With all this talk about the failure of the “Super Committee” to reach agreement on deficit reduction, I have a few random thoughts and questions…
- It was fairly obvious from the beginning that the members selected were very partisan ones. Did anyone really expect them to come up with anything?
- How come not one member selected for the committee was up for reelection in 2012? Would that have provided a sense of urgency? Maybe all should have been up for election.
- Why do all the politicians and the media keep saying that these are cuts, which implies the budget will be smaller, when the reality is these are nothing more than cuts in the rate of growth? The budget will still grow, just by not as much. How austere is that?
- Mostly lost in all of this is the realization that we have finally shifted the conversation to both political parties discussing shrinking the size of government. The size of government spending as a percentage of Gross Domestic Product while way too high has leveled off. Is there some room for optimism here?
- Finally, why do investors fret over this partisan bickering? Yes, the size of our debt is important. The fact that we spend 40% more than we take in is unsustainable. But this committee wasn’t going to change all of that. In the end it will take a change in the mindset of Washington and that, my friends, is when you and I get to have our say come next November. In the meantime, don’t let the frenzied investment press get you overly worked up. Stay diversified, stick to your plan, but remain flexible since we do live in an uncertain economic time.
Hold on to your kryptonite.
*The opinions in this material are for general information only and are not intended to provide specific advice or recommendation for any individual.