Learn From The Federal Debt Dilemma And Do Your Debt Workout

(The following discussion is extracted from Congressman Ron Paul’s blog and from other political pundits and writers including Mike “Mish” Shedlock (http://globaleconomicanalysis.blogspot.com).

Clear thinking and simple math is the solution to a problem not particularly as difficult or complex as so many are making it out to be. There is a direct parallel between the federal debt problem and the solution to small businesses locked into unaffordable debt. The differences between the entities are significant as small businesses have little access to additional capital and even if we did, borrowing is never the answer to resolving overwhelming debt – a lesson our country will soon learn – but the problems are the same and the solutions are very similar. The lesson for small business is explained at the end, read on.

Ask yourself, why are our politicians doing such a poor job in managing our country? Our credit rating was just dropped; we the richest country in the world and we can’t pay our bills without borrowing. Something is deeply wrong and we must ask ourselves how to fix this problem.

If we just didn’t spend any more than we are spending today we would save approximately $400 billion over the next few years as opposed to the mere $25 billion the current new budget claims to be cutting. It would take approximately 4-5 years to reduce the budget deficit by $1 trillion, simply by not increasing our spending. That doesn’t seem like a huge burden to hold spending where it is now. What’s the big deal? Why has our budget doubled in ten years? Our population has not doubled. What have we gotten from doubling our budget?

Now, let’s do some “balance the books” budgeting. We currently take in $2.2 trillion per year in revenue and spend $3.7 trillion per year. If we look at 2004, the country spent $2.2 trillion and had a balanced budget. It didn’t seem like we were living in hard times. Other than a few wars we cannot afford, what else have we gotten for the additional expenditure we are making? I can’t see it, can you? Here is the interesting fact: if we held spending to the 2004 level and allowed the revenues to grow as the economy healed, by 2015 we would have a balanced budget and no deficit. Can you imagine how good that would be?

Our politicians will never allow us to go back to the 2004 spending level but if we at least simply freeze our spending at today’s level, we would cure our ills quite quickly. But the best we can get is a minor reduction in the growth of our debt – and I do mean minor. An insignificant cut in the growth of our borrowing is hardly a real cut. There have been no cuts at all, merely a tiny reduction in the growth of the borrowing. How silly. Who do the special interest groups think they are fooling? No one was willing to cut anything because our politicians are controlled by greedy, self-absorbed lobbyists and voting blocks.

So I promised the quick and easy answer to this problem…

Vote the selfish, greedy, paid-off bastards out of office. Install honest men and women working for the best interest of the country, not their personal wealth and the personal gain of their immediate constituents, their lobbyists their special interest groups. In one election we can change our course. A leader will emerge; we must vote them in.

In small business, we are the leaders, it is we who must act. We can’t and should not borrow. We are doing everything we can to increase our revenue but the market is very down. Thus, we must do the workouts. Small business owners must rid themselves of the debt that is crushing them. There is no other answer. Do the debt workout, what are you waiting for? All that will come from delay is destruction.