The government shutdown | Off Kilter

 

Last updated 2/12/2020 at 12:08pm



I don't know if you remember, but our government was shut down for over three weeks last year. Did you notice? I certainly didn't.

Let's start with economic analysis: (Assuming 800,000 workers making an average of $50,000/year, that totals about $40 billion/year). See, even if we fired every one of those 800,000 workers, we'd only save approx. 1% of the government spending/year.

So keeping our government permanently reduced by 800,000 workers will not solve our burgeoning budget deficits. About 4 million people "work" for the federal government. That includes all the men and women serving in the military. So if we use the same figures as above, all government workers are paid approx. $200 billion/year. Now that is a number that could eventually start making a dent in our deficits.

One problem with this suggestion: that would leave us without a post office, a military, an IRS (no loss there), and no Social Security Administration. So for many of us of retirement age, no monthly SS check. In other words, a non-starter.

Now when the government shut down, all "non-essential" people were told not to report. How would you feel if you were identified as "non-essential?" Probably not very good.

Note that, surprise, members of Congress continued to receive their paychecks, except for a few who showed they have empathy, courage, and honor – lawmakers-who have-refused-their-pay-during-the-shutdown.

Also, Social Security recipients and those owed tax refunds continued to receive their benefits. No surprise here as there would have been an open revolt if seniors did not receive their monthly benefits.

But, as one example, the Homeland Security Administration's Transportation Security Adminstration continued to work without pay! I read that some were starting to call in with the "blue flu." In other words, no pay, no work.

I also read that, Washington Federal, a local bank, made arrangements to "float" their government employees' loans (free loan) until their paychecks started coming again. That should have helped some of the approximately 11,000 federal workers in our state. I'm certain that these workers and many others who were not Washington Federal customers soon became one.


A very nice gesture by this local bank. Beyond these very practical issues, I always like to look at what exactly the government does with its $4 trillion annual expenditures.

Here are just a few things that one could argue are not all that necessary:

The government spends about $2 billion/year on programs that do not produce any tangible results.

The Pentagon insists that about $2 billion is for new aircraft that they "do not need."

Nearly half of all credit card purchases are improper, fraudulent, or embezzled(!).

And perhaps my favorite: Washington planned to spend $2.6 million training Chinese prostitutes to drink more responsibly on the job(!).

So what, if anything, can we do? First, call your congressman and complain about all the fraud and waste. Second, vote for those running who are committed to trying to reduce our federal deficit. In the long run, our deficits are not sustainable. At present, our national debt is roughly the same as our GDP. China's, as an example, is double their GDP, Japan's is triple their GDP.


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One could rightly ask: "How is it possible for us to borrow so much money at very low rates?" Answer is simple: There is about $60 trillion worldwide in investible assets. That money has to go somewhere – unless leaving it in the bank earning 1% sounds attractive. As my consultant at Morgan Stanley says, "We are the best house in a bad neighborhood!"

So continue to save for your retirement. One national expert says one will need $5 million to retire now. You know what, I'm slightly behind this requirement.

 

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