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Red or Blue, It All Equals Green

March 19, 2018

There’s a taboo topic out there nobody is talking about.


We used to mention it. And at times, it’s been a big deal. But today – silence.


I’m talking about our national deficit (we’re over $20 trillion and counting).


I’ll give President Clinton credit – during his term, cutting spending was a priority. You could say it was politically-driven, since the deficit was a big issue in both the 1992 and 1996 elections.


Either way, he succeeded in cutting the deficit, primarily through capital gains taxes.


But then 9/11 happened, and everything changed. New spending took hold in the form of an entire department devoted to homeland security.


It trickled into other parts of government too – think the Medicare Part D prescription drug plan.


When the deficit is 3 percent of GDP or less, as it was not so long ago, spending is not a big deal.


Under President Obama, the debt rose to 10 percent of GDP, and a new era of fiscal concern was born. It was short-lived though, as the deficit has only risen since then and now nobody seems to care.


Not a single candidate campaigned on deficit reduction leading up to the 2016 election. Not President Trump. Not Hilary Clinton. Not even Rand Paul!


But think about it – every time we’ve worried about the debt, nothing has really happened. So, is it such a bad thing to run big deficits?


I tend to think it is. Big debt can lead to higher interest rates. With the government first in the borrowing line, if it causes a 2 percent increase because of its borrowing, that trickles down to regular folks’ mortgages.


And yet, federal spending doesn’t seem to be an issue in 2018 or 2020.


I guess both parties like spending money.

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This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Please consult with a professional specializing in these areas regarding the applicability of this information to your situation.

Andrew Wood, Dan Simon and Alison Slezak are Investment Advisor Representatives. Advisory services are offered through CoreCap Advisors, LLC., a Registered Investment Advisor. CoreCap Advisors, LLC and Daniel A. White & Associates, LLC are separate & unaffiliated entities. 

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