What’s Going On?

– by Murray Sawyer, JD, Founder and CEO

Some long-term clients and friends will remember that when I used to write Westover newsletters regularly, I always had a section titled “Listen to the Music.” That was the title of a song recorded by the Doobie Brothers in 1972. I intended my comments in that section to serve as a reminder that we should Listen To The Music, that we should pay attention to what was happening to the subject matters of our lives — be they political, economic, financial, athletic, musical, or something else.

With this latest musing, I return once more to a music theme. But this time to What’s Going On?, a record and studio album of the same name. It was released in 1971 by Motown and recorded and written by one of my all-time favorites, singer-songwriter Marvin Gaye. Its subject was a returning Vietnam War warrior who was observing the angry tension that conflict brought to the streets of our country. It’s an apt metaphor for the polarization and intractability we still see today. The more things change the more they stay the same.

I’m going to use What’s Going On? as the take-off point for my present-day ramblings. I intend to write them on an irregular basis, addressing my observations and providing you with information you might not otherwise know about the world of politics, Wall Street, the economy, and anything else that suits my fancy.

‘What’s Going On?,’ written and recorded by Marvin Gaye, was about a returning Vietnam War warrior who was observing the angry tension that conflict brought to the streets of our country. It’s an apt metaphor for the polarization and intractability we still see today.

I have three goals: (1) to inform and engage you, (2) from time to time, to respectfully challenge you to reconsider long-held opinions or be more understanding of the views of folks on the other side of your issue; and (3) to entertain. This kind of blog will evolve over time and likely will ultimately be part of a new, more formalized Westover newsletter to which both Matt and Chip will contribute in the future.

But for now, I hope you’ll enjoy What’s Going On.

Washington and Investment Advice Deductibility

Do you remember way back before the passage of the 2017 Tax Cut and Jobs Act that investment advisory fees could be deductible, provided they exceeded 2% of your adjusted gross income and were not for retirement accounts? That little perk was erased in the avalanche of so-called tax reform. Well, all the big hitters in the financial services industries are trying to bring this back. And more.

The Investment Advisor Association, the group to which Westover belongs as a registered investment advisor, has joined hands with the CFP Board, the Financial Services Institute, the National Association of Personal Financial Advisors, and the Financial Planning Association. Collectively we are asking our congressional representatives to restore the deduction for advisory fees charged for professional investment.

“Thanks” to the COVID-19 pandemic and recognizing that a crisis is never something to be wasted, our group is also asking that the deduction be broadened to assist all taxpayers at all income levels who need help getting access to competent financial advice. The argument here is that the 2% threshold serves only to help the high-income folks at the expense of middle-income ones.

Let’s see what happens. I give it maybe a 10% chance of passage. But then that’s the odds I gave Donald Trump’s chance of election when I was asked by Stan Diver the night before the 2016 election. Shows you what kind of a prognosticator I am. Let’s stay tuned.

Speaking of Washington

Nancy Pelosi has unveiled a massive $3 trillion-dollar COVID-19 stimulus bill. There are 1,815 pages to this report if you can believe it. It was introduced on Tuesday and is expected to be voted on this Friday. Thank goodness Sunday is a day of rest! I’m sure each one of our representatives will be relying on their Evelyn Wood speed reading skills to take in and understand all of its details.

Included within the bill are matters dealing with aid to marijuana growers as well as curbs on President Trump’s ability to fire whistleblowers. Neither one of those two has a Tinker’s-dam to do with the issues of this pandemic, but then I guess her attitude is, “Why not load ten pounds of stuff into a five-pound pandemic bag and see what falls out?”

There is no doubt that we need to get help to the states and localities which are in desperate need of payments. Some of the other proposals, however, need more thought.

For example, another proposal is to add another round of helicopter-dropped stimulus payments: $1,200 to individuals, $2,400 to couples, and $1,200 to dependents (up to three) regardless of need. My late mother-in-law, who died in 2018 and whose estate I settled last year, just received her first stimulus check. Alas, I returned it. Her urn was already paid. I don’t think she really needed it. And I’m absolutely certain she doesn’t need a second.

The House also wants to continue with the $600 unemployment checks through the end of the year. They are scheduled to end on July 31. This is free money that supplements existing unemployment payments. Query: Is this manna from Washington Heaven a disincentive to job-seeking and job-returning? If so, is it not a detriment to the idea of getting our economy back on track by restoring able-bodied folks to the workforce?

Did you know that more than 50% of those presently receiving unemployment checks are now receiving more money for sitting on their sofa watching Michael Jordan and the Chicago Bulls in The Last Dance than for working 40-hour weeks? How many of those folks do you think will be incented to return to work for the rest of this year if they are getting $600 weekly federal unemployment checks on top of their existing state unemployment checks? I know I wouldn’t. This strikes at the heart of the tension between the free market and the welfare state. The big question is where do you set that fulcrum?

There is no doubt that we need to get help to the states and localities which are in desperate need of payments. Some of the other proposals, however, need more thought.

I’m sure this will pass the House and equally sure it will be slow-walked by the Senate Republicans, who are controlled by Mitch McConnell.

That said, my guess is that come the summer, maybe around July, we will see this bill grant several trillion dollars, but not three, to some Pelosi-named beneficiaries. But sadly, instead of being a bill supported by all, it’s going to be used as a first-shot election campaign bomb.

Stay tuned for the fireworks. Fingers will be pointing. That’s what’s going on.