It is now clear that congressional budget compromises are an excuse to spend more on everyone’s wish list rather than to make hard decisions regarding appropriate priorities.
Running up the deficit is not a recent phenomenon. Adding to the national debt has been the reality of both political parties for a long time, as no one seems to be willing to take the political heat inherent in actually making the hard choices that would be required for a balanced budget.
This should not be surprising. Congress and the President are elected, by us. We do not have a particularly good record regarding credit card debt. If families are reluctant to make hard budget choices, how can we expect our elected officials to act differently?
Investors should accept that there is very little that we, as individuals, can do about government’s penchant for deficit spending. What investors can do, with the help of their advisor(s), is to develop a portfolio strategy that can meet their long term financial objectives while recognizing the likely affect of continuing deficit spending.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA