Thursday, January 1, 2009

Simple Solution: Stop Spending

California is leading the way in the economic doldrums that is confronting state governments. While our precious Federal government is spending money like they are printing it (wait...they do), the states are facing huge deficits. California, long known for it financial prudence in Sacramento, is heading the list of "states gone broke".

Governor Arnold Schwarzenegger is having to find a way to close a $42 billion budget gap. He is trying to tap into the lottery, shorten the school year, and raise tax in an effort to close this shortfall. (read it here) Of course, like most government driven ideas, this one does not solve the entire problem.

It baffles my mind that the government is immune from acting like private individuals or businesses. In both these instances, when there is a shortfall one is confronted with two options: stop spending or tap into existing credit. Those are the only two options when you having no reserves and less money coming in than is being spent. Naturally, if you operate using credit for too long, the lenders eventually shut you down. Overspending is what caused a lot of this economic mess.

So what does that leave? Simply, the answer to California's problem is to STOP SPENDING. Cease putting out so much money. There is nothing complicated about the matter. Social programs are wonderful when they can be afforded. However, in tough times, luxuries need to be eliminated. This is true whether you are an individual, a business, or a state government. If there is a shortfall of $42 billion, the solution is to cut out that same amount of money out of the budget.

I realize this solution is not an easy one to implement. Nevertheless, the circumstances confronting this country are dire. The average taxpayer cannot afford more taxation. For this reason, it is government's responsibility to cut wherever it can. If this means eliminating a lot of social services, then that is what must take place. Sometimes life is a real bitch. Trying to carry on the charade will only prolong the madness. Ultimately, we are going to feel all the pain that these decisions inflict. The only question is do we feel it now or later. Unfortunately, politicians try to prolong it until the next administration. That is why the hole keeps getting deeper.

So my New Year's message to all the Governors: STOP SPENDING!!!

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