James V. McTevia is a managing member of McTevia & Associates, LLC with offices in Bingham Farms, Mich. and in Florida. He is the author of the new book ?The Culture of Debt: How a Once-Proud Society Mortgaged Its Future.?
The 2010 midterm election will likely be remembered for a couple of buzzwords such as ?Tea Party? and ?Anti-Incumbent.? That is unfortunate because facile phrases obscure the most important issue facing our country today ? our enormous national debt.
A Gallup poll conducted just this summer shows that 40% of Americans consider the national debt an ?extremely serious? threat to our country, the same percentage as terrorism. Even with that national sentiment, the national debt, now topping $13 trillion, is seldom an issue in the current Congressional campaigns.
That is because no politician wants to run on a platform of promising to take something away. Every elected official wants to ?deliver? for constituents. Right now, the system enables every member of Congress to bring hundreds of millions of dollars back to us, even when our government cannot afford it. Many members of Congress publicly deplore earmarks and pork barrel politics but nearly all exploit them to the hilt.
In my five decades of working with financially troubled companies to solve business problems, I see the United States, in its current form, as the most troubled business I have encountered. In working with clients, I have always told them they have three options in times like these: increase revenues, cut expenses or a combination of both. From what I have heard this election season, I am not certain that any candidate is truly committed to doing any of the three.
The 112th U.S. Congress, with support of the president, must balance the budget to even make a dent in the national debt. Otherwise America cannot pay any of the principal while it is busy borrowing to pay interest on money borrowed to bridge the deficit. This would take serious reform. This would require very difficult and very painful cuts. But never has strong action been more necessary.
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In business, when companies continue to overborrow and overspend, the bank simply takes away the checkbook.
The further in debt the nation goes, the less likely the debt will be paid in full. At this point, the United States can't even pay the interest on its debt without borrowing. Common sense suggests that if this scenario continues, it will become expensive at a minimum to borrow or lenders will simply refuse to continue to lend and there will be a sovereign default. Does it need to come to that before financial discipline becomes the mantra in Washington?
We are struggling to regain our strength as the leading economic force on this globe. For that to happen, somebody will have to stand before the American people and tell them, ?The party?s over.? Somebody could demonstrate bold leadership. Somebody could build a strong majority to do what is needed instead of what is expected. What are the chances that ?somebody? will be any candidate running for Congress in this mid-term election? If you hear any candidate ? from any party ? speak seriously and sincerely about making a dent in the national debt, your decision in the voting booth should be a very easy one.
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