Has Dave Ramsey Hijacked Our Budget?

     Dave Ramsey is a popular author and radio personality who focuses on personal finance.  His teachings focus on eliminating debt at all costs, and much of his teaching has a foundation in Christianity and Biblical principles.  Ramsey uses churches throughout the country to network and spread his message that all debt is bad debt.  In a recent search on his website 49 separate class sites were found in Washington State alone, most being conducted by churches or religious organizations.   Ramsey has published 15 books for both adults and children on the subject of money, his radio program is heard on more than 230 radio stations throughout the U.S.
   This is the description on book jacket on Ramsey's best selling book:

 "The Total Money Makeover is all about "renewing your mind," using God's ways of handling money (over 800 scriptures deal with money) to be "transformed" (made over).  It's a plan to stop being "conformed" to the ways, of the world and as ridiculously broke as the rest of our culture.  And this isn't theory. It works every single time."
     While Ramsey's teachings are not bad in any stretch of the imagination they have contributed to the current false narrative, and political myth of fiscal conservatism that supposedly is sweeping the nation.  Ramsey, and his students, spread across the country in Evangelical Christian churches, overwhelmingly vote Republican.  Ramsey's teaching while possible and practical for individuals and families, are not reasonably applicable to the worlds largest economy.  The philosophies are just not transferable, and if attempted, certain disaster will come to our economy.  And yet Republican politicians continue to solicit votes by promoting simplistic, and disingenuous  eliminate all debt and reduce the size of government policies.
     In a family, positive cash flow is just about always preferable to negative cash flow.  There are times such as going to school or starting a business or perhaps making a large purchase such as a house or a car that reasonable people will feel it is ok to spend more than you take in.  However, outside of such exceptions most people will agree that spending more on monthly bills than a family earns in income is always bad.  This is not necessarily the case when transferred to a government or to the economy in general.

John Maynard Keynes

    Basic Keynesian economic theory states that in a recession as the economy contracts, and the private sector fails to produce enough economic activity to make up for that contraction, that the government should step in and make up the difference in possible economic activity through increased government spending and employment.  In this case, deficit spending is good and will lead to quicker economic recovery.  This is quite different than how a family or Individual should operate.
      In an economy such as the US where 70% revolves around consumer spending, any dip in in economic output, especially related to job loses which dramatically curtail consumer spending is highly damaging.  And yet, in the midst of the worst economic slowdown in decades, we are drastically cutting spending.  In a widely reported story the Commerce Department recently released figures confirming that reductions in state and local government spending has slowed the economic recovery.  Even Goldman Sachs is worried about excessive austerity measures, and how they may slow economic growth.
     Dave Ramsey would question how moral our excessive federal deficit is.  We are leaving a huge burden that future generations will be forced to deal with, and difficult choices will need to be made because of the massive debt.  Some of those difficult choices are being made as we speak.  House Republicans pledged before the election to cut $100 billion from this years budget, and are attempting to cut much of that amount.  And while cuts are needed, where those cuts come from say much about our priorities and what we value.
     As we examine proposed cuts and, even just look at our current budget, much like a family, where we spend our money reflects what we hold dear.  Some families, decide having a new car every two years is how they want to spend their money, and lease or take out a loan in order to do so.  Ramsey, suggests only purchasing a car in cash, and even trading your payments in for a fully paid off car in order to pay down other debt.  Others, decide vacations and travel are important and allocate funds accordingly, some value education, or having the latest fashions.
     As a nation we too must examine where our priorities are.  As we enter serious budget debates we must remember that not only is the huge debt we will leave future generations a moral issue, but so too is  how we decide to spend our money.  Sojourners, a faith based organization that focuses on politics and culture, has long made the argument that "Budgets are Moral Documents."  If our federal budget reflects our priorities as a nation, what does that say about us?
     As anyone who is following the debate over the budget knows, almost 2/3 of the budget revolves around defense, social security and medicare and medicaid spending.  None of these categories are currently being proposed for serious budget cuts, but rather the vast majority of these cuts are being proposed in the 14% of the budget that involves social safety net programs.  The entire non-military discretionary budget for 2010 was $491 billion.  The deficit for  2010 was roughly $1.3 trillion.  Do the math.  We can't be serious about cutting the deficit without cutting both defense spending, and continuing to reform healthcare and Social Security.  Cutting the $100 billion, or even the $61 billion now being proposed, strictly from non-military discretionary spending will devastate these social programs at a time where they are more important and more needed than ever.
     While, protecting seniors and the disabled, through Social Security is an important priority along with providing medical coverage through medicare and medicaid, spending 20% of our budget on national defense is a poor reflection of what our national priorities should be.  As seen by the chart, the amount of resources we pour into the military compared to other countries is just staggering.  Our priorities as a nation must change.
     In his State of the Union speech, President Obama highlighted several areas of investment which he believed, as a country we must make a priority in order to continue to compete in the global economy.  One of these areas was education.  We currently spend just 3% of our federal budget on education, and while most education spending comes from the states, most states are being forced to make drastic, even draconian cuts to their education budgets.  If budgets are "Moral Documents," then what does it say about us that we spend only 3% on education, vs. 20% on defense.  The Bible tells us that how we treat the least of our brothers and sisters so too we treat Christ.  As we contemplate taking heating assistance away from the poor, and reducing a program that helps ensure poor women, infants and children get the nutrition they need to properly develop, we must also contemplate how these cuts reflect on our priorities.
      Dave Ramsey, may have a biblically based financial plan that works great for many families, but it cannot be transferred to our national budget through completely eliminating any and all debt.  In fact rather than look at our national budget through Ramsey's viewpoint, as I fear many have and continue to do, we must examine our budget, and the cuts that will be needed by examining our priorities and values and how our budget reflects our priorities and morals.
    
    

Wisconsin is Outraged; Are You?

     What does it take to spark a protest?  In Birmingham, Alabama, it took being asked to give up your seat because of the color of your skin.  In Tiananmen Square, China it took years of authoritarianism  and repression, with little to no, freedom of speech or assembly. In Cairo, Egypt it was 30 years of dictatorial rule, with limited economic and educational opportunities for a population made up largely of young people. In Madison, Wisconsin it took the threat of loosing the ability of public servants to collectively bargain.  These are all examples of people standing up for their rights.  They are people groups who are either trying to gain, reclaim or hold on to fundamental rights they are entitled to.

     Public workers in Wisconsin have a right to be outraged.  Governor Scott Walker, is attempting to take away a fundamental right that all workers should enjoy. Walker, the Republican party, and Corporate America have long attempted to thwart unions.   Having virtually succeeded in eliminating unions in the private sector, the last union stronghold is public employees, and the Right will use every perceived crisis, and dirty tactic to take away any collective bargaining rights public employees may have.
    Unions, are champions for the middle class, they raise wages, improve working conditions, and greatly increase benefits such as health insurance and paid vacation.  Not only do they raise wages and working conditions for union workers, but they also raise wages for non-union employees working in the same field.  These things cost money and eat into profits.  Corporate America, wants any and all costs to be eliminated, even at the cost to American prosperity.
        Make no mistake the middle class is what made America great.  And the middle class is under attack.  There are many myths out there about public employees and their unions.  They are not paid more than public sector workers, (adjusted for educational levels they are paid less), they are not lazy incompetent or all rude, despite the ubiquitous DMV stereotype.  Yes, they have solid jobs, with good benefits, retirement, job security, and more likely than not, experience more fulfillment in their occupations than many in the private sector, yet these are not reasons to tear down public employees, but rather reasons for private sector employees to organize and fight for the same working conditions and compensation.  These are benefits every worker deserves, not just those who work for the government, and they are benefits businesses and corporations can easily afford.
      As the middle class dwindles, and the Right pretends to use deficits, that they created, to feign outrage and slash social spending, when does disgust and outrage turn to demonstration?  In Egypt it was 30 years of oppressive one party rule.  In Wisconsin, after 30 years of attacking the middle class it finally took the threat of taking away fundamental worker rights to spark mass demonstrations.  The redistribution of wealth from the many to the few has been going on for quite some time now.  Tax cuts for the rich are followed by cuts to services to the poor and middle class.  At what point do the people stand up and decide our government was founded for "We The People" not We the Corporations, or We the Rich?  At what point do the people decide to organize, vote and demonstrate to protect basic fundamental rights and our ability to pursue happiness?  If not now, then when?  Will it take eliminating Social Security?  Or eliminating all worker rights?  The destruction of our public school system?  The elimination of higher ed as realistic option due to cost?  What is the last straw that will re-ignite the masses who showed up in 2004 to fight for middle class?  What will it take to spark you to protest?

SB 5251

     Under Washington State Senate Bill 5251, owners of electric cars would have to pay an extra $100 fee simply for the privilege of driving an electric vehicle.  Why would the government punish electric car owners for making what seems to be the more socially responsible vehicle choice? Well, because electric cars in all their glory, don't use gasoline, allowing their owners to skirt paying one of the highest state gas taxes in the country.  
     The state relies on the gas tax to fund road and highway construction and maintenance, to the tune of $2.4 billion in the 2009-2011 biennium.  You can find a nice article about the proposed bill here, in the Seattle Times.  According to the article a driver who drives 12,000 miles a year, pays an average of $204 a year in gas taxes.   So while $100 is an added fee (or tax depending on who you ask)  it is still less that what a majority of the drivers in the state pay.  
     The problem with the bill is not that it attempts to ensure that those who drive electric cars help to fund the maintenance on the roads they use, but that it minimizes just one incentive to purchase an electric vehicle.  To state the obvious, electric vehicles do not use gas, and thus do not contribute greenhouse gases to the atmosphere which along with many other sources greatly contribute to global warming.  Spending less on gas, including taxes, is one major incentive to go green and buy an electric car.  It is not good policy for the government to take away that incentive. 

    The federal government has made it a clear policy to promote the purchase of electric and hybrid vehicles.  Since 2005 there has been a federal tax credit for hybrid vehicles that ranged from $450 to $3,400, depending on number of sales, and there is also a $7,500 credit for purchase of purely electric cars, such as the Chevy Volt, or Nissan Leaf. These incentives help promote the new technology until it is more able to survive in the open marketplace without the incentives.  Encouraging and supporting the development of electric vehicles is good government policy.  Much as the government subsidizes research for drugs, and supports military research that makes its way into consumer products so too should the government support the emerging electric vehicle industry.  
    The benefits of a fully developed electric car industry far outweigh the costs of the tax cuts.  Weening ourselves from foreign oil, much produced in countries with populations and regimes hostile to our best interests, is one benefit.  Slowing our output of greenhouse gas emissions, in order to slow or decrease global warming along with other environmental damage, is another.  Being an innovative leader in an emerging industry, worth potentially billions of dollars to US companies annually, just make sense economically.  

    States must not not work against these incentives by imposing a special electric vehicle tax simply to shore up the short-term needs of their department of transportation budgets.  Yes, electric vehicles do cause wear and tear to our roadways, however, gasoline powered cars cause wear and tear to our environment and yet the true costs of this environmental destruction is not paid by their drivers.  Eventually, as electric and hybrid vehicles become more popular and eclipse gasoline powered vehicles, an entirely new system of paying for our roads will be needed.  However, until then states should not impose these fees. 
      Rather, than punish those making the responsible choice, why not increase gas taxes in order to reflect the true costs (including environmental)  of driving gasoline powered vehicles?  This would mean increasing current gas taxes by perhaps a dollar or more.  Yes there would be some economic consequences, and it would disproportionally hurt the middle class, but it would also provide a huge incentive for consumers and car companies to produce and consume vehicles that cause much less damage to our environment.  And of course the revenue that such a tax would produce could be used for many greatly needed infrastructure investments such as those proposed in the State of the Union.  Oil companies have received too many subsidies for far too long, it is time we strongly commit to promoting a more sustainable transportation policy, and states must do their part to reinforce those policies at the state level.  This may be the only time I will ever agree with Tim Eyman.  

• as a disclaimer I do not own a hybrid or electric vehicle, and do not plan to anytime soon in the future.