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Monthly Client Newsletter | September 2011
B ack to School is now upon us, and Congress will be back in session. Will both students and Congress learn the lessons needed for a better future? Who knows. As we hope for the best, here is information that will help all of us be a little more knowledgeable.
- Cutting the Deficit: What was agreed to?
- Joint Select Committee on Deficit Reduction
- Investment Alternatives
- Boomerang Kids: Problem or Opportunity
Cutting the Deficit: What was agreed to?
With all the headlines and the behind closed doors negotiating, what was included in the bill signed by President Obama to cut the deficit?
The bill will potentially include deficit reductions of $2.1 trillion from 2012 - 2021.
The savings come from two sources.
The bill requires a vote on a balanced budget amendment between 9/30/2011 and 12/31/2011.
The bill establishes a Joint Select Committee with the stated purpose to create legislation including at least $1.5 trillion in additional savings from fiscal 2012 to 2021.
If the Joint Select Committee legislation fails to pass, $1.2 trillion in automatic deficit reductions go into place with cuts equally from security and non-security budgets. Security includes: Dept. of Defense, Homeland Security, Veterans Affairs, Nuclear Security Admin., International Affairs and the intelligence community.
Some education programs are impacted. Additional Funds are available for the federal Pell Grant program beginning in fiscal year 2012. However this is offset by the elimination of the subsidized loan program for graduate students and the elimination of federal student loan repayment incentives beginning on July 1, 2012.
While these changes are being enacted, the Federal Government borrowing authority has increased the ability to add to our national debt by as much as $2.1 - 2.4 trillion.
If automatic reductions are required because Washington cannot agree on cuts, starting in 2013 across the board cuts will be made. Social Security, Medicaid, welfare, veterans' benefits and civil/military retirement benefits would be exempt. Medicare would be limited to a 2% cut. Planned expiration of "Bush tax cuts" cannot be used to reduce the amount of the reductions.
What you should know
While the bill signed into law solves the immediate Federal solvency problem until after the 2012 elections by increasing our national debt limit, very little in the bill reduces spending next year. Only a $25 billion reduction in spending (outlays) is currently projected by the Congressional Budget Office in fiscal 2012.
Joint Select Committee on Deficit Reduction
What You Should Know
Will this process work? We'll all have to wait and see.
When there is bad news like the recent downgrade of the U.S. creditworthiness by Standard and Poor's the stock market takes a beating. As billions of worth evaporate in a minute based on nothing other than speculation, is there anything you can do to reduce the risk that it happens to you? Here are some ideas. Please recall that with any investment comes risk. Make sure you understand what you invest in and review your options and risks with a qualified professional before making any investment decision.
Boomerang Kids: Problem or Opportunity
Problem or opportunity?
Picture yourself returning home from your last graduation party and settling in for a quiet evening with your spouse to begin the "empty nest" phase of your life. The kids are now gone. Or are they? A recent phenomena is hitting America as an unprecedented number of grown kids are returning to the nest. This trend is becoming so well known it has fostered the phrase the "boomerang generation".
With the advent of high unemployment and record levels of college and graduate school debt, adult kids are struggling to make it on their own. There are also discussions about a shift in parents' willingness to help out financially and emotionally more so than in prior generations. In the 1940s 18 year olds were fighting wars in Europe or the Pacific. In the 1960s and 1970s kids were being drafted and many were protesting. Today's world is different, but is it bordering on over-indulging our children.
So what to do if you find yourself in a boomerang situation?
Whether you are a parent or a "boomerang" child, here are suggestions that may turn an uncomfortable situation into a rewarding experience.
Turn lemons into lemonade.
While there are many inherent problems with the concept of the boomerang generation, there are wonderful opportunities as well. A few examples include:
Remember many cultures value the benefits of multi-generational living. The wisdom of experience is passed from one generation to the next and the healthy bond established between generations helps those of all ages. If managed properly the boomerang experience could bring its own rewards.
Please contact us with any questions.
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