It’s Never Good When Politicians Handle Our Money

I have a theory that politics generally trumps doing the right thing. It shouldn’t, but it does. It’s not about excellence in education, the national debt, meaningful steps to solve financial problems, or solving health care problems without another study or throwing more money at the issue.

Last week’s federal budget trumpeted a radical decrease in the size of the government and the money it spends. But when is a $27 billion spending increase over the next four years actually called a spending decrease?

Although I have to give the government credit in slowly inching up the retirement age. We live seven times longer in retirement now and nothing has changed on paying for that. If your mortgage or rent went up seven-fold wouldn’t you take steps NOW to deal with that BEFORE you go broke?

In Greece and other countries in Europe people are rioting week after week. Sorry, but the hard choices to get their government spending under control are not optional. They’re not popular – but there isn’t a choice. Just like you and me, at some point when we’re broke we can’t borrow any more money. That’s the case for a lot of European countries – they’ve hit the wall.

Until they hit the wall, most governments just want to stay popular and worry about the next election. In the US, all the hard decisions have been put off to this year end – after the election, and all of them were made for a year or so, in order to avoid having to deal with reality during this election year: The alternative minimum tax, the next debt ceiling increase., one year payroll tax cuts, 100% capital purchases depreciation, and all those massive Bush tax cuts that were only extended for one year.

The insanity is even worse in California. The state has been discussing a high-speed rail system forever. This past week the California legislature concluded that the state should not issue a $2.7 billion bond borrowing to go ahead with it. Why? In part, because the cost would be insane. In 2008 voters approved a high speed rail line from San Diego to Sacramento, based on a cost of $33 billion. Today, that price has tripled to $98 billion. Case closed, right? Well, Governor Jerry Brown wants to go ahead with it anyway and commit to the $2.7 billion in debt or they’d lose out on $3.3 billion of federal funding. OK let me understand this: We should spend $2.7 billion so we can get $3.3 billion so we can then spend $98 billion in a state that’s on the verge of bankruptcy and has some of the highest taxes?

That kind of insanity, for every province or country is going to end badly. Not this week, or even in the next few years. But there will be a point of reckoning, a point where the country hits the wall, and changes won’t be optional. There will be violence and massive structural changes imposed by necessity. Those violent protests in Greece and other parts of Europe will happen in North America – later rather than sooner, because politicians keep putting off doing the right and necessary things.

It’s only about politics and confrontation. Creating a fight is great political ammo to score points, but it has nothing to do with problem solving. And the media only covers the conflict because it’s easy. Digging into the hard stories, structural problems, or holding politicians accountable takes a lot of work, research, knowledge and depth, and almost none of them will commit to that. And we voters really would rather hear what we want to hear than the truth and the hard facts and painful choices.

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