Politicians have now made “the economy” their main talking point. But I don’t think they yet realize that throwing future tax dollars towards a “stimulus” without disciplined Federal spending cuts is like a shark feeding on its own blood. And why not wait until the last minute? The November elections are still 60 or so days away…even though most Americans have had a heightened concern about the economy since around 2008.
I’m really not gloom and doom as some because I have faith in the resilience of American workers and entrepreneurs and I sense that the upcoming voters will vote more based on their economic comfort than by pure political party. There are glimmers of stabilization in spite of, in my opinion, an ineffective economic team that insists on bigger government as the answer rather than pro business, private enterprise, and a light handed touch by a now massive federal government. I wonder how quickly our economy might have recovered had they been more hands off. Economists will need to sift through what is spun for the sake of politics versus true statistics. History supports smaller government and lower taxes as foundations for sustained economic growth in a free-market society.
Now come several tests: Will the midterm elections make a strong enough statement to BOTH parties that fiscal spending must decrease and private job sectors be treated with due respect? Will we be given a clearer picture of future fiscal policy so private businesses (meaning non-government) can plan for the long term? In other words, whatever the outcome in November, will there be an articulate and intelligent launching pad?
Imagine you were trying to lay out a financial plan for your family and your life. You’d like to set goals and define variables. You might use years to retirement as a goal, or the cost of future college, or the cost to take time off to further education or change careers, or how much to save to cover time doing philanthropic work, or saving for a special trip, or developing a hobby, or starting a business. I have worked with clients to project the approximate costs, savings and time required for all of these goals.
Now, imagine a Company is projecting future goals that include hiring new people, training employees, investing in capital to expand, developing new marketing territories, etc. As much as our politicians would like to think the private business world functions similar to the government, it doesn’t. Without some parameters and level of fiscal certainty, it is difficult to commit to long term expenses. This is because the private world needs to maintain balance and profits to succeed.
Let’s assume that both you and the Company above have defined costs, realistic investment returns or projected growth and plan to make steady, healthy financial decisions. And then…..all momentum ceases. Suddenly you and the Company are left hanging, dangling over the precipice of swirling rumors, speculation and fears of the vast unknown of TAXES. Yes, because our politicians were busy on other issues these past few years (spending future tax dollars) they apparently didn’t pay attention to their calendars or “forgot” that 2011 is nearing. And on January 1, 2011, unless something happens, a plethora of tax changes will occur. Those most affected will be individuals working for companies and individuals running businesses.
To be blunt, the fact that our government (both parties) allowed this to happen is the most irresponsible and narcissistic lapse of consciousness I’ve seen in politics in a long time. It’s as if they can’t walk and chew gum at the same time. It’s as if they just turned up their hearing aids and heard, “It’s the economy, stupid.” It’s as if they haven’t yet realized that a healthy economy is directly tied to deficits – you cannot separate the two. They now see how quickly the November elections are coming and that January 1, 2011 is around the corner. And they’ve looked at our nation’s balance sheets and realized they’ve already spent SO much money trying “fixes” (through expansion of themselves rather than fixing their own mistakes such as Fannie Mae and Freddie Mac), that it will be very hard to throw more money at the economy and collect more from those doggedly hard working Americans. Americans need to work, and the businesses they work for really need clarity regarding their future outlay to this massive government deficit.
It’s like they (both parties) spent the past few years wearing those blinders that let a horse see only straight ahead. They’ve conducted themselves like kids with their first credit card – only theirs has no limit, and they have operated with an attitude of astonishing short sightedness. I almost feel like they are “learning” rules of basic economics 101 on our time and at our expense. Of course we know that agendas play an enormous role in government spending. But someone has to pay for those agendas, eventually.
The truth is if any of us ran our households like this, or any business owner ran his/her company like this, our country wouldn’t survive as we know it. We voted for people (in both parties) who have yet to clarify the two most important “unknowns” for smart personal and business planning. One: Future Individual and Business Income Tax changes after the expiration of the 2003 Tax Cuts, and Two: the looming, gargantuan Healthcare Laws that they were convinced America needed – so much so that they spent a year working to pass it.
They owe clarity to Americans who keep our economy healthy. On this Labor Day, my prayer is that these politicians are thinking hard about how to prevent us from laboring in vain. I define laboring in vain as when more of my earnings go to a government that spends them in ways that magnify the size of government and minimize a private citizens’ independence, liberty, and ability to freely give and invest into their own lives and families. My prayer is that those in office have some conviction about how they view individuals who keep our country humming: the American majority who care about working and conducting their lives with purpose and clear focus. The vast majority of us want no entitlements, just a level of certainty that will allow us to take wise steps. I heard someone on the radio say that when politicians talk about taxes, if they use the word “target” or “targeting” preceding the word “taxes”, it won’t likely benefit the vast majority of those who actually pay taxes. Good point.
Asking Americans to work and conduct businesses without defining necessary variables (Tax law changes and looming Healthcare mandated costs to name a few) is like blindfolding a baseball pitcher and expecting him to throw a strike and not hit the batter.
Meanwhile, as politicians reposition themselves prior to the November election, I would like to honor all hardworking Americans, whether currently working (in and out of the home), looking for work, or retired from working. You and our exceptional military service men and women are the backbone of our nation. You are the generous ones – giving sacrificially of time and service and charitably to those less fortunate and in need. Without your ability to walk and chew gum at the same time our nation would not be the exceptional nation that is still quietly functioning and overcoming in the background, in spite of the loud and confusing “talk” by our elected officials in the foreground. You are the “Doers.”