Waiting on Gallant and Change

Each cartoon presents a new dilemma for the boys. Goofus invariably chooses an irresponsible path, while Gallant is habitually conscientious and kind.  The panels usually provide pictorial descriptions for readers to assimilate. For example, Goofus hogs his seat on the school bus, but Gallant generously makes space for someone to be seated. Goofus rudely orders his friends, while Gallant politely asks his friends what they enjoy playing. Goofus and Gallant's primary function is to teach children basic, social skills.

GoofusWe are all waiting on a Gallant like character to arise from the political rhetoric in Washington. Someone to pose the common sense "right", selfless solution.
To understand the debt ceiling debate in Washington, it is very helpful to have some approximate numbers (1) to contemplate.

Current US Debt: 16.7 Trillion

Last Year US Government Annual Income: 2.5 Trillion

Last year Government Annual Spending: 3.5 Trillion

4 years since a budget was passed by both houses of Congress

Gallant

If a person approached you and said that their family was spending considerably more than they were making and borrowing to do so. Your initial reaction would be, "well you cannot keep doing that forever". Your recommendations to rectify the situation could vary among logical choices.

Politicians have diverse opinions when they interpret the fiscal situation. Their seemingly logical opinions are:

• The government spending above its income is not sustainable.

• If the government stops borrowing now it will upset the current economic recovery.

• The government should use this moment to stop and figure out what to cut to bring its spending below its income.

• Government income has been increasing each year due to the economy recovering, if government keeps its spending the same, it will fix itself.

• The overall debt is only 6 years of income. It's not that bad.

• Cutting a Trillion dollars out of a 3.5 Trillion dollar budget is a lot to cut in one year. Even if it was cut over 10 years, lots of people might suffer.

• The total debt dropped a little last year. This is fixing itself.

• If we raise taxes, income will increase and the government can keep spending at the same rate.

Each and every politician is viewing himself or herself as Gallant right now by standing up for what they believe is right and fiscally responsible. Unfortunately, because the attitude of both parties is unbending selfishness, Americans view them collectively as Goofus and only capable of the most irresponsible action. Overreaching the dialogue and debate in Washington is the common sense reality we all know: "well you cannot keep doing that forever".

In the last few months we have been thinking a lot about the effects on clients investments regarding Washington decisions and the possibility of a lack of decisions in Washington. On the days after the debt ceiling resolution and the end to the Government shutdown, I can confidently conclude that Gallant has still not shown up in Washington and the future still has some element of change pending.

1 BBC World News. Business Daily 10/15/2013 podcast