2 types of Christmas spending

Merry Christmas and Happy New Year!

As a “gift” (of questionable value!), here is my final newsletter of 2025.

Christmas Spending

Over the years, I’ve noticed that most people approach holiday spending in one of two ways.

Group one saves money during the year and then spends less than they saved. They have presents and celebrations, but they end the year with no extra debt, sleep well at night and start the new year in a financially strong position.

Group one is financially free and has the flexibility to deal with emergencies as they arise.

Group two goes on a spending spree and charges it all to credit cards. In other words, they pay more for the same items (due to future interest charges) and will start the new year scrambling to make monthly payments.

They, too, have presents and celebrations, but group two is in debt and will be in even deeper trouble when the unexpected happens — and it always does.

Both groups spend money. But group one is in much better shape financially than group two

It turns out that each of these groups has a presence in Des Moines.

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State spending

Here’s an important fact you may not know: the state of Iowa cannot legally spend more than 99% of its available revenue.

As you’d expect, group one has no problem complying with the law. Group one doesn’t spend more than it has. It doesn’t mortgage its future, and it doesn’t place future burdens on young people in order to buy some goodies today.

Group two, on the other hand, ignores the law and blows through the spending cap whenever it can.

But we’d never elect group two to run the state government, would we?

In fact, group two controlled Iowa between 2007 and 2010. Democrat Gov. Chet Culver and a Democrat-controlled legislature blew through the state spending limit each year.

When the national economy went into recession in 2008, the Democrats kept right on spending. Then, having spent irresponsibly during a terrible financial crisis, Democrats imposed two rounds of across-the-board cuts, including to K-12 public schools.

When Iowans voted Democrats out of power, the nonpartisan Legislative Services Agency revealed that the state had a funding gap of $1.07 billion!

Nothing has changed since 2010. Over the last fifteen years, Iowa House Democrats have proposed a total of $7.6 billion in additional spending on top of the enacted budgets. Democrats still want to run up Iowa’s “credit card debt” on a spending spree and hope there will be a way to pay it back.

Of course, there would be only one way to pay for their extra spending — tax hikes.

Fortunately, Iowa Republicans (group one) currently control our state budget and have complied with the 99% law every year.

What has been the result of the Republican approach to finances? Iowa’s reserve funds are at their statutory maximums. Iowa has nearly $6 billion in cash on hand. Iowa has over $4 billion in the Taxpayer Relief Fund.

You might ask: “Why do we need so much money just sitting around?”

My answer: “We don’t!”

You might ask: “Isn’t that taxpayer money?”

My answer: “Yes! It’s your money!”

That’s why we have worked to return that money to you. Your personal income tax rate dropped from 9% just a few years ago to 3.8% this year. The government doesn’t need to be holding piles of your money for no purpose.

Of course, when you lower taxes (Iowa’s primary source of revenue), state revenue temporarily dips. And that has happened.

But when you give people their money back, they invest and spend it, and state revenues begin to climb again. And that has happened too. Despite big challenges in agriculture and manufacturing, Iowa’s state revenue is projected to increase by about 4% next year.

This is the choice Iowans have. Between group-one Iowa Republicans who have stood for economic freedom, lower taxes, and reserve funds adequate to withstand the economic challenges that inevitably arise. Or group-two Democrats who spend as if tomorrow will never come.

Passport companies

As you know, I like to pass along warnings about fraud and scams. One of our neighbors recently passed along a concern about renewing your passport online. And while it is not clear that what is happening is technically a scam, I wanted to draw your attention to the issue.

Renewing your passport is a process you can do at a post office or on the website for the U.S. Department of State. You do not need to hire a company to help you with the process.

But if you Google “passport renewal,” the top link or two will be advertisements for companies that provide a passport renewal service. In addition to paying an unnecessary fee, you will also be giving these companies lots of personal data about yourself that you don’t need to share.

Please continue to be vigilant. With developments in artificial intelligence, scammers continue to improve their ability to deceive. We are all susceptible to being fooled, so keep an eye out for each other.