Spend or cut

It is becoming more obvious by the day that our elected officials have agreed to do what the people want and that is not to reduce any government programs. Do not touch my Medicare or do not touch my social security are cries heard all too often these days. People on welfare say they need the safety net and those getting unemployment need their checks until they find a job. Homeowners demand their interest deductions and farmers want their subsidies. Business wants to deduct health premiums and charities want tax deductible contributions. The list goes on and on so where does that leave us? FDR was the first president to use and economic advisor and when the idea was proposed to him he agreed as long as they could find one with only one arm. He reasoned that every economist he had known always answered every question by saying, one hand you can do this and on the other hand you can do that. FDR said he already knew that. Today we have economist who say we need to keep government spending and keep taxes low on the middle class. They say the government will turn the economy around by spending on things like extending unemployment, hiring teachers and firemen and policemen and financing shovel reading projects like bridges and highways. They do this by either borrowing money or printing money. Other economists say we need to get government out of the way and allow private business to determine how they want to expand. They say the energy industry would take off with a little less interference from government and housing will follow close behind. Well the argument has been settled. The President has chosen the first approach and now dares the congress to propose cuts in spending. He has the people on his side. He says to the public that he wants to take care of those in need and specifies the middle class. The people now have the choice of continuing benefits to themselves or reducing their benefits. I wonder what they will choose. I can give you an example from my experience as a financial planner. I witnessed this with several small businesses that I advised regarding pensions. If you had a business where your employees were mostly young people and you asked them if they wanted you to put aside money in a pension for them or would they prefer a Christmas bonus they opted for the bonus. If you had older employees they chose the opposite. The irony here is that the younger group, when they got older criticized you for giving them the option saying you should have known better than to give them a choice. Our elected officials do not know any better. Our only salvation is for the government spending program to ignite the economy and then through growth we can overcome these difficulties. Let’s hope this works!