Remember When Federal Budget Deficits Mattered?

It’s so interesting watching the latest talk from Washington come through.  It’s all about potential tax cuts and what they mean.  President Trump is touting a plan that would lower taxes for many businesses and people.  He claims it will help the middle class.  Pundits argue it mostly helps the rich.  Either way, it’s interesting that very little attention is given to the budget deficits and the impact that the plan would have.

Budget Deficits

For as long as I can remember, the federal government has run a budget deficit.  There were a couple of years under President Clinton when there was a surplus.  However, that seems to have been a blip on the radar, and very much an anomaly.

The government spends more than it brings in.  They’re the only level of government that is authorized to do so.  States, cities, townships and the like must all balance the budget.  The federal government does not have to do so.

And they don’t.

When a deficit is created, the government essentially issues bonds or bills and repay them down the road.  For decades, it seemed, people would worry about this.  They figured too many would devalue the dollar.  People worried that it could spark inflation.  Some worried what would happen if the market got saturated and there was no demand.

With all that, it was always thought that limiting or eliminiting deficits was the right idea.

I remember that budget deficits were a big point of most presidential elections as I was growing up.

Why No More Concern?

But it seems that the impact of budget deficits has waned.  Our deficit has exploded over the past fifteen years.  Yet, when the latest tax plan was introduced, the potential impact was nowhere near the top talking points.

So why is that? Why don’t budget deficits matter anymore?

Well, first, is that inflation seems to have really lowered the cost.  With inflation at historic low numbers, the government has to pay very little interest.  So, they can borrow practically for free.

Next, the demands for the US Dollar seems limitless.  Where many once feared too much debt could destabilize the dollar, that hasn’t happened.  At all.  It seems that as long as we issue debt, there are foreign countries willing to buy it.

Finally, I think it’s seen as an investment.  Cutting deficits would mean cutting programs and jobs. This would have a negative effect on the economy.  Some might argue that deficit spending has partially helped the economy chug along for the last ten years.  An argument could be made that cutting or reducing the deficit would be worse in the long run.

What’s Next?

I don’t have any idea how this plays out.  One could argue that there has to be a limit. However, you could also say that twenty years ago, the current deficits would have been unimaginable.  If George H.W. Bush or Bill Clinton had suggested the deficits we have today, they’d have been run out of office in a hurry.

So, really, as far as what happens next, who knows?  It’ll be interesting to watch, though.

Readers, what do you think about the current federal budget deficits?  Do you think the current deficit spending is sustainable?  What about adding even more with the proposed tax cuts?  

Copyright 2017 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

Why Donald Trump And Bernie Sanders Are Still Candidates

Seven months ago, I penned a post noting that I thought it was absolutely absurd that Donald Trump could actually be elected President.  While he still has a long way to go to be elected, he’s come a lot further than I had thought.  Seven months ago, I figured he’d be long gone by now, and predicted the Republican race would come down to…Jeb Bush and Scott Walker.


I’ve done some digging on why I was so wrong about Trump.

Why Trump and Sanders Are In The Race

Donald Trump and Bernie Sanders are two politicians, that in many years past, would have not come anywhere near making it this far.  Trump is loud, brash, offensive, and really has not dictated much of a plan if he were actually President.  Bernie Sanders is as close to a socialist as you can be without actually calling yourself one.

These are not the types that would strongly be considered President.

So why are they in it?  Well, in my opinion, it boils down to one thing, it’s all about the middle class and what they want from a President. Actually, no, that’s not right.  It’s about what they don’t want from a President.

The Middle Class Is On The Decline.

Since the mid-1980’s the middle class has pretty much been in a rut.  The middle class itself has shrunk and those left in the middle class have pretty much seen wage growth match or even come in under inflation.

I’ll even take it one step further.  Many people say that we’re in jeopardy of current generations being worse off then their parents.  I don’t think we’re in jeopardy.  I think we’re already there!

People doing effectively the same jobs are earning roughly the same pay as they did 30 years ago.  At first glance, this doesn’t seem all that bad, but then start to consider:

  • Pensions were in place for many workers in the mid-1980’s.  Now, most workers do not have a defined pension plan and must contribute a larger portion of their income to retirement than their 1980’s counterpart, just to keep pace.
  • Health care premiums and co-pays were often picked up in full or in large part by employer offered insurance.  Now, employees must contribute more both out of their paycheck to cover the plan, and at each doctor visit.
  • The stock market has gone up a lot, but the middle class hasn’t reaped the gains on par with their rich counterparts.  Consider that after the 2008-09 stock market crash, the market doubled, the rich, who had certainly lost money on the downswing, were able to recover their losses and then some, because they had a cushion of wealth that allowed them the opportunity to stay in the market.  Many middle class families lost their money on the way down, but were not able to get back in as they needed every cent just to try to keep afloat during the Great Recession.

The X-Factor: Redistribution of Wealth

So, from the items above, you can see that the middle class is getting squeezed.  That’s not the worst part, though.  The worst part is that the middle class is taking the brunt of it, but the rich have not.

During the entire period where the middle class continues to get squeezed and see a flat if not declining standard of living, the rich have seen their wages, their wealth, and their position continue to increase.

Effectively, many in the middle class see that there has been a redistribution of wealth, where money has flown from the middle class and to the rich.

The Middle Class Is Sick Of It (a.k.a. Why Trump and Sanders Are Here).

So, how does this tie into the presidential election and how Trump and Sanders are still legitimate candidates to become President?

Simple.  The middle class is sick of it.

The stagnation of the middle class has gone on for roughly eight presidential terms.  In that time, a Republican will have served 16 years and a Democrat will have served 16 years.  Every Presidential candidate has promised to take care of the middle class, and each party has had equal time to do so, yet over the last 32 years it hasn’t happened.  The middle class is sick of it.

mb-2015-08-trumpThe average person works for roughly 30-40 years before retiring.  That means that most of the work force in place today has gone through their entire careers with this stagnation of the middle class in place.  Entire careers from start to finish have gone by.  The middle class is sick of it.

Wage Growth Is Absent.

Real wage growth in the middle class is largely stagnant.  But it’s not for the rich.  How many CEOs and executives and other rich folks get huge raises and big bonuses, while the middle class gets a puny increase or none at all?  Do people realize what message this sends? I’ll tell you.

When Henry Ford effectively created the explosion of the middle class, the workers and people were made to feel important.  It was by their hard work that the country grew and there was recognition by the rich that, in fact, their prosperity would not have been possible but for the hard work of the middle class.  There was appreciation and with appreciation came the middle class being made to feel important.  Come time to divvy up the fruits of their labors, the middle class had a seat at the table.  Now, when the rich get the rewards and the middle class get scraps, it sends a message that the middle class is unimportant.  The middle class has effectively been marginalized and is sick of it.  That was not Henry Ford’s dream.

Can They Deliver?

People don’t know whether Donald Trump or Bernie Sanders and their outrageous ideologies could actually work.  Most people actually don’t believe they will.  But, at least they’re different.  The middle class is getting desperate.  They know that these last 32 years haven’t been great to them.  The can read the tea leaves enough to know that there is more of the same ahead.  They know that Trump or Sanders probably won’t really be able to change all that much, but at least there’s a slight chance, right?  Otherwise things just stay the same.  And the middle class is sick of the same.  Look how desperate the middle class is for change that even this type of crazy is now the chance we’re willing to take.

It’s Anyone’s Guess, Now.

I read a lot about the election and all of it makes me cringe a little.   I’ve heard that the Democrats would love Trump getting nominated because that would mean a clear path to the White House for their candidate.  They forget that Trump has overcome the odds to get this far.  I’ve heard that the Republicans loved the idea of Sanders getting nominated because no way would the general election see a socialist get elected.  Again, have we not learned so far from this election season that darn well anything is possible?

I really don’t know what’s going to happen now.  No idea.  I know whatever it is, it’s likely going to be unlike anything we’ve ever seen before.  Buckle in for the ride!

Readers, what do you think?  Do you think that some of the candidates have made it this far simply because they’re different?  Let me know what you think in the comments below.

Copyright 2017 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

Could Donald Trump Actually Be President?

By now, I’m sure that everybody knows that Donald Trump has been leading many polls for who people would vote for if the election for the 2016 Republican Presidential nominee were held today.  This upsets many people, causes our understanding and appreciation of Democracy to be brought into question, and has made Americans the butt of many a joke.

So could ‘The Donald’ actually be President?  Let’s take a look at some of the reasons for yes and reasons for no and come back to answer at the end (or you could just skip ahead).

Reasons President Trump Could Happen

Name Recognition

I’m 40 years old and I have memories of Donald Trump in some form or another for at least 20-30 years.  I religiously watched early seasons of ‘The Apprentice’ until the repetition made me (and tens of millions of other fans) drift away.  Before that, he had his name all over buildings in cities around the world, and was not afraid of the camera.  Compared to just about any other candidate out there, Donald Trump by and far is the most well known name.

He’s Getting Face Time

I seem to remember reading somewhere that this is the largest pool of candidates in the Republican party in decades, or maybe ever.  So with that said, you’d expect that media coverage would be fractured, but that’s not the case at all.  Any mention of the Presidential race these days inevitably includes Donald Trump.  He’s everywhere!

People Listen To Him

Let’s face it, when Donald Trump speaks, people listen.  There are many out there mb-2015-08-trumpwho can’t stand him and only listen to see who he’ll insult next, but the fact is they’re still listening!  And if people are listening, it means people are talking.

He Speaks What He Believes

You may not believe in what Donald Trump says or what he believes in, but one thing that he demonstrates is that when he does open his mouth and talk about something, he does so because he believes it.  Many other Republicans seem to believe what their party says is the right thing to believe, or they’re against something simply because Obama and other Democrats like it.  Donald Trump isn’t going to check with the party leadership before issuing a statement, you can be sure of that.

He Entertains People

Quick, name three contestents on the non-Celebrity version of The Apprentice.  Across any seasons.  Most people probably can’t.  The Apprentice was one of the most popular TV shows out there for a while, and it was all because of Trump.  He has entertainment value and while the President isn’t meant to entertain, the election talk at this point in the game holds little more than entertainment value.

There’s Precedent

Could an entertainer ever hold office?  A reality TV show host?  Or maybe….an actor?  Yes, we’ve already had a former entertainer hold office, and history largely thinks that he did a pretty good job.

Reasons Trump Won’t Get Elected

He’s Alienated Too Many

I’m pretty sure that most Mexican Americans won’t be voting for Trump.  He’s also made disparaging remarks about quite a few other classes of people that would likely vote against him or stay home.

His Numbers May Have Peaked

Other candidates will have the opportunity to grow their numbers as they try to introduce themselves, whereas I see Trump already has anybody he will likely have even down the road, and in the end, that might not be enough to get him to where he needs to be when it really counts.

The Field Will Shrink

Remember how I said that the current crop of Republicans is really big?  Before long that will start to consolidate.  Today, five of the candidates might be splitting the vote that will eventually go toward the last candidate remaining of the five.  Once actual primaries and such start taking place, the field will consolidate.

Today Means Nothing

I’ll be honest, I’m not following the 2016 election at all.  Not a single bit.  When I see Trump or anyone else talking, I tune out.  Why? Because not a single thing of what’s being said today will matter when votes start being cast.  Issues, even the big ones, rise and fall in importance within a few months.  Even if there are people agreeing with everything that Trump is saying today, that could change by voting day.

The Election Is Too Far Out

The Presidential election is fifteen months out.  That’s a crazy amount of time away.  In 2012, Michelle Bachman was a leading candidate with over a year to go.  In 2008, Hilary Clinton was practically handed the nomination when things first got started.  Remember in 1991 when George Bush had something like an 80% approval rating after Iraq was annihilated by the US-led forces in the Gulf War, and he was a shoo-in for re-election?  The bottom line is that the election is too far out to matter.  The election cycle starts earlier and earlier, but the fact remains that it just adds a bunch of meaningless time to the front of the whole thing.

So Can Trump Be President?

My opinion, in a word, is no.  I think that Trump is someone that the networks can throw on TV and get people to watch.  I don’t believe that will last.  The novelty value of Trump will fade around the time that people start paying attention to issues that matter to them.  Trump will slowly get left out of those conversations.

My early predictions: I will only narrow down to four candidates, two on each side.  On the Democratic side, I think it will be between Hilary Clinton and Bernie Sanders.  On the Republican side, I think it will be between Jeb Bush and Scott Walker.

Of course, as we all know, it’s way too early to tell!

Readers, what do you think of Donald Trump and his chances to be President next year?

Copyright 2017 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

US Heading For Economic Problems If Literacy Levels Stay Low

Although the idea that the United States is no longer leading the world in education is not news for most people, few Americans realize how low its ranking has dropped compared to other developed countries.

A report by the Education Testing Service (ETS) outlines how the drop in educational standards is much worse than most people imagine. This review analyzes information gathered by the Programme for the International Assessment of Adult Competencies (PIAAC) and the Organisation for Economic Cooperation and Development (OECD).

According to the report, America’s Skills Challenge: Millennials and the Future:

Recent research reveals an apparent paradox for U.S. millennials (born after 1980, ages 16–34): while they may be on track to be our most educated generation ever, they consistently score below many of their international peers in literacy, numeracy and problem solving in technology-rich environments. As a country, simply providing more education may not be the answer. There needs to be a greater focus on skills — not just educational attainment — or we are likely to experience adverse consequences that could undermine the fabric of our democracy and community. For example, for people who are hoping to find careers in PR and marketing, they will need to focus just as much on public speaking, extemporaneous and persuasive writing as they do social media techniques, graphic design and web sales.

The Paradox

The irony of this looming crisis is that the United States still has the knowledge and experience to offer its citizens a broad education. What’s more, for much of the first half of the last century it was far ahead of Europe when it came to educational leadership.

In the last century, it became clear that the United States needed more skilled workers to benefit from the industrial revolution. The consensus was that a high school education would be sufficient for the country to become a global economic powerhouse.

The nation rallied to this call with some decisive action. High school enrollment rose from 11 percent to 75 percent from 1900 to 1950. By the middle of the fifties, the rate of students in high school was double that of Europe. In 1944, when Britain was pushing the Education Act to give British children secondary school education, President Roosevelt was already initiating the GI Bill that would allow veterans to go to college tuition-free.

This remarkable history of educational achievement makes America’s educational crisis even more bewildering. Today, even working adults who did not get a chance to go to college or did not get the opportunity to go to graduate school, can sign up for accelerated degree programs at liberal art colleges like the Gwynedd Mercy Online Programs. Americans can now attend college classes in their pajamas after a hard day’s work simply by turning on their computers! Earning a degree that can launch your future without runining your present with time constraints and debt is a no brainer!

At present, the United States trails behind South Korea, Japan, Singapore, Hong Kong, Finland, United Kingdom, Canada, Netherlands, Ireland, and Poland in “cognitive skills and educational attainment.”

The world has not only caught up with the United States, but it is now leaving it behind. Starting in the 1970s, graduation rates from 4 year colleges fell dramatically, and over the last generation, the United States has fallen behind many Asian and European countries when it comes to an educated population.

The Looming Crisis

This falling level of literacy is a critical situation because the demand for educated workers continues to increase every single year. Fast paced technology and increasing globalization is pushing the world forward. By the year 2020, as many as five million jobs will go untaken because there will not be enough qualified people to do the work. In the 20th  century, a high school diploma was enough to secure a middle class life in manufacturing and retail work, but these jobs will be largely automated. Automation has already begun replacing labor in factories.

ACT, a nonprofit organization that focuses on building a link between education and workplace success, has a report called “Help Wanted: Many Youth Lack Education for Modern Workplace.” The research paper summarizes the consequences of low educational attainment on young workers:

“Based on current completion rates, 24 percent of current high school freshmen are unlikely to complete high school and another 27 percent will earn a high school diploma but not pursue postsecondary education. While 65 percent of HSDGs continue directly on to college, few of these students persist to earn college degrees. This evidence suggests that the influx of new workers entering the labor force will do little to meet growing demand for high skilled labor. Rather, low educational attainment will leave many young workers with high unemployment rates, chronically low wages, and low wage growth.”

What Does This Mean for Hopeful Marketing and PR Pros?

All of this focus on educational achievement might seem strange, especially since the Marketing and PR industry is far more focused on contacts and ideas than it is on degrees and classroom achievements. Still, completing a degree and mastering some communication skills are two of the best things you can do if you want to further your career. Why? Many of the clients you will be marketing and promoting probably will have these high level educations and you will have an easier time helping them achieve their goals if you can work on their level. This is particularly important if you are hoping to work with clients in the tech or educational fields.

Learning as much as you can is always going to be an asset. And focusing your studies on the areas in which you are hoping to find clients is a great way to set yourself apart from your competitors who will likely still be focusing on the portfolios of “sample” campaigns they built in their undergrad classes. It is especially helpful when you are a new graduate who hasn’t had the time to make many contacts or do much networking.

Copyright 2017 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.