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Need ‘pay as you go’ process

Posted: October 23, 2009 9:59 p.m.
Updated: October 24, 2009 4:55 a.m.
 
In response to Carole Lutness' column ("Economics and the brain," Sept. 15):

The Constitution grants to Congress the authority to issue money, a power that has now devolved to the Federal Reserve, an "autonomous" entity that's virtually unaccountable to anyone, as it's "non-partisan."

This raises several problems. When the Fed adjusts interest rates and takes other actions to increase or decrease the flow of money into the economy - essentially turning the government printing presses on or off - there's no practical political accountability for doing so. Though this gives Congress critters and the president political shelter from the consequences of such actions, it's ruinous to the fiscal structure of the country, regardless of who's in the majority.

The Fed has essentially been "printing" tomorrow's money today, which is what deficit spending really boils down to.
When the Fed does this, it's very much like getting a cash advance on your credit card. At some point, the money has to be paid back with interest or you're heading to bankruptcy court - or in the case of the government, either fiscal collapse and runaway inflation, or a Draconian increase in the rates of taxation as we've seen here in California.

To regain fiscal sanity, we have to return any and all authority for the issuance of money directly to Congress and have a "pay as you go" process.

Each year as programs are authorized, funding would also have to be directly controlled and authorized by Congress, with commensurate taxation to provide the funds.

This would instill direct political consequences for any program the government tries to initiate, and recapture the appropriate political dialogue, since those taxes would be imposed directly and immediately on the electorate.

No more would we see social programs or wars - for example - moving forward without a political dialogue with the people about whether or not they're willing to part with their hard-earned dollars to support such programs.

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