BUDGET SHUTDOWN OR IDEOLOGICAL WARFARE?

If you’re watching the news in recent days, it seems like Washington is burning down. Hashtags about the shutdown suggest that both parties are to blame for government’s utter failure to, well, govern.

But in recent decades, shutdowns are the norm in DC. According to ThoughtCo and FoxNews, the United States has experienced eighteen shutdowns in the last forty-two years, while only experiencing, arguably, two (1790 and 1933) prior to 1976. The shortest of these, occurred under the watch of President Reagan, with there being multiple one day stoppages. In contrast, the most recent shutdown (other than this one) was also the longest. In 2013, while Barack Obama was president, the government stopped for twenty-one days. Shutdowns should not continue to be the norm. Proper planning, budgeting and compromising should be the order of the day.

These large number of shut downs and the discrepancies in them make it crucial to examine the different causes. Although shutdowns are supposed to be about the budge, four of the eighteen shutdowns in the last forty-two years are actually related to the budget. In each case, congress presented a budget or resolution that was vetoed by the sitting President. The first was September 30, 1976 when President Ford vetoed the budget for out of control spending, and the government was shut down for ten days. President Carter vetoed the budget for wasteful spending, a decision that resulted in an eighteen-day government closure. President Reagan had seven shutdowns on his watch. However, only one, which lasted two days related to the budget. He vetoed the budget on November 20, 1981 because the House wanted to cut defense and give themselves and senior civil servants raises. Finally, the only shutdown during President George H.W. Bush’s term occurred when he vetoed a continuing resolution (CR) that did not include a deficit reduction package.

The budget-driven, presidentially-decided shutdowns are the exceptions. In reality, most shutdowns in recent times have been ideological with the budget as an excuse to start them. InfoPlease explains that the other four shutdowns during President Carter’s tenure were over abortion. In contrast President Reagan’s were a combination of defense initiatives and foreign aid. And of course, the shutdown in 2013 was over the Affordable Care Act (ACA).

This shutdown, whether you believe it to be the #SchumerShutdown or the #TrumpShutdown, is no different. The same basic rules apply. Ideology in Congress – from both sides of the proverbial isle – and in the White House is responsible for the shutdown. While partisan narratives are a convenient way to explain shutdowns, a single person (i.e. the President, the Minority Leader) or party isn’t entirely to blame. The problem here is a consistent unwillingness to use basic government functions as tools for ideological ends.

Recent history of shutdowns suggest that our politician don’t have to handle shutdowns in this regard. In November of 1983, President Reagan and his Democrat controlled congress compromised on several key elements: defense and foreign aid cuts, increase in education, MX missile funding, a ban on oil and gas leasing on federal wildlife land, and, abortion rears its ugly head again, and an agreement it made that federal employee insurance will not pay for abortions. These aren’t small issues for politicians to find middle ground and fix. The White House had a leader with a plan, and he knew how to accomplish it. The House of Representatives had a leader that knew his members, and his Members knew their constituents. Together, they found the common ground to make a budget work, not a series of continuing resolutions.

So, in this shutdown, where does the fault lie? According to The Election Project approximately 58% of eligible voters voted in the 2016 presidential election. While the 537 persons that were elected and sent to Washington DC certainly bare some blame, the fault ultimately lies with the 230 million eligible voters and specifically the 92 million that did not vote.

The problem is that people do not vote incumbents out of office despite consistent complaints from both sides about the state of politics. At the start of the 115th Congress, the average length of term for congressman is 9.4 years – that is basically five full terms. In contrast, until the beginning of the 20th century, the average term was 4 years. Similarly, the average length of a Senator, again at the start of the 115th Congress, is 10.1 years. The Senate, like the house also averaged 4 years until just before the turn of the 20th century.

According to Gallup for the period 4-11 December 2017, Congress’ approval rating was a whooping 17%. But the same members are continually elected to be representatives of the Republic. Some even move from the House of Representative to the more powerful Senate. Congress is dysfunctional. But people keep electing the officials who make it that way. Next time people are at the ballot box, they might reflect on whether the official they might re-elect was willing to work across the asile.

 

 

 

 

 

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Don’t Roll That Loan

We live in a society that is filled with opportunities and, unfortunately opportunists. That is not to imply that all opportunists are bad. Quite the contrary, it takes opportunist to build upon and grow our economy. Angela Duckworth describes in her book Grit: The Power of Passion and Perseverance, people who have the character and drive to do just that. However, there are those, that possess grit, that will take advantage of their position over the disadvantaged.

I have been a Financial Services Manager for the better part of twenty years. I have seen a lot of change in the industry over that time. One in particular would be the change in the effect of student loans on a person’s credit. Today if you have student loans they can have a major impact – either positive or negative – on your credit report. About a decade ago, no one paid attention to student loan debt. But that is not the issue that I would like to discuss.

Bad things happen to good people. An unexpected illness, a car accident or even a weather event could cause you to miss just enough work that you just need a few bucks to tie you over. So you visit the local short term lender. You fill out an application; put your TV and lawn mower up for collateral and leave with $700. You sigh with relief. You don’t have to worry about choosing between groceries and the power bill.

Here is what happens next. A few months go by, you have paid the lender well – good job. Your phone rings. “Hey thanks for your timely payments. I just wondered would you like to renew your loan? We can pay your current loan off and loan you $800 this time – that would give you $200.” Now here is what you are thinking. “I could use that $200, I can take the kids to Alabama Adventure. And I’m building my credit!” So you tell the nice fella on the other end of the phone you will be right down. A few more months come and go and now it is almost Christmas and you get that same phone call. This time he is going to loan you $900 which means you are going to have $250 to spend for presents for the kids. And you are building your credit!?

Let me tell you what happens next. You have had these three loans with the local short term lender over the course of a year. You think you have built up your credit; because you have made all of your payments on time! You just got your income tax refund of $1800. That 1998 Chrysler is smoking and the transmission is slipping. You are ready to go buy you a new ride. You come see me.

Here is what I get to tell you. “I’m sorry, the major lenders we use think that since you have been using the local short term lender so much that you are struggling to get by. They think it is a payday lender.” I have to let you go down the street to the Buy-Here Pay-Here. That does you no good. That is even where the Chrysler came from.

Here is the problem. The major lenders have a perception that may or may not be true. You took advantage of a lender that was willing to help you when you needed it and then they took advantage of you when you really did not need the help. They were opportunistic and most likely lead you to believe that what you were doing was helping yourself. I’m not sure but I think that all three of you are wrong in this scenario. I will explain:

How you are wrong: You needed help and excepted it from the only business that would provide it. However, you did not educate yourself. “Am I really benefiting myself by getting this second loan or would it be better to pay this one off.” Remember the interest rate you were paying was in the twenties. The internet if your friend. There are so many sites that offer opinions and strategies.

How the local short term lender is wrong: They offered to renew your loan not once but twice. Yes, they are in business to make money, but they should have some degree of ethics. They should at least refer you to some consumer information before continuing the renewal of these predatory.

How are the major lenders wrong: They need to understand that bad things happen to good people. Not all short term rolled loans are “pay day” loans. Some are just what they are as in the scenario I have described.

I make my living by securing financing for automobile consumers. Integrity is the one thing that I own that I refuse to lose. I am proud to say, after all these years mine is still intact. That is the reason that I do not understand why or how anyone can take advantage of the disadvantaged. If there is one thing that our school systems need to put in the curriculum it is personal finance. It does not need to be taught by a “school teacher.” It needs to be taught by a business professional.

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