Any elementary literature or mere common sense is good enough to tell us that when the expenses are within the revenues it results in surplus and its opposite, when expenses exceed revenues it results in deficit or shortage.
These days a large number of countries of our world are suffering from the fiscal or financial deficit. The responsible governments of these countries are obviously not able to manage the country's financial health. Either the revenue is not adequate enough to fully take care of the expenses or the expenses are way above the revenues.
Revenues are earned for running the country's common programs that should benefit the citizens of that country. These common programs are: security and safety, health, education, justice, essential amenities, infrastructure, research, maintenance of common facilities etc. These common programs and people responsible for executing these programs (governmental employees and the contracted employees at all the levels including bureaucrats, ministers and politicians etc) use the revenues for this purpose.
Revenues come from various means: professional fees, service charges, money earned from the organizations and companies directly run by the government, all kinds of taxes like income tax, sales tax, excise, customs duty, VAT, capital gains tax, wealth tax, vehicle/road tax and what have you.
Government cannot run a country properly if fiscal deficits become perennial. The top and senior officials of the government must take actions to get out of this kind of problem. So they take some actions that come obviously to their minds (even a child will get those ideas) to cut down the expenditures. So they take some actions and the expedient ones are:
1. Downsize the government employees at various levels (except at the senior and top levels i.e. the bureaucrats, ministers, politicians etc- we don't see them being fired).
2. Clamp the austerity measures on the government employees at various levels (except at the senior and top levels i.e. the bureaucrats, ministers, politicians etc- they keep continuing with their obnoxious king size/type pay packets and perquisites).
The other expedient action is towards earning more revenues and the first idea that comes to the minds of the top and senior governmental officials (even a child will get that idea) is to increase the taxes (putting the whole burden of mismanaging the finances on the people).
And many of the so called financial geniuses and experts in the government try for both the above mentioned expedient measures simultaneously troubling everyone around (except themselves).
The question to ask is: are these the only two measures available to tide over the fiscal deficit or fiscal cliff (or any other fancy name for it)? Can't the officials and politicians think of the following actions and implement them on the top most priority:
1. Stop and eliminate for ever the corruption at the top/senior levels and as a resultant at lower levels (the biggest drain on revenues). The huge chunk of revenues get siphoned off to the coffers of the corrupt governmental people at all the levels from top to bottom. Punish severely the people guilty of corruption. The severity of the punishment should set an example for others.
2. Stop and eliminate for ever the stashing of the unaccounted illegal black money by the unscrupulous people of the country in the foreign banks that allow such an atrocious activity. Bring this money back in the country and punish severely these unscrupulous people. The severity of the punishment should set an example for others.
3. Stop and eliminate for ever the practice of these foreign banks (in whichever countries they are) accepting the unaccounted black money from the unscrupulous people of the world. If they don't tow the line, the countries should boycott them.
4. Infuse effectiveness. efficiency and overall productivity and accountability in all the government and associated departments at every level of hierarchy. This is also one most important measure that must be implemented very seriously.
5. Stop and eliminate for ever the wastage of all kinds in all the government and associated departments. This is vital.
6. The salaries and perquisites of the top/senior level bureaucrats, ministers, politicians (members of parliament) should be controlled (that forms a big chunk of expenditure).
