Government Budget Process

The federal government uses an accounting system called base line budgeting. Last year's budget is assumed to be adequate, programs need funding adjustments and all funds will be spent for the fiscal year.

A dirty little secret is that towards the end of the budget year the remaining balances are moved around within the different agencies and are systematically spent so funds are not carried over. State and local governments do roughly the same thing. Different items may be changed but the total budget is the about the same plus the year's inflation factor. The budget must be balanced as state and local levels.

Next taxes are raised to supply the money to pay for all the items in the budget. The federal government does not have a system to match expenditure and revenue thus the national debt.

Your personal budget does not have an automatic way of adding inflation and for most taxpayer our net income is reduced. The question is how do I influence the different governmental levels to stop this hidden tax?

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Sub-Prime Real Estate Loans

I find it interesting that the real estate loan market issued sub-prime loans and sold them to all the big bank. These are the people who sit across the desk and tell you all the things that you are doing wrong with your finances.

It might be good for these big financial operations suffer the consequences of their desire for big profits with salary reductions, reduce bonuses, and cancellation of stock option. But a usual the dividends will be reduced, the share price will decline, and big fines will be paid to government for wrong doing. This is known at a stockholder bailout.

The saving and loan system went though the same meltdown by financing everything that wanted credit. The government (tax payers) bailed them out combining banks with saving and loans. Now were doing it again. Freddy Mac and Fannie Mae are having financial troubles resulting from misstatement of earnings.

There is to much power in the hand of a few people and/or institution. We need to clean house and have more accountability on these systems.

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Federal Govenment Universal Health Care

One of the topic that is being discussed by the politicians is health care. After many years of premium increases, the premium is becoming prohibitive. The current inflation rate is between 2.5% and 3% while total health expenditure in 2005 increased 6.9%

In the past employers offer health insurance as a way to keep good employees and paid all or a large part of the premium. As the premium increased (up 7.7% in 2006 to $11,500 for family coverage and $4200 for single coverage) the employer health plan coverage was reduced adding co-pay with larger deductible. The cost of health care has forced smaller companies to drop coverage all together to keep from going out of business.

With a third party paying your bills, you do not see what is charged by your doctor or hospital for services. The health insurance premium and deductibles /co-pay are your cost. How does the bill compare to the estimate you received before the elective surgery? Were the drugs generic and aspirin $4.00 each? What estimate? What are you talking about?

If you have some body work done on your car, the insurance company requires two estimates before approving repairs say in the range of $5000. Would is not make sense to get an estimate of the cost of a $45,000 to $200,000 surgery.

The over use of health care is one reason cost are going up, another is the lack of competition between health care providers, and drug manufactures with patent protected drug pricing. What do you buy that you find out the price after you have received the goods or services?

Universal health care as a federal program will be subject to Washington inflation. That's when we send one tax dollar to the federal government and receive 27 cents in benefits. This will make national health care cost nearly four time the cost now plus full cost of the estimated 40 million uninsured. The difference is now it is called health premium which will change to tax increase.

Just a reminder the same government that gave us Social Security, Medicare, Medicaid, Amtrak, Veteran's medical services is now being considered to take overall health care coverage.

Canada and Great Britain have national health care. In Canada you wait in line for joint replacement, or transplants. In England a man needed a hip replacement but is being required to stop smoking before the surgery. That was three and half years ago. He says he can not stop smoking and is collecting government disability income payments while he waits. Is this the beginning of government behavior management? Is this part of the nanny state?

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