June 24, 2019

Putting the News Together

Each day, it is hard to put everything in perspective when you read the news. With stories that are scattered all over the map being mixed in with other miscellaneous “garbage,” the news seems hardly news at all.

As our government continues to spend well beyond its limits, several things are happening: the Treasury has to borrow more and more money to fund growing deficits and now faces several new rate increases by the Federal Reserve this Fall. Couple this with the fact that at some point in the near future, most if not all of our entitlement programs are falling short of money – specifically Medicare and Social Security. Ignoring this situation is not an option but no politician wants to tell his or her constituents the sad truth that unless changes are made soon, they will not get near what they anticipate in retirement. Medicare’s hospital insurance program is running out of money and could be broke by 2026 and the Social Security administrators are now tapping into the trust funds to keep the program going. Projections are that by 2034, Social Security recipients will get about 23% less than they anticipated.

The United States auto market is heading into some difficult times. Sedans, the old mainstay of the industry, are being discontinued by many auto firms. We may debate the projected mileage requirements that were set years ago, but the sad fact is that the average new car now costs about $35,000 and the average financing has reach a minimum of 60 months. Is it any wonder that people are keeping their cars longer? The auto industry, including foreign manufacturers, are pricing the industry out of reach of most American buyers.

Retail firms are disappearing in this country at a record rate. Department stores lost nearly one quarter million jobs in the last 10 years while on-line shopping giants like Amazon keep growing. It would be easy to miss a small article on the Internet this past week where Brookstone filed for Chapter 11 bankruptcy protection and hired a liquidator to close its remaining 100 mall locations. Earlier this year, it was hard to miss the liquidation of Toys R Us and loss of 64,000 employees.

Americans love college football. As we prepare for the 2018 season, it is easy to forget that we have a student loan crisis that now has hit a record $1.5 trillion dollars. There is no doubt in my mind that without student loans most colleges would be empty. The debt burdens not only the debtors but also the entire economy by dampening consumer demand. It is hard to imagine that the fastest growing segment of the population of student loan debtors are older than 60. A soaring number of retirees are having their Social Security payment garnished to pay for student loans, mostly loans they took out for their children, but many times for themselves.

It is no longer possible to write down the National Debt. The clock is moving so fast that the only stable number is the million dollar category. We read about all the great things happening in our economy and while it is good news, our economy is based upon debt. A ever-growing portion of our entire Federal budget is debt. The tax cuts given to Americans last year along with the Affordable Care Act in years past were all based upon debt. Debt we can never pay back. Debt that is reaching astronomical proportions with interest on the Federal debt now close to the one trillion dollar figure. Total personal debt in the United States is staggering. It has passed $13.15 trillion dollars – comprised of mortgages, student loans, auto loans, and credit card debt. The National Debt clock measures Federal Debt at roughly $21 trillion dollars but not that far ahead of the US personal debt.

I think our news coverage today is selective. No one, not even the Wall Street Journal writers, likes to look at the big picture as it is too overwhelming for the average person to grasp. I think our Congress is in the same situation. We selectively pass bills that seem affordable but when taken in total exceed the annual Federal Revenue by a trillion dollars. However, at some point in the not too distant future, the big picture will come crashing down on us. It will be interesting to see how this catastrophic event will be reported in the news.

Print Friendly, PDF & Email
Written by
Donald Wittmer

DONALD WITTMER is a retired business executive who held key roles in the automotive and banking sectors. For a time, he also served as a Fiscal Agency Manager for the Detroit branch of the Federal Reserve Bank of Chicago. He received his undergraduate degree from Cincinnati's Xavier University, an M.A. in business management from Central Michigan University, and earned certification in bank operations from the School of Banking at the University of Wisconsin-Madison. A husband, father, and grandfather, he teaches part-time at the Kent Place School for Girls in Summit, New Jersey.

View all articles
Written by Donald Wittmer