Government and The Economy

In the News   Presented by Prairie Title  

October 31, 2016

         

Election Season is Here: Thinking of Government’s Role

By Frank Pellegrini, Prairie Title CEO   

It’s Halloween, so naturally the goblins and ghouls will be out in full force in our neighborhoods. Trick or treating reminds me of an economic concept I’ve been thinking a lot about lately. With the election just days away it’s a good time to ask the questions: How involved in our economy do we want our government to be? How many “treats” do we expect, or need? The federal government, of course, is very involved in our everyday economy, directly through regulation, taxation policy, etc., but also in some ways more indirectly.

Think of Social Security. While the money we all pay into Social Security is more or less the same money we eventually take out (hopefully), the government is still involved as the collector and distributor. And that money, when distributed, for the most part goes directly into the economy in the form of payments for housing, food, entertainment, etc.

Taking things a step further, some economists advocate strategic use of so-called “helicopter money” where the government flies in and “drops” money into a situation to solve a problem and at the same time provide economic benefit. Infrastructure is a good example. Government money spent on roads and bridges not only improves our lives by providing safer roadways, but also provides stimulus in the local area. Workers who provide the labor, in turn, pay taxes back to the government.

In an interesting piece by A. Gary Shilling published in Bloomberg News, Shilling argues that a form of helicopter money is needed to further stimulate our economy.

“Both U.S. political parties seem to agree that funding for infrastructure projects is needed, given the poor state of American highways, ports, bridges and the like. And a boost in defense spending may also be in the works, especially if Republicans retain control of Congress and win the White House. Given the ‘mad as hell’ attitude of many voters in Europe and the U.S., on the left and the right, don't be surprised to see a new round of fiscal stimulus financed by helicopter money, whether Donald Trump or Hillary Clinton is the next president.”

What’s your point of view? I’d love to start a conversation about this. Call or email me, or write a comment.

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Election Day is next week. If you haven’t voted already, I urge you to make your voice heard.

Other stories we’re following:

2017 U.S. mortgages to exceed $1 trillion: MBA.

Nine takeaways from the ULI convention.

Case-Shiller: Housing prices just below record highs.

 Why housing remains a bright spot.

Government by (Default)

In Washington last week there was a changing of the guard in the U.S. House. As one Speaker departed and another took his place, simultaneous action occurred to keep the nation from defaulting on its prior obligations and sidetrack the endless, nauseating budget debate that has been going on for years in our nation’s capital. Feel how you will about the process and the outcome, but at the very least a budget framework is in place and our legislators can move onto other matters (such as the TRID grace period passed in the House and pending in the Senate?).

To an extent, change was the catalyst that made something happen in Washington. What will be the catalyst for action in Illinois? For months now our legislature and governor have been at loggerheads over the state budget and that is having real impact on people’s lives and the business climate. The stalemate in Springfield was ushered in by change in the form of the election of pro-business Governor Bruce Rauner, and it is highly unlikely that any of the main combatants will be leaving the scene voluntarily as former Speaker John Boehner did.

So where does that leave us, the taxpayers of Illinois? What action on whose part can bring about a resolution?

Legislative leaders and the governor are scheduled to meet this week for the first time in quite a while. Perhaps further talks will move them closer to a resolution. Until some undetermined pressure point is reached, however, it seems unlikely that an agreement will happen. Fiscal pressure might be the key at some point in time, but in my view pressure bubbling up from below, from those of us who go to the polls every two years, is the most likely change agent that will pave the way for a breakthrough.

For my friends on the Democratic side of the email, that means contacting your legislators and the leadership of both houses to stress the need to compromise and reach agreement soon. For my Republican friends, you’re not off the hook. Contact Gov. Rauner, absolutely, but also make it clear to Republican legislators that they need to help convince the governor that reaching a budget agreement is vital.

Of course, just like in Washington, most parties will not be delighted by many of the details of any budget agreement, but that’s how government in a democracy works. We need to move forward before Illinois becomes even more of a laughingstock nationally.

I urge all to be active, get in your legislator’s ear, and help create momentum to move toward resolution. Until the next round of elections a year from now, our only recourse is to contact legislators and the governor directly to clamor for an agreement. We are the agent for change. 

An easy and effective way to have your voice heard is through the Title Action Network.  You can join TAN in seconds and it costs nothing.  However, through TAN your voice is added to those of other concerned professionals for a strong and clear message to lawmakers, regulators, and policy makers.