The Most Important Thing the President Forgot to Say Last Night
[The following represents the author's economic beliefs and political point of view. They do not necessarily represent Inc.'s point of view.]
Look, it isn't easy being the President of the U.S. And no matter how great a speaker you are, it can't be easy to make a speech in front of both houses of Congress, the entire Supreme Court, most of Washington's elite and millions of Americans who weren't watching Kentucky vs. LSU at the same time.
You can't remember to say everything, even with the help of teleprompters. So I guess that's the reason why the President didn't say the one most important thing that the business community wanted to hear during last night’s State of the Union address:
"I will make it my No. 1 priority during my last three years in office to address the No. 1 issue facing this country: the paydown of our national debt."
The national debt? Oh, please--isn't that old news by now? Aren't our deficits decreasing? Didn't we just reach a budget compromise? Won't those politicians just let that debt ceiling thing pass for God's sake? We've got other, more important things to worry about: health care, immigration reform, improvements to our infrastructure, education, a "call to action" to improve opportunity and reduce inequality.
Thankfully, many in Congress won't let this pass.
Chris Collins, a Republican Congressman from New York recently summed up why in a recent interview he gave me:
"Business owners need to invest in order to grow their business. You need confidence that an investment today will be earning money for you 5-10 years from now. Given our $17 trillion in national debt, how confident are you that the government will be able to pay its bills 5-10 years from now? How will you? This is what concerns business owners. And this is why they're not investing more."
He's right. It's the economy. According to a Gallup poll released yesterday, many are in agreement: 91 percent of Democrats and 88 percent of Republicans rated the economy as the most important issue that the president and Congress should deal with in the next year.
And behind it all is our national debt. Business owners like me want the same things that the President wants. But we also know that you can't fund better infrastructure, better education and better healthcare when you don’t have the money to do it. We would love to make improvements to our companies, too (you should see our bathrooms. . . ugh). But if we can’t afford it, then we can't do that, either. And we know that just because we may have the ability to service our debt for now doesn't mean it makes sense to bring on more and more. That's because some day we may not have the ability to continue servicing it.
And that day is getting closer for our country. Yes, after years of trillion dollar budget shortfalls, our deficits are going down. In fact, the Congressional Budget Office is projecting deficits of around $744 billion and $577 billion for fiscal years 2014 and 2015 (Our entire deficit in 2007 was $174 billion by the way). More growth could result in even better numbers. But those deficits are also projected to start increasing again in a few years as more entitlement liabilities kick in.
Even in an era of decreasing deficits, any red ink still continues to add to our national debt which has now grown beyond the entire size of our Gross Domestic Product for the first time in recent history and continues to grow larger each year.
Since the President took office, our national debt went from $10.6 trillion to more than $17 trillion. And many are projecting debt levels of 150% to 200% of our GDP in the next 20-30 years! Our friends in Greece, Spain and Italy know all about the painful consequences of an unsustainable level of debt. And these guys were nowhere near those levels.
Somehow, someday our national debt will affect our businesses in very specific ways. Forget about paying for better roads, better schools and better health care. Those options will be completely out the window. Instead, financial markets will falter. Borrowing will become more expensive. Wealth will depreciate.
When our debt levels reach that inevitable ceiling, and the government is limited from borrowing more because lenders have swallowed enough risk, then vital services will get shut down. Our national security will be put at risk. Our ability to pay for what's needed in a national emergency (A war? An outbreak?) will be taken away.
When push comes to shove, the government will have to do something and every business owner knows what that "something" is: Raise more money (increase taxes) or spend less money (sequestration).
Both scenarios are painful. But less painful now. And manageable if we at least know what the long-term plan is. Otherwise, we have uncertainty. And that stops us from hiring and investing.
The President forgot to mention all this. He forgot to say that debt reduction would be his No. 1 priority. Hey, sometimes you can't remember everything, right?