How to Have the Right Attitude During Government Belt Tightening

Apple Podcast Spotify

How to Have the Right Attitude During Government Belt Tightening

The Era of Easy Everything is over. In other words, the days of easy money at little or no cost are gone. We now find ourselves transitioning, and it may involve a hangover from a year’s long borrowing binge. It’s a painful transition – cutting our spending. Whether it is a reduction in income that causes you to reduce your personal spending, or whether it is a reduction in revenue that is causing you to cut your company’s budget, or whether it is a nation, seeking to reduce its spending outlay of trillions of dollars – this is hard stuff. I will say that I’m really glad that I’m getting the opportunity to devote an entire episode to government spending. Over the years I have shared that one of the greatest risks to the dominance of the U.S. dollar and to the strength of the U.S. Economy is our continuing to spend more than we make. I want to be clear that this is not a partisan episode, and this is not a political podcast. This is an economic episode, and this is an economic podcast. I would be cheering for either side of the aisle if they were serious about strategically and wisely bringing spending under control. But this is something easy to cheer for in theory and something very hard to stay unified around once you dig into the details. Why is that? I’ll share a couple of reasons why cutting spending is so difficult.

We’ve all gotten used to a certain level of spending. Let me give you an example to illustrate this. My wife and I, newlyweds at the time, rented a 2-bed-2-bath duplex for $645 per month as our first house 24 years ago. I’ll bet everyone can remember your first house, whether you were a renter or a buyer. And you might even remember how much you paid. So, here’s a question to consider, would you want to move back there? Chances are, you are living in something nicer now than the first place that you lived. So of course, you are going to say, “no way.” That’s the thing – once we get used to a certain level of spending or enjoyment, we don’t want to go backwards – even though, at one time, you probably thought that first property was the coolest thing ever. It’s a matter of perspective, isn’t it? It’s a comparison with what is most recently familiar. At the government level, there are people and organizations receiving money from the government, and to reduce or eliminate that money, well, it’s going to cause pain to adjust.

We all have different spending priorities. Some think more money should be spent domestically, while others think we should spend more money overseas. So, parsing through and deciding what is essential and what is wasteful is often in the eye of the beholder. This is a recipe for in-fighting. Each group that is receiving money will be advocating to their congressional representatives as to why their funding should not be cut. We are already seeing this today.

So, let’s just admit that is going to be a painful process. But let me tell you why it is essential. If we don’t live within our means our status as the best market in the world will continue to erode. It’s already eroding to some extent. Here’s how this erosion progresses. If you can’t live within your means, your finances begin to deteriorate. If your finances deteriorate, investors begin to lose confidence. If investors lose confidence, your borrowing costs go up. If your borrowing costs go up, you end up having to spend less anyway and opportunity for all suffers. Eventually the market rewards and disciplines it’s participants. So far, the U.S. has been given a pass, because it is really the least dirty shirt in the laundry. In other words, most countries throughout the world are in the same fiscal mess, so we’ve been the least bad option on the table for investors. But that could change in the future if people lose confidence in the U.S. as the safest place in the world to invest money. Another dirty shirt may start to attract capital if they can prove they are in better shape, or maybe just on a better course than the U.S.

One cost cutting decision that might actually have universal approval? The U.S Treasury announced it will stop producing pennies, since it costs more to make them than they are worth. This will save about $85 million. Not a huge amount of money – but again…a net positive, nonetheless.

Well, what does this cost cutting process mean for you and me? How can we approach it in the right way?

I think it means that we advocate our spending priorities through our members of Congress. They may or may not vote in accordance with what you want. More than likely, none of us will get what we want. But we can’t complain if we don’t make our priorities known to our representatives. Let’s debate ideas without degrading the people who hold those ideas. Make your case with respect, treating those who disagree with you with the same dignity with which you would like to be treated.

Let’s judge decisions by whether they are a net positive. We tend to view bills and decisions as either good or bad. And sometimes, it really is just that clear. But more often, there are costs and benefits to every decision. At the end of the day, none of us are going to get everything that we won’t. So, I think a better metric is, does this move us forward in any measure toward a more desirable goal? As each piece of legislation is introduced (including the current House version of the bid beautiful bill), identify your spending priorities and see if the bill moves in a net positive direction. If it is two steps back in some ways, but three steps forward in others, then it’s still a net positive. To be clear, I have not studied the House’s Big Beautiful Bill closely enough to make a determination. But you can use this lens to evaluate any piece of legislation or spending cuts as they are proposed in the days ahead.

Lastly, I think having an attitude of thanksgiving rather than entitlement is important. We are incredibly blessed, and I think the only way out of this is through shared sacrifice. That is easy if you can focus on what you have rather than what you are losing. There is a difference in complaining and constructive criticism, and often it comes down to the spirit that we have as we share our priorities with others.

There are no perfect governments. You know what, there are also no perfect banks. At Foundation Bank and MBC, we aren’t pursuing perfection – but we are pursuing progress. With every transaction and every client interaction we are looking to get better and better at what we do. Although we can’t be perfect, we do think it’s possible to be excellent. If you are looking for a financial partner that is focused on an excellent experience – whether you are borrowing, saving, or trying to just better steward what you already have, we can help. Start your financial conversation today by visiting Foundationbank.org. We also hope you’ll subscribe to this podcast in your favorite podcast app and share it on social media. 

Until our next episode, God bless you.

-President Chad P. Wilson, CFP

Today’s episode of “Money Matters” was written and recorded by President Chad P. Wilson of Foundation Bank/McKenzie Banking Company on June 3, 2025. This episode does not constitute financial advice. Please consult a financial professional to discuss your specific needs. Any rates mentioned are subject to change and are accurate as of the recording date. Foundation Bank/MBC is an Equal Housing Lender, Member FDIC.