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News & Press: CalAdvisor Newsletter

Financial Security of America is Not a Spectator Sport

Friday, August 5, 2016   (0 Comments)
Posted by: John A. Davidson, LUTCF, FSS
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In 1980, I made the decision to leave a ‘comfortable job’ for an exciting career in the Financial Services Industry. I was looking for ‘Fulfillment’ in my Business Life and I wanted Financial Security, freedom to spend time with my family and the ability to help others reach their dreams.

Over the past 35 years, I have worked with countless businesses and individuals, studied Life Insurance products, economics and business and watched as our National Debt kept increasing to the $19.5 Trillion it has reached today.

The Financial Security that I have tried to create for my clients is now in jeopardy because of the enormous National Debt that has been accumulated. The Life Insurance Industry and the products that we provide for our clients, represent security and dignity, but for how long?

Let me shed some light on just how bad this National Debt is:

In 2010, our National Debt was $13.5 Trillion. Do you know how much that really is? Well, it is more than we spent on the:
• Department of Health and Human Services
• Department of Transportation
• Department of Energy
• The Veteran’s Administration
• Department of Housing and Urban Development
• Department of Homeland Security
• The Justice Department
• Department of Agriculture
• Department of Commerce
• The Treasury Department
• The Department of Labor, and
• The Small Business Administration…COMBINED!

From 1988-2010, the U.S. Congress paid out over $8 Trillion in interest on the National Debt. That is enough money to give an exotic Lotus Sports car to every Taxpayer in the U.S. And, the Congressional Budget Office tells us that, in just five more years we will be paying out over $1.1 Trillion in interest payments annually. That is 1.5 times what we spend on National Defense.

If Congress were to stop all spending today, right now, and paid $100 million every day, it would take 389 years to pay off that debt. AND, unless we make changes, by 2046 every dime that the government collects will go to pay…you guessed it…interest payments alone.

So the question is: Where are they going to get the money? They can:
1. Raise Taxes
2. Cut or modify benefits and programs (means testing)
3. Remove the Tax Favorable Treatment of Insurance, Annuities and retirement programs or some combination of all the above.

Based on what I saw after watching both the Republican and Democratic Conventions, there was little or no specific talk about how we were going to reduce this terrible debt that is crushing us. And it certainly was not explained like I just laid it out. So, what is the solution?

My guess is that raising taxes is not a popular idea, and cutting benefits and programs that people are relying on or that have been promised will not go over well…so, it comes down to:

Reducing the Tax Favorable Treatment of those products that the Insurance Industry provides. That Tax Favorable Treatment figure, by the way, is $3.2 Trillion over five years. There is no other place for Congress to get the money.

As we head into the last 90 days before the Presidential (and Congressional) elections, we need your Political Involvement and your Political Contributions now more than at anytime in our history.

Please do the following: 1) Make a meaningful contribution to the PAC, 2) Contact your member of Congress (Democrat, Republican or Independent) and ask how you can get involved in their campaign; develop or strengthen that relationship right now and, 3) Talk to your clients about how important it is for them to make sure that they have that permanent Life Insurance in their portfolio. Share with them how you see the financial future and what they can and should do to build that floor of financial security for themselves and that future generation that they may never see. Create that sense of urgency.

Remember, ‘The Financial Security of America is not a Spectator Sport.’

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