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Left Coast / Right Coast: The Government Shutdown

Mike Gold living the dream in the Pacific Northwest. Photo credit: Frank Hammer.
Mike Gold living the dream in the Pacific Northwest. Photo credit: Frank Hammer.

By Mike Gold, a retired entrepreneur "living the dream in the Pacific Northwest."

Our government has been shutdown now for over three weeks. Has it affected you? It hasn't affected me. Let's take a look at its effect on the US budget.

Let’s start with economic analysis: Assuming 800,000 workers making an average of $50,000 per year, that totals out to approximately $40 billion per year. See, even if we fired every one of those 800,000 workers, we’d only save approximately 1% of the government spending per year.

So keeping our government permanently reduced by 800,000 workers will not solve our burgeoning budget deficits. Approximately four million people "work" for the Federal Government. That includes all the men and women serving in the military. So if we use the same figures as above, all government workers are paid approximately $200 billion per year. Now that is a number that could eventually start making a dent in our deficits.

One problem with this suggestion, is that it would leave us without a Post Office, a Military, an IRS (no loss there), and no Social Security Administration. So for many of us of retirement age, no monthly SS check. In other words, a non-starter.

Now when the government shut down, all “non-essential” people were told not to report. How would you feel if you were identified as “non-essential?” Probably not very good.

Note that, surprise, members of Congress continue to receive their paychecks, except for a few who have shown they have empathy, courage, and honor.

Also, social security recipients and those owed tax refunds have continued to receive their benefits. No surprise here as there would be an open revolt if seniors did not receive their monthly benefits.

But, as one example, the Homeland Security Administration’s Transportation Security Administration continues to work without pay! I’ve read that some are now starting to call in with the “blue flu.” In other words, no pay, no work.

This morning, I read that a local bank has made arrangements to “float” government employees' loans (free loan) until their paychecks start coming again. That should help the approximately 11,000 federal workers in our state. I’m certain that these workers and many others who are not Washington Federal customers will soon be one. A very nice gesture by this local bank.

Beyond these very practical issues, I always like to look at what exactly the government does for its $4 trillion annual expenditures.

Here are just a few things that one could argue are not all that necessary:

  • The government spends approximately $2 billion per year on programs that do not produce any tangible results!
  • The Pentagon insists that approximately $2 billion is for new aircraft that they “do not need.”
  • Nearly half of all government credit card purchases are improper, fraudulent, or embezzled!
  • And perhaps my favorite: Washington will spend $2.6 million training Chinese prostitutes to drink more responsibly on the job!

So what, if anything, can we do?

First, call your congressman and complain about all the fraud and waste.

Second, vote for those running who are committed to trying to reduce our federal deficit. In the long run our deficits are not sustainable. At present, our national debt is roughly the same as our GDP. China’s, as an example, is double their GDP, Japan’s is triple their GDP.

One could rightly ask: “How is it possible for us to borrow so much money at very low rates.

The answer is simple: There is approximately $60 trillion world wide in investable assets. That money has to go somewhere – unless leaving it in the bank earning 1% sounds attractive. As my consultant at Morgan Stanley says often: “We are the best house in a bad neighborhood!”

So continue to save for your retirement. One national expert says one will need $5 million to retire now.

You know what? I’m slightly behind on this effort.

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