If you know anything about finances, there are a few basics that must be paid attention to. Among the most important is a very simple concept: Don’t spend more than you make. Now when you have a bureaucracy as huge as the United States government, that is an amazingly difficult thing to do on the best of days.
When you spend more than you make, that is called deficit spending, it creates debt. The Obama administration was somewhat successful in fighting the deficit. He inherited an economy that was hemorrhaging cash and jobs at a rate that was as alarming as it was dangerous.
It took some serious work, but he, along with the OMB, Ben Bernanke (Who also bears some responsibility FOR the Financial crisis of 2007-08) and legislation (Frank-Dodd and in particular the Volcker rule, among other pieces of legislation) that successfully regulated the shadow banking system (It’s not that shadowy, but the subject will get additional scrutiny in future) managed to stop the bleeding.
But with a price that will be paid for in future. The deficit will rise again later. It cannot be helped. It is a ripple effect of the amount of damage that the unregulated economy did back in 2007-08, and the trillions of dollars that bled out of the system. The Obama administration has done all they could to mitigate that, with some success.
The deficit, year on year has dropped every year he has been in office, and thanks to the efforts of everyone in and around the economy, the deficit over the next ten years will never go, if things stay on track, over 4%. Not great, but given the circumstances, not too shabby.
Enter Donald Trump.
His plan is to cut taxes, increase the size of the military, spend billions on infrastructure.
And build a wall.
Let me explain something here about this. Cutting taxes feels good. No one likes paying taxes, especially if they don’t like government programs that pay for things people don’t like, like ANYTHING they think of as being wasteful or going to people who don’t deserve it. Both laughable concepts, but people think these things and they must be taken into account. So yeah, lower taxes puts more money in your pocket today so you can do more today.
But it increases the bill for later. Decreasing the taxes the government needs to pay for things while increasing government services, like border security and a larger armed forces will do nothing more than make the next financial crisis, and there will be one, count on that, that much worse.
Check the Links section for the pertinent information.
I would love nothing more than to have something that approaches a secure financial future. That future was nearly terminated by unregulated excess and improper financial decisions both in the private and public sectors, in particular by Hank Paulson, Christopher Cox, and George W. Bush. The Obama Administration did much to ameliorate the situation, but it seems that we are headed back to the same place we were at before the Democrats came in and saved the nations bacon.
Republican decision making nearly threw it, and us with it, into a fire, and thanks to Donald Trump and out of control spending and thoughtless tax cuts seemingly will send the economy reeling back into that same economic death spiral. Trump and his plan are darkening a future that was, while not bright, clearly not as dark as it is with Republicans back in fiscal control of the nation.
Expect inflation, deficit spending, and the debt to skyrocket over the next two years. So much for a secure financial future.
Quote of the day: I was aware that the loosening of mortgage credit terms for subprime borrowers increased financial risk. But I believed then, as now, that the benefits of broadened home ownership are worth the risk. ~Alan Greenspan, September 2007