As states (especially Texas) madly struggle to balance their budgets, a lot of rhetoric revolves around the idea that the government needs to operate like families during tough times: they tighten their belts, cut out unnecessary spending, etc. As mentioned in a previous blog, Governor Rick Perry (Republic of Texas) and other conservative legislators seek to balance the budget without raising taxes and without touching the 9 billion dollars in the rainy day fund. (That is not a misprint. Yes, a 9 followed by 9 zeroes. Just sitting there. Doing nothing.) So I thought it would be useful to study how a family should operate during tough times under these standards.
I convened a panel of misers, I mean Texas conservatives, and posed some real life examples to them, with Dick and Jane as the parents of two children. Dick is an electrician while Jane stays at home to take care of the kids. They have scrimped and saved through the years and have a healthy “rainy day fund” of $10,000 in a savings account.
Scenario 1: One day, their 1987 Chevy Nova breaks down. The transmission is shot and total repairs will cost $2000. What should they do?
A. They should tap into the rainy day fund to fix the car and replenish the fund when they can.
B. Dick should work overtime and maybe pick up a weekend job to raise the money for repairs.
C. Jane should get a part time job to help buy a new car.
D. They should not touch the rainy day fund, skip a few meals to save money, sell the old car for parts, and buy a used bicycle to replace it.
Panel’s Response: Answer: D. You don’t want to use 20% of the rainy day fund because you never know when times are going to get desperate. There isn’t a worse feeling than having $8,000 in the bank when you know you could have had $10,000. It will be impossible for Jane to get a part time job because she will have to home school the kids once we close all of the public schools in Texas. And how can Dick get a part-time job without a car? So the obvious solution is D, get a cheap bike.
Scenario 2: Remnants of a hurricane pass through the area causing a massive flood that leaves a foot of water in Dick and Jane’s house. They only have one room that is livable. Since they don’t live in a flood zone, they have no flood insurance and Governor Perry does not declare it a disaster area because it was only the remnants of a hurricane as opposed to a real disaster. What should they do?
A. They should tap into the rainy day fund to find better housing or make necessary repairs.
B. Dick should work overtime and maybe pick up a weekend job to get more money.
C. Jane should work harder to clean the house.
D. They should buy a Coleman camping stove, and everyone should live in the one tiny bedroom. They can all take baths in the living room since it is flooded.
Panel’s Response: The correct answer is D, but it’s a stupid question because an electrician obviously knows how to fix stuff. He’s probably been stealing supplies from his company for years because that’s what everyone does, so fixing the house will be virtually free.
Scenario 3: Dick and Jane get into a big argument one day. Jane storms out and does some “therapy” shopping and runs up $3,000 in credit card debt. What should they do?
A. They should kiss and make up, use the rainy day fund to pay off the debt, then cut up their credit cards.
B. They should return everything and get the credit card refunded.
C. Dick should file for divorce and make Jane keep the debt in her name.
D. They should make the minimal monthly payment on the credit card for the next 43 years.
Panel’s Response: Answer D. By now everyone is acutely aware that some companies in America are too big to fail, notably banks. By making the monthly minimal payment, you keep the economy humming by helping the bank’s bottom line while saving some of your own monthly budget. When banks are sound, America is sound. Also they should make up to 10 transfers back and forth between their savings account and checking account so the bank can make a monthly charge on their account. Come on, the bank needs to be making a little something with all that rainy day money they have there.
Scenario 4: It’s the week before Christmas. Dick and Jane’s house is all decorated with several presents already under the tree. One night while the family is at church, thieves break in and steal all of the presents. What should they do?
A. They should tap into the rainy day fund to ensure the children still have a memorable Christmas.
B. They should all volunteer at the local homeless shelter so the kids can see they don’t have it as bad as others.
C. Dick can give everyone supplies he stole from work as Christmas presents.
D. They should tell the kids Santa knows they’ve been bad, and he took the presents back.
Panel’s Response: This is a trick question. A is not an option but B, C and D are all pretty good even though they ignore the moral dilemma. Most people would argue that Santa Claus is the ultimate capitalist with his contract: if you’re good, he’ll deliver. It’s totally fair and would hold up in most courts. However, we all know Santa Claus does not exist. Hence, it’s up to the parents. How many parents do you know that actually withhold presents because the kids are bad? Zero. And that makes Christmas a socialist practice. So the correct answer is: you shouldn’t celebrate Christmas at all. Unless you’re communist.