- Posted on August 10, 2011
- by John Scranton
When a family continuously spends more than they earn, they eventually go bankrupt. The deficit between inflows and outflows grows as interest expenses mount and the cost of living lavishly increases. Eventually, the house of cards collapses. There are many businesses who see significantly increased income in their future, and apply leverage today to accelerate the speed with which they reach that destination. For a business this is an investment. They may borrow more to repay previous debts, but understand that default would mean fiscal destruction.
The Congress of Unites States seems to be in denial of these concepts. The gap between outflows and inflows of capital is expanding exponentially and there is not an effective solution in place to stop the bleeding. For a family or business, this would mean imminent bankruptcy. And there is no eventual windfall that awaits our Treasury. Spending $900,000,000,000 annually in Iraq and Afghanistan does not create a compelling ROI. Meanwhile, leadership continuously fails to instill any form of confidence and instead elects to threaten creditors with default rumors.
Imagine a CFO calling a banker and explaining that even though they have the ability to raise additional capital, they might just not pay their bills. And yes they are aware that rating agencies have issued a downgrade warning. But the CEO and CFO do not see eye to eye so instead they will accept the downgrade and maybe – maybe – work out a plan to pay some bills just before they are due. The banker would call the loan, the ratings agencies would immediately downgrade, shareholders would revolt, and the leadership would be replaced in an instant. The speed in which these changes would happen illustrate the efficiency of our corporate structure and economy, and conversely expose the inefficiency and ineffectiveness of Government.
The United States of America possesses the greatest portfolio of assets in world history: a free and educated population that primarily seeks peace and prosperity, a free market economy that offers opportunity to all who seek it, and vast natural, technological and scientific resources. If the USA were a software company, they would be Microsoft. The difference is that Microsoft is aware of this great opportunity and great fortune they possess, and they spend every minute of every day seeking ways to continue to grow and improve. My wish is that our leadership would be acutely aware of this concept and emulate our great businesses and business leaders.
To those listening in Washington: stop wasting time and resources pursuing personal incentives and agendas, take control of the fiscal disaster you have created and find a solution, and allow the greatest country in the history of the world to continue doing what is does best – innovate, prosper and enjoy freedom and liberty.
Posted in: Business, Politics