How to Fix the Economy and Balance the Budget – The Constitutional Way

Keeping up with the news has become a bit tedious lately because I get the distinct impression that I already know where this plot is going. We are living out the plot of Atlas Shrugged by Ayn Rand. For those of you that just read the Cliff’s Notes version, let me refresh your memory:

The government and our elected officials have over-regulated and over-taxed all of the major industrial markets limiting competition in the market place. As a result, large businesses and corporations begin to struggle. But never fear, the government knows how to fix it. More regulation. More taxes. Redistribution of wealth. And they all lived happily ever after…Right?

Does any of that sound familiar to you? The ultimate answer to the problem was to cut taxes. But how could we possibly be expected to do that in this day and age without causing a huge deficit? The truth is that we already have a huge deficit and the only way to correct it is to cut spending, cut programs, and cut everything non-essential. In other words, go back to the Constitution that has served us well for the last 200+ years and read it.

If anyone were so inclined to read a document written over two hundred years ago they may be surprised to find that there is no mention of the Department of Education, or the Department of Energy, or the Department of Anything, for that matter. In fact, Article I, Section 8 clearly defines the scope of our government’s laws. Our federal government was intended to protect its citizens from foreign nations, represent all of the states as a unit to foreign governments, keep free and open borders between the several united states, and provide specific services to the states. Our government has greatly overstepped its mandate and it is time to trim the fat.

Reading Article I, Section 8 tells us precisely what government programs and departments we need from our Legislature in order to fulfill the Constitutional requirements:

We need a Department of Defense to include an Army and a Navy and all of the things that go along with them. It is reasonable to include the National Intelligence Program (CIA, NSA, DIA, etc.) and the Department of Homeland Security as defensive agencies as well.

We need the Treasury Department to print currency, regulate its value, and protect against counterfeiting.

We need the United States Patent Office to protect our inventors, authors, and other owners of intellectual property. This encourages scientific discovery and the vital arts and is specifically provided for in Section 8.

We need the Department of Justice and the Judicial Branch of government to interpret and adjudicate our laws.

In an effort to compare apples to apples I will not attack our tax system at this time. Instead I will save that for another article and, against my better judgment, I will simply say that we need the Internal Revenue Service in order to collect and regulate taxes.

Article II, Section 2 details the powers of the President. It is a little more ambiguous in its language, but still clear in its intent:

We need the State Department to govern our ambassadors to other nations.

The rest of the President’s requirements are comingled with the Legislature’s and have already been covered. This is obviously a very simplified plan for government. But a simplified plan is exactly what Thomas Jefferson, Benjamin Franklin, and James Madison had in mind. We have gradually grown complacent and have, over the years, traded our liberties and freedoms for conveniences and promises.

The real question is how would America’s economy look if this were the system in which we lived? I would argue that it would look very good. Our currency would be very strong and inflation would be relatively negligible due to the fact that currency would not have been printed with reckless abandon in attempts to stave off recessions. We would have a statistically irrelevant unemployment rate because entrepreneurs and businesses would not be taxed at an alarming rate. This would make for higher profits, thus causing expansion of business and industry inevitably creating more jobs. Consumer markets would be thriving because the reduced budget would mean that Americans’ had more discretionary cash to spend. The stock market and securities market would also be thriving for the same reasons.

Don’t believe me? You don’t have to. The numbers don’t lie. The proposed budget for the coming fiscal year projects a total of $2.2 trillion in revenue. It projects $3.9 trillion in expenditures. That is a projected deficit of $1.7 trillion, nearly double the projected revenue. That means we are being taxed to death and still have nothing to show for it. For each $1.00 our government takes from us, they spend $1.77. That doesn’t sound too bad until you realize that it is us, the citizens that are on the hook for this debt. In order to spend into a deficit we have to borrow the money from other countries. The lender of choice at the moment is China. So when China calls and says it’s time to pay the piper they own us and all of our resources.

Under my plan of funding only the required programs at the federal level, we would only require approximately $800 billion, about one fifth of our current proposed budget. More importantly a number that is far less than the $2.2 trillion in projected revenue. That means that even if you double my proposed budget, significant reductions in taxes can be made and powers that were delegated to the states under the Constitution can be performed by the states and functions that should be left to the private sector can be performed there. This is all possible through cutting federal spending and would go a long way toward correcting the downturn in the national and global economies.

At the end of the day, we know how to spend our money better than the clowns we send to Washington. Some of the savings from the stripped budget would necessarily go to our state and local governments where it can be used in a more targeted way.  The rest will go directly into our pockets, our retirement accounts, our health savings accounts, our favorite charities, or wherever we choose. I’m going to spend mine on alcohol and guns. What will you do with yours?

“A Society of Sheep will in time beget a Government of Wolves” ~ Bertrand de Jouvenal

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