Crisis of debt

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We must move beyond crisis management approaches and start to address some of the key fiscal and other challenges facing this country if we want our future to be better than our past.” –David M. Walker, former comptroller general of the U.S. and head of the Government Accountability Office, currently president and CEO of the Peter G. Peterson Foundation.

Let’s move beyond trucking for a moment and look at the big picture where our country is concerned. At the moment, we’re struggling with one of the toughest economic recessions ever to afflict the U.S. (one in many ways largely of our own misguided making), which is a reflection of a massive global economic downturn.

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At some point (soon, we all hope) this recession will lift, freight will start to flow, and truckers large and small will get back to making money again. Yet looming over all of this – indeed, darkening the skies of our nation’s future – is something we’re simply not addressing, either as individuals, companies, or governments entities. It’s not about oil and energy consumption (though that’s a major concern), nor is it about the security of our freight networks against terrorists (still again another big worry).

This issue is both a near- and long-term millstone hanging around America’s neck – and the work required to remove it will be Herculean and involve a level sacrifice I highly doubt the citizens of our nation are ready to endure.

I’m talking, of course, about government deficits and debt – the trillion dollars of red ink that keeps growing like some unholy leviathan; a wrecking ball of mammoth proportions that leaves us financially reliant on foreign nations, such as China, that are also competitors in global business and politics. Unless we start answering some VERY tough questions on our financial priorities – and then make the painful cuts necessary to achieve them – we’re going to find ourselves in deep trouble. And it’ll be the kind of trouble that may make the current economic suffering pale by comparison.

David Walker – former U.S. comptroller general and head of the Government Accountability Office (GAO) and now president and CEO of the Peter G. Peterson Foundation – wrote several columns about this very subject, posted at CNN.com over the last several months. This is a guy who’s seen the America’s fiscal ledger up close and it makes for some pretty frightening reading.

[He also is one of the many stars in a documentary about the subject, too, called I.O.U.S.A. that you or may not have seen in the cinema – referring to our national debt as a “fiscal cancer.” Now THERE is a term that gets your attention!]

“In recent years, the federal government has spent more money than it takes in at an increasing rate,” he said. “Total federal debt almost doubled during President George W. Bush's administration and, as much as we needed some stimulus spending to boost the economy, the nonpartisan Congressional Budget Office (CBO) now estimates total debt levels could almost double again over the next eight years based on the budget recently outlined by President Obama.”

Regardless of what politicians tell you, said Walker, any additional accumulations of debt are – absent dramatic reductions in the size and role of government – basically deferred tax increases.

To help put things in perspective, the Peterson Foundation calculated the federal government’s total debt load and found it’s accumulated $56.4 trillion in total liabilities and unfunded promises for Medicare and Social Security as of September 30 LAST year – that’s before we tack on the pile of red ink President Obama added to the mix this year.

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“The numbers used to calculate this figure come directly from the audited financial statements of the U.S. government,” Walker said. “If $56.4 trillion in financial commitments is too big a number to digest, think of it as $483,000 per American household, or $184,000 for every man, woman and child in the country. Remember the old saw: ‘You can pay me now or you can pay me later, with interest.’”

He stressed that unless we as a nation begin to get our fiscal house in order, there's simply no other way to handle our ever-mounting debt burdens except by doubling taxes over time. “Otherwise, our growing commitments for Medicare and Social Security benefits will gradually squeeze out spending on other vital programs such as education, research and development, and infrastructure,” Walker pointed out.

Personal savings, while experiencing an uptick lately because of the recession, have been too low for too long, he added. “As a result, when our government has to borrow money, it must increasingly turn to lenders overseas,” Walker noted – not exactly a good idea when it comes to issues of national security, I would think.

“Effectively addressing these issues will require tough choices and comprehensive reforms, including budget controls, changes to our entitlement programs, reductions in health care costs, other spending cuts, and yes, tax increases,” Walker explained. “But as the old saw goes, paying now, or paying soon, won't be as painful as paying later.”

Indeed – and the consequences for continuing to ignore our growing debt burden as a nation won’t be pleasant, for trucking and every other sector of the U.S. economy.

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Trucks at Work: Sean Kilcarr comments on trends affecting the many different strata of the trucking industry.

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