Government spending 101

“Gentlemen, we have run out of money. Now we must think,” said Winston Churchill and it is as true now as I am sure it was then.

President Barack Obama won reelection with 10 million less votes than he did in 2004. Gov. Mitt Romney lost his bid for the presidency albeit with 4 million less votes than Sen. John McCain received in 2004. There you have it. This is not what mandates are made of, this is what a divided government is made of, and a divided government is an ugly thing, but it is a safe government. Since the election, the Dow Industrial Average has dropped  by about 5.25 percent while the S&P 500 has dropped 5.3 percent. This is not the Obama Reelection hangover as some will tell you, this is the realization that as Winston Chruchill said, “Now we must think.”

I am a believer that a government who cannot make due with $2.6 trillion is a government that is too big, too incompetent and certain to fail from the inside. Our federal government not only used the $2.6 trillion, but went over budget by an additional $1.3 trillion. I believe both parties are at fault and equally. I believe it is now up to us regardless who you voted for to keep the pressure on Washington for them to compromise and do the work of the people.

My colleague, a very smart Californian liberal, in a discussion of the fiscal cliff asked me how we added $4 trillion to the national debt since President Obama took office. I had to research it, but could only document less than a billion dollars specific to the adminstration, the rest came from “the wars,” the tax cuts enacted by the Congress and mainly reduced tax revenues due to a terrible economy. Now, it is not lost on me that the president submitted a horrific budget of his own, which received zero votes in Congress. So, to simply blame the president for the deficit is simply anti-arithmetic.

My clients for the most part are “those rich people” who can just pay more and all will be good. As I have written earlier in the year, taxing them 100 percent does not run the federal government for 30 days. Hence, as a believer in arithmetic, I do not believe the democratic populist propaganda, and neither should you. By the way, none of my clients are unwilling to pay more in taxes if the government will cut waste, and yes expenditures. This is not just cutting the rate of growth we have to cut the actual dollar by dollar expenses. I do not believe the goofy Republican-the-government-is-the-problem-propaganda either … and neither should you.

Lastly, we all need to be better and not just believe anything put out by either of our party affiliation. I guess this is why being independent just seems easier to me. I will leave you rabid Democrats or Republicans with the lyrics of one of my favorite songs, by Florence + The Machine, “I’m not calling you a liar, just dont lie to me. I’m not calling you a thief just dont steal from me. I’m not calling you a ghost, just stop haunting me. And I love you so much, I am going to let you kill me.”

The opinions and recommendations expressed herein are those of Mr. Garrido and do not necessarily reflect those of the firm and are subject to change without notice. This information is not to be construed as an offer to sell or the solicitation of an offer to buy any securities. The information contained herein has been derived from sources believed to be reliable but is not guaranteed as to accuracy and does not purport to be a complete analysis of the security, company or industry involved.