefiting when we as a country sink deeper into debt?  Not the American citizen, that’s for sure.

Finally, some have argued that the 14th Amendment gives the President the ability to raise the debt limit without the consent of Congress.  According to Section 4 of the 14th Amendment:  “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”  So, the argument is made, President Obama could simply ignore Congress and increase the debt limit himself, or, as some have suggested, declare the idea of any debt limit unconstitutional in and of itself.

Of course, this entire thinking is backward.  Congress (and the President) was concerned about our ability to BORROW above the current debt limit.  Why wasn’t anyone asking about our ability to REPAY what had already been borrowed?  Isn’t that our real problem?

For an excellent discussion of this issue, click here:


Who’s In Charge, Anyway?

As the Tenth Amendment to the U.S. Constitution makes clear:  “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”  In other words, unless the Constitution specifically provides that the federal government has a particular power, or specifically takes that power away from the states, the states and the people retain it.

This is the beauty of our system of federalism.  The problem, of course, is that the federal government no longer deems that amendment worthy of following.  While the amendment specifies that the bulk of the powers resides with the states and the people, the federal government for too long has usurped both.

Congress long ago forgot its proper role in our system of government.  No longer do the members worry about the constitutionality of the laws they are drafting.  In fact, they don’t even seem to ask that basic question anymore, and if they do ask it, they’re answering it incorrectly time after time.

Most of the time, however, they approach a new law by asking if it will be “good for us”.  If they deem it beneficial, in their patriarchal “wisdom”, they pass it, without even the slightest consideration as to the law’s constitutionality in the first place.  In so doing, they continue to infringe on the rights of the states and the people, and the Tenth Amendment continues to lose all practical meaning.

This website is dedicated to the discussion of the proper role of the federal government in the lives of its citizens.  I believe our federal government views its citizens primarily as wards of the government itself.  Instead of the elected officials working for us, they consider themselves our overlords.  This attitude, by the way, is not limited to a particular party.  Liberal Democrats and conservative Republicans have all been guilty of treating us in this manner.  It must stop.

In order to stop it, however, the citizens must educate themselves on the Constitutional limitations placed on government at all levels, not just the federal government.  It is our hope that this website will contribute to that education.