Two years ago in a speech to U.S. House Democrats, Microsoft CEO Steve Ballmer predicted that America was headed for “a fundamental economic reset.” According to Ballmer, for 25 years our economy grew on unrealistically cheap debt. That is over.
Since Ballmer’s remarks, our national debt has continued to grow and now surpasses $14 trillion, President Obama and Congress are struggling with massive federal budget deficits, state and local governments are drowning in red ink and protesters are massing at state capitols demonstrating against wage and benefit cuts.
Elected officials have no choice. They must trim spending and make some very difficult choices. As Gov. Christine Gregoire repeatedly has told state lawmakers, we have to make fundamental changes and do things much differently. We have to quit kicking the can down the road in hopes that somehow our problems will magically disappear.
Here’s why: On Feb. 24, 2011, each U.S. resident’s share of our national debt was $45,587.31. That’s how much you owe. That’s how much each of your children owes. That debt has continued to increase an average of $4.12 billion per day since Sept. 28, 2007.
The U.S. government is borrowing huge amounts of money to fund programs and services it can’t pay for. This year’s deficit — the difference between what we have and what we’re spending — is forecast to reach a record $1.65 trillion, 10 times what it was in 2007. Foreign nations, led by China ($892 billion), hold $4.37 trillion of our national debt.
Our massive debt affects our foreign policy and our standing in the world. Now, instead of acting from a position of strength, we are reduced to the role of debtor, beholden to foreign nations for propping up our economy.
So what is the answer?
Second, elected officials cannot add new programs we can’t afford. For example, while there are some good provisions of Obamacare, the cost increases and taxes being phased in will not only bust government budgets at all levels but the budgets of families, hospitals and employers as well.
Third, we all are going to have to share in the sacrifice. While union protesters rally at state capitols to protect wages and benefits, the cold hard fact is the money isn’t there to continue these programs.
Fourth, we need to take stock of our resources, find ways to create jobs, reduce our trade deficit and become less dependent on foreign oil.
For example, the price of crude oil is skyrocketing because of the unrest in Egypt, Libya and other oil-producing countries. Yet we hold ourselves hostage to those nations by imposing regulatory and legal barriers that limit domestic oil production. We have enough oil to free ourselves from foreign control — we’re simply not using it. Alaska’s North Slope oil fields were opened 35 years ago after the Arab oil embargo to help America become energy independent. Developing our own domestic oil resources will increase our national security, reduce energy costs, stimulate the economy and create jobs.
Fifth, we shouldn’t limit our options. We have this fixation about coal, but China recognizes that it needs coal — and clean-coal technology — to employ people, power its factories and provide enough electricity for its hospitals, schools and homes. While we argue and delay, China builds, expands its economy and wields more power over the world — and us.
It is time to concentrate on the fundamental economic reset. If we don’t take charge of our future now, someone else will.
Don Brunell is the president of the Association of Washington Business. For more about AWB, visit www.awb.org.