SDI Society occasionally publishes op-ed pieces from informed investors and experts in financial industry sectors. The opinions expressed in this piece are those of the author alone and are neither endorsed nor refuted by SDI.
Salvatore Buscemi is a former investment banker for Goldman Sachs and has raised over $50 million in capital for his real estate hedge funds.
Update: On Friday, January 25, 2019, President Trump reopened the federal government for three weeks, creating the opportunity to collect back pay for federal workers working without pay during the shutdown, in exchange for three weeks of “good faith” negotiations over the border wall. However, the current legislation only funds the full federal government through February 15, 2019.
Everywhere you looked on the mainstream media recently, you saw profiles of government employees about to go 30 days or longer without a paycheck. It’s disingenuous at best, and propaganda at worst.
For the first time since perhaps the 1970s, there is finally parity between government workers and private sector employees.
If you’re not getting paid, try something else. After all, that’s what most private sector employees do and some of them go months – even years – in hard economic times to find a job going without a paycheck.
Public sector federal employees (think TSA agents) have long gotten away with being insulated from being fired or terminated for performance, all while still retaining their benefits. Benefits you and I don’t have, such as medical insurance and a defined benefit pension.
It is a widely held view amongst the NYC elite in the circles I run in that President Trump has nothing to lose. He doesn’t have to run again and is operating this standoff as such. They do call him “Teflon Don” for a reason.
The other side of this is that if Trump really wants to be re-elected, he will have to stand firm on his major commitment to the wall. Otherwise Trump’s legacy will be emasculated – just like what he did to all of the other Obama-era policies and statutes that have been swiftly reversed.
So the shutdown is really doing Trump’s heavy lifting for him by draining the swamp. As we’ve seen, the government can remain closed far, far longer than any federal employee can remain solvent. And he can decide after 30 days if he wants to rehire these folks. If at all. With a pension and medical benefits or not (mark my words on this…)
No one ever shed a tear for a DMV teller who was rude to them. Or a postal employee who threw out the mail in the dumpster behind the post office. Or the TSA agent who suddenly got deliberately slow clearing you through airport security after you barked and stated that your flight was leaving in 15 minutes.
But why now? Because it’s the media’s attempt to continually shame President Trump. Ask just about anyone who doesn’t work at a university or at the state level behind closed doors what they think, and they will tell you – in so many words – that they think this is a genius move to trim some of the fat from the federal government that has gotten too bloated.
On social media, the only bleeding hearts are of the spouses of those furloughed workers. That’s far from the polarization that you saw for an entire year prior to November 2016.
Pensions and pension-related liabilities are the most prohibitive and costly balance sheet item today for most states, and municipalities.
Look at Texas and Illinois for example. Property taxes are being increased to cover pension shortfalls. This will drive investment capital out of those states (already has for Illinois). In the Northeast, more people are leaving New York and New Jersey for Florida, Texas and even Nevada.
The more workers voluntarily drop out, the less of a financial burden later that future generations need to be burdened with. No pesky employee lawsuits. No mediation.
In the gig economy, it’s not that bad. After all, Lyft and Uber drivers are still needed.
Yes, its hard. But remember when you were lying in a pool of your own sweat that no one helped you.
Entrepreneurs have been bastardized in this country for being greedy. If a government employee – whom on average make much more than most private sector employees when you add in salaries healthcare and pensions – lives paycheck to paycheck, then that is their problem. Not ours. Maybe they should call Dave Ramsey.
It’s easy to emphasize with families who are struggling to make ends meet. With that said, no one put a gun to their heads to work for the government. Cushy jobs have made it prohibitive to fire poor performers and this stand-off is – all things being equal – a net positive for a government that has lost the confidence of its constituents. Perhaps those government employees who are going without pay should find something else to do in the meantime.
At the end of the day, we the taxpayers have skin in the game. You are a de facto shareholder in this great company called America that has been mis-operated and mismanaged for decades. You may not feel it now, but when the debt clock ticks higher, that is can be an oppressive burden for your children and grandchildren.
Where you want your grandkids to be 30 years from now requires massive action now from our elected leaders.
When looking at the television tonight, there’s more here going on than just the wall. The wall just happened to be the straw that broke the camels back.
Always look behind the scenes. Be cynical at best, and paranoid at worst. This may slow GDP a bit, however, with the private economy blazing ahead, it will be a net positive going forward.
Rates will stay low and money will still flow into alternative assets. Follow the sophisticated money and its going to be hard to go wrong. Companies like Lyft, and Airbnb will still go public and America will still prosper.