Budget Cuts: Who Loses?

In an effort to balance the budget, Americans are bound to come out ahead in the long run. But it’s the short run we might want to be worried about.


In recent news, we learned that four federal agencies recently closed on the Friday before Memorial Day – giving more than 115,000 employees a four-day weekend. They weren’t paid for Friday, but probably got the Monday holiday off with pay. Since one of the agencies involved was the IRS, Americans still waiting for their tax refunds may see delays as the agency will be taking a total of five furlough days between May and August.


[CLICK HERE to read the article, “4 Federal Agencies to Shut on Friday,” at CNN.com, May 23, 2013.]


These furloughs may well create some short-term savings, but long-term it doesn’t seem like a particularly effective way of running a government. It’s kind of like a company asking its employees to work at half-mast lighting one week out of every month, or a household skipping on all but essential groceries for a week.


Here are some articles with more examples and ideas about where we are or should be cutting back:


[CLICK HERE to read the article, “Think Tank’s Radical Idea to Cut Defense Budget: Fire ‘Slacker’ Soldiers,” at DailyFinance.com, May 24, 2013.]


[CLICK HERE to read the article, “Poor hit hardest by Washington budget cuts,” at CNN.com, May 24, 2013.]


[CLICK HERE to read the article, “Abandon ship: Budget cuts force Fleet Week to skip NYC,” at MSNBC.com, May 23, 2013.]


Recently we witnessed another natural disaster with the Oklahoma tornadoes. It seems these events are more frequent every year – and they come with a price for recovery. Some politicians have proposed that every dollar that is used for disaster aid is offset somewhere else in the budget. Like this one, it seems like many of the proposals concerning deficit spending are really just moving beans from one jar to another.


When allocating resources, politicians are struggling to manage our tax dollars and not all programs will be fully funded. Here are two articles regarding this circumstance:


[CLICK HERE to read the article, “Tornado loss estimate: $2 billion to $5 billion,” at CNN.com, May 24, 2013.]


[CLICK HERE to read the article, “Disaster Aid and Vital Investments Aren’t Mutually Exclusive,” at US News & World Report, May 23, 2013.]


You may face similar decisions in your own household budget each day. Should we go to Disneyland for vacation this year, or visit the in-laws in Des Moines? That’s a monetary decision – probably based on how well your inflow has been this year. In Washington, the inflows have been hard hit for the same reason as households – reduced household income means less tax revenue, and less money to try to serve everyone.


Consider how tough a job that must be the next time you argue about whether to eat in or dine out. At least you get to decide.


As always, we’re here to help you make decisions to help you meet your financial goals. If you’ve got some big decisions coming up, we’re happy to offer our guidance.


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Source: Woods Blog Old

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