Priorities for budgets

Even in personal budgeting, the issue is always trying to determine priorities. An abode is chosen so that rent or mortgage doesn’t take too much of the income so transportation choices can suit preferences. Where it gets interesting is in balancing the small stuff like clothing and entertainment. Much of the recent economic turmoil was caused by using debt to finance a bit more of what was desired than income would allow.

National governments have suffered the same dilemma and the need to face the music is the question in the news regarding the U.S. budget.

Deficits have increased in the last couple of years from the couple of percent of GDP that has been common over the years to levels that have worried many. There was no budget approved for the current year and operations have limped along on ad hoc resolutions. An election was held and the folks who had getting a closer match between income and outgo did very well. That has put the issue on the line so now the matter of priorities in the budget are being examined. The pressure is on to stop business as usual; to not just fund programs and projects at ever increasing levels and run up the debt. That means that every project and program is on the table and, for some, just chips in a game of high stakes poker.

Ed takes a look. Breaking: Budget deal? Update: Not yet; Reid says Planned Parenthood higher priority than funding government. In the past, the armed forces were taken off the table and defense department payroll assured but that is not the case this time. Soldier pay, i.e. national defense, is being used as a bargaining chip.

The hyperbole from those invested in many social programs and projects has reached stratospheric levels.

The first decision – government spending and income need to be more in balance – has been made. The general agreement is that they do indeed need to be brought closer to balance.

The second decision is about whether to do this by ‘taxing the rich’ or reducing government spending. The elections indicated that the latter was the public choice but the contingent for the former has not yet accepted that.

It has been a long run with no need for discipline. That run appears to have ended. The choice is about how to make the landing.

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