The Heart Of Business

The Heart of Business

By Craig S. Galati

I recently attended a Las Vegas Chamber luncheon entitled, “The Fiscal Wake Up Tour.”  Wow, the speakers sure got my attention!  The people who spoke–David M. Walker, Comptroller General of the United States; Robert L. Bixby, Executive Director of The Concord Coalition; Alison Acosta Fraser, The Heritage Foundation; and Isabel Sawhill, Senior Fellow, Brookings Institution–were all from different backgrounds and political parties, yet their message was the same: the economic stability of our country is in serious jeopardy.

We already know that the population of the United States is aging.  Baby Boomers are reaching retirement age, while at the same time, less people are entering the workforce than in previous generations.  Couple this with rising healthcare costs and unfunded mandates such as Social Security, Medicare and Medicaid and you see the problem.  Throw in the public sentiment against raising taxes, flattening revenue, aging infrastructure, and unfunded state and local retirement and healthcare plans and our debts continue to escalate well beyond our revenues to unseen proportions.

One of the most interesting parts of the presentation dispelled myths that I held as true about our country’s financial situation.  I believed that the war in Iraq and Afghanistan and legislative pork projects were the major contributors to our growing national deficit.  I learned that removing all pork spending and eliminating the entire Defense Department barely makes a dent in the deficit over the long term.  Today, more than 40% of our federal budget is made up of Medicare, Medicaid and Social Security.  And that is with Baby Boomers just beginning to retire!  These programs have grown faster than revenue and will continue to outstrip our economy’s ability to fund them.  By comparison, the entire Defense Department makes up 20% of the federal budget today.

Another important point of the talk was the assertion by David Walker that there is a deficit in this country larger than the federal budget deficit–a deficit in leadership.  This notion of a leadership deficit made me think of the following:

The government will not be able to solve the problem:  Our current system of government is not set up to solve the tough issues.  To get elected, one must pledge not to raise taxes and to continue to provide services.  Those who suggest raising taxes or cutting programs are quickly ostracized and either not elected or returned to office.

The private sector must get involved in the discussion:  The private sector is great at solving problems, but to date has been reluctant to get involved in discussing and helping to solve this financial problem.  It is time that the private sector step up to the plate and get involved.  There are great local and national business leaders in the United States, and our country needs them now.  We need to return to the example set by way our Founding Fathers, where they were able to see a vision for our country that was greater than the needs of their own individual businesses.

This problem won’t be easy to solve:  I don’t believe that there is a “silver bullet” solution.  Solving this problem will take serious dialogue and commitment from all sectors of our country.  We won’t solve it by cutting spending or by raising revenue alone.

So what can a business leader do to help with this situation?

Become informed:  Business leaders need to take notice of what is going on around them.  Educating yourself and the people with whom you work is a great first step.  It will help you see the problem for what it is and may help formulate strategies and ideas that can address the issues.

Get involved:  Many Chambers of Commerce have government affairs committees or other committees that can be great sources of information as well as excellent vehicles to bring business leaders together regarding the national debt and deficit spending.  Share what you have learned with others who you know and with whom you conduct business. 

Help your employees plan their savings:  Many people are counting on Social Security, Medicare, and pension plans to take care of them in the future.  Help your employees learn that these plans may not be enough and suggest that they should start some type of savings plan.  If you don’t have a 401K or a Simplified Retirement Plan in your company, look into starting one.  These plans, if set up correctly, can give you and others an easy way to save for the future.

Lead responsibly:  It is imperative that in business we lead responsibly.  Teach those around you about living within their means and not becoming leveraged beyond what they can afford.  Do you best in your business to minimize your long-term debt and only borrow for the short term.  Plan your business with sufficient reserves.

I’d like to hear from you:

• What do you think about the financial situation that presently exists in our country?

• Do you believe this financial crisis will affect your business or your quality of life?

• Do you have any ideas as to how we can bring the national budget into control? 

Until next week…

Craig

This entry was posted on Monday, October 8th, 2007 at 9:06 am and is filed under Fiscal Responsibility. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.