America cannot afford more deficit

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Published: February 14,2010

Tags: banking industry, deficits, housing market, unemployment

A famous quote that is often attributed to the late Congressional Rep. Everett Dirksen goes like this:  “A billion here, a billion there.  Pretty soon it runs into real money.”

Appearing on a recent edition of “Meet the Press,” financial mavens Alan Greenspan and Hank Paulson discussed the economic health and well-being of the nation, and they agreed on a number of key conclusions that were rather disturbing.

There were speculations on the prospects for continued turmoil in the housing market (likely), the health of the banking industry (better), the likelihood for continued high unemployment numbers (certain) and other important and pressing issues.

Chief among their concerns, however, was the impact of the current and ongoing federal deficits and the mushrooming growth of the national debt. From their point of view, this issue is larger and more important than all of the others combined.  Based on the numbers for annual deficits submitted by the budget planners at the top levels of government, Greenspan suggested that even if those numbers are correct (and history is adamant in suggesting that those pictures are always painted with rosy brushes), they’re going to do serious and lasting damage to America. How so? In simple terms, by reducing America’s economic and financial status in the world. By changing the world’s currency standard from the dollar to another currency. By subjecting America to control by the institutions and nations that finance our debt. In fact, he said that he sees a very real possibility that America will no longer be perceived as a “Great Power” within a very brief span of years, because of this.

The numbers have become so vast that it’s difficult to digest them. In an effort to reduce them to a level that’s easier to get your arms around, consider this.  If the deficit for just this current fiscal year comes in at the $1.6-trillion forecast level, here’s what that really means. Every day for 365 days, the federal government will spend $4.386 BILLION that it does not have.  Every hour, the government will spend $182.7 MILLION that it does not have.  And every MINUTE for the next 365 days, the United States of America will spend $3.046 MILLION that we do not have.  Every minute! (It makes those so-called “big bonuses” paid out on Wall Street look pretty puny by comparison, does it not?)

Getting your arms around these numbers, and understanding that we must BORROW the money to finance these deficits and pay regular, ongoing interest on our national debt, can help all of us to see what Greenspan and Paulson were talking about.

Regardless of politics, regardless of idealogy, regardless of perspective, it seems certain that these considerations will impact business and commerce throughout the nation, as well as right here in Mississippi. As we all know, we have significant and ongoing budget issues of our own here in the Magnolia State, and the same is true in most of the other states, and at the municipal levels as well. Can these problems be solved? Can the obstacles we’re facing be surmounted? As an American, my answer is “yes, absolutely!” But overcoming our challenges will require that we band together and work as a team, that we set aside our political differences and seek the solutions that will get our businesses, our schools, our governments and our families back on track. Is there really another alternative? It seems that the choice before us is clear: we can either stand together, or fall apart.

What do YOU think?

Contact Mississippi Business Journal publisher Alan Turner at alan.turner@msbusiness.com or (601) 364-1021.

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