The word on everyone’s mind is sequester. Turn on the news, the radio, or pick up a magazine and you will see it. The sequester is a series of indiscriminate spending cuts to lower our nations budget deficit. It will cut government programs across the board; excluding entitlement spending (the true cause of our debt crisis). Entitlement spending requires more and more of our nations budget each year and yet our leaders in Washington refuse to discuss actual reform. President Obama has proposed to base future entitlement payments on chained-CPI, which will save a substantial amount of money. However, this does not address the fundamental problems with Medicare and Social Security (high medical costs combined with an aging population).
Even better, the sequester is a manufactured crisis; a result of Washington’s inability to compromise and lead our nation out of a weak recovery. The purpose of the sequester was to force Democrats and Republicans to work together for real reform. Who in their right mind would allow these indiscriminate budget cuts? Our leaders in Washington would HAVE to make a deal before the sequester comes into effect. Once again the American people have been let down.
With all this talk of spending cuts, one key aspect of our recovery is lost in the noise. Where is the discussion of growth? How will Washington help the American economy prosper in the 21st century? We might be able to cut our way to lower deficits, but we cannot cut our way to more economic growth. The best way to increase revenues and decrease our deficit is to increase the taxable base. What better way to increase revenues, then through growth inspired policies? The faster the economy prospers, the quicker a solution to our debt will emerge.
Today’s low interest rate environment puts us in a unique position to invest in our future. With interest rates at record lows we can borrow and invest to help our nation prosper. But we must act now! If the FED’s minutes this week showed anything, it was the fact that interest rates will not be low forever. Washington’s fiscal policy needs to compliment the FED’s monetary policy.
Now some people may argue that the government has tried and failed to steer the economy in the right direction. They will point to the trillion dollar deficits of the past four years and failed investments in companies like Solyndra and A123. However, I beg to differ. Imagine what our economy would look like today if the government spent trillions on research and development, education, and infrastructure rather than bailing out big banks. What we need today is a smarter government that invests its limited funds efficiently; not a smaller government that you can “drown in a bathtub”.
Like it or not the government plays an instrumental role in steering the economy. It is time to move beyond the ideology of how we would like our government to be and accept the reality of what government is. Washington has played an important role in the economy for generations. President Eisenhower, a republican, invested in America’s infrastructure and help build the interstate highway system, which revolutionized commerce in our nation. The Apollo program provided advances in technologies ranging from kidney dialysis, to semi-conductors, to athletic shoes. And we should never forget that the United States Military played an instrumental role in developing ARPAnet, the precursor to the Internet.
The American economy is revved up and ready to go; we just need Washington to clear us a path. Will they decide for a short-term Band-Aid or real investment in our future? Will they maintain entitlements for the older generations or provide a future for the younger generation? It is time for millennials to make our voice heard in Washington. Our government needs incentives to focus on long-term solutions. It is time for us to stand up and demand a prosperous future!