The United States now has a damage control bill for capital markets signed and ready for action. The bill, thanks to its relatively small size, should ensure that a number of companies fail thus cleansing the economy, but the overall economy survives.
The damage control bill should be part one of two when it comes to political and economic conversations. Similar to getting a quick loan to pay off the mafia, this bill was born of haste and desperate need and it only highlights a bigger, much bigger problem. The fact that the House isn’t in session right now debating about how to restructure the government to pay for this $850 billion plus the other trillions is very concerning.
The US government is trillions of dollars in debt. The new bailout and coming correction will most likely add not just the $850B, but upwards of 2-3 trillion to an already enormous debt. A quick check of the national debt clock shows we’re currently at $10T. When will the debt become too high to maintain our economic standing in the world?
In my opinion, without fundamental changes to the US government’s approach to deficit spending, social programs and general expenditures things are less than optimal.
Current high level issues
* Our public education system isn’t properly educating young people, especially the urban poor. Critical thinking skills, logic, math, science, grammar, literature, and the arts are all poorly handled in most public schools. “No Child Left Behind” program appears to be helping the worst schools in urban areas but has altered teaching in less than the worst places to educate to the test rather than ensuring kids can think through problems.
* Huge debt, continuing deficits, downturn in the economy and a majority of the earners (baby boomers) retiring in the next 10-15 years.
* Congress has taken the money from Social Security and spent it on pet projects or frankly other things. More deficits, higher debt
* Foreign policy – we want to be everywhere and have an influence on everything for what appears to be no good reason.
* A dependence on foreign oil for energy
* Political bifurcation the presents handmaiden of executive business interests and pure socialism as our only ‘mainstream’ choices.
* Political leaders have given into their own personal incentives rather than the incentives of the public good.
* More and more people subscribing to class envy and personal entitlement from the government rather than self-reliance. Thank goodness for immigrants and those people with a drive to make their lives better than the parents.
* The socialization of risk with the privatization of reward providing an environment that allows some people to live beyond their means. The credit bubble and SUV bubbles are next.
Current High Level Opportunities
I am an optimist at heart and pragmatic with change. The government must rework its economic spending to not only balance the budget over the economic lifecycle (8 years) but run surpluses over eight years to work down the deficit.
A seismic shift in thinking around education moving almost all education responsibilities to the local level, a push for creating smaller schools, and a move our education targets of public schools toward the targets of private schools. Throw out 12 year education plans making it a range between 8-12 years for primary schools with smarter kids being pushed to excel while the slower kids get more attention.
Alternative energy, technology that uses alternative energy provide a pathway to more domestic blue collar employment and energy independence.
Provide an economic environment that fosters the greatest amount of revenue, while stripping down the federal government spending in dramatic ways. If it can be handled by the states, shift it to the states. If it needs regulation, regulate it. Those Sprint-Nextel Firefighters really had something with their philosophy of governing.
And finally we need a carrot and stick approach to foreign relations. We need to defend our interests abroad and ensure that the USA is safe. Our policy of trying to manage both Europe and Asia (Africa?) so we don’t have to commit to fighting someone else’s war (WWI and WWII) hasn’t worked. Our pre-WWI/II military policy may be worth considering.
A final thought on solving our budgetary problems – someday in the future when our deficit is $25T and the world is no longer willing to lend us money – which state or states would we be willing to sell to cover our debts?