This summer we’ve heard a lot of talk about rising interest rates and concern about when the Federal Reserve will begin easing up on its bond buying program (QE3). This fall the focus is likely to shift to Washington due to Congress’ looming fiscal-to-do list. Here’s what’s on that list:
Approved funding for 2014 – The House and Senate have each passed their own budgets but there is a $91 billion dollar difference in the amount each is willing to spend with no indication either side is willing to budge. It’s possible Congress will pass a temporary funding bill by September 30th to prevent a government shutdown on October 1st, the first day of fiscal year 2014. Stay tuned on this first of several battles.
Decide the sequester’s future – Unless Congress takes further action to repeal the sequester, the 2013 across-the-board spending cuts will continue into 2014 and $19 billion more will need to be cut from defense and domestic “discretionary” spending. These would be cuts to a number of programs and agencies from national parks to the FBI.
Raise the debt ceiling – The Treasury Department is taking measures to keep our country’s debt below its legal borrowing limit but it’s estimated that sometime between mid-October and mid-November the Treasury will no longer be able to pay all the country’s bills in full and on time unless it can borrow more money. That can only happen if lawmakers agree to raise the debt ceiling. In the past Republicans have insisted that any increase in the debt ceiling come with equal amounts of spending cuts. Since spending is already being cut, the GOP may call for other types of reform to the tax code or maybe entitlement programs.
Needless to say, our lawmakers have a lot to do this fall. Both sides are already staking their ground, especially with regard to raising the debt ceiling. It may (or may not) surprise you to know that our country has been in debt every year except for 1835. Every President since Herbert Hoover has added to the National debt including 18 times under Ronald Reagan, 8 times under Bill Clinton, 7 times under George W. Bush and 7 times (so far) under Barack Obama. Depending on who is doing the research, it is said that the U.S. has raised its debt ceiling (in some form or other) at least 90 times in the 20th century and 14 times from 2001-2013. While spending more money than you bring in has never been a good business plan, the United States defaulting on its debt obligations is not a good option either. It is clear that raising the debt limit is only putting a band aid on the real problem. The real and permanent solution is to put in place a budget to control spending and require the government to spend only what it brings in. It’s called a balanced budget.
Linda Eden is a Registered Principal offering securities through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Legacy Wealth Management, LLC and Cambridge are not affiliated. Cambridge does not offer tax advice.
Copyright ©2013 Linda Eden. All Rights reserved. Commercial copying, duplication or reproduction is prohibited.