In my fictional club… the Board (Congress) is in the habit of giving members whatever they want, to avoid unpleasant annual  meetings (elections).

This is being written while the debt-ceiling debate is going on in Congress, and once again I am stunned by either the bias, but more probably the laziness, of the media. As usual, we are being scared by threatened cuts in Social Security, Medicare, and education, and given the demographics of our market, all of our members’ tax breaks that are so “unfair.”

Nowhere in the discussion are cuts in crazy programs that have been going on for decades, and here is just one example: During World War II, to ensure enough wool for military uniforms, a “mohair” subsidy was introduced that is still going on six decades after the end of the war. Sam Donaldson, the old (and thankfully retired) White House reporter for ABC, got one because he owned a sheep ranch in New Mexico. I don’t know if he still does or not, but there are literally thousands of these programs that aren’t even in the discussion. And the reason is very simple. These are the prices for votes. One congressman will vote for your deal, if you will vote for his. The votes are the currency of deal-making.

But just for a minute, let’s run my fictional club the way the government runs theirs.

After almost 100 years of being in business, my Board (read: Congress) has gotten in the habit of giving the members whatever they want, mainly to avoid unpleasantness at annual meetings (elections). Because of this we have a massive debt, literally in the millions (trillions). We have brought in a new manager who promised he would fix the problem and get us on the right track, but once hired, he went on a spending spree that almost doubled our existing debt. He brought in unions, added to our staff by about 24%, and implemented a brand-new employee health plan that the Board didn’t read but told the membership we had to enact.

During the last 20-30 years, to maintain our membership, we decided to reduce or eliminate any dues (taxes) on about half our members, based on economic circumstances. About half our members were in the upper-income brackets and we simply passed along any dues increases to them alone. As long as it was relatively small, they didn’t mind too much and paid. Over the decades we created a sense of entitlement among the non-dues paying members, and any time we ran short on cash, the banks were more than willing to lend us the money. Because things on the surface seemed the same, we didn’t notice or pay close attention to what was going on. But then came the recession.

We didn’t lose too many members, but we weren’t getting new ones. Our fixed costs were very high due to the 24% increase in our number of employees, and the new manager refused to reduce headcount. On top of that, he recommended—no, demanded—to the Board that we increase the dues only of the highest-earning members. In fact, he began to attack those members as selfish and not paying their fair share. No mention was made of the members that paid nothing.

The manager then came to us and said he wanted a bigger line of credit at the bank, to cover our cash shortage. On top of this, he refused to cut any expenditures, and blamed the Board for being unrealistic and obstructionist. He singled out a portion of the Board that was most aggressive on stopping the expanded spending for being particularly difficult.

How long do you think he would stay club manager? How long would the club survive if the Board (and membership) gave him what he wanted?

It’s too bad we couldn’t print money.