by Anthony J. Ogorek Ed.D., CFP™
I know that it is still early to make a prediction on the outcome for this year’s presidential election. We have only had one of three scheduled debates. The polls seem to be tightening within the margin of error. Any misstep can tank the election for one of the candidates. Well here it goes. My prediction is whoever wins will not have the ability to substantively change course for our country.
At this juncture, financial constraints will begin to limit the options for our next president. Many people I talk with seem to forget that a president cannot spend a nickel without the consent of Congress. That is why we have the threat of government shutdowns. Without the approval of spending bills authorized by Congress, government would grind to a halt. Presidents can veto spending bills, but they cannot unilaterally fund initiatives that have not been approved by Congress.
The majority of spending in the federal budget is mandated. In other words, legislation locks in these amounts and there is no real way around paying our obligations. Mandated spending is comprised of Social Security and Federal health programs such as Medicare and Medicaid. According to the Congressional Budget Office (CBO) mandated spending for 2016 will amount to 73% of federal revenues. The cost of these programs is projected to grow by 4%, significantly higher than inflation. In order to cover all of the other spending that Congress has promised it has authorized borrowing $590 billion – just for this year.
With these types of figures, all of the election year grandstanding will likely become empty promises. The fact is that we simply cannot afford them. Couple this with the fact that Congress seems to be incapable of passing a budget and can only keep government functioning with continuing resolutions; the thought of enacting new entitlement programs such as child care seems a distant wish. Additionally, neither candidate has been able to provide a tax plan that does not add to our national debt.
So my election projection is that the more things change, the more they will stay the same.