The election is still more than a week away and I already have election ad burnout. I’m tired of watching and listening to ads that contain half-truths, unrealistic promises and that portray a candidate’s opponent as evil and incompetent.
I just want it all to be over, but it appears that final results may not be tallied for quite some time. So don’t be shocked if election drama lingers well into the new year.
Rest assured that it’s not my intent to promote red or blue political policies. As a financial advisor, my role is simply to get you in the green. And keep you there.
From the president on down to all other elected officials, whomever wins is going to be faced with significant challenges, especially financial. Our national debt isn’t just skyrocketing, it’s doing so at an astronomical rate. At some point in the future it could cause severe economic havoc throughout the country.
The country’s fiscal year ended on September 30. According to the Congressional Budget Office (CBO), the 2020 fiscal year deficit was $3.13 trillion. Uncle Sam collected $3.42 trillion in tax revenue, but spent $6.52 trillion. Actually, the government has been spending more than it collected for decades.
In fact, our annual deficit has tripled since 2019 and those annual deficits add up. Our total national debt is now in excess of $27 trillion. That breaks down to nearly $82,000 per citizen and $220,000 per taxpayer.
The COVID-19 pandemic has not only cost many lives, it has also decimated several household budgets and forced a lot of businesses to shut their doors for good. Over the course of this year many families have gone from a comfortable lifestyle to survival mode.
Through various stimulus plans and the Payroll Protection Program, Uncle Sam has tried to help by getting money into the hands of those people. In reality, however, the funds weren’t government dollars but money the government borrowed. Distributing cash to businesses and households in need is a worthy cause, but keep in mind that Uncle Sam has to pay interest on the money it borrows.
So there’s a downside because it means your tax dollars are taken away from other worthwhile programs like education. Since we’re in a low interest rate environment, the interest is minimal, but that could quickly change.
When the federal government borrows money, it’s similar to an adjustable rate mortgage. It’s tolerable when interest rates are low, but if they creep up, more money will be needed to cover the existing debt obligations. And more money will be diverted from other programs.
Because of medical research and breakthroughs, I’m confident we’ll be able to put the COVID-19 pandemic behind us at some point. But I fear our children and grandchildren will feel the adverse economic impact of the huge debt load placed on their shoulders for many years.
Regardless of your political beliefs, the reality is that we have a massive national debt that was hardly discussed during the campaign. Politicians rarely suggest tightening the belt, but most can come up with numerous ways to spend.
We used to be able to say the government was spending the taxpayers’ money. In reality, the debt is so enormous you could say Uncle Sam is borrowing from future taxpayers.