NEW WORLD ORDER PART 1

Well, the New Year is here and the new Congress and Senate will soon begin to discuss the plans for the New Year.  There are a lot of promises that the Republicans made during the mid term elections and they may have some issues keeping them.  I will be addressing these issues in my next series of blogs.

The republicans ran their campaign on fiscal responsibility.  Their strategy made sense.  I mean, if you have a huge debt and the media is reporting how big it is; then you add to that the American people are not happy with it, the best thing you can do is run a campaign stating you will do the opposite.  That’s what they did and they won big capturing the House and gaining seats in the Senate. 

So what now?

Well, now comes the part where they have to come through with their promises.  Now here is the problem with that.  The republicans want to restrict government spending, but all of the major spending bills Obama wanted to pass have already passed (stimulus bill, healthcare reform, etc…), so it seems to me the first place they will try to restrict spending is with the federal budget.  In fact, some Republicans made promises to reduce the federal budget by 100billion dollars.  Now, Understand that the federal budget is very confusing so I will try to simplify it the best way I know how.

The federal budget is the amount of money that the federal government is ESTIMATED to pay out every year to different programs (social security, defense, medicare, etc…..). A budget year runs from October 1^st to September 30^th.  Normally, the amount actually paid out is greater than that but it should still be close to the budgeted number.  The government then looks at how much money came in (taxes) and figures the difference.  If the amount the feds make is more than they spent, there is a surplus.  If the amount spent is more than made, we have a deficit.  I have noticed through research of the last few years that two things always happen every year.

1. We always underestimate our budget
2. We never collect more than we spend, meaning we add to our deficit every year

So how do you reverse this? Well if you want to tackle point 1, you restrict spending.  Restricting spending will bring us closer to our budget.  If you want to tackle point 2, you raise taxes.  The more money the federal government makes, the more it can pay out or save (HA).  And THOSE TWO POINTS were the subject of debate since Obama became president.  The Democrats wants to raise taxes, the Republicans want to reduce spending.  Well, in 2010 the American people decided that it was time to restrict spending.  So, now all of those promises made will have to be kept.  Can they? My next blog will address that………