Federal Dollars are Investments in the Country. How are Our Returns on Those Investments? Looking at Two Cases
Money is Money – But There are Differences
Most of us intuitively understand the big themes around money, whether it is about ours, business, or government funds. But there are important differences among those categories.
I spent much of my career in the government, as an Army officer. For much of that time, what I concentrated on in using resources was maximum effectiveness in known situations, maximum insurancein unknown situations. When I first joined the corporate sector, I proposed an IT upgrade for our corporate HQ. I made the case for how this would make us more effective.
When asked what the measured Return on Investment (ROI) would be and how would the investment return assets, I knew I was not in Kansas anymore – I needed an additional set of benchmarks. I used that as a training opportunity for myself. And yes, we did the IT project, and it paid off handsomely.
Two recent national conversation threads remind me that it is sometimes different when talking about government money – must be different in some ways – but at times commercial or business criteria could be useful.
Case Number 1: The National Debt Ceiling
By the time you read this, the national debt ceiling issue may be resolved. It may also be crashed, although I do not expect that to happen in the end. Allow me just to note at the outset that this is one of the dumbest repeating self- made crises we have in this country. We are talking about paying the debts we have already obligated to as a government. Imagine you telling Mastercard that yes, you ran up a debt but you want to think about whether you intend to pay it off or not. Get real.
The language of the constitution is quite clear on this. We should do away with the debt ceiling process and acknowledge that when a law is passed with costs, the debt will be honored. The separate process is superfluous, and as we see this year, a breeding ground for malfeasance. This artificiality has only existed for the last hundred years; it is not embedded in the constitution. Only one other Western country has such a device (and they have never come close to the nonsense we permit).
To default would be a cataclysmic failure but we have just enough people now in Congress who really don’t get that and would be happy to drive off that cliff. Like to put a final nail in the coffin of America as a world leader? This would be an excellent way to do so, with financial pain that we would all feel for the rest of our days.
How To Think About This Problem
So, let’s keep in mind, using a personal or business financial perspective what is going on here. The USG has about $28 trillion in debt that must be paid. A goodly hunk of that came about during the Trump administration – $1.5 trillion in Trump’s first year alone, mostly in a tax cut for his buddies. Long before the COVID economy. About $8 trillion in all from Trump’s time in office. McConnell has voted to honor our debts 28 times so far.
Yet now McConnell wants to wash his hand of it all, dump it on the Democrats. All to make Biden look bad and to force the Democrats to use up their Reconciliation option for this cycle on debt rather than infrastructure. That is as craven and irresponsible as it gets. Remember that as much as Democrats hated the money Trump and company wasted, they never put honoring our debt in question. I hope there is an afterlife following this one. McConnell deserves a very special place, as do those who so timidly follow him.
In the end, this is likely to get resolved in some way. So far it looks like a short range punt into December. But this is a stupid dance we are doing. If this leads to at least a partial shutdown of the filibuster, it is worth something to have gone through this anyway. Let’s hope voters remember who honors his word and who does not.
Case Number 2 – Federal Money to the States
Everyone knows that some states get WAY more money back from the federal government than they ever contribute. And most of those states are Republican run, either the governor, the legislature or both. The same so-called leaders who squeal about taxes and too much government. Think about Alabama, Mississippi, South Dakota, South Carolina, and many more. Moscow Mitch’s home state of Kentucky is a leader in this race.
On one level, that is OK. It is a function of government to help share resources and to help along those less fortunate. But it would seem possible to have some standards of progress and accountability rather than an endless flow of money with little progress to show for it.
One model might be that of the Gates Foundation. They are famous for requiring solid plans and realistic benchmarks of progress before they invest in developing needs. And they have good results to show for that approach. Why not the same for the Federal government?
Tell us, Mississippi, what are your detailed and long term plans to improve the lives of your citizens? Lacking those, whyu should the rest of us invest in you? Better to find a way to help people directly and bypass the states or put the money somewhere that will make better use of it.
Want Examples?
South Dakota wants to use its COVID relief money for tourism advertising and to cut taxes (an old Republican solution for everything). Alabama is using its allocation to build new prisons (Yeah, we don’t have enough of those in America, do we?). Are those programs you like to see your tax dollars supporting. Or were you thinking of rural medical coverage, childcare, and basic infrastructure? Same for me.
I am more than willing to see tax dollars go to areas that need the help. I just would like to see some evidence that those in charge locally have the responsibility to use it to improve people’s lives or get out of the way.
On the Other Hand,…
Stay Tuned. On an upcoming blog we are going to talk about a completely different model – funds dispersed with no restrictions, no guidelines, no oversight. And it works terrifically, every time it has been tried. More on that shortly.
In the meantime, it would be nice if McConnell and Minions would act like adult Americans who actually care about this country.
Bill Clontz
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